The 4 - PowerPoint Presentation

Slide1

The 4th Management Function: CONTROLLINGSlide2

Managing for productivity and results

You as a manager…

Competitive advantage

Diversity

Globalization

Information technology

Ethical standards

Your happiness & goals

Planning

Organizing

Leading

Controlling

… to achieve

productivity

and realize results

…must operate in

a complex environment and…

…make decision about

the 4 management functionsSlide3

What is productivity?Productivity

can be applied at any level

, whether for you as an

individual, for work unit

you’re managing, or for organization you work forIt is defined by the formula of outputs divided by inputs for a specified period of time. Outputs

are all the goods and services produced. Inputs are not only labor but also capital, materials, and energy

productivity = outputs/ inputs =

goods+services/ labor+capital+materials+energySlide4

Why increasing productivity is important?Productivity is important to companies because ultimately it determines whether the organization will make profit or even survive

These functions (below) affect one another and it turn affect in

Org’s

productivity

Planning:

set goals & decide how to achieve them

Organizing:

arrange tasks, people, and other resources to accomplish the work

Leading: motivate people to work hard to achieve Org’s goals

Controlling:

monitor performance, compare it with goals, and take corrective action as needed

For productivitySlide5

What is Controlling?A process of

monitoring

performance, comparing

with goals, and correcting work performance as needed to make sure performance meets objectivesSlide6

Why control is needed?To adapt to change & uncertaintyTo discover irregularities & errors

To reduce costs, increase productivity, or add value

To detect opportunities

To deal with complexityTo decentralize decision making & facilitate teamworkSlide7

Why control is needed?To adapt to change & uncertaintyConsumer tastes change

New competitor appear

Technologies are reborn

New materials are invented

Government regulations are alteredSlide8

Why control is needed?To discover irregularities & errorsCost overruns

Manufacturing defects

Employee turnover

Bookkeeping errors

Customer satisfactionSlide9

Why control is needed?To reduce costs, increase productivity, or add value

Reduce labor costs

Eliminate waste

Increase outputIncrease product delivery cycle

Add value to productSlide10

Why control is needed?To detect opportunitiesHot-selling products

Competitive prices on materials

Changing population trends

New overseas marketSlide11

Why control is needed?To decentralize decision making & facilitate teamwork

Allow top management to decentralize decision making at lower levels within the organization

Encourage employees to work together in teamsSlide12

Why control is needed?To deal with complexityHelp managers, in larger organization, coordinate well with various elements:

several product lines

material-purchasing policies

customer bases

workers from different cultures Slide13

Control ProcessIt is a 3 steps processes of measuring actual performance, comparing actual performance against a standard, and taking managerial action to correct deviations or inadequate standards

3 main steps for controlling process:

Measuring

Comparing

Taking Managerial ActionSlide14

1. MeasuringEstablish standard

:

“What is the desired outcome we want?”

A control standard (or performance standard or standard)

is the desired performance level for a given goal, for example, level of charitable contributions, number of students retained, number of financial performance, number of employee hiring, number of manufacturing defects, percentage increase in market share, percentage reduction in costs, number of customer complaints, and etc. Measure performance:

“What is the actual performance?”Example: number of products sold, units produced, cost per item sold, new products create by research scientist, scholarly writing by a college professor, or opinions expressed in peer report Slide15

How we measure & report actual performance

Advantages (+)

Drawbacks (-)

Personal Observations

Get first

hand knowledgeInformation isn’t filtered

Intensive coverage of work activitiesSubject to personal biasesTime-consuming

Obtrusive (interfering)Statistical Reports

Easy to visualizeEffective for showing relationships

Provide limited informationIgnore subjective factors

Oral ReportFast way to get information

Allow for verbal and nonverbal feedbackInformation

is filteredInformation can’t be documented

Written ReportsComprehensive (detailed)Formal

Easy to file and retrieveTake more time to prepareSlide16

2. Comparing Performance to StandardThis step

determines the variation between actual performance and a standard

How much deviation (difference) is acceptable? It depends on

the range of variation

built into the standards.Managers prefer to see performance exceeds the standards.The greater the difference between the desired and actual performance, the greater the need for action. Slide17

Acceptable Range of Variation

Acceptable rage of variation

Acceptable

Upper

Limit

Acceptable

Lower

LimitSlide18

3. Taking managerial action“What changes should we make to obtain desirable outcomes?”

There are 3 possibilities:

Make no changes

Recognize and reinforce positive performance

Take action to correct negative performanceSlide19

3. Taking managerial action (con’t)

When

performance meets or exceeds the standards set

, managers should give rewards, ranging from giving a verbal “Job well done” to more substantial payoffs such as raises, bonuses, and promotions to reinforce good behaviorSlide20

3. Taking managerial action (con’t)

When

performance falls significantly short of the standard

, managers should carefully examine the reason why and take the appropriate action.

