CONTROLLING GROUP 1 EUNICE SANCHEZ LAUREN VILLEGAS
Outline:1) Control as a Management Process • Meaning of Controlling2) Significance of Control Process • Its relation to Planning, Organizing, Directing and Staffing • Definition of Control System • Purpose of Control System in a firm3) Role of Controls • Coping with Uncertainty • Detecting Irregularities • Identifying Opportunities • Handling Complex Situation4) Levels of Control • Strategic Control • Tactical Control • Operational Control5) Steps of Control Process • Determine areas to control • Establish Standards • Measure Performance • Compare Performance • If Standards are met, recognize performance • If Standards are not met, take corrective action • Adjust Standards and measures as necessary6) Managerial Approaches to Implementing Controls • Market Control • Bureaucratic Control • Clan Control7) Characteristics of an Effective Control System • Future Oriented • Multidimensional • Cost Effective • Accurate • Realistic • Timely • Monitorable • Acceptable to Organization Members • Flexible
1) Control as a Management Process We define management as the process of regulating organizational activities so that actualperformance conforms to expected organizational standards and goal. As the definition suggests,controlling means that managers should verify whether everything occurs in conformities with theplans adopted, instructions issued and principles established. It also ensures that there is an efficientand effective utilization of organizational resources so as to achieve planned goals and standards.2) Significance of Control Process• Its relation to Planning, Organizing, Directing and Staffing Controlling function has a relation to the other functions of management: planning,organizing, directing, and staffing. It builds more directly to planning, by providing the means ofmonitoring and making adjustments in performance, plans can be realized. Plans can be made bywhat controlling does in such activities in the firm. Still, controlling also supports organizing byhelping ensure that resources are channeled toward organizational activities. For example, feedbackfrom the control process might signal the need to reorganize, provide more training to workers orclarify communication. Also, with directing, controlling affects this function, thru controlling,managers would know what to instruct, guide and oversee to achieve predetermine goals. Forinstance, managers will know which is need to have more guidance in terms of performance toachieve high quality of products after controlling determines that workers who are assigned in thequality assurance are in need of strict guidance to ensure high quality of products. Lastly, it also hasrelation to staffing. By means of controlling firms will know if there is a need to hire more people,reassign workers and change schedules or workers.• Definition of Control System and Purpose of Control System in a firm Control System is a set of mechanisms that are designed to increase probability of meetingorganizational standards. Control system can be also called as the game plan. It can be developed toregulate any area that a manager considers important. Control system is strictly followed byemployees to achieve high quality of products and service, quantity produced, resources expended,profit margins, client satisfaction, and other specific activities in the firm.3) Role of Controls• Coping with Uncertainty Uncertainties or problems arise because not all things always go according to plan. Differentfactors in the environment typically bring about changes in such areas as customer demand,availability of resources, and technology. By developing control systems, managers are able tomonitor specific activities and react quickly to significant changes in the environment.
• Detecting Irregularities Control systems also help managers detect undesirable irregularities that might affect thename of the business, product defects, or rising personnel turnover. Early detection helps firms to cansave a great deal of time and money preventing minor problems to become major ones. It alsoavoids problems that are difficult to rectify.• Identifying Opportunities It highlights situations in which things are going better than expected, which alertsmanagement to possible future opportunities.• Handling Complex Situation As firms grow larger or engage in more complex operations and projects, controls enhancecoordination. Controls help manager to keep in track of various elements to be sure that they arewell synchronized.4) Levels of Control• Strategic Control Strategic control involves monitoring critical environmental factors that could affect theviability of strategic plans, assessing the effects of organizational strategic actions, and ensuring thatstrategic plans are implemented as intended. The one who is usually concern is the top-levelmanagers, who generally take an organizationwide view or perspective. They often concentrate onlong time frames, such as quarterly, semiannual or annual reports. However, if environment isunstable or there is a keen competition, managers use shorter reporting cycles for strategic control.• Tactical Control A control that focuses on accessing the implementation of tactical plans at department levels,monitoring associated periodic results, and taking corrective actions as necessary. It involve middlemanagement who are concerned with department-level objectives, programs, and budgets and whoconcentrate mid-term time frames and often use weekly and monthly reports. Middle managers arelikely to engage in strategic control because they escalate information to top-level management onstrategic issues.• Operational Control Operational control involves overseeing the implementation of operating plans, monitoringday-to-day results and taking corrective action when required. Lower-level managers has a largeresponsibility in this control, they are more concerned on rules, specific outputs, and schedulesnormally associated with individuals. Managers in the operational control give feedbacks about whatis happening in the very near term to achieve both short- term and long-term goals.
