Mgt function8 controlling 2
- 1. CONTROLLINGWHY, HOW AND WHAT
- 2. CONTROLLING • a process of measuring performance and taking action to ensure desired results. Its purpose is straightforward – to make sure that plans are achieved, that actual performance meets or surpasses objectives.
- 3. • Planning – to set the direction • Organizing – to create structures • Leading – to inspire effort • Controlling – to ensure results
- 5. FEEDFORWARD CONTROLS • called PRELIMINARY CONTROLS, take place before a work activity begins. Also, preventive in nature. The goal is to solve problems before they occur by asking an important but often-neglected question: “WHAT NEEDS TO BE DONE BEFORE WE BEGIN?” They ensure: • Objectives are clear • Proper directions are established • Right resources are available to accomplish them
- 6. CONCURRENT CONTROLS • called STEERING CONTROLS, focus on what happens during the work process. They make sure things are being done according to plan. The goal is to solve problems as they are occurring. The key question is: “WHAT CAN WE DO TO IMPROVE THINGS RIGHT NOW?”
- 7. FEEDBACK CONTROLS • Called POSTACTION CONTROLS, take place after work is completed. They focus on the quality of end results rather than on inputs and activities. It is largely reactive. The goals are to solve problems after they occur and prevent future ones. They ask the question: “NOW THAT WE ARE FINISHED, HOW WELL DID WE DO?”
- 8. TWO BROAD OPERATIONS WITH RESPECT TO CONTROL
- 9. INTERNAL CONTROL • this strategy allows motivated individuals and groups to exercise self-discipline in fulfilling jobs expectations. Alternatively, managers can take direct action to control the behavior of others.
- 10. EXTERNAL CONTROL • this strategy occurs through personal supervision and the use of formal administrative systems.
- 11. STEPS IN THE CONTROL PROCESS
- 12. FOUR STEPS IN THE CONTROL PROCESS • ESTABLISH OBJECTIVES AND STANDARDS • MEASURE PERFORMANCE RESULTS • COMPARE RESULTS WITH OBJECTIVES AND STANDARDS • TAKE CORRECTIVE ACTION
- 13. STEP 1: ESTABLISH OBJECTIVES AND STANDARDS • the process begins with planning, when performance objectives and standards for measuring them are set. It can’t start without them. • Performance objectives should represent key results that one wants to accomplish. The word “key” in the prior sentence is important. The focus in planning should be on describing “critical” or “essential” results that will make a substantial performance difference. • Standards are important, too. As key results are identified, one also has to specify the standards and measures that will be uses to evaluate their accomplishment.
- 14. TWO TYPES OF STANDARDS
- 15. • OUTPUT STANDARDS -- measure actual outcomes or work results. • INPUT STANDARDS -- measure work efforts. These are often used in situations where outputs are difficult or expensive to measure.
- 16. STEP 2: MEASURE PERFORMANCE RESULTS • measure actual performance. The goal is to assess results based on output standards and/or input standards. Measurement must be accurate enough to spot significant differences between what is really taking place and what was originally planned. Without it, effective control is not possible. And a willingness to measure has its rewards: what gets measured tends to happen.
- 17. STEP 3: COMPARE RESULTS WITH OBJECTIVES AND STANDARDS • You can remember Step 3 by this control equation. Need for action = Desired performance – Actual performance • Dealing with an identified need for action is like any other problem solving. It can point toward: performance threat or deficiency – when actual is less than desired. Or it can point toward a possible performance opportunity – when actual is more than desired. NOTE: Historical Comparison Relative Comparison
- 18. STEP 4: TAKE CORRECTIVE ACTION • To take any action necessary to correct problems or make investments. Management by Exception – the practice of giving attention to situations that show the greatest need for action. It can save valuable time, energy, and other resources by focusing attention on high-priority areas.
- 19. TWO TYPES OF EXCEPTIONS
- 20. • Problem Situation – must be understood so corrective action can restore performance to the desired level • Opportunity Situation – must be understood with the goal of continuing or increasing the high level of accomplishment in the future.
- 22. EMPLOYEE DISCIPLINE SYSTEMS • Discipline – the act of influencing behavior through reprimand • Progressive Discipline – ties reprimands to the severity and frequency of the employee’s infractions. Penalties for misbehavior vary according to the significance of the problem.
- 23. PROJECT MANAGEMENT - Is responsibility for the overall planning, supervision and control of projects. • Projects – one-time events with unique components and an objective that must be met within a defined time period.
- 25. GANTT CHART • Developed by Henry Gantt, an industrial engineer, it graphically displays the scheduling of tasks required to complete a project. It has become a mainstay of project management ever since.
- 26. CPM/PERT • Network modeling approaches that originated separately and have now converged.
- 27. INFORMATION AND FINANCIAL CONTROLS • In business, the analysis of a firm’s financial performance is an important aspect of managerial control. At a minimum, managers should be able to understand: 1. Liquidity – ability to generate cash to pay bills 2. Leverage – ability to earn more in returns than the cost of debt 3. Asset Management – ability to use resources efficiently and operate at minimum cost 4. Profitability – ability to earn revenues greater than costs
- 28. Liquidity • Current Ratio = Current Assets / Current Liabilities Leverage • Debt Ratio = Total Debts / Total Assets Asset Management • Inventory Turnover = Sales / Average Inventory Profitability • Net Margin = Net Profit after Taxes / Sales • Return on Assets = Net Profit after Taxes / Total Assets
- 29. END THANK YOU