Controlling Flashcards
definition of controlling
monitoring activities to ensure they are being accomplished as planning and to correct significant deviations in order to meet org goals
work of taylor, fayol, weber - concerned with the control of employees for this purpose, e.g. scientific mgmt, lines of authority, formalisation
importance of controlling
1) planning - make sure goals are being achieved in the intended manner, and know how to take future action (correct or move on)
2) empower employees - providing info and feedback on performance can empower those with delegated authority and reduce the risk of delegation for responsible managers
3) protect the workplace - controls to prevent security incidents and other disruptions, as well as contingency plans to minimise impact
steps of the control process
1) set standards for performance
2) measure performance
3) compare actual performance against standard
4) take managerial action
planning-controlling link
1) planning - objective, strategies, tactics
2) organising - structure, HRM
3) leading - motivate, lead, communicate
4) controlling - setting standards then MCA
how to measure performance
1) personal observation
2) statistical reports
3) self-monitoring computers
4) oral reports
5) written reports
what to measure
- some control criteria for any situation e.g. employee satisfaction/turnover/absenteeism; costs within budget
- most others need to be situation and business specific - e.g. for a pizza business - number delivered per day, delivery time, number of coupons redeemed
comparing performance against the standards
- determine a range of variation - acceptable parameters of variance between actual performance and the standard
- only if significant (determine what this is), will need to take action
taking action
1) correct performance - either immediate corrective or basic corrective action
2) revise the standard - if unrealistically high or low. Revising downwards is risky because it may lead to complacency. Manager needs to decide whether or not to hold ground
immediate and basic corrective action
immediative - corrects problems at once and gets performance back on track
basic - looks at how and why performance deviated to understand what needs to be corrected
immediative done when managers think they ‘don’t have time’ but basic must be done to permanently correct significant performance deviations PROVIDED benefits of doing so outweigh costs
what is organisational performance
the accumulated results of all the organisation’s work activities
measures of org performance
1) productivity
2) effectiveness - how appropriate org goals are and how well they’re met
3) industry and company rankings - lists on specific performance measures e.g. Fortune’s Best Companies to Work For on employee satisfaction
productivity
= output/inputs
outputs = selling price*number sold
- mgmt must increase this ratio; easiest way is increasing price but not easy as price competitiveness becomes more important esp in some industries like retail
controlling employee performance
1) effective feedback
2) disciplinary action - used if feedback is ineffective; should be progressive disciplinary action (moves sequentially through steps to ensure the minimum penalty to an offense is imposed)
progressive disciplinary action
typically 5 steps: oral warning, initial written warning, final written warning, termination review/suspension, dismissal
is most likely to succeed in claims of unfair dismissal if behaviour and disciplinary actions have been carefully documented and followed steps in order
tools to measure organisational performance
1) feedfoward, concurrent and feedback controls
2) information controls
3) financial controls
4) balanced scorecard
5) benchmarking
feedforward, concurrent, feedback concurrent
FF - takes place before a work activity is done to prevent problems rather than resolving them and incurring the costs of damage e.g. poor quality products, lost custom and revenue. Not always easy and may have to rely on CC and FB
CC - takes place while a work activity is in progress, e.g. quality assurance procedures during car assembly, to correct problems before they become too costly Most common form is direct supervision by first-line mgmt
FB - takes place after work activity is done, e.g. quality control in manufacturing. Problems are only found after they have occurred and costs of waste/damage/reputation already incurred, but may be only viable form of control e.g. very short production process
EGs:
FF - procedure for making cheeseburgers at McD
CC -
FB -
pros of feedback control
1) gives managers info on how effective planning efforts were by showing performance deviations and lets them know how to revise plans
2) can enhance motivation by letting employees know how well theyre doing and how to improve
financial controls
these help businesses to achieve their objectives profit and are either RATIOS or BUDGETS
Ratios:
1) liquidity - current and acid test
2) leverage - gearing and times interest earned
3) activity - inventory turnover; asset turnover
4) profitability - profit margin on sales; ROI
Budgets:
- both planning (how much resources should be allocated to diff work activities) and control tools (measure variances and understand reasons to take action)
read what each ratio tells you
information controls
Using info to control performance
1) Management information systems - source of info (not raw data!) needed on a regular basis about activities in concerned area; standards; range of variation; to help develop courses of action
Controlling the use of info
1) protect info used to control performance e.g. firewalls, data backups, data encryption. Online sources like search engines and social media may contain leaked sensitive or defamatory info
balanced scorecard
benchmarking
identifying, analysing and adopting best practices from other organisations (external) or departments within the same org (internal) that lead to superior performance
using benchmarks (standard of excellence against to measure and compare) helps to identify specific performance gaps and gains independent perspective on performance (if external)
read AL flashcards
suggestions for internal benchmarking
1) strategies and objectives should dictate what types of best practices to focus on
2) develop best practices knowledge-sharing and reward and recognition systems
3) communicate best practices throughout org
4) nurture org culture of ‘we can learn from everyone’ to encourage improvement and sharing information
contemporary issues in control
1) social media as a control tool
2) global differences
3) privacy
4) employee theft
5) corporate governance
social media as a control tool
- leverage the growing number of customers, clients and citizens on social media to gather information (flooding!) and feedback (e.g. quality)
global differences
measurement and correction steps of control process differ
1) MNCs - distance means more formalised control and extensive formal reports to measure performance
2) more technologically developed nations use more indirect control devices like computer generated reports in addition to standardised rules and direct supervision
3) some laws prohibit closing facilities, laying off employees or bringing in new mgmt team from out of the country
4) comparability - e.g. labour costs per unit b/w scottish manufacturers using more tech than cambodia due to higher labour costs
5) must have feedforward controls to protect workers and other assets during times of global turmoil e.g. conflict in ME
workplace privacy
reasons for monitoring:
1) recreational use of the internet costs billions of dollars in lost productivity
2) offensive messages/inappropriate media may lead to lawsuits for hostile work environment
3) ensure company secrets aren’t being leaked
however, employees may react negatively to constant surveillance - must be done respectfully and transparently
employee theft
unauthorised taking of company property for personal use
can be tackled with various forms of FF (e.g. prehiring screening, educate on anti-theft policies), CC (treat employees with respect, video/remote surveillance) and FB control (mention incidents and reiterate severity; review culture/managerial relationships with employees)
corporate governance
system used to govern a corporation to protect the interests of corporate owners (shareholder value)
- changing role of BOD - greater pressure to act responsibly and increase accountability
- increased scrutiny and transparency of financial reporting and audit
- compliance offices - systems to ensure an org conducts businss in full compliance with all internal and national laws and regulations
