Monitoring and Controlling

 What do we learn?

a.     What is the nature and importance of control?

Ø  Controlling: the process of monitoring, comparing, and correcting work performance.

Ø  Why controlling is important?

·         Planning: controls let managers know whether their goals and plans are on target and what future actions to take. (Planning can be done)

·         Empowering employees: control systems provide managers with information and feedback on employee performance. (Employees motivated through effective leadership)

·         Protecting the workplace: controls enhance physical security and help minimize workplace disruptions. (An organizational structure created to facilitate efficient achievement of goals)

b.    Steps in the control process.

Ø  Control process: a three-step process of measuring actual performance, comparing actual performance against a standard, and taking managerial action to correct deviations or inadequate standards.

Ø  The steps:

1.      Measuring actual performance:

·          How We Measure ?

o   personal observations, statistical reports, oral reports, and written reports.

·         What We Measure?

o    critical to the control process than how it’s measured.

2.      Comparing actual performance against the standard:

·         Determining the degree of variation between actual performance and the standard.

·         Range of variation: the acceptable parameters of variance between actual performance and the standard.

3.      Taking managerial action:

·         Immediate corrective action: corrective action that corrects problems at once in order to get performance back on track.

·         Basic corrective action: corrective action that looks at how and why performance deviated before correcting the source of deviation.

·         Revise the Standard: if performance consistently exceeds the goal, then a manager should look at whether the goal is too easy and needs to be raised.

·         Managers must be cautious about revising a standard downward.

4.      Managerial decision in controlling:

c.      How organizational and employee performance are measured.

Ø  What is organizational performance?

·         Performance:  the end result of an activity.

·         Organizational performance: the accumulated results of all the organization’s work activities.

Ø  Measures of organizational performance:

·         3 measures:

o   Productivity: the amount of goods or services produced divided by the inputs needed to generate that output.

o   Organizational effectiveness:  a measure of how appropriate organizational goals are and how well those goals are being met.

o   Industry and company ranking.

Ø  Controlling for employee performance:

·         Disciplinary actions:

o   actions taken by a manager to enforce the organization’s work standards and regulations.

o   Delivering Effective Performance Feedback – managers need to provide their employees with feedback so that the employees know where they stand in terms of their work.

d.    Tools used to measure organizational performance.

Ø  Feed forward control:  control that takes place before a work activity is done.

Ø  Concurrent control:  control that takes place while a work activity is in progress.

Ø  Management by walking around:  a term used to describe when a manager is out in the work area interacting directly with employees.

Ø  Feedback control:  control that takes place after a work activity is done.

Ø  financial controls:

·         Ratio analysis:

o   Liquidity

o   Leverage

o   Activity

o   Profitability

·         Budget Analysis:

o   Quantitative standards

o   Deviations

Ø  Information controls:

·         Managing information system (MIS): a system used to provide management with needed information on a regular basis.

·         Data:  an unorganized collection of raw, unanalyzed facts (e.g., an unsorted list of customer names).

·         Information: data that has been analyzed and organized such that it has value and relevance to managers.

Ø  The balanced score card:

·         Balanced score card: a performance measurement tool that examines more than just the financial perspective.

·         Measures a company’s performance in four areas:

o   Financial

o   Customer

o   Internal processes

o   People/innovation/growth assets

Ø  Benchmarking of best practices:

·         Benchmarking: the search for the best practices among competitors or non-competitors that lead to their superior performance.

·         Benchmark: the standard of excellence to measure and compare against.

e.      Contemporary issues in control.

Ø  Workplace concerns:

·         Employee theft: any unauthorized taking of company property by employees for their personal use.

Ø  Adjusting controls for cross-cultural differences and global turmoil.

Ø  Workplace violence.

Ø  Controlling customer interactions:

·         Service profit chain: the service sequence from employees to customers to profit.

Ø  Corporate governance: the system used to govern a corporate so that the interests of corporate owners are protected.