Process of Controlling

with Examples at each stage. & methods of Controlling

.

: What is the control process?

Controlling
The process of measuring performance and taking

action to ensure desired results.

Has a positive and necessary role in the management

process.
Ensures that the right things happen, in the right way, at

the right time.

Organizational learning and after-action review.

Control system :
A good control system should: be flexible so managers can respond as needed. provide accurate information about the organization. provide information in a timely manner.

NEED of controlling ?
Managers must monitor and evaluate:
Is the firm efficiently converting inputs into outputs? Are units of inputs and outputs measured accurately? Is product quality improving? Is the firms quality competitive with other firms? Are employees responsive to customers? Are customers satisfied with the services offered? Are our managers innovative in outlook? Does the control system encourage risk-taking?
4

Control process..:
Steps in the control process:
Step 1 establish objectives and standards. Step 2 measure actual performance. Step 3 compare results with objectives and standards.

Step 4 take corrective action as needed.

5

Four steps in the control process.

Steps :
Step 1 establishing objectives and

standards
Output standards
Measure performance results in terms of quantity, quality, cost, or time.

Input standards
Measure effort in terms of amount of work expended in task performance.
7

What is the control process?

Step 2 measuring actual performance
Goal is accurate measurement of actual performance results and/or performance efforts. Must identify significant differences between actual results and original plan. Effective control requires measurement.
Management 8/e - Chapter 8 8

: What is the control process?

Step 3 comparing results with objectives

and standards
Need for action reflects the difference between

desired performance and actual performance

Comparison methods:
Historical comparison Relative comparison Engineering comparison
Management 8/e - Chapter 8 9

What is the control process?

Step 4 taking corrective action Taking action when a discrepancy exists between desired and actual performance. Management by exception
Giving attention to situations showing the greatest need for action. Types of exceptions
Problem situation Opportunity situation
Management 8/e - Chapter 8 10

Example of process of organization control management . Profit Ratios

measure how efficiently managers are using the organizations resources to generate profits

Return on Investment (ROI) most commonly used financial performance measure organizations net income before taxes divided by its total assets
11

 Operating margin calculated by dividing a companies operating profit by sales revenue Provides managers with information about how efficiently an organization is utilizing its resources

12

 Liquidity ratios measure how well managers have protected organizational resources to be able to meet short-term obligations
Leverage ratios measure the degree to which managers use debt or equity to finance ongoing operations

13

 Activity ratios provide measures of how well managers are creating value from organizational assets

14

Output control :
Organizational Goals Each division within the firm is given specific goals that must be met in order to attain overall organizational goals.
Goals should be set appropriately so that managers are motivated to accomplish them

15

Output control :
Operating Budgets Blueprint that states how managers intend to use organizational resources to achieve organizational goals efficiently.

16

The role of feed forward, concurrent, and feedback controls in organizations.

Management 8/e - Chapter 8

17

What is the control process?

Internal and external control
Internal control
Allows motivated individuals and groups to exercise self-discipline in fulfilling job expectations.

External control
Occurs through personal supervision and the use of
formal administrative systems.
Management 8/e - Chapter 8 18

What are the common organizational controls?

Management by Objectives (MBO)
A structured process of regular communication. Supervisor/team leader and workers jointly set performance objectives. Supervisor/team leader and workers jointly review results.
Management 8/e - Chapter 8 19

What are the common organizational controls?

Statistical quality control
Quality control involves checking processes, materials, products, and services to ensure that they meet high standards. Statistical quality control involves:
Taking samples of work.

Measuring quality in the samples.

Determining the acceptability of results.
Management 8/e - Chapter 8 20

Methods of controlling :
Evolutionary change gradual, incremental, and narrowly focused constant attempt to improve, adapt, and adjust strategy and structure incrementally to accommodate changes in the environment

Management 8/e - Chapter 8

21

 Revolutionary change Rapid, dramatic, and broadly focused Involves a bold attempt to quickly find ways to be effective Likely to result in a radical shift in ways of doing things, new goals, and a new structure for the organization

Management 8/e - Chapter 8

22

 Top Down Change A fast, revolutionary approach to change in which top managers identify what needs to be changed and then move quickly to implement the changes throughout the organization. Bottom-up change A gradual or evolutionary approach to change in which managers at all levels work together to develop a detailed plan for change.

Management 8/e - Chapter 8

23

 Benchmarking The process of comparing one companys performance on specific dimensions with the performance of other, high-performing organizations.

24

Changes in organization control:

Movement of an organization away from its

present state and toward some desired future state to increase its efficiency and effectiveness There are a wide variety of forces arising from the way an organization operates, from its structure, culture, and control systems that make organizations resistant to change
Management 8/e - Chapter 8 25

Management 8/e - Chapter 8

26