Controlling Part 1 PPTs
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Transcript of Controlling Part 1 PPTs
Developed by MET CET
Prof. NaikMET IOM
CONTROLLINGPART I
Management Function-
You will learn about: What is Controlling? Process Steps Types of Controls Techniques for Controlling
Developed by MET CET
Content Outline
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At the end of this session, you will be able to: Analyze the impact of the internal forces of organization on
managerial performance/functions Identify the effects of the external forces of organization on
managerial performance/functions Describe the steps in the basic control process. Investigate the use of control as a feedback system. Justify that Feedforward control systems can make
management control more effective
ObjectivesDeveloped by
MET CET
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Who is controlling your life?
Are you in control of your own life?
What is controlling for you?
IntroductionDeveloped by
MET CET
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What is Controlling?Developed by
MET CET
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Controlling is one of the five management functions which include all the activities undertaken by the manager in attempting (not necessarily succeeding) to ensure accomplishment of objectives and plans made for achieving them.
What is Controlling?Developed by
MET CET
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Three Primary Topics
Conditions which determine effectiveness of control function---Establishment of standards, availability of information to measure establishment of standards and that managers can take action
Basis for classifying and understanding control procedures Control procedures
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What is Controlling?
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Conditions which determine effectivenessStandards Possible :
Cost Monetary (Direct Material cost/unit)
Physical Non – monitory standards like Quantity of Product sold; Tons of Production (Lower operating level)
Capital Monetary measures of capital most common ROI
Revenue Money value of sales e.g. sales/customer in Assam
Intangibles Interpersonal relations
Goals To be achieved
Program There may be program to train workmen. How effective is it?
What is Controlling?
What is Controlling?Developed by
MET CET
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Organising- To create structures
HR-to inspire effort
Controlling-To ensure result
________________•Measure performance•Take corrective action
Decision Making and Planning -
To set the direction
Management Process
Need for Organizational ControlDeveloped by
MET CET
Accurately measure the units of inputs in comparison to outputs
Determining the quality of goods and services being produced
Performance of the Organization and need for improvements Monitoring employee behavior Raise the level of innovation.
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1. Read the handout individually.
2. Think of an example for each step.
Think: 5 min Pair: 5 min Share: 10 min
Controlling Process
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2. Pair up with the person sitting next to you, share and discuss your understanding and examples.
3. Share & justify your answers with the class.
1. Read the handout individually.
2. Think of an example for each step.
Think: 5 min Pair: 5 min Share: 10 min
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Controlling Process – Step 1Developed by
MET CET
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Controlling Process – Step 1
Step 1: Establishing Performance objectives and standards
Without availability of standards, performance cannot be measured
Output Standard Measure results in terms of performance criteria (quantity,
quality, cost or time)
Input Standard Measure effort in terms of amount of work
Developed by MET CET
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Controlling Process – Step 2Developed by
MET CET
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Step 2: Measure Actual Performance Goal: Accurately measure the performance results (Output standards) and/or the performance efforts (Input standards)Example: Most senior Japanese Executives are known for walking around the factory just to see “at the end of the day how many machines were going out of the back dock.”
Controlling Process – Step 2
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Controlling Process – Step 3Developed by
MET CET
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Step 3: Compare Results with Objectives and Standards This step can be expressed as the following Control Equation: Need for action = Desired performance – Actual performanceExample: The delivery routines of Domino Pizza drivers are carefully measured in terms of expected minutes per delivery on various routes.
Controlling Process – Step 3
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Controlling Process – Step 4Developed by
MET CET
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Step 4: Take Corrective Action
Management by exception is the practice of giving attention to situations that show the greatest need for action.Managers should be alert to two types of exceptions:
Problem Situation: actual performance is below the standard
Opportunity Situation: actual performance is above the standard
Controlling Process – Step 4
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Step 4: Take Corrective Action
Example: The cause of the low sales of product ‘A’ was less advertising and untrained salesmen. So, the company must spend reasonable money on advertising and training.
Controlling Process – Step 4
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Controlling Process
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Video
Tailored to plans and positionsEvery plan has unique characteristics. Control should tell manager who is doing, how is he doing.
So both plans & positions should be reflected. VP (marketing), Sales officer needs are different.
