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Chapter 13 - Control Systems: Financial and Human
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Chapter 13 - Control Systems: Financial and Human

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Chapter 13 - Control Systems: Financial and Human Chapter 13 - Control Systems: Financial and Human Presentation Transcript

  • Control Systems: Financial and Human
  • Learning Outcomes
    • List the four stages of the systems process and describe the type of control used at each stage.
    • Describe the appropriate feedback process within and between the functional areas/departments.
    • List the four steps in the control systems process.
    • Describe the differences among the three categories of control frequency.
    • Explain how the capital expenditures budget is different from the expense budget.
    • List the three primary financial statements and what is presented in each of them.
    After studying this chapter, you should be able to:
  • Learning Outcomes (cont’d)
    • Explain the importance of positive motivational feedback in coaching.
    • Explain the manager’s role in counseling and the role of the employee assistance program staff.
    • Define the key terms listed at the end of the chapter.
    After studying this chapter, you should be able to:
  • IDEAS ON MANAGEMENT at The Ranch Golf Club
    • How does The Ranch control the organizational system? How does The Ranch control the functional systems?
    • How does The Ranch use the control systems process, and how is it performing?
    • What control methods are used to achieve objectives and standards at The Ranch?
    • What are the major operating budget revenues and expenses at The Ranch?
    • How does The Ranch use capital expenditure budgets? How does The Ranch use financial statements and budgets?
    • Does Peter Clark coach his Jiffy Lube business, The Ranch, and sports teams the same way?
    • How does The Ranch get feedback to improve performance?
  • Exhibit 13 – 1 ● The Systems Process with Types of Controls
  • Organizational Systems Control
    • Controlling
      • The process of establishing and implementing mechanisms to ensure that objectives are achieved.
    • Preliminary Control (Feedforward Control)
      • Controls designed to anticipate and prevent possible problems (e.g., preventive maintenance)
      • Planning and organizing are the keys to preliminary control.
        • Standing plans are designed to control employee behavior in recurring situations to prevent problems.
        • Contingency plans tell employees what to do if problems occur.
  • Organizational Systems Control (cont’d)
    • Concurrent Control
      • Action taken to ensure that standards are met as inputs are transformed into outputs.
    • Rework Control
      • Action taken to fix an output.
    • Damage Control
      • Action taken to minimize negative impacts on customers/stakeholders due to faulty outputs.
    • Feedback
      • Information about outputs from customers and stakeholders.
  •  
  • Exhibit 13 –2 ● Systems Processes for Functional Areas/Departments
  • Exhibit 13 –2 ● Systems Processes for Functional Areas/Departments (cont’d)
  • Exhibit 13 –3 ● The Feedback Process between Functional Areas/Departments
  • Exhibit 13 –4 ● The Control Systems Process
    • Balanced Standards:
    • Quantity
    • Quality
    • Time
    • Cost
    • Behavior
    Identify Critical Success Factors (CSFs)
  • Exhibit 13 –5 ● Operations Performance Report
  • Join the Discussion Ethics & Social Responsibility
    • Academic Grades
      • Why are professors giving higher grades today than were given 5, 10, or 20 years ago?
      • Are students who are putting in less time and getting higher grades being well prepared for a career with high standards after graduation?
      • Is it ethical and socially responsible for professors to drop standards and for colleges to award higher grades today than they did 5, 10, or 20 years ago?
      • Should colleges take action to raise standards? If so, what should they do?
  • Exhibit 13 –6 ● Types, Frequency, and Methods of Control
  •  
  • Exhibit 13 –7 ● Steps in the Master Budgeting Process
  • Budgeting
    • Budget
      • A planned quantitative allocation of resources for specific activities.
    • Operating Budget
      • Revenue Budget
        • A forecast of total income for the year.
      • Expense Budget
        • A forecast of total operating spending for the year.
    • Capital Expenditures Budget
      • All planned expenditures for major asset investments.
  • Join the Discussion Ethics & Social Responsibility
    • Expenses
      • Is it ethical and socially responsible for PricewaterhouseCoopers to charge the full rate for travel expenses when it gets discounts?
      • If you worked for a company and knew it did this, would you say anything to anyone about it? If yes, to whom would you speak and what would you say?
  • Financial Statements
    • Income Statement
      • Presents revenues and expenses and the profit or loss for the stated period of time.
    • The Balance Sheet
      • Presents the assets and liabilities and owners’ equity for the stated period of time.
    • Cash Flow Statement
      • Presents the cash receipts and payments for the stated time period.
  • Exhibit 13 –8 ● IBM Financial Statements (in millions) Source : http://www.ibm.com, as of December, 2006.
  • Human Controls
    • Coaching
      • The process of giving motivational feedback to maintain and improve performance.
    • The Importance of Positive Feedback
      • Many managers spend more time giving negative criticism than praise.
      • Managers who only criticize employees tend to demotivate them.
    • Management by Walking Around (MBWA)
      • Listening rather than talking
      • Teaching rather than telling
      • Facilitating rather than ordering
  • Exhibit 13 –9 ● Coaching Model
  • Human Controls (cont’d)
    • Types of Problem Employees
      • Employees who do not have the ability to meet the job performance standards.
      • Employees who do not have the motivation to meet job performance standards.
      • Employees who intentionally violate standing plans .
      • Employees with problems .
    • Counseling
      • Dealing with problem employees by attempting to help solve the problem.
  • Exhibit 13 –10 ● Problem Employees The late employee The absent employee The dishonest employee The violent or destructive employee The alcoholic or drug user The nonconformist The employee with a family problem The insubordinate employee The employee who steals The sexual or racial harasser The safety violator The sick employee The employee who’s often socializing or doing personal work
  • Human Controls (cont’d)
    • Management Counseling
      • Giving employees feedback so they realize that a problem is affecting their job performance.
      • Referring employees with problems to the employee assistance program.
    • Employee Assistance Program (EAP)
      • A staff of people who help employees get professional assistance in solving their problems.
  • Disciplining
    • Discipline
      • Corrective action to get employees to meet standards and standing plans.
      • Objectives:
        • To change ineffective employee behavior.
        • To let employees know that action will be taken when standing plans or performance requirements are not met.
        • To maintain authority when challenged.
      • Progressive discipline steps
        • Oral warning, written warning, suspension, and dismissal
        • Documentation must be maintained.
  • Exhibit 13 – 11 ● Guidelines for Effective Discipline
    • Clearly communicate the standards and standing plans to all employees.
    • Be sure that the punishment fits the crime.
    • Follow the standing plans yourself.
    • Take consistent, impartial action when the rules are broken.
    • Discipline immediately, but stay calm and get all the necessary facts before you discipline.
    • Discipline in private.
    • Document discipline.
    • When the discipline is over, resume normal relations with the employee.
  •  
  • Join the Discussion Ethics & Social Responsibility
    • Disciplining Ethical Behavior
      • Have you ever been in or known of a situation in which people were rewarded for being unethical and disciplined for being ethical? If so, describe the situation.
      • Is it ethical and socially responsible for firms to establish controls that reward unethical behavior and discipline ethical behavior to make more money?
  • Exhibit 13 – 12 ● The Discipline Model
  • KEY TERMS
    • controlling
    • preliminary control
    • concurrent control
    • rework control
    • damage control
    • control systems process
    • standards
    • critical success factors
    • control frequency
    • management audit
    • budget
    • operating budgets
    • capital expenditures budget
    • financial statements
    • coaching
    • management by walking around (MBWA)
    • management counseling
    • employee assistance program (EAP)
    • discipline