CONTEMPORARY

MANAGEMENT

PROF SAAD MOSAD

PROF.

P R E PA R E D B Y:
MENATALLAH OMRAN
SPRING 2010
 Organizational Control
g

What is organizational control?

Controlling is the process whereby managers monitor and 
regulate how efficiently and effectively an organization and its
regulate how efficiently and effectively an organization and its 
members are performing the activities necessary to achieve 
organizational goals.
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 Organizational Control
g

y Control, however does not mean just reacting to events after 
Control however does not mean just reacting to events after
they have occurred. 

y It also means keeping an organization on track, anticipating 
events that might occur, and then changing the organization 
to respond to whatever opportunities or threats have been 
d h ii h h b
identified. 

y Control is concerned with keeping employees motivated, 
focused on the important problems confronting the 
p p g
organization, and working together to make the changes that 
will help an organization improve its performance over time.
 Concurrent  Control

Gives managers immediate feedback on how efficiently inputs 
are being transformed into outputs so that managers can
are being transformed into outputs so that managers can 
correct problems as they arise.

Concurrent control is at the heart of total quality management 
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programs in which workers are expected to constantly 
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monitor the quality of the goods or services they provide at 
every step of the production process and inform managers as 
soon as they discover problems.
 THREE TYPES OF CONTROL

Input conversion output

stage stage stage

Feedback control
Feed forward control Concurrent control
(manage problems
(anticipate problems (manage problems as
after they have
before they occur) they occur)
arisen)
Four steps in organizational control:
F t i i ti l t l
1.Establish the standards of performance, 
goals or targets against which
goals or targets against which 
performance is to be evaluated 

2.Measure actual performance 

3.Compare actual performance against 
chosen standards of performance
chosen standards of performance 

4.Evaluate the result and initiate 
4 Evaluate the result and initiate
corrective action if the standards is not 
being achieved .
 Three Organizational Control Systems
g y

Type of control Mechanism of control

y Output Control y Financial measures of 
F l f
performance
Organizational goals   
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Operating budgets 
y Direct supervision  
y Behavior Control
Behavior Control M
Management by objective    
b bj i
Rules and standard operating 
procedures
y Socialization

y Clan Control Values 
Norms
 Output Control
p

All managers develop a system of output control for their 
All d l t f t t t l f th i
organization. 

First, they choose the goals or outputs performance standards 
or targets that they think will best measure efficiency quality
or targets that they think will best measure efficiency, quality, 
innovation, and responsiveness to customers. 

Then they measure to see whether the performance goals and 
standards are being achieved at the corporate, divisional, 
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functional, and individual employee levels of the organization. 
 Output Control
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The three main mechanisms that managers use to assess 
h h h h
output or performance are :

Financial measures

Organizational goals 

And operating budgets
 Four measures of financial performance
Liq idit Ratios
Liquidity Ratios

A.Current ratio = 
current assets / current liabilities
D o   m a n a g e r s   h ave   r e s o u r c e s   av a i l a b l e   t o   m e e t   c l a i m s  
of short­term creditors?

B. Quick ratio=
c u r r e n t   a s s e t s ­ i nve n t o r y / c u r r e n t   l i a b i l i t i e s  
C a n   m a n a g e r s   p ay   o f f   c l a i m s   o f   s h o r t ­ t e r m   c r e d i t o r s  
w i t h o u t   s e l l i n g   i nve n t o r y ?
 Four measures of financial performance 
Profit Ratios
Profit  Ratios

A .   R e t u r n   o n   i nve s t m e n t   =  
n e t   p r o f i t   b e f o r e   t a xe s   / t o t a l   a s s e t s
M e a s u r e s   h o w   w e l l   m a n a g e r s   a r e   u s i n g   t h e   o r g a n i z a t i o n' s  
resources to generate profits.

B. Operating margin = 
t o t a l   o p e r a t i n g   p r o f i t   / s a l e s   r e ve n u e s  
A   m e a s u r e   o f   h o w   m u c h   p e r c e n t a g e   p r o f i t   a   c o m p a ny   i s  
earning on sales; the higher the percentage, the better a 
c o m p a ny   i s   u t i l i z i n g   i t s   r e s o u r c e s   t o   m a k e   a n d   s e l l   t h e  
product.
 Four measures of financial performance
Activity Ratios

A .   i nve n t o r y   t u r n o ve r   =  
C o s t   o f   g o o d s   s o l d   /   i nve n t o r y
M e a s u r e s   h o w   e f f i c i e n t lly   m a n a g e r s   a r e   t u r n i n g  
i nve n t o r y   o ve r   s o   t h a t   e xc e s s   i nve n t o r y   i s   n o t   c a r r i e d .