Production & Marketing requirements different
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Effective Control Developed by
MET CET
Tailored to individual managers Control is to help manager in doing his job. If he cant understand – willingly/unwillingly – information
is useless. Marketing Research info on Factor Analysis in STATISTICAL
format
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Developed by MET CET
Effective Control
Avoids complex techniques:no use giving net worth if not going to be understood
Reports exceptions at critical points Routinised information stating everything is as planned --
Manager will become complacent. By exception & criticality of activity e.g. 5% deviation in
market share in a market of large potential is more significant than 20% in a small market which one must worry about.
Develops objective, accurate, suitable standards But no use giving vernier where micrometer least count is
necessary.
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Developed by MET CET
Effective Control
Flexible Significant Changes/failure of plan
Changed controls required
Fits organisational climate and is accepted by allE.g. TQM introduction
Economical Cost of control- Must be worth it Look at the size of company
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Developed by MET CET
Effective Control
Developed by MET CET
Magnitude or the extent of the control process (low to high)a.Organizational membersb.Subsystemsc.The total system
Focus of the control processa.Internal (e.g., socialization)b.External
1. Precontrols (feed forward)
2. Steering (feedback & feed forward)
3. Yes-no (feedback & feed forward)
4. Post action (feedback)
Degree of human intervention in the control processa.Non cybernetic control involving human interventionb.Cybernetic control
Time horizona. Operational control
(short time horizon)b. Strategic control (long
time horizon)
Classification of Controls
1 2
34
Magnitude or the extent of the control process (low to high)
Organization members: Control of peoples’ behaviour from point of goal achievement
Subsystems: Sales, Production, etc.
Entire Organisation: Higher management point of view
Classification of Controls Developed by
MET CET
1
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Time horizon Strategic Control: Management may decide to change
direction (strategy) in which company is headedExample: Departmentation from functional to divisional org structureImplementation of this involves strategic control
Operational Control: involves shorter period, more frequent, lower management level
Developed by MET CET
2
Classification of Controls
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Time Horizon2
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Degree of human intervention in the control process
Cybernetic: Through machine, real time information
Non-cybernetic: Not through machine
Developed by MET CET
3
Classification of Controls
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Focus of the control process
A. Internal Focus: allows motivated individuals to exercise self-discipline in fulfilling job expectations
Motivated members, INTERNALISE performance standards, Exercise self control and fulfill expectations
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus: Normally control implies externally applied control through formal administrative systems and though personal supervision
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus:I. Pre-control or Feed forward II. Concurrent ControlIII. Feedback control (post action)
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus:
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus:I. Pre-control or Feed forward
• Control that takes place before the work is performed• Managers using this type of Control create Policies,
Procedures and rules aimed at eliminating behavior that will cause undesirable work results
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus:I. Pre-control or Feed forward
For Feed Forward Control installation the following are required:
• Identify input Variables• Develop model• Collect data• Assess regularly • Take action
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus:I. Pre-control or Feed forward
• Example: At McDonalds, Preliminary control of food ingredients plays an important role in the firm’s quality program.
• Company requires that suppliers of its burger buns produce them to exact specifications, covering everything from texture to uniformity of colour.
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus:II. Concurrent Control or screening or yes control
• Control that takes place as work is being performed• It relates not only to employee performance but also to
areas such as equipment performance and department appearance.
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus:II. Concurrent Control or screening or yes control
• Example: At McDonalds, ever present shift leaders provide concurrent control through direct supervision.
• They constantly observe and correct things on the spot when it is not done right.
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus:III. Feedback Control (post action)
• Control that concentrates on post organisational performance
• Managers exercising this type of control are attempting to take corrective actions by looking at the organisational history over a specific time period.
Developed by MET CET
4
Classification of Controls
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Focus of the control process
B. External Focus:III. Feedback Control (post action)
Example: McDonalds conduct online ‘Customer Satisfaction Survey’
to take feedback for improving their services.
Developed by MET CET
4
Classification of Controls
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Developed by MET CET
Concurrent controls
Input
Feed Forward
Standards
Process Output
Simplefeedback
Solve problemswhile occurring
A system appropriate to the organisationis to be designed.
Solve problems before they occur Solve problems after they occur
Classification of Controls
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• Find out your internal and external locus of control by filling the questionnaire given to you.
• Use the key to interpret your score
10 min
Questionnaire
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Summary
What is Controlling?
Process Steps
Types of Controls
All those activities undertaken by the manager in ATTEMPTING (not necessarily succeeding) to ensure accomplishment of objectives and the plans made for achieving them
1. Organisation members, subsystems and entire organisation
2. Strategic and Operational
3. Internal and external4. Cybernetic, non-
cybernetic5. Feedforward Controls
and Feedback Controls 6. Concurrent Controls
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