Monitoring and Control

Lecture:
Gede Bayu Rahanatha, SE, MM.

Compiled By:

1. Made Anggasatyaprana Harta Ginsakti Seputra (09/2307521101)

2. Bagus Adnyana Baldwin Putra (17/2307521133)
3. Ni Kadek Dwi Oktaviani (21/2307521179)
4. Putu Leoni Artika Putri (24/2307521188)
5. Bima Anugerah Pangestu (25/2307521190)
6. I Made Angga Dwipaguna Muditha (30/2307521201)

MANAGEMENT MAJOR
FACULTY OF ECONOMIC AND BUSINESS UDAYANA
UNIVERSITY
2023/2024
1.Monitoring and Control
What is monitoring?
Monitoring is the periodic tracking of any activity progress by systematically gathering
and analyzing data and information in real-time. Monitoring is usually being done after planning,
hence in progress of executing a plan. The relationship between monitoring and controlling is that
monitoring involves collecting and analyzing data that’s gathered from the project, while
controlling uses the data to make changes to be effectively reaching the goal.
For example, a company is working on a new marketing project and imagine that you are
the marketing manager. Monitoring would be tracking the progress of how the team work together,
how far the project already being done, how the team handles difficulties, and so on. While
controlling, after we got the information from the monitoring progress, and manager wanted to
make changes or improving the teamwork by applying a program, the controlling will be needed.

Function of Monitoring:
- Provide regular, timely feedback on implementation of a project
- Identify areas that require improvement
- Boost employee performance on productivity
- Create a more engaged team
- Effective risk management

What is Control?
Control, however, does not mean just reacting to events after they have occurred. It also means
keeping an organization on track, anticipating events that might occur, and then changing the
organization to respond to whatever opportunities or threats have been identified. Control is
concerned with keeping employees motivated, focused on the important problems confronting the
organization, and working together to make the changes that will help an organization improve its
performance over time.

Why Control Is Important?

Control is important, therefore, because it’s the only way that managers know whether
organizational goals are being met and, if not, the reasons why. The value of the control function
can be seen in three specific areas:
A. Planning
However, just stating goals or having employees accept goals doesn’t guarantee that the
necessary actions to accomplish those goals have been taken. The effective manager follows up to
ensure that what employees are supposed to do is, in fact, being done and goals are being achieved.
If managers didn’t control, they’d have no way of knowing whether goals and plans were being
achieved and what future actions to take.

B. Empowering Employees.
The second reason controlling is important is because of employee empowerment. Many
managers are reluctant to empower their employees because they fear something will go wrong
for which they would be held responsible. But an effective control system can provide information
and feedback on employee performance and minimize the chance of potential problems.
 C. Protecting The Workplace.
The final reason that managers control is to protect the organization and its assets.
Organizations face threats from natural disasters, financial pressures and scandals, workplace
violence, supply chain disruptions, security breaches, and even possible terrorist attacks. Managers
must protect organizational assets in the event that any of these should happen. Comprehensive
controls and backup plans will help minimize work disruptions.

2. The Control Process

At step 1 in the control process, managers decide on the standards of performance, goals,
or targets that they will use in the future to evaluate the performance of the entire organization or
part of it (such as a division, a function, or an individual). The standards of performance that
managers select measure efficiency, quality, responsiveness to customers, and innovation. If
managers decide to pursue a low-cost strategy, for example, they need to measure efficiency
at all levels in the organization.

At step 2, once managers have decided which standards or targets they will use to evaluate
performance, the next step in the control process is to measure actual performance. In practice,
managers can measure or evaluate two things: (1) the actual outputs that result from the behavior
of their members and (2) the behaviors themselves In general, the more nonroutine or complex
organizational activities are, the harder it is for managers to measure outputs or behaviors. Outputs,
however, are usually easier to measure than behaviors because they are more tangible and
objective. Therefore, the first kind of performance measures that managers tend to use is those that
measure outputs. Then managers develop performance measures or standards that allow them to
evaluate behaviors to determine whether employees at all levels are working toward organizational
goals.

At step 3, managers evaluate whether and to what extent performance deviates from the
standards of performance chosen in step 1. If performance is higher than expected, managers might
decide they set performance standards too low and may raise them for the next period to challenge
their employees. However, if performance is too low and standards were not reached, or if
standards were set so high that employees could not achieve them, managers must decide whether
to take corrective action.

At step 4, The final step in the control process is to evaluate the results and implement
change as appropriate. Whether or not performance standards have been met, managers can learn
a great deal during this step. If managers decide the level of performance is unacceptable, they
must try to change how work activities are performed to solve the problem. Sometimes
performance problems occur because the work standard was too high—for example, a sales target
was too optimistic and impossible to achieve. In this case, adopting more realistic standards can
reduce the gap between actual performance and desired performance.

