final 2 controlling
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© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.1
Chapter ObjectivesIdentify three types of control and the
components common to all control systems.Learn the two approaches to control systemDiscuss organizational control from a strategic
perspective.Learn the components of organizational
control system.Understand why Planning and Controlling are
called he Siamese twin of ManagementUnderstand and discuss the Planning/Control
Cycle© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Fundamentals of Organizational Control
Control Comparing desired results with actual results and
taking corrective action as needed to keep things on track. Checking, testing, regulating, verifying, or adjusting Objectives are yardsticks for measuring actual
performance. Purpose of the control function:
To get the job done despite environmental, organizational, and behavioral obstacles and uncertainties
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.3
Types of ControlsFeedforward Control
The active anticipation and prevention of problems, rather than passive reaction
Concurrent Control Monitoring and adjusting ongoing activities
and processesFeedback Control
Checking a completed activity and learning from mistakes
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.4
Figure 16.1: Three Types of Control
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1. Bureaucratic Control - extensive rules and regulations, top-down authority, tightly written job descriptions and other formal methods for preventing and correcting deviations from desired behaviors and results.
2. Clan or Organic Control - flexible authority, loose job descriptions, individual self-controls and other informal methods of preventing and correcting deviations from desired behaviors and results.
Approaches to Control System
BUREAUCRATIC CONTROL CLAN CONTROL
Use of detailed rules and procedures whenever possible.
Use of detailed rules and regulations only when necessary.
Top-down authority with emphasis on positional power.
Flexible authority with emphasis on expert power and networks of control.
Activity-based job descriptions that prescribe day-to-day behavior
Results-based job description that emphasize goals to be achieved.
Emphasis on extrinsic rewards (wages, pensions, status symbols) for controlling performance.
Emphasis on both extrinsic and intrinsic rewards (meaningful work) for controlling performance.
Org. culture not recognized as source of control
Org culture seen as a way of integrating org, group and individual goals for greater overall control.
Organizational Control SubsystemsStrategic plansLong-range plansAnnual operating budgetsStatistical reportsPerformance appraisalsPolicies and proceduresThe organization’s culture
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Components of Organizational Control Systems
Objectives Measurable reference points (targets) for
corrective actionStandards
Guideposts on the way to achieving objectives Benchmarking: Identifying, studying, and
building upon the best practices of organizational role models
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Evaluation-Reward Systems
Goals of System To measure and reward individual and team
contributions to attaining organizational objectives
To shape effort-reward expectancies in order to motivate better performance
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Identifying Control Problems
Executive Reality Checks Top managers periodically work at lower-level
jobs to become more aware of operations.Internal Audits
Independent appraisals of organizational operations and systems are conducted to assess effectiveness and efficiency.
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Identifying Control Problems (cont’d)
Symptoms of Inadequate Control An unexplained decline in revenues or profits A degradation of service (customer complaints) Employee dissatisfaction Cash shortages caused by bloated inventories or
delinquent accounts receivable Idle facilities or personnel Disorganized operations Excess costs Evidence of waste and inefficiency (scrap,
rework)
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.12
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.13
PLANNING AND CONTROLLING: . . . “ THE SIAMESE TWIN OF
MANAGEMENT”
•Planning is the formal process of developing goals, strategies, standards and allocating resources while controls are the measures that help ensure that decisions, actions and results are consistent with those plans. Thus, planning and controlling go hand in hand.•Planning prescribes desired behavior and results while controls help maintain or redirect actual behavior and results.•Managers cannot effectively plan without accurate and timely information, controls provide some of this essential information.•Managers need plans to indicate the purposes to be solved by controls. Thus, planning and controls complement and support each other.•To conclude, without planning, there would be no way to control.
Define Vision
Identify Mission
Set Goals & Objectives
Develop & Implement Strategic Plans
Develop & Implement Intermediate Plans
Develop & Implement Operational Plans
Determine Areas to Control
Establish Standards
Measure Performance
Compare Performance
Against Standards
Standards met?
Recognize Performance
Take Corrective Action as necessary
Adjust Standards & Measures as necessary
YES
NO
The Planning/Control Cycle