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C 20 The Controlling Process

C 20 The Controlling Process. Compared to planning, developing org. structure, developing strategies, goals and motivating employees. Why Control?. Types of control. Controls help the manager

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C 20 The Controlling Process

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  1. C 20The Controlling Process Compared to planning, developing org. structure,developing strategies, goals and motivating employees

  2. Why Control? Types of control • Controls help the manager • Control is a process to regulate organizational activities to make them consistent with established: • Plans • Targets • Standards Acceptable level? Compare (Financial …) Effective? Need a change? process of monitoring, comparing, and correcting work performance. FedEx- 99.8% On time Delivery

  3. What Is the Purpose of Control? • It is one of the four basic management functions and has four basic functions. • Functions of control • Adapts to change. • Limits accumulation of error. • Helps coping with complexity. • Helps minimize costs.

  4. Purpose- Control helps the organization • Many things can happen during the execution of a plan • Anticipate, monitor, respond (contingency) • Rising quality standard at Metalloy • Accumulation creates a huge problem! • Defect rate rose 4% > 9% > 25% (100/250 People reworking) • 100s of raw material, large market segments, complicated work design, • Calculation based on implementation of new wood-cutting technology

  5. Levels of Control

  6. Figure 20.2: Levels of Control

  7. Who Is Responsible for Control? • Control rests with all managers. • Large corporations have a controller. • What does a controller do? • Helps line managers with their control activities. U-Form (Single) H-form (Multiple), M-form (Multiple)

  8. F20.3: Steps in the Control Process • Taco Bell • 95% greeted within 3 minutes • Preheated chips- maximum 30 mins • Tables Cleaned within 5 mins # Graduates/year … …. ….. ….. …… (Performance Indicators) Measurable Consistent with organization goal

  9. F20.4: Forms of Operational Control

  10. What Does Preliminary Control Monitor? • It attempts to monitor quality and quantity of: • Financial resources. • Material resources. • Human resources. • Information resources. • Why? • Before they become part of the system. • Ex: Employee Interview, Who can buy stocks

  11. Purpose of Screening Controls • They focus on how inputs are being transformed into outputs. • They also rely heavily on feedback processes during the transformation process. • Ex: LCD panel on TV- Check before installation

  12. Postaction Control- Focus • Focus is on outputs from the organizational system. • What do they monitor? • They monitor the output results of the organization after the transformation process is complete. • (see Figure 20.4 illustration)

  13. Financial Controls- Most common • They control the financial resources as they flow into the organization. • Then they are held by the organization. • Then they flow out of the organization. • Businesses must manage their finances so that revenues are sufficient to cover expenses and still return a profit.

  14. It is a plan expressed in numerical terms. What is the time frame for a budget? Usually a year, but sometimes broken down into quarters and months. Budgets are quantitative in nature and provide yardsticks for measuring performance and facilitating comparisons. What Is a Budget? Page 566 Strength and Weaknesses of Budget

  15. Types of Budgets • Types of budget: • Financial • Operating • Non-monetary • What the budget shows: • Sources and use of cash. • Operations in financial terms. • Operations in non-financial terms. Capital Budget at Exxon Vs. Shell and Exxon-Mobil

  16. F20.5: Developing Budgets in Organizations

  17. Other Tools for Financial Control Audit: An independent appraisal of an organization’s accounting, financial, and operational system.

  18. Structural Control • Bureaucratic Control • A form of organizational control characterized by formal and mechanistic structural arrangements. • Decentralized control • An approach to organizational control characterized by informal and organic structural arrangements.

  19. Figure 20.6: Organizational Control

  20. What Is Meant by Strategic Control • Control aimed at ensuring that the organization is maintaining an effective alignment with its environment and moving toward achieving its strategic goals

  21. Characteristics of Effective Control • Integration with plan • Flexibility • Accuracy • Timeliness • Objectivity

  22. What Influences Resistance to Control? • Over-control • Inappropriate focus • Rewards for inefficiency • Too much accountability

  23. How Can Resistance to Control Be Overcome? • When employees are involved with planning and implementing the control system, they are less likely to resist. • Verification procedures need to be developed to provide checks and balances in order for managers to verify the accuracy of performance indicators.

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