3. Types of Control

What Is Feedforward Control?

The most desirable type of control—feedforward control—prevents problems because it
takes place before the actual activity. For example of feedforward control is the scheduled
preventive maintenance programs on aircraft done by the major airlines. These schedules are
designed to detect and hopefully to prevent structural damage that might lead to an accident. The
key to feedforward controls is taking managerial action before a problem occurs. That way,
problems can be prevented rather than having to correct them after any damage—poor-quality
products, lost customers, lost revenue, etc.—has already been done.

When Is Concurrent Control Used?

Concurrent control, as its name implies, takes place while a work activity is in progress,
many organizational quality programs rely on concurrent controls to inform workers whether their
work output is of sufficient quality to meet standards. The best-known form of concurrent control,
however, is direct supervision. For example, Nvidia’s CEO Jen-Hsun Huang had his office cubicle
torn down and replaced with a conference table so he’s now available to employees at all times to
discuss what’s going on.

Why Is Feedback Control So Popular?

The most popular type of control relies on feedback. In feedback control, the control takes
place after the activity is done. the major problem with this type of control. By the time a manager
has the information, the problems have already occurred, leading to waste or damage. However,
in many work areas—the financial area being one example—feedback is the only viable type of
control. Feedback controls do have two advantages. First, feedback gives managers meaningful
information on how effective their planning efforts were. Feedback that shows little variance
between standard and actual performance indicates that the planning was generally on target.
Second, feedback can enhance motivation. People want to know how well they’re doing, and
feedback provides that information.

4. What Contemporary Issues Do Manager Confront?

 Cultural Differences:
In global organizations, cultural nuances significantly influence how control systems are
implemented. For instance, in some cultures, direct supervision and hierarchical decision-making
are more accepted and effective, while others rely on extensive reporting and technological tools
due to dispersed operations and limited direct oversight. These differences create a need for
managers to understand and adapt their control strategies to align with diverse cultural norms and
expectations. It's crucial to strike a balance between standardized control methods and culturally
sensitive approaches to maintain efficiency while respecting local practices.

 Legal Constraints:
Laws and regulations in different countries can pose challenges for global managers in
executing control measures. For instance, in some nations, strict labor laws limit managerial
options like downsizing or shutting down facilities, compelling them to seek alternative solutions
or approaches to address performance issues. Negotiating these legal limitations demands
creativity and strategic thinking from managers to maintain operational control while staying
within legal boundaries.

 Data Comparison Issues:

The disparity in labor intensity between different locations impacts cost-control
comparisons. For instance, a manufacturing facility in one country might focus on labor-intensive
production due to lower labor costs, while another location might rely more on technology or
automation. This diversity makes it challenging to create uniform performance benchmarks or
cost-control measures across global sites. Managers must devise adaptable metrics that consider
these differences to effectively evaluate and manage performance across location. Given these
challenges, global managers need to be flexible and agile in their approach. They must employ a
mix of standardized control mechanisms and localized strategies to align with cultural norms and
legal constraints, ensuring effective control without impeding local operations or violating laws.
5. Three Organizational Control Systems
Output Control (Financial measures of performance & Operating budgets.)
The objectivity of
financial measures of
performance is the
reason why so many
managers use them to
assess the efficiency and
effectiveness of their
organizations. When an
organization fails to meet
performance standards
such as ROI, revenue, or
stock price targets,
managers know they
must take corrective
action. Thus, financial controls tell managers when a corporate reorganization might be necessary,
when they should sell off divisions and exit businesses, or when they should rethink their
corporate-level strategies.

Behavior Control (Direct supervision, MBO/balanced scorecard, Rules and

standard operating procedures)
Direct Supervision
The most immediate and potent form of behavior control is direct supervision by managers
who actively monitor and observe the behavior of their employees, teach them the behaviors that
are appropriate and inappropriate, and intervene to take corrective action as needed. Moreover,
when managers personally supervise employees, they lead by example and in this way can help
employees, develop and increase their own skill levels. Direct supervision allows managers at all
levels to become personally involved with their employees, and allows them to mentor employees,
and develop their management skills. Thus, control through personal supervision can be an
effective way of motivating employees and promoting behaviors that increase efficiency and
effectiveness.

Manage By Objectives
Management by objectives (MBO) is a goal-setting process in which a manager and each
of his or her employees negotiate specific goals and objectives for the employee to achieve and
then periodically evaluate the extent to which the employee is achieving employee goals.

