Systematic Approach and Process of Controlling in an Organization

1. The System and Process
of Controlling

2. Presentation participants
• Sanjid Mahmud
• Adil Rayhan
• Md. Samiul Islam
• Nasim Al Goni
• Mahamid Rahaman
• Riasat Rahman

3. Sanjid Mahmud

4. What is Controlling?
Controlling is the process of monitoring, comparing, and correcting
work performance
• Monitoring
• Comparing
• Correcting

5. Why controlling is Important??
• Controlling is the only way that managers know whether
organizational goals are being met and if not, the reasons why

6. Process of Control
• Setting Standards for Performance
• The standards should be set in a manner that allows
them to be compared with actual performance.
• Measuring Actual Performance
• An organization must decide:
• What to measure.
• When to measure.
• How frequently to measure.

7. Process of Control
• Comparing Actual Performance With Standards
• This step involves determining if actual performance
compared to standards falls within acceptable limits
• Responding to Deviations
• If the deviation from performance is unacceptable,
then corrective action is warranted. If the deviation
is acceptable, no correction action is necessary

8. Managerial Decisions in the Control Process

9. Adil Rayhan

10. Critical Control Points, Standards
& Benchmarking
• Simple Operation – simple control through observation
• Large scale operations – Complex to observe and control
• Careful selection of critical points for measurement
• Principle of Critical Point Control:
– Effective Control requires attention to factors
critical to evaluating performance against Plans

11. Types of Critical Control Point Standards
• Physical Standard
– Non-monetary measurements (common at operating level)
– Reflection of quantities: labor-hours, per unit of output, Lit
of fuel/ hour, length of wire/ ton of copper
– Reflection of quality: hardness, durability, fastness of color,
allowance of tolerance

12. Types of Critical Control Point Standards
• Cost standards:
–Monetary measurements (common at operating level)
– Cost/ unit produced, labor cost/ hour, machine hour cost
• Capital Standards:
– Monetary measurements to physical items
– Related to Capital investment rather than Costs
– Balance sheet, Ratios current assets to liabilities, RoI etc.

13. Types of Critical Control Point Standards
• Revenue Standard
– Attaching monetary values to Sales (Avg Sales/ customer group)
• Program Standards:
– Program to improve QC, Program to develop new product, etc.
• Intangible Standard:
– Neither physical nor monetary; difficult to establish these standards
– Whether the Public Relations program is successful or not?
– Are Supervisor loyal to the Co.?

14. Types of Critical Control Point Standards
• Goals as Standards:
– In modern management, verifiable Goals can be used as
standards
– Both quantitative & qualitative goals (objectives) can be
measured
• Strategic Plan as Control (Strategic Control)
– Systematic monitoring of strategic control points
– Modifying strategies based on this evaluation

15. Benchmarking
An approach for setting goals and productivity measures based on
best industry practices.
• Widely accepted concept & technique
• Three types of Benchmarking:
– Strategic Benchmarking
– Operational Benchmarking
– Management Benchmarking

16. Md. Samiul Islam

17. Feedback and Feedforward Control System
Feedback Control
Feedback refers to the process of adjusting future actions on the
basis of information about the past performance. Many Systems
controls through information feedback, which shows deviations from
standards and initiates changes. The following chart, which depicts
the Feedback process involved in a management control, gives an
idea of the Feedback system.

18. Feedback Control

19. Real Time Information and Control
Real Time Information is what is happening while it is happening.
In todays world computers and from electronic gathering, transmission,
and storage of data is the development of systems of real-time
information.
And this has the following advantages:
• ability to make immediate production adjustments
• compare these data with standards and to identify deviations.
• allows faster decision making

20. Feedforward Control
The most desirable type of control is feedforward control which
prevents problems because it takes place before the actual activity.
The key to feedforward controls is taking managerial action before
a problem occurs. That way, problems can be prevented rather than
having to correct them after any damage (poor-quality products,
lost customers, lost revenue, etc.) has already been done.

21. Feedforward versus Feedback
Simple feedback systems measure output of a process and feed into
the system or the inputs of a system corrective actions to obtain
desire outputs.
For most management problems, due to the time lags, this process
becomes unfavorable. Feedforward system monitors inputs into a
process to ascertain whether they are as planned.

