Orgnaization and controlling

1. Organization and Controlling

2. Planning
How do managers plan?
What types of plans do managers use?
What are the useful planning tools and
techniques?
What is the control process?
What are the common organizational
controls?

3. How do managers plan?
 Planning
– The process of setting objectives and determining how
to best accomplish them.
 Objectives
– Identify the specific results or desired outcomes that
one intends to achieve.
 Plan
– A statement of action steps to be taken in order to
accomplish the objectives.

4.  Steps in the planning process:
– Define your objectives.
– Determine where you stand vis-à-vis objectives.
– Develop premises regarding future conditions.
– Analyze and choose among action alternatives.
– Implement the plan and evaluate results.

5. The roles of planning and controlling in the
management process.

6. Benefits of planning:
– Improves focus and flexibility.
– Improves action orientation.
– Improves coordination.
– Improves time management.
– Improves control.

7. A sample means-ends chain for total quality
management.

8. What types of plans do managers use?
Short-range and long-range plans
– Short-range plans = 1 year or less
– Intermediate-range plans = 1 to 2 years
– Long-range plans = 3 or more years
 People vary in their capability to deal
effectively with different time horizons.
 Higher management levels focus on longer
time horizons.

9. What types of plans do managers use?
 Strategic and operational plans
– Strategic plans — set broad, comprehensive, and
longer-term action directions for the entire
organization.
– Operational plans — define what needs to be done in
specific areas to implement strategic plans.
• Production plans
• Financial plans
• Facilities plans
• Marketing plans
• Human resource plans

10. Policies and procedures
– Standing plans
• Policies and procedures that are designed for
repeated use.
– Policy
• Broad guidelines for making decisions and taking
action in specific circumstances.
– Rules or procedures
• Plans that describe exactly what actions are to be
taken in specific situations.

11. Budgets and project schedules
– Single-use plans
• Only used once to meet the needs and objectives of a well-
defined situation in a timely manner.
– Budgets
• Single-use plans that commit resources to activities, projects,
or programs.
• Fixed, flexible, and zero-based budgets.
– Projects
• One-time activities that have clear beginning and end points.
• Project management and project schedules.

12. What are the useful planning tools and
techniques?
 Forecasting
– Making assumptions about what will happen in the
future.
– Qualitative forecasting uses expert opinions.
– Quantitative forecasting uses mathematical and
statistical analysis.
– All forecasts rely on human judgment.
– Planning involves deciding on how to deal with the
implications of a forecast.

13.  Contingency planning
– Identifying alternative courses of action that
can be implemented to meet the needs of
changing circumstances.
– Contingency plans anticipate changing
conditions.
– Contingency plans contain trigger points.

14. Scenario planning
– A long-term version of contingency planning.
– Identifying alternative future scenarios.
– Plans made for each future scenario.
– Increases organization’s flexibility and
preparation for future shocks.

15. Benchmarking
– Use of external comparisons to better evaluate
current performance and identify possible
actions for the future.
– Adopting best practices of other organizations
that achieve superior performance.

16. Use of staff planners
– Coordinating the planning function for the total
organization or one of its major components.
– Possible communication gaps between staff
planners and line management.

17.  Participation and involvement
– Participatory planning requires that the planning
process include people who will be affected by the
plans and/or will help implement them.
– Benefits of participation and involvement:
• Promotes creativity in planning.
• Increases available information.
• Fosters understanding, acceptance, and commitment to the
final plan.

18. How participation and involvement help build
commitments to plans.

19. What is the control process?
 Controlling
– The process of measuring performance and taking
action to ensure desired results.
– Has a positive and necessary role in the management
process.
– Ensures that the right things happen, in the right way, at
the right time.
– Organizational learning and after-action review.

20. Steps in the control process:
– Step 1 — establish objectives and standards.
– Step 2 — measure actual performance.
– Step 3 — compare results with objectives and
standards.
– Step 4 — take corrective action as needed.

21. Four steps in the control process.

22. Step 1 — establishing objectives and
standards
– Output standards
• Measure performance results in terms of quantity,
quality, cost, or time.
– Input standards
• Measure effort in terms of amount of work
expended in task performance.

23. Step 2 — measuring actual performance
– Goal is accurate measurement of actual
performance results and/or performance efforts.
– Must identify significant differences between
actual results and original plan.
– Effective control requires measurement.

