Principle of management

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.

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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 firm’s 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?

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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.

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Four steps in the control process.

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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.

Management 8/e - Chapter 8 8

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.


: 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



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

Example of process of organization control management . Profit Ratios –

– measure how efficiently managers are using the organization’s resources to generate profits

Return on Investment (ROI) – – most commonly used financial performance

measure – organization’s net income before taxes divided

by its total assets

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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

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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

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Activity ratios

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

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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

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Output control :

Operating Budgets– Blueprint that states how managers intend to

use organizational resources to achieve organizational goals efficiently.

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



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.


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.


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.

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


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


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.


Benchmarking – The process of comparing one company’s

performance on specific dimensions with the performance of other, high-performing organizations.

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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


Principle of management

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