Chapter 18 Controlling

 

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•Explain the nature and importance of control •Describe the three steps in the control process •Explain how organizaonal performance is measured •Describe tools used to measure organizaonal performance

•Discuss contemporary issues in control

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What Is Control? • Contr Controlling olling - the process of monitoring, comparing, and correcng work performance. • The Purpose of Control Control  – To ensure that acvies are completed in ways that lead to the accomplishment of organizaonal  goals.

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Why Is Control Important? • As the nal link in management funcons:  – Planning • Controls let managers know whether their goals and plans are on target and what future acons to take.

 – Empowering employees • Control systems provide managers with informaon and feedback on employee performance.

 – Protecng the workplace

• Controls enhance physical security and help minimize m inimize workplace disrupons. Copyright © 2012 Pearson Educaon, Inc. ©2012 Pearson Education, Inc. publishing as Prentice Hall Publishing as Prence Hall

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Exhibit 18-1: Planning-Controlling Link

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The Contr Control ol Process Process • The Process of Control 1. Meas Measurin uring g actu actual al perf performan ormance ce 2. Comparin Comparing g actual p perf erformance ormance agains againstt a standard 3. Taking acon to corr correct ect devia deviaons ons or inadequate standards

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Exhibit 18-2: The Control Process

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Step1 Measuring: How and What We Measure • Sources of Informaon (How)

• Control Criteria (What)  – Employees

 – Personal observaon  – Stascal reports

• Sasfacon • Turnover

 – Oral reports

• Absenteeism

 – Wrien reports  – Budgets • Costs

• Output • Sales Copyright © 2012 Pearson Educaon, Inc. ©2012 Pearson Education, Inc. publishing as Prentice Hall Publishing as Prence Hall

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Exhibit 18-3: Sources of Informaon for Measuring Performance

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Step 2: Comparing Actual Performance Against the Standard • Determining the degree of variao variaon n between actual performance and the standard • Range of variaon - the acceptable parameters paramet ers of variance between actual performance and the standard. standard.

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Exhibit 18-4: Acceptable Range of of Variaon Variaon

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Step 3: Taking Managerial Acon • Immediate correcve acon - correcve acon that corrects problems at once in order to get performance back on track. • Basic correcve acon - correcv correcve e acon that looks at how and a nd why performance deviated before correcng the source of deviaon. (Training)

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Controlling for Organizaonal Organizaonal Performance • Organizaonal performance - the accumulated results of all the organizaon’s work acvies.

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Measures of Organizaonal Performance 1. Producvity - the amount of goods or services produced divided by the inputs needed to generate that output. 2. Organizaonal eecveness - a measure of how appropriate organizaonal goals are and how well those goals are being met. 3. Industry & Company Rankings - Rankings are a popular way to measure organizaon’s performance. Rankings are determined by specic performance measures and create a equal plaorm for other comparable companies. Copyright © 2012 Pearson Educaon, Inc. Management , Eleventh Edition by Stephen P. Robbins & Mary Coulter 

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Exhibit 18-7: Popular Industry and Company Rankings

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Types of Control • Feed forward control control that takes place before a work acvity is done. • Concurrent control control that takes place while a work acvity is in progress.

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Types of Control (cont.) • Management by walking around - a term used to describe when a manager is out in the work area interacng directly with employees. • Feedback control control that takes place aer a work acvity is done. Copyright © 2012 Pearson Educaon, Inc. Management , Eleventh Edition by Stephen P. Robbins & Mary Coulter 

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Exhibit 18-8: Types of Control

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Financial Contr Controls ols • Tradional Controls  – Rao analysis • Liquidity • Leverage • Acvity • Protability

 – Budget Analysis • Quantave standards • Deviaons Copyright © 2012 Pearson Educaon, Inc.

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Exhibit 18-9: Popular Financial Raos

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Exhibit 18-9: Popular Financial Raos (cont.)

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What is the Balanced Scorecard? • Balanced scorecard - a performance measurement tool that examines more than  just the nancial perspecve. perspecve.  – Measures a company’s performance in four areas: • Financial • Customer • Internal processes • People/innovaon/growth assets

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Informaon Controls • Management informaon system (MIS) - a system sys tem used to provide management with needed informaon on a regular basis. • Data - an unorganized collecon of raw, unanalyzed facts (e.g., an unsorted list of customer names). • Informaon - data that has been analyzed and organized organi zed such that it has value and relevance to managers.

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Benchmarking of Best Pracces Pracces • Benchmarking - the search for the best pracces among competors competors or noncompetorss that lead to their superior competor performance. • Benchmark - the standard of excellence to measure and compare against. against.

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