Controlling
Table of contents
01 Meaning
02 Purpose
03 Process
04 Techniques
What Is Control?
• Controlling
⮚ The process of monitoring, comparing and correcting work
performance.
• The Purpose of Control
⮚ To ensure that activities are completed in ways that lead to
accomplishment of organizational goals.
Why Is Control Important?
● The value of the control function can be seen in three specific areas:
planning, empowering employees, and protecting the workplace.
⮚ Whether their goals and plans are on target & what future actions to
take
⮚ Control systems provide managers with information and feedback on
employee performance.
⮚ To protect the organization and its assets. Controls enhance physical
security and help minimize workplace disruptions.
Planning-Controlling Link
The Control Process
The Process of Control:
3 step process of
1. Measuring actual
performance.
2. Comparing actual
performance against a
standard.
3. Taking action to correct
deviations or inadequate
standards.
The Control Process
1.Measuring: How & What We Measure
• Sources of Information • Control Criteria
(How) (What)
⮚ Personal observation ⮚ Employees
⮚ Statistical reports o Satisfaction
⮚ Oral reports o Turnover
⮚ Written reports o Absenteeism
⮚ Budgets
o Costs
o Output
o Sales
Sources of Information for measuring performance
2. Comparing actual performance against a standard
• Determining the degree of variation between actual performance and the
standard.
⮚ Significance of variation is determined by:
❖ The acceptable range of variation from the
standard (forecast or budget).
❖ The size (large or small) and direction (over or
under) of the variation from the standard
(forecast or budget)
● Range of Variation: The acceptable parameters of variance between actual
performance & the standard
Acceptable Range of Variation
Example of Determining Significant
Variation
3. Taking Managerial Action
● Courses of Action
⮚ “Doing nothing” - 1
❖ Only if deviation is judged to be insignificant.
⮚ Correcting actual (current) performance - 2
❖ Immediate corrective action to correct the problem at once.
❖ Basic corrective action to locate and to correct the source of the
deviation.
❖ Corrective Actions
– Change strategy, structure, compensation scheme, or training
programs; redesign jobs; or fire employees
3. Taking Managerial Action
● Courses of Action (cont’d)
⮚Revising the standard - 3
❖ Examining the standard to ascertain whether or
not the standard is realistic, fair, and achievable.
❖ Upholding the validity of the standard.
❖ Resetting goals that were initially set too low or
too high.
Activity
• Assume you are the leadership team for a chain of
convenience stores with more than 15 locations. The company
has a problem with inventory shrinkage and store managers
are reporting that employee theft seems to be the most
significant problem.
• As a group, brainstorm a list of possible actions that the
company could taek to reduce the occurrence of employee
theft.
Activity
• Assume you are the manager of a customer call
centre for timeshare vacations.
• What types of control measures would you use to
see how efficient and effective an employee is?
Managerial Decisions in the Control
Process
Controlling for
Organizational
Performance
Controlling for Organizational
Performance
● What Is Performance?
⮚ The end result of an activity
● What Is Organizational Performance?
⮚ The accumulated end results of all of the organization’s work
processes and activities
❖ Designing strategies, work processes, and work activities.
❖ Coordinating the work of employees.
Organizational Performance Measures
Organizational Performance Measures
● Organizational Productivity
⮚ Productivity: the overall output of goods and/or services
divided by the inputs needed to generate that output.
❖ Output: sales revenues
❖ Inputs: costs of resources (materials, labor expense,
and facilities)
⮚ Ultimately, productivity is a measure of how efficiently
employees do their work.
Organizational Performance Measures
● Organizational Effectiveness
⮚ Measuring how appropriate organizational goals are & how well the
organization is achieving its goals.
Industry and Company Rankings
● Industry rankings on:
⮚ Rankings are a popular way for managers to measure
their organization’s performance.
⮚ Example – Forbes, Fortune 500, Great Place to Work.
Tools for Measuring Organizational
Performance
Tools for Measuring Organizational Performance
• Managers can implement controls before an activity
begins, during the time the activity is going on, and
after the activity has been completed.
• The first type is called feedforward control; the
second, concurrent control; and the last, feedback
control
Types of Control
Tools for Measuring Organizational Performance
● Feedforward Control
⮚ A control that prevents anticipated problems before actual
occurrences of the problem.
