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Chapter 13 - Control Systems: Financial and Human

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
      • 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