1. The 4th Management Function: CONTROLLING

2. Managing for productivity and results
Competitive advantage
…must operate in
a complex environment and…
Diversity
Planning
…make decision about
the 4 management functions
You as a manager…
Globalization
Organizing
… to achieve productivity and realize results
Information technology
Leading
Ethical standards
Controlling
Your happiness & goals

3. What is productivity?
Productivity can be applied at any level, whether for you as an individual, for work unit you’re managing, or for organization you work for
It is defined by the formula of outputs divided by inputs for a specified period of time.
Outputs are all the goods and services produced.
Inputs are not only labor but also capital, materials, and energy
productivity = outputs/ inputs
= goods+services/
labor+capital+materials+energy

4. Why increasing productivity is important?
Productivity is important to companies because ultimately it determines whether the organization will make profit or even survive
These functions (below) affect one another and it turn affect in Org’s productivity
Controlling: monitor performance, compare it with goals, and take corrective action as needed
Planning: set goals & decide how to achieve them
Organizing: arrange tasks, people, and other resources to accomplish the work
Leading: motivate people to work hard to achieve Org’s goals
For productivity

5. What is Controlling?
A process of monitoring performance, comparing with goals, and correcting work performance as needed to make sure performance meets objectives

6. Why control is needed? To adapt to change & uncertainty
To discover irregularities & errors
To reduce costs, increase productivity, or add value
To detect opportunities
To deal with complexity
To decentralize decision making & facilitate teamwork

7. Why control is needed? To adapt to change & uncertainty
Consumer tastes change
New competitor appear
Technologies are reborn
New materials are invented
Government regulations are altered

8. Why control is needed? To discover irregularities & errors
Cost overruns
Manufacturing defects
Employee turnover
Bookkeeping errors
Customer satisfaction

9. Why control is needed?
To reduce costs, increase productivity, or add value
Reduce labor costs
Eliminate waste
Increase output
Increase product delivery cycle
Add value to product

10. Why control is needed? To detect opportunities Hot-selling products
Competitive prices on materials
Changing population trends
New overseas market

11. Why control is needed?
To decentralize decision making & facilitate teamwork
Allow top management to decentralize decision making at lower levels within the organization
Encourage employees to work together in teams

12. Why control is needed? To deal with complexity
Help managers, in larger organization, coordinate well with various elements:
several product lines
material-purchasing policies
customer bases
workers from different cultures

13. Control Process
It is a 3 steps processes of measuring actual performance, comparing actual performance against a standard, and taking managerial action to correct deviations or inadequate standards
3 main steps for controlling process:
Measuring
Comparing
Taking Managerial Action

14. 1. Measuring
Establish standard: “What is the desired outcome we want?”
A control standard (or performance standard or standard) is the desired performance level for a given goal, for example, level of charitable contributions, number of students retained, number of financial performance, number of employee hiring, number of manufacturing defects, percentage increase in market share, percentage reduction in costs, number of customer complaints, and etc.
Measure performance: “What is the actual performance?”
Example: number of products sold, units produced, cost per item sold, new products create by research scientist, scholarly writing by a college professor, or opinions expressed in peer report

15. How we measure & report actual performance
Advantages (+)
Drawbacks (-)
Personal Observations
Get firsthand knowledge
Information isn’t filtered
Intensive coverage of work activities
Subject to personal biases
Time-consuming
Obtrusive (interfering)
Statistical Reports
Easy to visualize
Effective for showing relationships
Provide limited information
Ignore subjective factors
Oral Report
Fast way to get information
Allow for verbal and nonverbal feedback
Information is filtered
Information can’t be documented
Written Reports
Comprehensive (detailed)
Formal
Easy to file and retrieve
Take more time to prepare

16. 2. Comparing Performance to Standard
This step determines the variation between actual performance and a standard
How much deviation (difference) is acceptable? It depends on the range of variation built into the standards.
Managers prefer to see performance exceeds the standards.
The greater the difference between the desired and actual performance, the greater the need for action.