22. Feedforward versus Feedback
Inputs Process Outputs
Desired
value of
Outputs
(Standard)
Simple
Feedback
Feedforwar
d
Corrective Action
Information

23. Requirements for Feedforward Control
• make a thorough and careful analysis of the planning as well as
the control system and identify the more important input
variables by applying careful discrimination
• develop a model of the system
• keep the model up-to-date by reviewing it regularly to see
whether the identified input variables and their inter-
relationships still represent realities

24. Requirements for Feedforward Control
• collect regularly the data on input variables and assess it properly
before putting it into the system
• keep the feed forward system dynamic by regularly assessing the
variations of actual input data from the planned—for inputs and
evaluating their impact on expected end-results
• take prompt corrective action to solve the problems that are
detected by the Feed forward Control System

25. Nasim Al Goni

26. Control of Overall Performance
• Planning and Controlling are interrelated system
• Control helps to measure overall performance of the enterprise or
integrated division or project against total goal
• Overall performance is mainly measured against financial
documents i.e profit or loss statements and take necessary steps
accordingly

27. Reason of Controlling
Three reason
1. Like as overall planning, overall control is required to achieve
the over all goals set by the enterprise
2. Decentralization creates semi independent units. Overall control
removes the chaos of complete independence
3. Permits the measurement of Manager’s total effort rather part of
it

28. Profit and Loss Control
• Measure immediate revenue or cost factor which have accounted
for success or failure
• Income statement as the better controlling device here
• For startups, goals may be different than the big corporations
even it serves the same type of things

29. Purpose of Profit and Loss Control
• Survival of business depends on profits
• Profits are the definite standards against which success or failure
is measured
• Income statements gives the picture of revenue and expense at
the same time
• Individual division or department should contribute to achieve the
total goal of the company

30. Limitations of Profit and Loss control
1. Arise the cost accounting and paper transection due to
Intracompany transfer (though it is now reduced due to the use
of computers)
2. Duplication of accounting records
3. Time and effort required to calculate

31. Control through Return on Investment
• Commonly known as ROI
• Instead of calculating profit and loss of the company compared to
others, ROI gives the feedback of the overall performance of the
company

32. Management Audit and Accounting firms
• One of the significant role of the Audit firm is they can act as the
consultancy firm for Board Committee
• Company’s own Audit/Financial department can play this role
since they have easy access and monitoring the data but it arise
the question of power
• Weather an outsider or Company’s very own department, an audit
firm requires a great deal of trust

33. Mahamid Rahaman

34. Bureaucratic Control Systems: The Control
Cycle
A typical bureaucratic control system has four major
steps
• Setting performance standards
• Measuring performance
• Comparing performance against the standard and
determining deviations
• Taking corrective action

35. Bureaucratic Control (Advantages)
• Top-level managers in bureaucratic organizational structures
exercise a great deal of control
• Strategic decision-making time can be shorter as less individuals
are involved in the process
• Ensures that work is consistently completed efficiently and
effectively

36. Bureaucratic Control (Disadvantages)
• Bureaucratic structures can discourage creativity and innovation
throughout the organization
• Front-line employees may receive less satisfaction from their jobs
in a rigidly bureaucratic organization
• Employee turnover rates are high

37. Clan Control: The Role of Empowerment
and Culture
• Clan control involves creating relationships built on
mutual respect and encouraging each individual to
take responsibility for his or her actions
• Employees work within a guiding framework of
values, and they are expected to use good
judgment
• The emphasis in an empowered organization is on
satisfying customers, not on pleasing the boss
• Clan control takes a long time to develop and an
even longer time to change

38. Clan Control (Advantages)
• Employees with common beliefs, goals or even
demographic characteristics make united effort
easier
• Emphasizes on reaching common agreement on
important decisions
• Clan culture is open, friendly and arguably
more appreciative of its employees

39. Clan Control (Disadvantages)
• Lack of diversity
• Employees may be hesitant to voice dissenting
opinions or to fight for an unpopular idea
• Lack of a clearly-defined chain of command causes
problems in crucial situations

40. Riasat Rahman

41. Requirements for effective controls
• Tailoring controls to plans and positions
• Tailoring controls to individual managers
• Designing controls to point up exceptions at
critical points
• Seeking objectivity of controls
• Ensuring flexibility of controls
• Fitting the control system to the organization
culture

42. Requirements of Effective Controls
• Achieving economy of control
• Establishing controls that lead to corrective
action
• Strategic placement
• Information quality
• Quick action

43. Thank You