Lesson 5. Controlling
Controlling as a management process
Managerial control methods
Operations management
Information systems in management
Controlling as a Management Process. Subject and Object in Controlling. Role of Controls and Levels of Control. Steps in the Control Process. Types of Control. Managerial Control Styles. Assessing Control Systems.
Major Control Systems. Financial Control. Financial Statements, Financial Audits. Budgetary Control. Types of Budgets, The Budgetary Process. Quality Control. Inventory Control. HACCP, ISO systems. Strategic Implications of Quality. Quality Assurance Institutions.
The Nature of Information Systems and their importance in the controlling process. Information Needs by Managerial Level. Characteristics of Useful Information. Impacts of Information Technology on Organizations.
Operations Management and Controlling Function. The Operations Management Process. Operations Strategy. Developing and Implementing Operating Systems.
1. Controlling as a management process
Controlling: the process of regulating organizational activities so that actual performance conforms to expected organizational standards and goals.
Meaning: developing appropriate standards, compare ongoing performance against these standards, and take corrective actions if necessary.
Part of the control process: set up control systems: set of mechanisms that are designed to increase the profitability of meeting organizational standards and goals. Can be established for any areas that managers think are important.
Levels of controls
Strategic: control type that involves monitoring critical environmental factors that could affect the viability of strategic plans, assessing the effects of organizational strategic actions, and ensuring that strategic plans are implemented as intended.
Tactical: type that focuses on assessing the implementation of tactical plans at department levels, monitoring associated periodic results, and taking corrective action as necessary.
Operational: involves overseeing the implementation of operating plans, monitoring day-to-day results, and taking corrective actions.
The control process: steps
1. Determine areas to control
Managers make choices – usually on the organizational goals and objectives developed during the planning process.
2. Establish standards
Three major purposes, related to employee behavior. First, help employees understand what is expected and how their work will be evaluated. Second, provide a basis for detecting job difficulties that are related to personal limitations of organization members. Third, help reduce the potential negative effects of goals inconsistencies (incompatibilities between the goals of an organization member and those of org-n).
3. Measure performance
For a given standard, a manager must decide both how to measure actual performance and how often to do so. One – MBO. Means of measuring – depend on standards; ex. Units produced, profits, return on investment, quality of output, steps or processes followed, etc.
Quantitative and qualitative measurements: easy to measure the number of minutes to fill the order vs. polite to customers, etc.
Decisions on how often to control performance for control purposes.
Compare performance against standards;
based on the reports, that summarize planned versus actual standards.
If standards met or Exceeded, Recognize Performance.
If standards are not met, take corrective action as necessary
Adjust standards and measures as necessary.
Characteristics of an effective control system
Future-Oriented: need to help regulate future events
Multidimensional: in order to capture the major relevant performance factors
Cost-effective: but benefits should outweigh the costs
Accurate: because of basis for future actions
Realistic: control systems should incorporate realistic expectations about what can be accomplished.
Timely; Monitorable- (can be monitored to ensure that they are performing as expected)
Acceptable to organization members (who are effected by them)
Flexible: to respond rapidly to changing environments. Can be changed quickly to measure and report new information.