Matakuliah
Tahun
: J0562 / Management
: 2010
Foundations of Control
Pertemuan 13 (Thirteenth
Meeting)
Learning Outcome
Student should be able to prove that controlling
has an important
role to achieve organization goals -> C3
Learning Outline
• What Is Control
• Why Is Control Important
• The Control Process
• Controlling for Organizational Performance
• Tools for Controlling Organizational
Performance
• Contemporary Issues in Control
1. What Is Control
a. Definition
It’s the process of monitoring, comparing,
and correcting work performance
b. Characteristic of Three Approaches
to Control Systems:
1) Market control
2) Bureaucratic control
3) Clan control
2. Why Is Control Important
a. The Values of Control:
1) Related to planning
2) Empowering employees
3) Protecting the organization and it’s
assets
b. The Planning-Controlling
Link
Planning
Goals
Organizing
Objectives
Strategies Structure
Controlling
Human Resources
Plans
Standards
Management
Measurements
Leading
Comparison
Motivating
Actions
Leadership
Communication
Individual and
Group Behavior
3. The Control Process
a. Measuring
1) How We Measure
a) Personal Observation
b) Statistical Reports
c) Oral Reports
d) Written Reports
2) What We Measure
Measurement of Performance
b. Comparing
Acceptable
Upper
Limit
Acceptab
le
Range of
Variation
Standard
Acceptable
Lower
limit
t
t+1
t+2
t+3
t+4
Time Period (t)
t+5
c. Taking Managerial Action
1) Correct Actual Performance
a) Immediate corrective action
b) Basic corrective action
2) Revise the Standard
4. Controlling for Organizational Performance
a. What Is Organizational Performance
Organizational performance is the
accumulated end results of all the
organization’s work activities
b. Measures of Organizational Performance
1) Organizational Productivity
2) Organizational Effectiveness
3) Industry and Company Rankings
Popular Industry
and
Company Rankings
Fortune (www.fortune.com)
Business Week (www.businessweek.com)
Forbes (www.forbes.com)
5. Tools for Controlling Organizational
Performance
a. Feedforward/Concurrent/Feedbak Controll
1) Feedforward Control
2) Concurrent Control
3) Feedback Control
Types of Control
Input
Processes
Output
Feedforward
Control
Concurrent
Control
Feedback
Control
Anticipates
problems
Corrects
problems as
they happen
Corrects
problems after
they occur
b. Financial Controls
1) Traditional Financial Control Measures
Popular Financial Ratios
Objective
Liquidity
Ratio
Current ratio
Acid test
Leverage Debt to assets
Time interest
earned
Calculation
Current assets
Current liabilities
Current assets less inventories
Current liabilities
Total debt
Total assets
Profit before interest and taxes
Total interest charges
Popular Financial Ratios
Objective
Activity
Profitability
Ratio
Calculation
Inventory turnover
Sales
Inventory
Total assets turnover
Sales
Total assets
Profit margin on sales
Net profit after taxes
Total sales
Return on ivestment
Net profit after taxes
Total assets
2) Other Financial Control Measures
a) Economic value added (EVA)
b) Market value added (MVA)
c. Balanced Scorecard
1) Financial
2) Customer
3) Internal processes
4) People/innovation/growth assets
d. Information Control
1) How Information Used in Controlling
Management Information System (MIS) is a
system used to provide management with
needed information on regular basis
2) Controlling Information
e. Benchmarking of Best Practices
6. Contemporary Issues in Control
a. Adjusting control for Cross-cultural
Differences
b. Workplace Concerns
1) Workplace Privacy
2) Employee Theft
3) Workplace Violence
c. Controlling Customer Interactions
d. Corporate Governance
1) The role of Boards of Directors
2) Financial Reporting