CONTROLLING

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INDEX

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 A process of monitoring performance and taking action to ensure desired results. It sees to it that the right things happen, in the right ways, and at the right time.

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Why ???
Done well, it ensures that the overall directions of individuals and groups are consistent with short and long range plans. It helps ensure that objectives and accomplishments are consistent with one another throughout an organization . It helps maintain compliance with essential organizational rules and policies. Controls let managers know whether their goals and plans are on target and what future actions to take. Control systems provide managers with information and feedback on employee performance. Controls enhance physical security and help minimize workplace disruptions

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The Purpose of Control

To ensure that activities are completed in ways that lead to accomplishment of organizational goals. Provides organizations with indications of how well they are performing in relation to their goals. Provides a mechanism for adjusting performance to keep organizations moving in the right direction.

Control is one of the four basic management functions. The control function, in turn, has four basic purposes.

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HOW IT HELPS????
Adapt to environmental change Limit the accumulation of error

Control helps the organization

Cope with organizational complexity

Minimize costs

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Levels of
Control

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LEVELS

Operational control:
Focuses on the processes used to transform resources into products or services.

Financial control:
Concerned with financial resources.

Structural control:
How the elements of structure are serving the intended purposes.

Strategic control:
How effective are the functional strategies helping the organization meet its goals.

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Steps of controlling :-

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PROCESS
Establish Standards Control standarda target against which subsequent performance will be compared. Control standards should be expressed in measurable terms. Control standards should be consistent with organizational goals. Control standards should be identifiable indicators of performance. Measure Performance Performance measurement is an ongoing process. Performance measures must be valid indicators (e.g., sales, costs, units produced) of performance.

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PROCESS(contd)

Steps in the Control Process (contd) Compare Performance Against Standards Define what is a permissible deviation from the performance standard. Utilize the appropriate timetable for measurement. Determine the Need for Corrective Action Maintain the status quo (do nothing). Correct the deviation to bring operations into compliance with the standard. Change the standard if it was set too high or too low.

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Financial Control

Financial Control Control of financial resources (i.e., revenues, shareholder investment) as they flow into the organization, are held by the organization (i.e., working capital, retained earnings), and flow out of the organization (i.e., payment of expenses).

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Budgets

Estimates of the income and expenditure of a business or a part of a business over a time period Used extensively in planning Helps establish efficient use of resources Help monitor cash flow and identify departures from plans Maintains a focus and discipline for those involved
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Budgets
Flexible Budgets budgets that take account of changing business conditions Operating Budgets based on the daily operations of a business Objectives Based Budgets - Budgets driven by objectives set by the firm Capital Budgets Plans of the relationship between capital spending and liquidity (cash) in the business

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Operational control

Operational control systems are designed to ensure that day-today actions are consistent with established plans and objectives. It focuses on events in a recent period. Operational control systems are derived from the requirements of the management control system. Corrective action is taken where performance does not meet standards. This action may involve training, motivation, leadership, discipline, or termination.

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Types of Control
Feedback

Inputs

Transformation

Outputs

Preliminary control
Focuses on inputs to the organizational system

Screening control
Focuses on how inputs are being transformed into

Postaction control
Focuses on outputs from the organizational system

outputs

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What Is Bureaucratic Control?

Bureaucratic control is the use of rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms to influence employee behavior and assess performance. Bureaucratic control can be used when behavior can be controlled with market or price mechanisms.

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Strategic Control
Strategic control is concerned with tracking the strategy as it is being implemented, detecting any problems areas or potential problem areas, and making any necessary adjustments.

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The Importance Of Strategic Control

Henry Mintzberg,one of the foremost theorists in the area of strategic management, tells us that no matter how well the organization plans its strategy, a different strategy may emerge. Starting with the intended or planned strategies, he related the five types of strategies in the following manner:

Intended strategies that get realized; these may be called deliberate strategies. Intended strategies that do get realized; these may be called unrealized strategies. Realized strategies that were never intended; these may be called emergent strategies.
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Characteristics of Effective Control

Accurate. Information on performance must be accurate. Evaluating the accuracy of the information they receive is one of the most important control tasks that managers face. Timely. Information must be collected, routed, and evaluated quickly if action is to be taken in time to produce improvements. Objective and Comprehensible. The information in a control system should be understandable and be seen as objective by the individuals who use it. A difficult-to understand control system will cause unnecessary mistakes and confusion or frustration among employees. Focused on Strategic Control Points. The control system should be focused on those areas where deviations from the standards are most likely to take place or where deviations would lead to the8/6/2012 MP greatest

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