Controlling Part 1 PPTs

Developed by MET CET

Prof. NaikMET IOM

CONTROLLINGPART I

Management Function-

You will learn about: What is Controlling? Process Steps Types of Controls Techniques for Controlling


Content Outline

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At the end of this session, you will be able to: Analyze the impact of the internal forces of organization on

managerial performance/functions Identify the effects of the external forces of organization on

managerial performance/functions Describe the steps in the basic control process. Investigate the use of control as a feedback system. Justify that Feedforward control systems can make

management control more effective

ObjectivesDeveloped by

MET CET

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Who is controlling your life?

Are you in control of your own life?

What is controlling for you?

IntroductionDeveloped by

MET CET

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What is Controlling?Developed by

MET CET

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Controlling is one of the five management functions which include all the activities undertaken by the manager in attempting (not necessarily succeeding) to ensure accomplishment of objectives and plans made for achieving them.


MET CET

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Three Primary Topics

Conditions which determine effectiveness of control function---Establishment of standards, availability of information to measure establishment of standards and that managers can take action

Basis for classifying and understanding control procedures Control procedures

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What is Controlling?

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Conditions which determine effectivenessStandards Possible :

Cost Monetary (Direct Material cost/unit)

Physical Non – monitory standards like Quantity of Product sold; Tons of Production (Lower operating level)

Capital Monetary measures of capital most common ROI

Revenue Money value of sales e.g. sales/customer in Assam

Intangibles Interpersonal relations

Goals To be achieved

Program There may be program to train workmen. How effective is it?



MET CET

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Organising- To create structures

HR-to inspire effort

Controlling-To ensure result

________________•Measure performance•Take corrective action

Decision Making and Planning -

To set the direction

Management Process

Need for Organizational ControlDeveloped by

MET CET

Accurately measure the units of inputs in comparison to outputs

Determining the quality of goods and services being produced

Performance of the Organization and need for improvements Monitoring employee behavior Raise the level of innovation.

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1. Read the handout individually.

2. Think of an example for each step.

Think: 5 min Pair: 5 min Share: 10 min

Controlling Process

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2. Pair up with the person sitting next to you, share and discuss your understanding and examples.

3. Share & justify your answers with the class.

1. Read the handout individually.

2. Think of an example for each step.

Think: 5 min Pair: 5 min Share: 10 min

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Controlling Process – Step 1Developed by

MET CET

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Controlling Process – Step 1

Step 1: Establishing Performance objectives and standards

Without availability of standards, performance cannot be measured

Output Standard Measure results in terms of performance criteria (quantity,

quality, cost or time)

Input Standard Measure effort in terms of amount of work


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MET CET

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Step 2: Measure Actual Performance Goal: Accurately measure the performance results (Output standards) and/or the performance efforts (Input standards)Example: Most senior Japanese Executives are known for walking around the factory just to see “at the end of the day how many machines were going out of the back dock.”


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MET CET

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Step 3: Compare Results with Objectives and Standards This step can be expressed as the following Control Equation: Need for action = Desired performance – Actual performanceExample: The delivery routines of Domino Pizza drivers are carefully measured in terms of expected minutes per delivery on various routes.


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MET CET

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Step 4: Take Corrective Action

Management by exception is the practice of giving attention to situations that show the greatest need for action.Managers should be alert to two types of exceptions:

Problem Situation: actual performance is below the standard

Opportunity Situation: actual performance is above the standard


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Step 4: Take Corrective Action

Example: The cause of the low sales of product ‘A’ was less advertising and untrained salesmen. So, the company must spend reasonable money on advertising and training.


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Controlling Process

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Video

Tailored to plans and positionsEvery plan has unique characteristics. Control should tell manager who is doing, how is he doing.

So both plans & positions should be reflected. VP (marketing), Sales officer needs are different.

Production & Marketing requirements different

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Effective Control Developed by

MET CET

Tailored to individual managers Control is to help manager in doing his job. If he cant understand – willingly/unwillingly – information

is useless. Marketing Research info on Factor Analysis in STATISTICAL

format

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Effective Control

Avoids complex techniques:no use giving net worth if not going to be understood

Reports exceptions at critical points Routinised information stating everything is as planned --

Manager will become complacent. By exception & criticality of activity e.g. 5% deviation in

market share in a market of large potential is more significant than 20% in a small market which one must worry about.