Management by objectives involves three specific steps:

Step 1: Specific goals and objectives are established at each level of the organization.
MBO starts when top managers establish overall organizational objectives, such as specific
financial performance goals or targets. Then, objective setting cascades down throughout the
organization as managers at the divisional and functional levels set their goals to achieve corporate
objectives. Finally, first-level managers and employees jointly set goals that will contribute to
achieving functional objectives.
Step 2: Managers and their employees together determine the employees’ goals.
An important characteristic of management by objectives is its participatory nature. Managers at
every level sit down with each of the managers who report directly to them, and together they
determine appropriate and feasible goals for the subordinate and bargain over the budget that the
person will need to achieve his or her goals. The participation of employees in the objective-setting
process is a way of strengthening their commitment to achieving their goals and meeting their
budgets. Another reason it is so important for employees (both individuals and teams) to participate
in goal setting is that doing so enables them to tell managers what they think they can realistically
achieve.

Step 3: Managers and their employees periodically review the employees’ progress toward
meeting goals.
Once specific objectives have been agreed on for managers at each level, managers are accountable
for meeting those objectives. Periodically, they sit down with their employees to evaluate their
progress. Normally, salary raises and promotions are linked to the goal-setting process, and
managers who achieve their goals receive greater rewards than those who fall short.

Rules and standard operating procedures

Rules and SOPs guide behavior and specify what employees are to do when they confront
a problem that needs a solution. It is the responsibility of a manager to develop rules that allow
employees to perform their activities efficiently and effectively. Rules and SOPs also clarify
people’s expectations about one another and prevent misunderstandings over responsibility or the
use of power. Such guidelines can prevent a supervisor from arbitrarily increasing a subordinate’s
workload and prevent a subordinate from ignoring tasks that are a legitimate part of the job.

Clan Control (Organizational Change: Lewin’s Force-Field Theory of Change,

Managing Change, Evolutionary and Revolutionary Change)
Lewin’s Force-Field Theory of Change
Lewin's Force-Field Theory states that
two sets of forces called the driving and
restraining forces are always in opposition in an
organization. When they're in equilibrium,
manager maintain the status quo. To drive
change, manager must strengthen the driving
forces, weaken restraining forces, or do both
simultaneously.
Illustrates Lewin’s theory. An
organization at performance level P1 is in
balance: Forces for change and resistance to
change are equal. Management, however,
decides that the organization should strive to
achieve performance level P2. To get to level
P2, managers must increase the forces for change (the increase is represented by the lengthening
of the up arrows), reduce resistance to change (the reduction is represented by the shortening of
the down arrows), or both. If managers pursue any of the three strategies successfully, the
organization will change and reach performance level P2.

Evolutionary and Revolutionary Change

Evolutionary change is gradual, incremental, and narrowly focused. Evolutionary change
is not drastic or sudden but, rather, is a constant attempt to improve, adapt, and adjust strategy and
structure incrementally to accommodate changes taking place in the environment.

Revolutionary change is rapid, dramatic, and broadly focused. Revolutionary change

involves a bold attempt to quickly find new ways to be effective. It is likely to result in a radical
shift in ways of doing things, new goals, and a new structure for the organization. The process has
repercussions at all levels in the organization—corporate, divisional, functional, group, and
individual. Reengineering, restructuring, and innovation are three important instruments of
revolutionary change

Managing Change

Assessing The Need For Change

Organizational change can affect practically all aspects of organizational functioning,
including organizational structure, culture, strategies, control systems, and groups and teams, as
well as the human resource management system and critical organizational processes such as
communication, motivation, and leadership. Organizational change can alter how managers carry
out the critical tasks of planning, organizing, leading, and controlling and the ways they perform
their managerial roles.

Deciding On The Change To Make

Once managers have identified the source of the problem, they must decide what they think
the organization’s ideal future state would be. In other words, they must decide where they would
like their organization to be in the future— what kinds of goods and services it should be making,
what its business-level strategy should be, how the organizational structure should be changed,
and so on. During this step, managers also must plan how to attain the organization’s ideal future
state.

Implementing The Change

Generally, managers implement that is introduce and manage change from the top down or
from the bottom up. Top-down change is implemented quickly Top managers identify the need for
change, decide what to do, and then move quickly to implement the changes throughout the
organization. For example, top managers may decide to restructure and downsize the organization
and then give divisional and departmental managers specific goals to achieve.

Evaluating The Change

The last step in the change process is to evaluate how successful the change effort has been
in improving organizational performance. Using measures such as changes in market share, profits,
or the ability of scientists to innovate new drugs, managers compare how well an organization is
performing after the change with how well it was performing before.