Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 21-1 9.

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 21-1

9


The Fundamentals of ControllingThe Fundamentals of ControllingThe Fundamentals of ControllingThe Fundamentals of ControllingAs the scale and complexity of modern organizations grow, the

problem of control also grows.


Defining ControlDefining ControlDefining ControlDefining ControlControl: is ensuring that an event occurs as it was planned to

occur (It is making something happen the way it was planned)

Planning and control are virtually inseparable functions (The Siamese Twins of Management) How is that?

The planning process provides a map of what actions needed to meet the objectives (the scope & time of these actions)

But it is not enough! If we don’t follow it, or did something wrong, we will not achieve the desired results

a plan is a s good as we can make it happen. That’s why we need Controlling; we must (1) develop methods of measurements and control, (2) to know when a deviation from the plan happens, (3) then take a corrective action


Defining ControlDefining ControlDefining ControlDefining ControlMurphy’s Law: anything that can go wrong will go wrong.

That’s why managers should be alerts for possible problems (even if the system is operating well, it might be eroding under the surface)

Managers should continually control. They should check to see that organizational activities and processes are going as planned, get feedback, and make corrective changes if needed.


Defining ControllingDefining ControllingDefining ControllingDefining ControllingControlling: is the process managers go through to control.

Controlling: is a systematic effort by business management to compare performance to predetermined standards, plans, or objectives to determine whether performance is in line with these standards and presumably to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives. (this definition is for understanding only)

Example: Production workers

Daily & weekly production levels

Daily & weekly production goalsRecord

Set

Compare

If levels below goals

Corrective action

ContinueIf levels equal goals


The Controlling SubsystemThe Controlling SubsystemThe Controlling SubsystemThe Controlling SubsystemPurpose: to help managers enhance the success of the overall

management system through effective controlling.


The Controlling ProcessThe Controlling ProcessThe Controlling ProcessThe Controlling Process3 Main Steps in the controlling process:

1. Measuring Performance2. Comparing measured performance to standards 3. Taking corrective actions


The Controlling ProcessThe Controlling ProcessThe Controlling ProcessThe Controlling Process1. Measuring Performance:Measure current org. performance to determine what must be done to be more effective and efficient

Before measuring! Should establish units of measureHow to measure? (example?)1.Establish units of measure that represent performance2.Determine the number of each of these units accomplished by each employeeWhat to measure? (example?)A wide range or org. activities can be measuredPerformance measurements can relate to various effects of production

The degree of difficulty is determined by the activity being measured


The Controlling ProcessThe Controlling ProcessThe Controlling ProcessThe Controlling Process2. Comparing Measured Performance to Standards:

Standard: is the level of activity established to serve as a model for evaluating organizational performance

Standards are the yardsticks that determine whether org performance is adequate or inadequate

The performance evaluated can be for the org as a whole or for some individuals working within the org

Successful managers pinpoint all important areas of org performance and establish corresponding standards in each area


The Controlling ProcessThe Controlling ProcessThe Controlling ProcessThe Controlling Process3. Taking Corrective Action (if necessary):

Corrective action: is managerial activity aimed at bringing org performance up to the level of performance standards

It focuses on: correcting org mistakes that are hindering (obstruct, stop) org. performance

Managers should first make sure that:Standards were properly establishedMeasurements of org. performance are valid & reliable



Recognizing Problems:Problem: any factor within the organization that is a barrier to organizational goal attainment

Difficult to pinpoint

Recognizing Symptoms:The manager must determine whether the failure is a problem in it self or a symptom. (what exactly is causing the situation?)symptom: a sign that a problem exists.



Once the problem has been properly identified → corrective action can focus on one or more of the three primary management functions (Planning, Organizing, Influencing), example?:

Modify past plans → more suitable for futureChange existing organizational structure →Restructure incentive program →

Because planning, organizing, and influencing are closely related, it is likely that corrective action in one area --will need→ some corresponding actions in one or both of the other two areas


Power and ControlPower and ControlPower and ControlPower and ControlTo control successfully, managers must understand:

1. The control process (nonhuman variable)

2. How organization members relate to it (human-relater variable, e.g. Power)


Definition of PowerDefinition of PowerDefinition of PowerDefinition of PowerThe differences between Authority & Power:

Authority: is the right to command or give orders

Power: is the ability to influence others so they respond to orders (or take orders)

Power and control are closely related, HOW? (book)

Managers must learn how to wield (use) power in order to advance their organization’s agenda

Many highly competent professionals floundered (failed) in management careers because they are uncomfortable using power


Total Power of a ManagerTotal Power of a ManagerTotal Power of a ManagerTotal Power of a ManagerThe total power a manager possess (have) is made up of two different kinds of power:

1.Position power: derived from the organizational position a manager holds (lower-level v.s. upper-level)

2.Personal power: derived from a manager’s relationships with others.


Steps for Increasing Total PowerSteps for Increasing Total PowerSteps for Increasing Total PowerSteps for Increasing Total PowerManagers can increase their total power by increasing:

1. Position power, by moving to a higher organizational position. (but they have little control over it)

2. Personal power (they have greater control over it), by developing the following attitudes and beliefs in other organization members:

1. Sense of obligation toward the manager. How?

2. Belief that the manager possesses a high level of expertise. How?

3. Sense of identification with the manager. How?

4. Perception that they are dependent on the manager. How?


Making Controlling SuccessfulMaking Controlling SuccessfulMaking Controlling SuccessfulMaking Controlling SuccessfulFactors to make controlling system successful and increase its

quality:

1. Specific Organizational Activities Being Focused On. Explain?

2. Different Kinds of Organizational Goals. Explain?

3. Timely Corrective Action. Explain?

4. Communication of the Mechanics of the Control Process. Explain?

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 21-1 9.

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Transcript of Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 21-1 9.