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Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Kinicki/Williams, Management: A Practical Introduction 3e 2008, McGraw-Hill/Irwin,33,Management A Practical IntroductionThird Edition,Angelo Kinicki &,Brian K. Williams,Chapter 16: Control,Techniques for Enhancing Organizational Effectiveness,Managing for Productivity,Control,The Balanced Scorecard, Strategy Maps, & Measurement Management,Levels & Areas of Control,Some Financial Tools for Control,Total Quality Management,Managing Control,16.1 Managing for Productivity,WHAT IS PRODUCTIVITY?,Productivity,is defined as outputs divided by inputs,where:,outputs,are the goods and services produced, and,inputs,are labor, capital, materials, and energy,Productivity is important because it determines whether a company will make a profit and affects a countrys standard of living,Maintaining productivity depends on control,16.1 Managing for Productivity,Figure 16.1: Managing for Productivity and Results,16.2 Control: When Managers Monitor Performance,WHY IS CONTROL IMPORTANT?,Control,is making something happen the way it was planned to happen, while,controlling,is monitoring performance, comparing it with goals, and taking corrective action as needed,Recall that:,-,planning,is setting goals and deciding how to achieve them,-,organizing,is arranging tasks, people, and other resources to accomplish the work,-,leading,is motivating people to work hard to achieve the organizations goals,-,controlling,is making sure performance meets objectives,16.2 Control: When Managers Monitor Performance,Figure 16.2: Controlling for Productivity,Chapter 16: Control,CLASSROOM PERFORMANCE SYSTEM,The four management functions include all of the following except,A) implementing,B) organizing,C) planning,D) controlling,16.2 Control: When Managers Monitor Performance,There are six reasons why control is needed:,1.,To adapt to change & uncertainty,- organizations need to be able to deal with change and uncertainty in the environment,2. To discover irregularities and errors,- without checks and balances, companies might not survive,3. To reduce costs, increase productivity, or add value,- control systems can reduce costs, increase output, and add value to a product,16.2 Control: When Managers Monitor Performance,4. To detect opportunities,- controls can help firms identify opportunities that might otherwise go unnoticed,5. To deal with complexity,- controls help firms deal with the complexities of multiple product lines, customer bases, and so on,6. To decentralize decision making & facilitate teamwork,- controls allow top managers to decentralize control to lower levels and encourage teamwork,16.2 Control: When Managers Monitor Performance,There are four steps in the,control process,:,1. Establish Standards,The desired performance level for a given goal is a,control standard,or,performance standard,Standards can be broad or narrow,2. Measure Performance,Performance is measured using three sources: written reports, oral reports, and personal observation,16.2 Control: When Managers Monitor Performance,3. Compare Performance To Standards,Measured performance is compared to established standards,The amount of deviation acceptable depends on the predetermined range of variation,Some firms follow,management by exception,where managers are informed of a situation only if data show a significant deviation from standards,4. Take Corrective Action, If Necessary,Firms can make no changes to the current situation, recognize and reinforce positive performance, or take action to correct negative performance,16.2 Control: When Managers Monitor Performance,Figure 16.4: Steps in the Control Process,16.3 The Balanced Scorecard, Strategy Maps & Measurement Management,HOW CAN MANAGERS ESTABLISH STANDARDS AND MEASURE PERFORMANCE?,The,balanced scorecard,strategy maps,and,measurement management,are all techniques that managers use to establish standards and measure performance,The,balanced scorecard,gives top management a fast but comprehensive view of the organization using four indicators: customer satisfaction, internal processes, innovation and improvement activities, and financial measures,16.3 The Balanced Scorecard, Strategy Maps & Measurement Management,Figure 16.5: The Balanced Scorecard,Chapter 16: Control,CLASSROOM PERFORMANCE SYSTEM,The balanced score card sets goals and performance measures from all of the following perspectives except,A) innovation and learning,B) financial,C) customer,D) productivity,16.3 The Balanced Scorecard, Strategy Maps & Measurement Management,A,strategy map,is a visual representation of the four perspectives of the balanced scorecard that enables managers to communicate their goals so that everyone in the company can understand how their jobs are linked to the overall objectives of the organization,There are two types of organizations:,-,measurement-managed,companies are ones that have set measurable criteria that are linked to performance goals,-,non-measurement managed,firms do not have measurable criteria linked to goals,16.3 The Balanced Scorecard, Strategy Maps & Measurement Management,Figure 16.6: The Strategy Map,16.4 Levels & Areas of Control,HOW SHOULD CONTROL BE IMPLEMENTED?,There are three levels of control:,1.,Strategic control,is monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed,Strategic control is performed by top managers with reports being issued quarterly, semi-annually, or annually,16.4 Levels & Areas of Control,2.,Tactical control,is monitoring performance to ensure that tactical plans those at the divisional or departmental level are being implemented and taking corrective action as needed,Control is done by middle managers with reports on a weekly or monthly basis,3.,Operational control,is monitoring performance to ensure that operational plans day-to-day goals are being implemented and taking corrective action as needed,Control is by first-line managers with reports on a daily basis,Chapter 16: Control,CLASSROOM PERFORMANCE