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MANAGEMENT

FOUNDATIONS
CONTROLLING

THE MANAGEMENT PROCESS

PURPOSE AND IMPORTANCE OF


CONTROL
Meaning :
actual activities conform to Planned activities
assures that the right things are being done in the right
manner and at the right time.
Purpose:
Helps merge long range goals with short term ones.
Brings consistency to the activities and accomplishments
throughout the organization
Helps bring individual behaviors in line with organizational goals .

WHY IS CONTROL NEEDED?

To
To
To
To
To

create better quality


cope with change
create faster cycles
add value
facilitate delegation and team work .

AREAS OF CONTROL
Two perspectives
1. Resource Focus
2. Level of focus
. Resource focus can be control over
. Physical resources
. Financial resources
. Information resources
. Human resources
. Implemented through quality control, inventory
control, employee recruitment performance
appraisal, budgets.

AREAS OF CONTROL
Level of focus:
strategic control

Operations control

THE CONTROL PROCESS


Step1: Establishing Standards
A standard is defined as the end-state or target against which
subsequent performance will be compared

Step 2 : Measuring Performance


Deals with measurement of actual performance- the
activity being controlled.
Constant process
Frequency of measurement depends on the activity being
measured e.g. continuous measurements for safety
standards etc.
Personal observation, statistical reports, oral reports, and
written reports
Management by walking around (MBWA)

THE CONTROL PROCESS


Step 3: Comparing measured performance
against the standards
Comparison to objective measures: budgets, standards,
goals
Range of variation

Step 4: Evaluate performance and take action


Requires solid diagnostic skills on part of the
manager.

THE CONTROL PROCESS


Three Alternatives
1. Maintain status quo
2. Correct the deviation
3. Change the standards

TYPES OF CONTROL SYSTEM

TYPES OF CONTROL SYSTEM


Concurrent control/ real time information and control
E.g. supermarkets and departmental stores , airline ticketing
counters
Information is received about what is happening while it is
happening
Is applied to operations during the transformation processinformation about what is happening while it is happening .
Can be applied at critical points in the transformation
process
Real time control is limited to the evaluation of
performance analysis of causes of deviation ,development
of correction programs may not be real time as these are
time consuming .

TYPES OF CONTROL SYSTEM


Feedback control:
It is the inspection of the output and the
feedback of results .
There can be a definitive time lag between the
occurrence of the problem and corrective action .
Can help managers plan for the future and serve
to evaluate employee or process performance

TYPES OF CONTROL SYSTEM


Feedforward / preventive control systems:
E.g. inventory planning , selection and screening of
job applicants
Monitors inputs into a certain process to ascertain if
the inputs are as planned ; if not the inputs or the
process is changed in order to obtain the desired
results.
Focuses on inputs to the transformation process .It is
necessary to watch for disturbances or factors which
have not been taken into account in the input model
but which may have an impact on the desired result

ORGANIZATIONAL CONTROL
Bureaucratic control: characterized by formal mechanistic
arrangements
Clan control : informal organic arrangements

ORGANIZATIONAL CONTROL
Strategic control:
Directed at ensuring that the organization is in effective alignment
with the external environment and that the organization is
progressing towards strategic goals.
To exercise effective control ,a manager continually need to reflect
on strategic questions regarding managerial styles , culture
structure appraisal systems

Quality circles:
A quality circle is a small group of workers who meet voluntarily
once a week or two ,to identify, analyze and resolve problems in
the work area .
Creates greater employee satisfaction and improved performance
and productivity

BUDGET CONTROL
Budgeting may be defined as the process of
expressing a set of planned activities for a future
time period in numeric terms .
Budgets serve four purposes primarily :
1. Provide clear guidelines about organizational
resources and expectations for their use
2. To help coordinate projects and resources
3. To help define control systems standards
4. To help evaluate the performance of managers
and work units

BUDGET CONTROL
Types of budgets
1. Financial Budgets:
Is used to show where the organization expects to get cash
for the coming period and how that cash is to be used.
. Cash budgets an estimate of the cash flow on the daily or
weekly basis and is designed to ensure that the organization
will always have sufficient cash to meet its obligations.
. Capital expenditure budgets - represents a plan for future
investments in major capital assets
. Balance sheet budget/master budget : sets the amount of
assets and liabilities for the end of the planning period. It
serves as an overall control device to ensure that all budgets
integrate properly and yield profitable results.

BUDGET CONTROL
Operating budgets :
Is an expression of an organizations planned operations.
Expressed in terms of products and services to be sold and the
resources needed to produce and sell them
Sales budget : identifies the sales/ revenues required by the
organization and represents the firms expected income .
Sales forecast helps establish the prices.
Expense Budget :
Defines the anticipated expenses of the organization for the
period.
Fixed cost budgets
Variable cost budgets
Discretionary cost budgets

BUDGET CONTROL
Non-monetary budgets :
not financial in nature
expressed in terms of machine hours , units of
output and man-hours .