B .   D ay s   s a l e s   o u t s t a n d i n g   =  
C u r r e n t   a c c o u n t s   r e c e iv a b l e   /   s a l e s   f o r   p e r i o d   d iv i d e d  
b y   d ay s   i n   p e r i o d  
M e a s u r e s   h o w   e f f i c i e n t ly   m a n a g e r s   a r e   c o l l e c t i n g  
r e ve n u e s   f r o m   c u s t o m e r s   t o   p a y   e x p e n s e s .
 Four measures of financial performance
Leverage Ratios
Leverage Ratios

A. Debt –to­assets ratio=
total debt / total assets
To   w h a t   e x t e n t   h ave   m a n a g e r s   u s e d   b o r r o w e d   f u n d s   t o  
f i n a n c e   i nve s t m e n t s ?

B .   T i m e s   c o ve r e d   r a t i o s =
p r o f i t   b e f o r e   i n t e r e s t   a n d   t a xe s   /   t o t a l   i n t e r e s t   c h a r g e s
Measures how far profits can decline before managers 
cannot meet interest changes. 
If ratio declines to less than 1, the organization is 
t e c h n i c a l ly   i n s o l ve n t .
 Leadership
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It is the process by which a person exerts influence over other 
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people and inspires motivates and directs their activities to 
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help achieve group or organizational goals .

The person who exerts such influence is leader .
When leaders are ineffective, the  influence they exert over 
others helps a gro p or organi ation achie e its performance
others helps a group or organization achieve its performance 
goals. 

When leaders are ineffective, their influence does not 
contribute to, and often detracts from , goal attainment
 Models  Of  Leadership
f p

The trait model
y It focused on identifying the personal characteristics that 
cause effective leadership. 
y Researchers thought effective leaders must have certain 
R h h h ff i l d h i
personal qualities that set them apart from ineffective leaders 
and from people who never become leaders
and from people who never become leaders.
y Decades of research (beginning in the 1930s) and hundreds 
of studies indicates that certain personal characteristics do
of studies indicates that certain personal characteristics do 
appear to be associated with effective leadership.
 Strategic Human Resource Management
g g

y Strategic human resource management is the 
St t i h t i th
process by which managers design the components 
of an HRM system to be consistent with each other, 
f HRM t t b i t t ith h th
with other elements of organizational architecture, 
and with the organization's strategy and goals. 
d ith th i ti ' t t d l
y The objective of strategic HRM is the development of 
an HRM system that enhances an organization's 
efficiency, quality, innovation, and responsiveness to 
customers
Trait Description
Intelligence Helps managers understand complex issues and solve
problems

Knowledge Helps managers make good decisions and discover ways to

and expertise increase efficiency and effectiveness

Dominance Helps
p managers
g influence their subordinates to achieve
organizational goals
Self Contributes to managers
managers' effectively influencing subordinates
confidence and persisting when faced with obstacles or difficulties

High energy Helps managers deal with the many demands they face

Tolerance
T l for
f Helps
H l managers d
deall with
ith uncertainty
t i t and
d make
k diffi
difficult
lt
stress decisions

Maturity Helps managers avoid acting selfishly, control their feelings,

and admit when they have made a mistake.

Integrity and Helps managers behave ethically and earn their

honestyy subordinates' trust and confidence
 The Behavior Model

After extensive study in the 1940s and 1950s, researchers at 
Ohio state university identified two basic kinds of leader
Ohio state university identified two basic kinds of leader 
behaviors that many leaders in the United States, Germany, 
and other countries engaged in to influence their 
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subordinates: consideration and initiating structure.
 The Behavior Model

Consideration 
C id ti
™Leaders engage in consideration when they show 
their subordinates that they trust, respect, and care 
about them. 
™Managers who truly look out for the well‐being of 
their subordinates and do what they can to help 
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subordinates feel good and enjoy their work perform 
consideration behaviors
 Strategic Human Resource Management
g g

Human resource management (HRM) includes all the 
H t (HRM) i l d ll th
activities managers engage in to attract and retain 
employees and to ensure that they perform at a high 
l dt th t th f t hi h
level and contribute to the accomplishment of 
organizational goals.
i ti l l
These activities make up an organization's human 
resource management system, which has five major 
components: recruitment and selection, training and 
development, performance appraisal and feedback, 
pay and benefits, and labor relations