Chapter 7 Controlling

CHAPTER 7: CHAPTER 7: CONTROLLINGCONTROLLING

DMG 1213 / DMG1113 / DPM1213 / DPM1113Principles of Management

Laura LawPerak College of Technology

Laura Law Perak College of Technology 1

Perspectives on ControlPerspectives on ControlThe controlling function of management is to

ensure that the outcomes of an organization are as planned. (Stoner)

This process can carried out by comparing the true performance with the standard that been established and taking corrective actions in order to rectify any distortion that does not comply the standard

EXAMPLE:

1.Production targets are met

2.Quality is as planned

3.Organizational culture is what was wanted

2Laura Law Perak College of Technology

Challenges That Manager Face1. Coping with uncertainty

2. Detecting Irregularities

3. Identifying Opportunities

4. Handling Complex Situations

5. Decentralizing Authority


The Purpose of ControlThe Purpose of ControlThe Purpose of ControlThe Purpose of Control5

Adapt to environmental change Limit the accumulation of error

Control helps the organization

Cope with organizational complexity Minimize costs

Laura Law Perak College of Technology

The Purpose/Advantage of The Purpose/Advantage of ControlControl

The Purpose/Advantage of The Purpose/Advantage of ControlControl

1. Assist the management process

2. Deal with change or uncertainty.

3. Deal with complexity (size & diversity).

4. Deal with human limitation.

5. Help delegation and decentralization to run smoothly.


Steps in Control Process

CHAPTER 7: ControllingDMG 1213 / DMG1113 / DPM1213 / DPM1113

Principles of ManagementLaura Law

Perak College of Technology


Steps in the Control Steps in the Control ProcessProcess

Steps in the Control Steps in the Control ProcessProcess

9

Establish/ Set

standards

Measure

performance

Compare

performanceagainst standards

Maintain the

status

Correct the

deviation

Change

standards

Determine need

for correctiveaction

21 43



Steps in the Control Steps in the Control Process:1Process:1


2. Measure Performance◦Ongoing process◦Most challenging step◦Measuring period gap must not be too long or too often◦Performance measures must be valid indicators (e.g., sales,

costs, units produced) of performancei. What to measureii. When to measureiii. How Frequently to measure




3. Compare Performance Against Standards◦Easier of all steps◦Define what is a allowable deviation from the

performance standard◦Utilize the appropriate timetable for measurement◦Exp: Performance appraisal



4. Determine the Need for Corrective Action◦Done only if the performance does not meet the earlier establish

standard◦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◦Providing more incentive to enhance the performance



Type of Controlling





Types or Methods of ControlTypes or Methods of ControlTypes or Methods of ControlTypes or Methods of Control

1. Preliminary/Pre-Action/Feed-Forward Control:

- Controlling is done at the input level of production

- It is initiated before the start of production of service activity.

- This type of control is sometimes called preventive control because the objective is to prevent problems at the input level before going through the transformation process.

- “Prevention is better than cure” 15Laura Law Perak College of Technology

2. Steering Control/Concurrent Control

- Focus on what occurs during the work/transformation process

- The primary goal is to spot problems as they develop and take corrective action before final results are achieved



3. Screening Control (Yes or No Control)

- Specify check points that must be successfully passed before an activity proceeds further.

- Before proceeding to the next sequence, an activity, product or service must be approved or meet specific conditions.



4. Post-Action Control/Feedback Control/Corrective Control

- Controlling takes place AFTER the action is completed.

- It attempts to measure the result of certain actions

- If there are problems, corrective action is taken and applied for future activities



Forms of Operations Forms of Operations ControlControl

Forms of Operations Forms of Operations ControlControl

19

Preliminary control

Focuses on inputs

to the organizational

system

Inputs Transformation Outputs

Screening control

Focuses on how

inputs are being

transformed into

outputs

Postaction control

Focuses on outputs

from the organiza-

tional system

Feedback


Characteristics of an Effective Control System





Characteristics1. To help avoid problems with human relations to control

2. Characteristics as guidance to make control more effective

3. Effective control system is:i. Accurate (Information)

ii. Timely

iii. Objective and Comprehensive

iv. Focused on Strategic Control Points (Strategic and Result Oriented)

v. Flexibility

vi. Consistent with the Organization’s Structure (Organzationally Realistic)

vii. Acceptable by Organization Members

viii. Utilize all steps of the Control Process

ix. Understandable and Justifiable

x. Corrective Action


Accurate (Information)Inaccurate information

will cause the organization to make

wrong decision or to take the wrong action


TimelyInformation must

collected and evaluated quickly to enable

managers to solve problems on time


Objective and Comprehensive

Standards set must be understandable and measurable. Difficult

control system will cause frustration.


Focus on Strategic Control Points (Strategic and Result Oriented)

Designed what is important now and what will

important in the future. Pass as a guidelines for future measurement


FlexibilityLeave room for individual judgment and is modified to fit new circumstances

as they arise


Consistent with the Organization’s Structure (Organizationally Realistic)

Exercise and obtain by all level of employees who

work within the organization


Acceptable by Organizational Members

Able to motivate workers to recognize the importance of

standards and engage themselves in an appropriate

behavior to achieve them


Utilize all steps of the control process

Omitting any of these steps will break (destroy) the overall

control system and the future of the organization will be

doubtful


Understandable and Justifiable

Employees who know exactly what is expected of

them will exhibit less resistance, know earlier will

be easier to obtainLaura Law Perak College of Technology 30

Corrective ActionAny problem detected should come up with appropriate solutions


Chapter 7 Controlling

Education

performance standard

management process

performance appraisal

performance measures

true performance

control processprocess

control processchapter

accumulation of error