Ensures adjustment or conformity to specifications Ensures adjustment or conformity to...
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Transcript of Ensures adjustment or conformity to specifications Ensures adjustment or conformity to...
Ensures adjustment orconformity to specifications
Ensures adjustment orconformity to specifications
Regulates activitiesRegulates activities
Regulates behaviorRegulates behavior
Ensures adjustment orconformity to objectivesEnsures adjustment or
conformity to objectives
ControlControl
Control Function in Management
• Effective control depends heavily on planning, organizing, and leading
• Reflect changes in internal and external environments of the firm
• Need to balance too much vs. too little control
• Control amounts, levels, and types should be appropriate for the organization
• Provides feedback for changes in planning and organizing
Control Function in Management
Basic Elements in Control Process
• Control process includes four elements
• Each element involves managerial attention and decisions
Establish StandardsEstablish Standards
Measure PerformanceMeasure Performance
Compare Performanceagainst Standards
Compare Performanceagainst Standards
Evaluate Results and Take Action
Evaluate Results and Take Action
Basic Elements in Control Process
• Standards = targets of performance
• Start at the top of the organization and involves every level of employee
• Should be as specific as possible
• Involve employees in setting standards– Commits the employees to achieving
the standards
– Results in more appropriate standards
Establish StandardsEstablish Standards
Basic Elements in Control Process
• Obtain consensus about how to assess performance
• If performance involves multiple activities, measurement must be comprehensive
• Measurement is costly, so usefulness of the information must justify the costs
Establish StandardsEstablish Standards
Measure PerformanceMeasure Performance
Basic Elements in Control Process
• Comparing expected vs. actual performance
• Comparisons are affected by the kinds of measurements available
• Managers must interpret the patterns of comparisons (some negative/some positive)
• Comparisons often involve subjective and objective measures
Establish StandardsEstablish Standards
Measure PerformanceMeasure Performance
Compare Performanceagainst Standards
Compare Performanceagainst Standards
Basic Elements in Control Process
• Not all results require action– Evaluate importance and
magnitude of the deviation
• Determine what action to take if necessary– Diagnosis skills of managers
– Level of expertise
– Evaluate the standards and the measures
– Employees performing better than “standard” should be recognized and rewarded
Establish StandardsEstablish Standards
Measure PerformanceMeasure Performance
Compare Performanceagainst Standards
Compare Performanceagainst Standards
Evaluate Results and Take Action
Evaluate Results and Take Action
Outcomes of Performance Measurement
Actual performance measured against
standard for performance
Actual performance measured against
standard for performance
GapDetected
GapDetected
Reinforcing Action Taken(e.g., increase rewards and
recognition, consider increasing production
targets, add new product lines)
Reinforcing Action Taken(e.g., increase rewards and
recognition, consider increasing production
targets, add new product lines)
Corrective Action Taken(e.g., increase training,
modify supervision, invest in newer equipment)
Corrective Action Taken(e.g., increase training,
modify supervision, invest in newer equipment)
Actual performance better than expected
performance+
-Actual performance worse than expected
performance
Types and Scope of Control
Scope(Narrow) (Broad)
Operational Controls
Tactical Controls
Strategic Controls
Strategic Controls
• Assessment and regulation of how the organization as a whole fits its external environment and meets its long-range objectives and goals
• Comparisons are made to other companies
• Affected by:– Ability to specify and measure strategic goals
objectives
– Environmental uncertainty
Tactical Controls
Assessment and regulation of the day-to-day functions of the organization and its major units in the implementation of its strategy
• Financial controls
• Budgetary controls
• Supervisory structure controls
• Human resource controls
Strategic and Tactical Controls Tactical Controls Strategic Controls
Time Frame
Objective
Types of Comparisons
Focus
Limited Long, unspecific
Controls relate to specific, functional areas
Controls relate to organization as a whole
Comparisons made within organization
Comparisons made to other organizations
Implementation of strategy
Determination of overall organizational strategy
Tactical Controls: Financial Controls
• Include quantitative ratios involving key financial statistics
• Common financial ratios – Profitability ratios (e.g., ROI)– Liquidity– Leverage– Efficiency or activity
• Can be used for internal and/or external comparisons
• Other financial measurements– Break-even point
Tactical Controls: Budgetary Controls
• A type of tactical control based on responsibility for meeting financial targets and evaluating how well those targets have been met
• Compared to financial controls, budgetary controls:– Cover a more limited time frame (3-12 months)– Focus on financial objectives– Usually cannot be used to compare an organization to
its competitors
Supervisory Structure Controls
A type of tactical control based on reporting levels in the organization
Measure and evaluate:
• Reporting structure
• Span of control
• Other structural issues
TrainingTraining
Control in the Human Resource Function
Compensation
Compensation
SelectionSelection
Human Resource Function Controls
Human Resource Function Controls
Appraisal and evaluation
Appraisal and evaluation
Control in Bureaucracy and Clan Structures
Type of Control
Social Requirements
Control Approach Informational Requirements
Bureaucracy • Norm of
reciprocity• Legitimate
authority
•Adherence to rules and regulations•Formal and impersonal•Emphasis on detecting deviance•Imposed on the individual
Rules
Clan •Norm of reciprocity•Legitimate authority•Shared values, beliefs
•Stresses group consensus on goals and their measurement•Mutual assistance in meeting performance standards•Uses deviations as guidelines in diagnosing problems•Control comes from the individuals or groups
Traditions
Operational Controls
• Assessment and regulation of the specific activities and methods an organization uses to produce goods and services
• Used in evaluating:
– Inputs
– Transformation
– Outputs
Operational Controls
Pre-control
Controls the quality, quantity,
and other characteristics of the inputs
to the process
Pre-control
Controls the quality, quantity,
and other characteristics of the inputs
to the process
ConcurrentControl
Evaluates the conversion
process as it occurs
Provides immediate
feedback, which impacts worker
motivation
ConcurrentControl
Evaluates the conversion
process as it occurs
Provides immediate
feedback, which impacts worker
motivation
Post-control
Traditionally,quality control
Many of these controls are
being changed to pre- and concurrent
controls
Post-control
Traditionally,quality control
Many of these controls are
being changed to pre- and concurrent
controls