5) Steps of Control Process• Determine areas to control Determining areas to control is the first major step in the control process. Manager mustmake wise choices or decision because it is expensive and impossible to control every aspect oforganization’s activities. Prioritizing is important in this steps, managers should know which toprioritize in which the organization will earn more profit, gain more consumer and will avoid loses.• Establish Standards Second step in the control process is establishing standards. Every firm has its own standardor criteria for evaluating performance and related employee behaviors. There are requirements,characteristics that an employee should have that will become an asset to the company. Standardsare also set to provide excellent customer service, quality products and to achieve organizationalgoals.• Measure Performance Once standards are set, the next step is to measure performance. Managers should decidehow to measure performance and how often to do so. Measuring standards depends on the standardsset, but may also include such data as units produced, amount of materials used, or stores opened.After managers measure performance they will then identify the opportunities of its employees,products or services and branches.• Compare Performance This step is consists of comparing the performance measured with the standards established.Managers often base their comparisons on the information provided in the reports that summarizeplanned versus results. Reports may be verbal, written or by computerized process. Throughtechnology, reports are escalated up-to-the-minute.• If Standards are met, recognize performance If standards are met, there is usually no corrective action to be done. Managers usually giveout incentives like, bonuses, substantial rewards or pay raises. Having these incentives or these typesof recognitions motivates employees to work harder or be competitive in terms of ranking or aimingfor higher positions. It also encourages further improvements.• If Standards are not met, take corrective action If standards are not met, managers must carefully assess or investigate the reasons why andmust take corrective actions. Evaluation of performance should be done to make sure that they arestill realistic. Sometimes, managers don’t do corrective actions, because standards may also beinappropriate because of changing in conditions.
• Adjust Standards and measures as necessary Control is a dynamic process. As a result, managers need to check standards periodically toensure that standards and performance measures are still relevant for the future. Standards may bechanged due to circumstances have changed. Adjustments are also necessary depending upon thereports of the different levels of management. Managers may raise their standards for future effortsor may lower down their standards because some standard may consume too many resources.6) Managerial Approaches to Implementing Controls• Market Control A managerial approach that relies on market mechanisms to regulate prices for certainclearly specified goods and services needed by an organization. To use market control, there must bea reasonable level of competition in goods and services and it must also be possible to specifyrequirements clearly. Without bidding and specifications, purchasing agents may expend more timeand effort attempting to control costs.• Bureaucratic Control A managerial approach that relies on regulation through rules, policies, supervision,budgets, schedules, reward systems, and other administrative mechanisms aimed at ensuring thatemployees exhibit appropriate behaviors and meet performance standards. These approach followsa procedure, rules or policies. Employees should always comply to avoid sanctions.• Clan Control Clan control relies on values, beliefs, traditions, corporate culture, shared norms, andinformal relationships to regulate employee behaviors and facilitate the reaching of organizationalgoals. It has greater emphasis on internal motivation. With clan control, managers concerted effortto encourage participation and ideas from everyone.7) Characteristics of an Effective Control System• Future Oriented To be effective, control systems need to forecast future events, rather than developing aresolution after knowing problems in the firms. With control system, the firm may prevent futureproblems or uncover unforeseen opportunities that might be developed.• Multidimensional Control systems need to be multidimensional or should consider every aspect that mightaffect the firms whether about production, its employees or its resources and to capture majorrelevant performance factors.
• Cost-Effective The cost of controls is an important consideration. A firm may invest more money on suchactivities but the benefits should outweigh the costs.• Accurate Since controls provide the basis for future actions, accuracy is vital. Every informationescalated to top managers should be accurate in order for them to regulate such standards, rules,policies that will highly affect the entire organization.• Realistic Control systems should incorporate realistic expectations about what can be accomplished.Standards established should have a clear and definite reasons why it was set or it should bereasonable.• Timely Control systems are designed to provide data on the state of a given production cycle. Itshould be timely or submitted at a specific time for the managers and employees respond promptlyto irregularities.• Monitorable Control systems should be monitorable to ensure that they are performing as expected. Ifcontrol systems are monitorable it will be easier to determine which areas to improve.• Acceptable to Organization Members Control system operates best when the are accepted by organization members. Otherwise,members may sabotage or override controls. Control system should always give a win-win result tomanagers and members.• Flexible Control systems should be flexible enough to meet new or revised requirements. They shouldbe designed so that they can be changed quickly to measure and report new information.