TOPIC 6
CONTROLLING
Copyright © Houghton Mifflin Company. All rights reserved.
6-1
Why Control?
• Control is an issue every
manager faces.
• How does control help the
manager?
– Control is a process to regulate
organizational activities to make
them consistent with
established:
• Plans
• Targets
• Standards
– An effective control system
ensure that activities are
completed aligned to
organization’s goals
Copyright © Houghton Mifflin Company. All rights reserved.
6-2
The Importance/Purpose of Control
Adapt to
environmental change
Limit the
accumulation of error
Control helps the organization
Cope with organizational
complexity
Copyright © Houghton Mifflin Company. All rights reserved.
Minimize costs
6-3
1
Controlling Process
Copyright © Houghton Mifflin Company. All rights reserved.
6-4
Steps in the Control Process
• Step 1: Establish Standard
– A control standard is a target against which
subsequent performance will be compared
• i.e. Employees at Taco Bell work toward the following
standards:
– A min of 95% of all customers will be greeted within 3 min
of their arrival empty table will be cleaned within 5 min after
being vacated
– Standards established for control purposes should
be expressed in measurable terms
– Control standard should be consistent with
organization’s goals
• i.e. Taco Bell goals involving customer service, food
quality and restaurant cleanliness
Copyright © Houghton Mifflin Company. All rights reserved.
6-5
Steps in the Control Process
• Step 2: Measuring Performance
– Performance measurement is a constant,
ongoing activity for most organizations.
– Measurement must be valid i.e.
• Daily, weekly, monthly sales figures measure sales
performance
• Productivity performance may be expressed in terms
of unit cost, product quality, or volume produced
• Employee’s performance is measured in terms of
quality or quantity of output
• However, there are jobs measuring performance is
not so straight-forward i.e. R&D scientist may spend
years on a single project before achieving
breakthrough
– Valid performance measurement is vital in
maintaining effective control
Copyright © Houghton Mifflin Company. All rights reserved.
6-6
2
Steps in the Control Process
• Step 3: Compare Performance Against
Standard
– Comparing measured performance against
established standards
– If performance is lower, therefore analysis
should be conducted and remedial action
must be taken
Copyright © Houghton Mifflin Company. All rights reserved.
6-7
Steps in the Control Process
• Step 4: Determine Need for Corrective
Action
– The need for corrective action
– After comparing performance against
control standard, one of three actions is
appropriate:
• Maintaining the status quo (do nothing)
• Correct the deviation
• Change the standard
Copyright © Houghton Mifflin Company. All rights reserved.
6-8
Types of Control
•
Feedforward Control (Pre-Action Control)
– Control that focuses on preventing anticipated problems before
they arise
– i.e. screening job applicants-view their resume, have several
interviews-to choose highly skilled people- lessens the chances of
hiring less skilled people
•
Concurrent Control (Steering Control)
– A control that takes place while work activity is in progress
– i.e. direct supervision-oversees wrong doing of an employeecorrect them immediately-before much damage/waste
•
Screening Control (Yes or No Control)
– Specify check points that must be successfully passed before an
activity proceeds further
– Before proceeding to the next sequence, an activity, product or
service must be approved or meet specific conditions
– i.e. cheque clearing
•
Post-Action Control (Corrective Control)
– Controlling takes place after an action is completed
– If there is problem, corrective action is taken and applied to future
activities
Copyright © Houghton Mifflin Company. All rights reserved.
6-9
3
Characteristics of Effective Control
•
Accuracy
•
Timeliness
–
–
Information needed for controlling is accurate
Info must be collected and evaluated quickly to enable
managers to solve problems on time
•
Objectivity
•
Strategic & Result Oriented
–
–
Standard must be understand and measurable.
Control system should be designed to measure what is
important now and in the future
•
Flexibility
•
Consistent with Organization’s Structure
–
–
•
Leaves room for modification to fit new circumstances
Must be exercised at all level of management and
obtainable by all levels of employees
Corrective Action
–
An effective control system should suggest what action to
be taken when deviation occurs
•
Economy
•
Reasonable Criteria
–
–
Economical to operate
Logic, reasonable, attainable
Copyright © Houghton Mifflin Company. All rights reserved.
6 - 10
Effective Control System
Timeliness
Consistent with
org’s structure
Economy
Flexibility
Accuracy
EFFECTIVE
CONTROL
SYSTEM
Corrective
Action
Objectivity
Strategic &
Result Oriented
Reasonable
Criteria
Copyright © Houghton Mifflin Company. All rights reserved.
6 - 11
Barriers to Successful Control
•
Game Playing
•
Over-control
•
Under-control
– Managers attempt o improve their standing by
manipulating resources usage
– Organization try to control too many things
– Limiting individuals job autonomy
– Granting a lot of autonomy to individualsorganization losses its ability to direct individuals
effort towards achieving organization’s goal.
•
Inappropriate focus
•
Rewards for inefficiency
•
Too much accountability
– Control system may be narrow or focus too much
and leave no room for analysis
– Inappropriate focus lead people to counter the
organization’s objective
– People who do not want to be answerable for their
mistakes or who do not want to work as hard as
their boss might resist control
Copyright © Houghton Mifflin Company. All rights reserved.
6 - 12
4
How Can Resistance to Control Be
Overcome?
• Encourage Employee
Participation
– When employees are involved
with planning and
implementing the control
system, they are less likely to
resist.
• Develop verification
Procedures
– Verification procedures need
to be developed to provide
checks and balances in order
for managers to verify the
accuracy of performance
indicators.
Copyright © Houghton Mifflin Company. All rights reserved.
6 - 13
5