❖ Example of feedforward control is the scheduled preventive
maintenance programs on aircraft done by the major
airlines.
Tools for Measuring Organizational Performance
● Concurrent Control
⮚ A control that takes place while the monitored activity is in
progress.
❖ Direct supervision: management by walking around-A
term used to describe when a manager is out in the work
area interacting directly with employees.
❖ Example: Google monitoring ads and searches.
Tools for Measuring Organizational Performance
● Feedback Control
⮚ A control that takes place after an activity is done.
❖ Corrective action is after-the-fact, when the problem has
already occurred.
⮚ Advantages of feedback controls:
❖ Provide managers with information on the effectiveness of
their planning efforts
❖ Enhance employee motivation by providing them with
information on how well they are doing.
Control Tools
Control Tools
Tools for Measuring
Organizational Performance
● Financial Controls ● Traditional Controls
⮚ Ratio analysis
● Managers need financial controls
to analyze quarterly income ❖ Liquidity
statements for excessive
expenses. ❖ Leverage
❖ Activity
● They calculate financial ratios to
ensure that sufficient cash is ❖ Profitability
available to pay ongoing
expenses, that debt levels ⮚ Budget Analysis
haven’t become too high, or that ❖ Quantitative
assets are being used standards
productively.
❖ Deviations
Popular Financial Ratios
Tools for Measuring
Organizational Performance
● Balanced Scorecard
⮚ Is a measurement tool that uses goals set by managers in four areas to
measure a company’s performance:
❖ Financial
❖ Customer
❖ Internal processes
❖ People/innovation/growth assets
⮚ Is intended to emphasize that all of these areas are important to an
organization’s success & that there should be a balance among them.
Information Controls
● Purpose of Information Controls
⮚ As an organizational area that managers need to control.
❖ Managers must have comprehensive and secure controls in place
to protect the organization’s important information.
⮚ Managers deal with information controls in two ways:
(1) as a tool to help them control other organizational activities,
(2) as an organizational area they need to control.
⮚ Most of the information tools that managers use come from the
organization’s management information system.
Information Controls (Cont’d)
● Management Information Systems
⮚ A system used to provide management with needed information on a
regular basis.
❖ Data: an unorganized collection of raw, unanalyzed facts (e.g.,
unsorted list of customer names)
❖ Information: data that has been analyzed and organized such
that it has value and relevance to managers.
Benchmarking of Best Practices
● Benchmark
⮚ The standard of excellence against which to measure and compare.
● Benchmarking
⮚ Is the search for the best practices among competitors or
noncompetitors that lead to their superior performance.
⮚ Is a control tool for identifying and measuring specific performance
gaps and areas for improvement.
Suggestions for Internal Benchmarking
Contemporary Issues In Control
Contemporary Issues In Control
Contemporary Issues In Control
● Cross-Cultural Issues
⮚ The differences are primarily in the measurement and
corrective action steps of the control process.
⮚ Technology’s impact on control is also seen when comparing
technologically advanced nations with less technologically
advanced countries.
⮚ Some countries’ laws prohibit closing facilities, laying off
employees, taking money out of the country, or bringing in a
new management team from outside the country.
⮚ Finally, another challenge for global managers in collecting
data for measurement and comparison is comparability.
Contemporary Issues In Control(Cont’d)
● Workplace Concerns
⮚ Workplace privacy versus workplace monitoring:
❖ E-mail, telephone, computer, and Internet usage
❖ Productivity, harassment, security, confidentiality, intellectual
property protection
⮚ Employee theft
❖ The unauthorized taking of company property by employees for their
personal use.
⮚ Workplace violence
❖ Anger, rage, and violence in the workplace is affecting employee
productivity.
Contemporary Issues In Control(Cont’d)
● Controlling Customer Interactions
⮚ Service quality index measure, employees’ careers
and financial aspirations which links with the
organizational goal of providing consistently
superior service.
⮚ Service Profit Chain:
• The service sequence from employees to
customers to profit.
Contemporary Issues In Control(Cont’d)
● Corporate Governance
⮚ The system used to govern a corporation so that the
interests of corporate owners are protected.
⮚ Two areas where reform has taken place are the role
of boards of directors and financial reporting.