SYSTEM,Which type of control issues reports on a weekly or monthly basis?,A) strategic,B) operational,C) supervisory,D) tactical,16.4 Levels & Areas of Control,There are six areas of organizational control:,1. Physical area control,includes things like equipment controls to monitor computer use, inventory management controls to keep track of inventory levels, and quality controls to ensure that products are being produced properly,2.,Controls to monitor,human resources,include personality tests, drug tests, and performance tests,3.,Controls of,informational areas,include production schedules, sales forecasts, and analyses of the competition,16.4 Levels & Areas of Control,4. Financial controls,affect debt payments, payroll, budgets, and so on,5.,Structural,control involves the organizational hierarchy,Bureaucratic control,is characterized by rules, regulations, and formal authority,Decentralized control,is characterized by informal and organic structural arrangements,6.,Cultural,controls influence the norms and values of the organizations culture which then affect the work process and performance levels,16.3 Some Financial Tools For Control,WHAT ARE THE MAJOR FINANCIAL TOOLS FOR MANAGERS?,Financial controls including budgets and financial statements are especially important to firms,A,budget,is a formal financial projection,Budgets provide a yardstick against which performance can be measured and comparisons can be made to other time periods, departments, and so on,16.3 Some Financial Tools For Control,There are two different ways to budget:,Incremental budgeting,allocates increased or decreased funds to a department by using the last budget as a reference pointonly incremental changes in the budget request are reviewed,Zero-based budgeting,forces each department to start from zero in projecting its funding needs for the budget period,There two different types of budgets:,Fixed budgets,allocate resources on the basis of a single estimate of costs,Variable budgets,allow the allocation of resources to vary in proportion with various levels of activity,16.3 Some Financial Tools For Control,A summary of some aspect of an organizations financial status is a,financial statement,There are two basic types of financial statements:,A,balance sheet,summarizes an organizations overall financial worth (assets and liabilities) at a specific point in time,where:,-,assets,are the resources the organization controls,current assets,are cash and other assets that are readily convertible to cash,fixed assets,are property, buildings, and equipment that are harder to convert to cash, and,liabilities,are claims by suppliers, lenders, and others,16.3 Some Financial Tools For Control,The,income statement,summarizes an organizations financial results - revenues (the assets from the sale of goods) and expenses (the costs required to produce goods and services) - over a specified period of time,Liquidity ratios,indicate how easily a companys assets can be converted to cash,Debt-management ratios,indicate the degree to which an organization can meet its long-term financial obligations,Asset management ratios,indicate how effectively an organization is managing resources,Return ratios,indicate how effective management is at generating a return on assets,Chapter 16: Control,CLASSROOM PERFORMANCE SYSTEM,Ratios that indicate how effectively an organization is managing resources are,A) return ratios,B) liquidity ratios,C) asset management ratios,D) debt management ratios,16.3 Some Financial Tools For Control,Formal verifications of an organizations financial and operational systems are called,audits,There are two types of audits:,An,external audit,is a formal verification of an organizations financial accounts and statements by outside experts,An,internal audit,is a verification of an organizations financial accounts and statements by the organizations own professional staff,16.6 Total Quality Management,HOW CAN QUALITY BE IMPROVED?,Total quality management (TQM),is a comprehensive approach, led by top manager and supported throughout the organization, dedicated to continuous quality improvement, training, and customer satisfaction,The,two core principles of TQM,are,people orientation,(everyone involved in the organization should focus on delivering value to customers), and,improvement orientation,(everyone should work on continuously improving work processes),There,are several techniques for improving quality including employee involvement, benchmarking, outsourcing, reduced cycle time, and statistical process control,16.7 Managing Control Effectively,HOW CAN CONTROL BE MANAGED SUCCESSFULLY?,Successful control systems are:,1. Strategic & results oriented, they support strategic plans and focus on activities that will make a real difference to the firm,2. Timely, accurate, & objective,3. Realistic, positive, & understandable & encourage self-control,4. Flexible,- so that they can be modified as needed,Chapter 16: Control,There are several barriers that can limit successful control:,Too much control,- when companies exert too much control, employees may rebel,2. Too little employee participation,- employee participation can enhance productivity,3. Overemphasis on means instead of ends,4. Overemphasis on paperwork,- unnecessary emphasis on paperwork can reduce effort in other areas,5. Overemphasis on one instead of multiple approaches,- using multiple control activities can increase accuracy and objectivity,Chapter 16: Control,CLASSROOM PERFORMANCE SYSTEM,Which of the following is not a barrier to successful control?,A) flexibility,B) too much control,C) overemphasis on paperwork,D) too little employee participation,Finale: Some Life Lessons,WHAT ARE THE KEYS TO MANAGERIAL SUCCESS?,Initiative is always in short supply,If you have an active desire to learn new things, youll be ready for the next step,Think ahead, understand what your obstacles are, and develop a strategy to win,Be flexible, keep your cool, and take yourself lightly,
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