Chapter 9 - Controlling Flashcards
List the 6 Reasons why Controlling is Important
- Adapt to Change & Uncertainty
- Discover Irregularities & Errors
- Reduce Costs, Increase Productivity
- Detect Opportunities
- Deal with Complexity
- Decentralise Decision-Making & Facilitate Teamwork
How does Controlling let an organisation ‘Adapt to Change & Uncertainty’?
- Help managers to anticipate, monitor and react to changes
- Examples include Changes in Taste of Customers, Changes in Government Regulations
How does Controlling let an organisation ‘Discover Irregularities & Errors’?
- Helps managers to identify areas where they need to investigate to find out the causes of irregularities and errors
How does Controlling let an organisation ‘Reduce Costs & Increase Productivity’?
- Help managers to identify areas where they can be more attractive to customers
- Examples include lower labour cost and higher output
How does Controlling let an organisation ‘Detect Opportunities’?
- Control systems can alert managers to opportunities that may otherwise go unnoticed
- Examples include what products are in demand and new markets overseas
How does Controlling let an organisation ‘Deal with Complexity’?
- Help managers to coordinate better as their organisation becomes larger and more complex
- Organisations get larger when they merge and there is a need to track what every department is doing, create many product lines and understand different policies, customers, employees etc.
How does Controlling let an organisation ‘Decentralise Decision-Making & Facilitate Teamwork’?
- Allow top managers to decentralise decision making to lower levels within the organisation
- Encourage employees to work together in team
What are the 4 Steps of the Control Process?
- Establish Standards
- Measure Performance
- Compare Performance to Standards
- Take Corrective Actions, if necessary
- If no, continue work progress and recognise success
- If yes, take corrective action perhaps revise standards
Describe the Flow of the Control Process
Establish Standards
- “What is the outcome we want?”
- Best measured when they can be quantifiable
- Performance standard is the desired performance level for a given goal
Measure Performance
- “What is the actual outcome we got?”
- Obtained from written reports, oral reports and personal observations
Compare Performance to Standards
- “How do the desired amd actual outcomes differ?”
- Management by exception: managers should be in informed of a situation only if data shows significant deviation from standard
Take Corrective Actions
- “What changes to make to get the desired outcome?”
- Recognise and reinforce positive performance
- Take action to correct negative performances
What are the 3 Types of Control Methods? Define them
Feedback Control
- Gathering of information about performance deficiencies after they occur
- Used to correct performance deficiencies and/or prevent it from recurring
Concurrent Control
- Gathering information about performance deficiencies as they occur
- Eliminates/shorten the delay between performance and feedback
Feedforward Control
- Prevent/minimise performance deficiencies before they occur
- Monitoring performance inputs rather than outputs
What are the 3 Levels of Control? Define them
Strategic Control
- Monitor performance to ensure that strategic plans are implement take corrective action as needed
- Performed by Top Managers
- Report through formal reports quarterly/annually
Tactical Control
- Monitor performance to ensure that tactical plans are implemented
- Performed by Middle Managers
- Reports done weekly/monthly
Operational Control
- Monitor performance to ensure that operational plans are implemented
- Performed by First-Level Managers
- Reports done weekly/daily
What are the 6 Areas of Control? What does each area consist of?
Physical Area
- Buildings, equipments, products
- Keeping track of stock in the warehouse
Human Resources Area
- Skills development
- Performance evaluation
- Measuring productivity
- Employee satisfaction survey
- Staff turnover
Informational Area
- Production schedules
- Sales forecasts
- Analyses of competition
Financial Area
- Are suppliers being paid?
- Is money collected promptly from customers?
- Is allocated budget properly used?
Structural Area
- Centralised/decentralised control
- Formal/informal hierachy
Cultural Area
- Values and beliefs of an organisation
What are the 4 Characteristics of Successful Control Systems?
- Strategic & Results-Oriented
- Timely, Accurate, & Objective
- Realistic, Positive, Understandable & Encourage Self Control
- Flexible
Define the Characteristic ‘Strategic & Results-Oriented’
- Support of strategic plans and showing of significant results
Define the Characteristic ‘Timely, Accurate & Objective’
- Timely: Information should be delivered at an appropriate and specific time
- Accurate: Errors such as inaccurate figures must be avoided at all costs
- Objective: Information must not be biased so that everyone involved can enhance their performance
