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International University of Erbil
College of Business and Management
Department of General Management
Controlling
CHAPTER 3
DR. NAWAR AL-SAADI
ERBIL
2017
Controlling as a Management
Function
 Controlling
 A process of monitoring performance
and taking action to ensure desired
results.
 It sees to it that the right things
happen, in the right ways, and at the
right time.
2
Controlling as a Management
Function
 Controlling
 Done well, it ensures that the overall directions
of individuals and groups are consistent with
short and long range plans.
 It helps ensure that objectives and
accomplishments are consistent with one
another throughout an organization.
 It helps maintain compliance with essential
organizational rules and policies.
3
Controlling as a Management
Function
 Cybernetic Control System
 One that is self-contained in its
performance monitoring and correction
capabilities. (thermostat)
 The control process practiced in
organizations is not cybernetic, but it
does follow similar principles.
4
The Control Process
 Establish objectives and standards.
 Measure actual performance.
 Compare results with objectives and
standards.
 Take necessary action.
5
Establish Objectives and
Standards
 The control process begins with
planning and the establishment
of performance objectives.
 Performance objectives are
defined and the standards for
measuring them are set.
6
Establish Objectives and
Standards
 There are two types of standards:
 Output Standards - measures performance
results in terms of quantity, quality, cost, or time.
 Input Standards - measures work efforts that go
into a performance task.
7
Measuring Actual
Performance
 Measurements must be accurate enough
to spot deviations or variances between
what really occurs and what is most
desired.
 Without measurement, effective control is
not possible.
8
Comparing Results with Objectives
and Standards
 The comparison of actual performance
with desired performance establishes the
need for action.
 Ways of making such comparisons include:
 Historical / Relative / Engineering
 Benchmarking
9
Taking Corrective Action
 Taking any action necessary to correct or
improve things.
 Management-by-Exception focuses
managerial attention on substantial
differences between actual and desired
performance.
10
Taking Corrective Action
 Management-by Exception can save the
managers time, energy, and other resources,
and concentrates efforts on areas showing the
greatest need.
 There are two types of exceptions:
Problems - below standard
Opportunities - above standard
11
Effective Controls
The Best Controls in Organizations are:
 Strategic and results oriented
 Understandable
 Encourage self-control
 Timely and exception oriented
 Positive in nature
 Fair and objective
 Flexible
12
Types of Control
Preliminary
Sometimes called the feed forward controls,
they are accomplished before a work activity
begins.
They make sure that proper directions are set and
that the right resources are available to
accomplish them.
13
Types of Control
Concurrent
Focus on what happens during
the work process. Sometimes
called steering controls, they
monitor ongoing operations and
activities to make sure that things
are being done correctly.
14
Types of Control
Postaction
Sometimes called feedback controls, they
take place after an action is completed.
They focus on end results, as opposed to
inputs and activities.
15
Types of Controls
Managers have two broad options
with respect to control.
 They can rely on people to exercise
self-control (internal) over their own
behavior.
 Alternatively, managers can take
direct action (external) to control the
behavior of others.
16
Types of Control
Internal Controls
Allows motivated individuals to exercise
self-control in fulfilling job expectations.
The potential for self-control is enhanced
when capable people have clear
performance objectives and proper
resource support.
17
Types of Control
 External Controls
It occurs through personal supervision and
the use of formal administrative systems.
 Performance appraisal systems, compensation
and benefit systems, employee discipline
systems, and management-by-objectives.
18
Organizational Control Systems
 Management Processes
 Strategy and objectives
 Policies and procedures
 Selection and training
 Performance appraisal
 Job design and work structures
 Performance modeling, norms, and
organization culture
19
Organizational Control Systems
 Compensation and Benefits
Attract talented people and retain
them.
Motivate people to exert maximum
effort in their work.
Recognize the value of their
performance contributions.
20
Organizational Control Systems
 Employee Discipline
 Discipline is defined as influencing behavior
through reprimand.
 Progressive Discipline ties reprimand to the
severity and frequency of the employee’s
infractions.
 Positive Discipline tries to involve people more
positively and directly in making decisions to
improve their behavior.
21
The “Hot Stove Rule”
 Immediate
 Focus on activity
not personality
 Consistent
 Informative
 Occur in a supportive
setting
 Support realistic rules
22
To be Effective Discipline Should be:
Organizational Control Systems
 Information and Financial
Activity-based costing - the true cost of
all products and services.
Economic value added - examine the
value added by all activities.
Understand the implication of key
financial measures of (ratios)
organizational performance
23
Operations Management and
Control
Purchasing
Economic Order Quantity
automatic reorder points
Just-In-Time Scheduling
24
Operations Management and
Control
 Project Management
Program Evaluation and Review Technique
(PERT) - Identifies and controls the many
separate events in complex projects.
 Statistical Quality Control
Based on the establishment of upper and
lower control limits, that can be graphically
and statistically monitored to ensure that
products meet standards.