24. Step 3 — comparing results with objectives
and standards
– Need for action reflects the difference between
desired performance and actual performance
– Comparison methods:
• Historical comparison
• Relative comparison
• Engineering comparison

25. Step 4 — taking corrective action
– Taking action when a discrepancy exists
between desired and actual performance.
– Management by exception
• Giving attention to situations showing the greatest
need for action.
• Types of exceptions
– Problem situation
– Opportunity situation

26. Feedforward controls …
– Employed before a work activity begins.
– Ensures that:
• Objectives are clear.
• Proper directions are established.
• Right resources are available.
– Focuses on quality of resources.

27. Concurrent controls …
– Focus on what happens during work process.
– Monitor ongoing operations to make sure they
are being done according to plan.
– Can reduce waste in unacceptable finished
products or services.

28. Feedback controls …
– Take place after work is completed.
– Focus on quality of end results.
– Provide useful information for improving future
operations.

29. The role of feed forward, concurrent, and
feedback controls in organizations.

30. What are the common organizational
controls?
Management by Objectives (MBO)
– A structured process of regular communication.
– Supervisor/team leader and workers jointly set
performance objectives.
– Supervisor/team leader and workers jointly
review results.

31. Management by objectives as an integrated
planning and control framework.

32. What are the common organizational
controls?
 MBO involves a formal agreement specifying …
– Workers’ performance objectives for a specific time
period.
– Plans through which performance objectives will be
accomplished.
– Standards for measuring accomplishment of
performance objectives .
– Procedures for reviewing performance results.

33. The MBO process:
– Supervisor and workers jointly set objectives,
establish standards, and choose actions.
– Workers act individually to perform tasks;
supervisors act individually to provide
necessary support.
– Supervisor and workers jointly review results,
discuss implications, and renew the MBO
cycle.

34.  Types of MBO performance objectives
– Improvement
– Personal development
– Maintenance
 Criteria for effective performance objectives
– Specific
– Time defined
– Challenging
– Measurable

35. Pitfalls to avoid in using MBO
– Tying MBO to pay.
– Focusing too much attention on easily
quantifiable objectives.
– Requiring excessive paperwork.
– Having managers tell workers their objectives.

36. Advantages of MBO
– Focuses workers on most important tasks and
objectives.
– Focuses supervisor’s efforts on important areas
of support.
– Contributes to relationship building.
– Gives workers a structured opportunity to
participate in decision making.

37. Employee discipline systems
– Discipline is the act of influencing behavior
through reprimand.
– Discipline that is applied fairly, consistently,
and systematically provides useful control.

38.  To be effective, reprimands should …
– Be immediate.
– Be directed toward actions, not personality.
– Be consistently applied.
– Be informative.
– Occur in a supportive setting.
– Support realistic rules.

39. Employee discipline systems
– Progressive discipline ties reprimands to the
severity and frequency of the employee’s
infractions.
– Progressive discipline seeks to achieve
compliance with the least extreme reprimand
possible.

40.  Important financial aspects of organizational
performance …
– Liquidity
• The ability to generate cash to pay bills.
– Leverage
• The ability to earn more in returns than the cost of debt.
– Asset management
• The ability to use resources efficiently and operate at minimum
cost.
– Profitability
• The ability to earn revenues greater than costs.

41.  Break-even analysis …
– Determination of the point at which sales
revenues are sufficient to cover costs.
– Break-Even Point = Fixed Costs / (Price –
Variable Costs)
– Used in evaluating:
• New products
• New program initiatives

42. Graphical approach to break-even analysis.

43.  Purchasing control …
– A productivity tool
– Trends in purchasing control:
• Leveraging buying power
• Committing to a small number of suppliers
• Working together in supplier-purchaser partnerships

44.  Inventory control
– Goal is to ensure that inventory is just the right
size to meet performance needs, thus
minimizing the cost.
– Methods of inventory control:
• Economic order quantity
• Just-in-time scheduling

45.  Statistical quality control
– Quality control involves checking processes,
materials, products, and services to ensure that
they meet high standards.
– Statistical quality control involves:
• Taking samples of work.
• Measuring quality in the samples.
• Determining the acceptability of results.