adeyl khan, faculty, bba, nsu compared to planning, developing org. structure, developing...

Adeyl Khan, Faculty, BBA, NSU

C 20The Controlling ProcessCompared to planning, developing org.

structure,developing strategies, goals and motivating

employees


Why Control?Controls help the

manager Control is a process to

regulate organizational activities to make them consistent with established: Plans Targets Standards

Physical• Inventory, QC

Human• Selection

Informational• Forecasting, PR

Financial• Manage Debt, Assets

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process of monitoring, comparing, and correcting work performance.

Effective? Need a change?

Acceptable level? Compare (Financial …)

FedEx- 99.8% On time Delivery

Types of control


What Is the Purpose of Control?It is one of the four basic management

functions and has four basic functions.Functions of control

Adapts to change. Limits accumulation of error. Helps coping with complexity. Helps minimize costs.

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Purpose- Control helps the organization Many things can happen

during the execution of a plan Anticipate, monitor, respond

(contingency) Rising quality standard at

Metalloy Accumulation creates a

huge problem! Defect rate rose 4% > 9% >

25% (100/250 People reworking)

100s of raw material, large market segments, complicated work design,

Calculation based on implementation of new wood-cutting technology

Adapt to environmental change

2. Limit the accumulation of error

3. Cope with organizational complexity

4. Minimize costs

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Levels of ControlOperational control:

Focuses on the processes used to transform resources into products or services. E.g. Quality Control

Financial control:

Concerned with financial resources. E.g. Accounts receivable

Structural control:

How the elements of structure are serving the intended purposes. E.g. Administrative ratio

Strategic control:

How effective are the functional strategies helping the organization meet its goals. E.g. Related diversification failed

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Figure 20.2: Levels of Control

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Who Is Responsible for Control?Control rests with

all managers.Large corporations

have a controller.What does a

controller do?Helps line

managers with their control activities.

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U-Form (Single)H-form (Multiple), M-form

(Multiple)


F20.3: Steps in the Control ProcessTaco Bell

95% greeted within 3 minutes Preheated chips- maximum 30 mins Tables Cleaned within 5 mins

20 - 8Measurable

Consistent with organization goal

# Graduates/year…….…..…..

……(Performance

Indicators)


F20.4: Forms of Operational Control

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What Does Preliminary Control Monitor?It attempts to monitor quality and quantity

of: Financial resources. Material resources. Human resources. Information resources.

Why? Before they become part of the system.

Ex: Employee Interview, Who can buy stocks 20 -

10


Purpose of Screening ControlsThey focus on how inputs are being

transformed into outputs.They also rely heavily on feedback

processes during the transformation process.

Ex: LCD panel on TV- Check before installation

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Postaction Control- FocusFocus is on outputs

from the organizational system.

What do they monitor?They monitor the

output results of the organization after the transformation process is complete.

(see Figure 20.4 illustration)

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Financial Controls- Most commonThey control the financial resources as they

flow into the organization. Then they are held by the organization. Then they flow out of the organization.

Businesses must manage their finances so that revenues are sufficient to cover expenses and still return a profit.

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What Is a Budget?

It is a plan expressed in numerical terms.What is the time frame for a budget?

Usually a year, but sometimes broken down into quarters and months.Budgets are quantitative in nature and provide yardsticks for measuring performance and facilitating comparisons.

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Page 566Strength and Weaknesses of

Budget


Types of BudgetsTypes of budget:

FinancialOperatingNon-monetary

What the budget shows:Sources and use of

cash.Operations in

financial terms.Operations in non-

financial terms.

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Capital Budget at ExxonVs. Shell and Exxon-Mobil

Adeyl Khan, Faculty, BBA, NSU 20 - 16


F20.5: Developing Budgets in Organizations

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Other Tools for Financial ControlFinancial Statement: • A profile of some aspect of an

organization’s financial circumstances

Income Statement• A summary of financial

performance over a period of time, usually one year.

Balance Sheet• List of assets and liabilities of

an organization at a specific point in time, usually the last day of the fiscal year.

Ratio Analysis• The calculation of one or more

financial ratios to assess some aspect of the organization’s financial health.

Other Financial Control

Tools

20 - 18Audit: An independent appraisal of an organization’s accounting, financial, and operational system.


Structural ControlBureaucratic Control

A form of organizational control characterized by formal and mechanistic structural arrangements.

Decentralized control An approach to organizational control

characterized by informal and organic structural arrangements.

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Figure 20.6: Organizational Control

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What Is Meant by Strategic ControlControl aimed at

ensuring that the organization is maintaining an effective alignment with its environment and moving toward achieving its strategic goals

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Characteristics of Effective ControlIntegration with planFlexibilityAccuracyTimelinessObjectivity

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What Influences Resistance to Control?Over-controlInappropriate focusRewards for inefficiencyToo much accountability

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How Can Resistance to Control Be Overcome?When employees are involved with

planning and implementing the control system, they are less likely to resist.

Verification procedures need to be developed to provide checks and balances in order for managers to verify the accuracy of performance indicators.

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adeyl khan, faculty, bba, nsu compared to planning, developing org. structure, developing...

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nsu purpose control

purpose of control

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