Controlling

Modified Version
Prepared by: Michael K. McCuddy
Published by: John Wiley & Sons Canada, Ltd.
What is the control process?

➢ Controlling
– The regulation of organizational
activities in such a way as to facilitate
goal attainment
– Has a positive and necessary role in the
management process.
– Ensures that the right things happen, in the
right way, at the right time.
– Organizational learning and after-action
review. Management - Chapter 8 2
Why Control ?

Source: Griffin
Management Fundamentals - Chapter 3
8
Four steps in the control process.

Management - Chapter 8 4
 What is the control process?

➢ Step 1 — establishing objectives and

standards
– Output standards
• Measure performance results in terms of
quantity, quality, cost, or time.
– Input standards
• Measure effort in terms of amount of work
expended in task performance.

Management - Chapter 8 5
What is the control process?

➢ Step 2 — measuring actual performance

– Goal is accurate measurement of actual
performance results and/or performance
efforts.
– Identify significant differences (if any)
between actual results and original plan.
– Effective control requires measurement.
Management - Chapter 8 6
What is the control process?

➢ Step 3 — comparing results with

objectives and standards
– Need for action reflects the difference
between desired performance and actual
performance

Management - Chapter 8 7
 What is the control process?

➢ Step 4 — taking corrective action

– Taking action when a discrepancy exists
between desired and actual performance.
– Management by exception
• Giving attention to situations showing the
greatest need for action.
• Types of exceptions
– Problem situation
– Opportunity situation

Management - Chapter 8 8
Types of controlling

➢ Feed forward controls …

– Employed before a work activity begins.
– Ensures that:
• Objectives are clear.
• Proper directions are established.
• Right resources are available.
– Focuses on quality of resources.

Management - Chapter 8 9
Types of controlling

➢ Concurrent controls …
– Focus on what happens during work process.
– Monitor ongoing operations to make sure
they are being done according to plan.
– Can reduce waste in unacceptable finished
products or services.

Management - Chapter 8 10
Types of controlling

➢ Feedback controls …

– Take place after work is completed.

– Focus on quality of end results.

– Provide useful information for improving

future operations.

Management - Chapter 8 11
The role of feedforward, concurrent, and
feedback controls in organizations.

Management - Chapter 8 12
Levels of control

Management Fundamentals - Chapter 13

Source : Griffin 8
The Control Process

Management Fundamentals - Chapter 14

8
 What are the common organizational
controls?

➢ Internal and external control

– Internal control
• Allows motivated individuals and groups to exercise
self-discipline in fulfilling job expectations.
– External control
• Occurs through personal supervision and the use of
formal administrative systems.

Management - Chapter 8 15
What are the common organizational
controls?

➢ Management by Objectives (MBO)

– A structured process of regular
communication.
– Supervisor/team leader and workers jointly
set performance objectives.
– Supervisor/team leader and workers jointly
review results.
Management - Chapter 8 16
Management by objectives as an integrated
planning and control framework.

Management - Chapter 8 17
What are the common organizational
controls?
➢ MBO involves a formal agreement specifying
– Workers’ performance objectives for a specific time
period.
– Plans through which performance objectives will be
accomplished.
– Standards for measuring accomplishment of
performance objectives .
– Procedures for reviewing performance results.

Management - Chapter 8 18
 : What are the common organizational
controls?
➢ The MBO process:
– Supervisor and workers jointly set
objectives, establish standards, and choose
actions.
– Workers act individually to perform tasks;
supervisors act individually to provide
necessary support.
– Supervisor and workers jointly review
results, discuss implications, and renew the
MBO cycle.
Management - Chapter 8 19
 What are the common organizational
controls?

➢ Features of MBO
– Focuses workers on most important tasks
and objectives.
– Focuses supervisor’s efforts on important
areas of support.
– Contributes to relationship building.
– Gives workers a structured opportunity to
participate in decision making.

Management - Chapter 8 20
 What are the common organizational
controls?

➢ Employee discipline systems

– Discipline is the act of influencing behavior

through reprimand.

– Discipline that is applied fairly, consistently,

and systematically provides useful control.

Management - Chapter 8 21
 What are the common organizational
controls?

➢ To be effective, reprimands should …

– Be immediate.
– Be directed toward actions, not personality.
– Be consistently applied.
– Be informative.
– Occur in a supportive setting.
– Support realistic rules.

Management - Chapter 8 22
 What are the common organizational
controls?

➢ Employee discipline systems

– Progressive discipline ties reprimands to the
severity and frequency of the employee’s
infractions.
– Progressive discipline seeks to achieve
compliance with the least extreme reprimand
possible.
Management - Chapter 8 23
 What are the common organizational
controls?
➢ Important financial aspects of organizational
performance …
– Liquidity
• The ability to generate cash to pay bills.
– Leverage
• The ability to earn more in returns than the cost of debt.
– Asset management
• The ability to use resources efficiently and operate at
minimum cost.
– Profitability
• The ability to earn revenues greater than costs.

Management - Chapter 8 24
Financial Controls

Source: Robbins Management Fundamentals - Chapter 25

8
 What are the common organizational
controls?
➢ Break-even analysis …
– Determination of the point at which sales
revenues are sufficient to cover costs.
– Break-Even Point = Fixed Costs / (Price –
Variable Costs)
– Used in evaluating:
• New products
• New program initiatives

Management - Chapter 8 26
Graphical approach to break-even analysis.

Management - Chapter 8 27
 What are the common organizational
controls?
➢ Purchasing control …
– A productivity tool
– Trends in purchasing control:
• Leveraging buying power
• Committing to a small number of suppliers
• Working together in supplier-purchaser
partnerships

Management - Chapter 8 28
What are the common organizational
controls?

➢ Inventory control
– Goal is to ensure that inventory is just the
right size to meet performance needs, thus
minimizing the cost.
– Methods of inventory control:
• Economic order quantity
• Just-in-time scheduling

Management - Chapter 8 29
 : What are the common organizational
controls?
➢ Statistical quality control
– Quality control involves checking processes,
materials, products, and services to ensure
that they meet high standards.
– Statistical quality control involves:
• Taking samples of work.
• Measuring quality in the samples.
• Determining the acceptability of results.

Management - Chapter 8 30
Questions ?

Management Fundamentals - Chapter 31

8