1. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–1 CHAPTER 15 CONTROLLING THE ORGANISATION

2. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–2 LECTURE OUTLINE Control as a management function The control process Types of controls Managerial approaches to implementing controls Assessing control systems

3. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–3 CONTROL AS A MANAGEMENT FUNCTION Controlling: Process of regulating organisational activities so that actual performance conforms to expected organisational standards and goals.

4. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–4 CONTROL AS A MANAGEMENT FUNCTION Significance of the control system: Set of mechanisms designed to increase probability of meeting organisational standards and goals. Controlling ensures resources are used for organisational objectives supporting organising and leading functions.

5. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–5 CONTROL AS A MANAGEMENT FUNCTION Role of controls: Coping with uncertainty Watching environmental factors for change Detecting irregularities Such as quality, cost, staff turnover Identifying opportunities Alerting management to opportunities

6. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–6 CONTROL AS A MANAGEMENT FUNCTION Role of controls (cont.): Handling complex situations Aiding coordination of complex situations Decentralising authority Controls allow decision-making at lower levels

7. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–7 CONTROL AS A MANAGEMENT FUNCTION Levels of control: Strategic control Monitoring critical environmental factors Tactical control Assessing implementation of tactical plans at department level Operational control Overseeing implementation of operating plans, monitoring day-to-day results

8. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–8 CONTROL AS A MANAGEMENT FUNCTION Levels of control: Top management Middle management 1 st level management Strategic planning Tactical planning Operational planning Strategic control Tactical control Operational control

9. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–9 THE CONTROL PROCESS Steps in the control process: 1. Determine areas to control 2. Establish standards 3. Measure performance 4. Compare performance against standards 5. Recognise positive performance; take corrective action as necessary 6. Adjust standards & measures as necessary

10. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–10 THE CONTROL PROCESS Steps in the control process: Determine areas to control Establish standards Measure performance Compare performance Recognise positive performance Recognise positive performance Control process steps Control process steps Take corrective action Adjust standards

11. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–11 THE CONTROL PROCESS Deciding what to control: Resource dependence – Approach that argues that managers need to control areas where they depend on others for resources. – Four conditions must be met to justify a control point. – These controls are known as: Strategic control points

12. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–12 THE CONTROL PROCESS Deciding what to control: Four conditions for control 1. High dependence on resource 2. Expected resource flow is unacceptable 3. Control process feasibility 4. Cost acceptability

13. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–13 THE CONTROL PROCESS Deciding what to control: High dependence on the resource Chance that expected resource flow will be unacceptable Chance that expected resource flow will be unacceptable Control-process feasibility Cost acceptability Determining strategic control points Determining strategic control points Alternatives to control: Change dependence relationships Change nature of dependence relationships Alternatives to control: Change dependence relationships Change nature of dependence relationships

14. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–14 THE CONTROL PROCESS Deciding what to control: Alternatives to control If the first of these conditions show a need for control, but such control process is either not feasible or too costly, then managers must develop alternatives to control, e.g. – Change dependence relationship on suppliers etc. – Change nature of dependence relationship – Build reliability – Eliminate dependence

15. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–15 TYPES OF CONTROL Major control types by timing – Feedforward control Regulation of inputs to ensure they meet standards – Concurrent control Regulation of activities to ensure they conform to standards – Feedback control Regulation of completed product to ensure standards are met

16. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–16 TYPES OF CONTROL Control types by timing: Input Transformation processes Transformation processes Outputs Feed-forward control Anticipating problems Feed-forward control Anticipating problems Concurrent control Attending to problems as they occur Concurrent control Attending to problems as they occur Feedback control Correcting problems after product/service is produced Feedback control Correcting problems after product/service is produced

17. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–17 TYPES OF CONTROL Multiple controls Systems using two or more of the feedforward, concurrent and feedback control processes and involving several strategic control points. Cybernetic control Self-regulating control system which, once operating, can automatically monitor the situation and take corrective action when necessary. Non-cybernetic control Control system relying on human discretion as a basic part of its process.

18. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–18 MANAGERIAL APPROACHES TO IMPLEMENTING CONTROLS Bureaucratic control Clan control Market control Control & innovation

19. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–19 MANAGERIAL APPROACHES TO IMPLEMENTING CONTROL Bureaucratic control: Managerial approach relying on regulation through rules, policies, supervision, budgets, schedules, reward systems and other administrative mechanisms aimed at ensuring employees exhibit appropriate behaviours and meet performance standards.

20. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–20 MANAGERIAL APPROACHES TO IMPLEMENTING CONTROL Clan control: Managerial approach relying on values, beliefs, traditions, corporate culture, shared norms and informal relationships to regulate employee behaviours and facilitate reaching of organisational goals.

21. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–21 MANAGERIAL APPROACHES TO IMPLEMENTING CONTROL Market control: Managerial approach relying on market mechanisms to regulate prices for certain clearly-specified goods and services needed by an organisation.

22. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–22 MANAGERIAL APPROACHES TO IMPLEMENTING CONTROL Control & innovation: Four levers for strategic control/innovation – Belief systems – Boundary systems – Performance management systems – Interactive monitoring systems Incrementalist approach Control of an innovative project that relies on clan control but also involves a phased set of plans and accompanying bureaucratic controls.

23. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–23 ASSESSING CONTROL SYSTEMS Potential dysfunctional aspects: Behavioural displacement Game playing Operating delays Negative attitudes

24. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–24 ASSESSING CONTROL SYSTEMS Overcontrol versus undercontrol: Overcontrol Cutting job autonomy to the point where it seriously inhibits effective job performance. Undercontrol Granting autonomy to an employee to the point where the organisation loses its ability to direct individual effort towards achieving organisational goals.

25. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–25 ASSESSING CONTROL SYSTEMS Characteristics of effective control systems: Future-oriented Multidimensional Cost-effective Accurate Realistic

26. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–26 ASSESSING CONTROL SYSTEMS Characteristics of effective control Systems (cont.): Timely Monitorable Acceptable to organisation members Flexible

27. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–27 LECTURE SUMMARY Control as a management function – Significance of the control process – Role of controls – Levels of control The control process – Steps in the process – Strategic control points Types of control – Types by timing, multiple, cybernetic, non- cybernetic

28. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 15–28 LECTURE SUMMARY Managerial approaches to control – Bureaucratic, clan, market – Control & innovation Assessing control systems – Dysfunctions – Over-control/under-control – Characteristics of effective control systems