25
THE END
26

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Controlling in Management

  • 1. International University of Erbil College of Business and Management Department of General Management Controlling CHAPTER 3 DR. NAWAR AL-SAADI ERBIL 2017
  • 2. Controlling as a Management Function  Controlling  A process of monitoring performance and taking action to ensure desired results.  It sees to it that the right things happen, in the right ways, and at the right time. 2
  • 3. Controlling as a Management Function  Controlling  Done well, it ensures that the overall directions of individuals and groups are consistent with short and long range plans.  It helps ensure that objectives and accomplishments are consistent with one another throughout an organization.  It helps maintain compliance with essential organizational rules and policies. 3
  • 4. Controlling as a Management Function  Cybernetic Control System  One that is self-contained in its performance monitoring and correction capabilities. (thermostat)  The control process practiced in organizations is not cybernetic, but it does follow similar principles. 4
  • 5. The Control Process  Establish objectives and standards.  Measure actual performance.  Compare results with objectives and standards.  Take necessary action. 5
  • 6. Establish Objectives and Standards  The control process begins with planning and the establishment of performance objectives.  Performance objectives are defined and the standards for measuring them are set. 6
  • 7. Establish Objectives and Standards  There are two types of standards:  Output Standards - measures performance results in terms of quantity, quality, cost, or time.  Input Standards - measures work efforts that go into a performance task. 7
  • 8. Measuring Actual Performance  Measurements must be accurate enough to spot deviations or variances between what really occurs and what is most desired.  Without measurement, effective control is not possible. 8
  • 9. Comparing Results with Objectives and Standards  The comparison of actual performance with desired performance establishes the need for action.  Ways of making such comparisons include:  Historical / Relative / Engineering  Benchmarking 9
  • 10. Taking Corrective Action  Taking any action necessary to correct or improve things.  Management-by-Exception focuses managerial attention on substantial differences between actual and desired performance. 10
  • 11. Taking Corrective Action  Management-by Exception can save the managers time, energy, and other resources, and concentrates efforts on areas showing the greatest need.  There are two types of exceptions: Problems - below standard Opportunities - above standard 11
  • 12. Effective Controls The Best Controls in Organizations are:  Strategic and results oriented  Understandable  Encourage self-control  Timely and exception oriented  Positive in nature  Fair and objective  Flexible 12
  • 13. Types of Control Preliminary Sometimes called the feed forward controls, they are accomplished before a work activity begins. They make sure that proper directions are set and that the right resources are available to accomplish them. 13
  • 14. Types of Control Concurrent Focus on what happens during the work process. Sometimes called steering controls, they monitor ongoing operations and activities to make sure that things are being done correctly. 14
  • 15. Types of Control Postaction Sometimes called feedback controls, they take place after an action is completed. They focus on end results, as opposed to inputs and activities. 15
  • 16. Types of Controls Managers have two broad options with respect to control.  They can rely on people to exercise self-control (internal) over their own behavior.  Alternatively, managers can take direct action (external) to control the behavior of others. 16
  • 17. Types of Control Internal Controls Allows motivated individuals to exercise self-control in fulfilling job expectations. The potential for self-control is enhanced when capable people have clear performance objectives and proper resource support. 17
  • 18. Types of Control  External Controls It occurs through personal supervision and the use of formal administrative systems.  Performance appraisal systems, compensation and benefit systems, employee discipline systems, and management-by-objectives. 18
  • 19. Organizational Control Systems  Management Processes  Strategy and objectives  Policies and procedures  Selection and training  Performance appraisal  Job design and work structures  Performance modeling, norms, and organization culture 19
  • 20. Organizational Control Systems  Compensation and Benefits Attract talented people and retain them. Motivate people to exert maximum effort in their work. Recognize the value of their performance contributions. 20
  • 21. Organizational Control Systems  Employee Discipline  Discipline is defined as influencing behavior through reprimand.  Progressive Discipline ties reprimand to the severity and frequency of the employee’s infractions.  Positive Discipline tries to involve people more positively and directly in making decisions to improve their behavior. 21
  • 22. The “Hot Stove Rule”  Immediate  Focus on activity not personality  Consistent  Informative  Occur in a supportive setting  Support realistic rules 22 To be Effective Discipline Should be:
  • 23. Organizational Control Systems  Information and Financial Activity-based costing - the true cost of all products and services. Economic value added - examine the value added by all activities. Understand the implication of key financial measures of (ratios) organizational performance 23
  • 24. Operations Management and Control Purchasing Economic Order Quantity automatic reorder points Just-In-Time Scheduling 24
  • 25. Operations Management and Control  Project Management Program Evaluation and Review Technique (PERT) - Identifies and controls the many separate events in complex projects.  Statistical Quality Control Based on the establishment of upper and lower control limits, that can be graphically and statistically monitored to ensure that products meet standards. 25