17. Acceptable Range of Variation
Acceptable Upper Limit
Acceptable rage of variation
Acceptable Lower Limit

18. 3. Taking managerial action
“What changes should we make to obtain desirable outcomes?”
There are 3 possibilities:
Make no changes
Recognize and reinforce positive performance
Take action to correct negative performance

19. 3. Taking managerial action (con’t)
When performance meets or exceeds the standards set, managers should give rewards, ranging from giving a verbal “Job well done” to more substantial payoffs such as raises, bonuses, and promotions to reinforce good behavior

20. 3. Taking managerial action (con’t)
When performance falls significantly short of the standard, managers should carefully examine the reason why and take the appropriate action.
They may need to revise the standards as they were unrealistic or faced changing conditions.
Or when the employees can’t perform tasks to achieve the standards, manager may need to take some actions according to the specific reason of low performance.
Example: When a UPS driver fails to perform according to the standard set for him/her, a supervisor rides along and give suggestions for improvement. If drivers are unable to improve, they are warned, then suspended, and then dismissed.

21. Types of control Before the work is done: Anticipates problems
While the work is going on: Corrects problems as they occur
After the work is done: Corrects problems after they occur
Future-oriented
Feedforward controls
Present-oriented
Concurrent controls
Past-oriented
Feedback controls
Feedback

22. Types of control (con’t)
Feedforward—control the future: before the work begins
It takes place before operations begin and is intended to prevent anticipate problems
The purpose is to keep problems from happening so that manager won’t have to fix them afterward
Concurrent—control for the present: while the work is in progress
It takes place while operations are going on and is intended to minimize problems as they occur
The purpose is to correct problems before they become too difficult or expensive by directing, monitoring, and fine-tuning activities
Feedback—control for the past: after the work is done
It takes place after operations are finished and is intended to correct the problems that have already occurred
The drawback is the damage has already been done, however, the benefit is feedback shows how well the planning process worked and tell employees how well they performed, thereby contributing to employee motivation

23. Levels of Control Strategic control by top managers
It is monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed
Tactical control by middle managers
It is monitoring performance to ensure that tactical plans— those at the divisional or departmental level—are being implemented and taking corrective action as needed
Operational control by first-level managers
It is monitoring performance to ensure that operational plans— day to day goals—are being implemented and taking corrective action as needed

24. Areas of control
Physical control: buildings, equipments, and tangible products
Example: the use of computers, cars, and other machinery.
There are inventory-management controls to keep track of how many products are in stock, how many will be needed, and what their delivery dates are from suppliers
There are quality controls to make sure that products are being built according to certain acceptable standards
Human control
Informational control
Financial control

25. Areas of control (con’t)
Physical control: buildings, equipments, and tangible products
Human control: controls used to monitor employees
Example: personality tests and drug testing for hiring, performance tests during training, performance evaluations to measure work productivity, and employee surveys to assess job satisfaction and leadership
Informational control
Financial control

26. Areas of control (con’t)
Physical control: buildings, equipments, and tangible products
Human control: controls used to monitor employees
Informational control
Example: production schedules, sales forecasts, environmental impact statement, analyzes of competitions
Financial control

27. Areas of control (con’t)
Physical control: buildings, equipments, and tangible products
Human control: controls used to monitor employees
Informational control
Financial control
Example: Are bills being paid on time? How much money is owed by customers? Is there enough cash on hand to meet payroll obligations? What are the debt-repayment schedules? What is the advertising budget?
Financial controls are very important because they can affect the other 3 types of resources

28. Balanced Scorecard Approach
The balanced scorecard approach to evaluate organizational performance beyond just a financial perspective.
Managers should develop goals in each of 4 areas and then measure whether the goals are being met.

29. Balanced Scorecard Perspectives
The Learning & Growth Perspective: Includes employee training, learning and corporate cultural attitudes related to both individual and corporate self-improvement.
The Business Process (Internal) Perspective: Includes how well their business is running, and whether its products and services conform to customer requirements (the mission).
The Customer Perspective: Includes customers satisfaction, how to fulfill their needs in order to prevent future decline
The Financial Perspective: Include all financial controls, timely and accurate funding data will always be a priority for organizations

30. Importance of Control
It helps managers know whether organizational goals are being met and if they’re not being met, the reason why
Maintaining productivity depends on control as control is to make something happen the way it was planned to happen

31. Final Examination Guideline:
SWOT Analysis
SMART Goals
MBO
Strategic Management
Control Process
HRM
Leading & Motivation
Elements of Organization
“Time management” in the exam room is important!!!
Your answers should be “Clear, Complete, Correct”
No need to be very long answer!
…enough to make the one, who haven’t studied Management before, understand your explanation
Work hard for your final exam!