Develops objective, accurate, suitable standards But no use giving vernier where micrometer least count is

necessary.

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Effective Control

Flexible Significant Changes/failure of plan

Changed controls required

Fits organisational climate and is accepted by allE.g. TQM introduction

Economical Cost of control- Must be worth it Look at the size of company

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Effective Control


Magnitude or the extent of the control process (low to high)a.Organizational membersb.Subsystemsc.The total system

Focus of the control processa.Internal (e.g., socialization)b.External

1. Precontrols (feed forward)

2. Steering (feedback & feed forward)

3. Yes-no (feedback & feed forward)

4. Post action (feedback)

Degree of human intervention in the control processa.Non cybernetic control involving human interventionb.Cybernetic control

Time horizona. Operational control

(short time horizon)b. Strategic control (long

time horizon)

Classification of Controls

1 2

34

Magnitude or the extent of the control process (low to high)

Organization members: Control of peoples’ behaviour from point of goal achievement

Subsystems: Sales, Production, etc.

Entire Organisation: Higher management point of view

Classification of Controls Developed by

MET CET

1

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Time horizon Strategic Control: Management may decide to change

direction (strategy) in which company is headedExample: Departmentation from functional to divisional org structureImplementation of this involves strategic control

Operational Control: involves shorter period, more frequent, lower management level


2


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Time Horizon2

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Degree of human intervention in the control process

Cybernetic: Through machine, real time information

Non-cybernetic: Not through machine


3


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Focus of the control process

A. Internal Focus: allows motivated individuals to exercise self-discipline in fulfilling job expectations

Motivated members, INTERNALISE performance standards, Exercise self control and fulfill expectations


4


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B. External Focus: Normally control implies externally applied control through formal administrative systems and though personal supervision


4


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B. External Focus:I. Pre-control or Feed forward II. Concurrent ControlIII. Feedback control (post action)


4


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B. External Focus:


4


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B. External Focus:I. Pre-control or Feed forward

• Control that takes place before the work is performed• Managers using this type of Control create Policies,

Procedures and rules aimed at eliminating behavior that will cause undesirable work results


4


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For Feed Forward Control installation the following are required:

• Identify input Variables• Develop model• Collect data• Assess regularly • Take action


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• Example: At McDonalds, Preliminary control of food ingredients plays an important role in the firm’s quality program.

• Company requires that suppliers of its burger buns produce them to exact specifications, covering everything from texture to uniformity of colour.


4


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B. External Focus:II. Concurrent Control or screening or yes control

• Control that takes place as work is being performed• It relates not only to employee performance but also to

areas such as equipment performance and department appearance.


4


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B. External Focus:II. Concurrent Control or screening or yes control

• Example: At McDonalds, ever present shift leaders provide concurrent control through direct supervision.

• They constantly observe and correct things on the spot when it is not done right.


4


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B. External Focus:III. Feedback Control (post action)

• Control that concentrates on post organisational performance

• Managers exercising this type of control are attempting to take corrective actions by looking at the organisational history over a specific time period.


4


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B. External Focus:III. Feedback Control (post action)

Example: McDonalds conduct online ‘Customer Satisfaction Survey’

to take feedback for improving their services.


4


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Concurrent controls

Input

Feed Forward

Standards

Process Output

Simplefeedback

Solve problemswhile occurring

A system appropriate to the organisationis to be designed.

Solve problems before they occur Solve problems after they occur


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• Find out your internal and external locus of control by filling the questionnaire given to you.

• Use the key to interpret your score

10 min

Questionnaire

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Summary


Process Steps

Types of Controls

All those activities undertaken by the manager in ATTEMPTING (not necessarily succeeding) to ensure accomplishment of objectives and the plans made for achieving them

1. Organisation members, subsystems and entire organisation

2. Strategic and Operational

3. Internal and external4. Cybernetic, non-

cybernetic5. Feedforward Controls

and Feedback Controls 6. Concurrent Controls

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Controlling Part 1 PPTs

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