They may need to revise the standards as they were unrealistic or faced changing conditions.Or when the employees can’t perform tasks to achieve the standards, manager may need to take some actions according to the specific reason of low performance. Example:

When a UPS driver fails to perform according to the standard set for him/her, a supervisor rides along and give suggestions for improvement. If drivers are unable to improve, they are warned, then suspended, and then dismissed. Slide21

Types of control

Future-oriented

Feedforward

controls

Present-oriented

Concurrent controls

Past-orientedFeedback controls

Before the work is done: Anticipates problems

While the work is going on: Corrects problems as they occurAfter the work is done: Corrects problems after they occur

FeedbackSlide22

Types of control (con’t)

Feedforward

—control the future: before the work begins

It takes place before operations begin and is intended to prevent anticipate problems

The purpose is to keep problems from happening so that manager won’t have to fix them afterwardConcurrent—control for the present: while the work is in progressIt takes place while operations are going on and is intended to minimize problems as they occurThe purpose is to correct problems before they become too difficult or expensive by directing, monitoring, and fine-tuning activities

Feedback—control for the past: after the work is doneIt takes place after operations are finished and is intended to correct the problems that have already occurredThe drawback is the damage has already been done, however, the benefit is feedback shows how well the planning process worked and tell employees how well they performed, thereby contributing to employee motivation Slide23

Levels of Control

Strategic control by top managers

It is monitoring performance to ensure that

strategic plans

are being implemented and taking corrective action as neededTactical control by middle managersIt is monitoring performance to ensure that

tactical plans—those at the divisional or departmental level—are being implemented and taking corrective action as neededOperational control by first-level managers

It is monitoring performance to ensure that operational plans—day to day goals—are being implemented and taking corrective action as needed Slide24

Areas of controlPhysical control

:

buildings, equipments, and tangible products

Example: the use of computers, cars, and other machinery.

There are inventory-management controls to keep track of how many products are in stock, how many will be needed, and what their delivery dates are from suppliersThere are quality controls

to make sure that products are being built according to certain acceptable standards Human controlInformational controlFinancial controlSlide25

Areas of control (con’t)

Physical control

: buildings, equipments, and tangible products

Human control:

controls used to monitor employees Example: personality tests and drug testing for hiring, performance tests during training, performance evaluations to measure work productivity, and employee surveys to assess job satisfaction and leadershipInformational controlFinancial controlSlide26

Areas of control (con’t)

Physical control

: buildings, equipments, and tangible products

Human control: controls used to monitor employees

Informational controlExample: production schedules, sales forecasts, environmental impact statement, analyzes of competitionsFinancial controlSlide27

Areas of control (con’t)

Physical control

: buildings, equipments, and tangible products

Human control: controls used to monitor employees

Informational controlFinancial controlExample: Are bills being paid on time? How much money is owed by customers? Is there enough cash on hand to meet payroll obligations? What are the debt-repayment schedules? What is the advertising budget?Financial controls are very important because they can affect the other 3 types of resources Slide28

Balanced Scorecard Approach

The balanced scorecard approach to evaluate organizational performance beyond just a financial perspective

.

Managers should develop goals in each of 4 areas and then measure whether the goals are being met.Slide29

Balanced Scorecard Perspectives

The Learning & Growth Perspective:

Includes employee training, learning and corporate cultural attitudes related to both individual and corporate self-improvement.

The Business Process (Internal) Perspective:Includes how well their business is running, and whether its products and services conform to customer requirements (the mission).

The Customer Perspective:Includes customers satisfaction, how to fulfill their needs in order to prevent future decline The Financial Perspective:Include all financial controls, timely and accurate funding data will always be a priority for organizationsSlide30

Importance of ControlIt helps managers know whether organizational goals are being met and if they’re not being met, the reason why

Maintaining productivity depends on

control

as control is to make something happen the way it was planned to happenSlide31

Final Examination Guideline:SWOT AnalysisSMART Goals

MBO

Strategic Management

Control ProcessHRM

Leading & MotivationElements of Organization“Time management

” in the exam room is important!!!

Your answers should be “Clear, Complete, Correct”No need to be very long answer!

…enough to make the one, who haven’t studied Management before, understand your explanation

Work hard for your final exam!