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CONTROL TECHNIQUE AND PERFORMANCE


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TWO TECHNIQUES

Traditional techniquesModern techniques


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TRADITIONAL TECHNIQUES1. Personal observation2. Budgeting3. Break-even analysis4. Financial statement5. Statistical data & report6. Setting examples7. Written instructions


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PERSONAL OBSERVATIONThis is the most traditional method of control.It helps managers to collect first hand information.

It also creates a psychological pressure on theemployees to perform well as they are aware that theyare being observed personally on their job.How ever it is very time consuming , & not suitable for

all kinds of jobs.


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BUDGETING Meaning- A budget is a statement which reflects futureincomes ,expenditures &profits of the firm.Benefit of budgeting-

1. Standards ofperformance

2. Planning3. Predicting the future4. Financial planning


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BREAK EVEN ANALYSISIt deals with the study of the relationship betweencosts, volume, & profit.It determines the probable profit and losses atdifferent levels of activity.The sales volume at which there is no profit, no loss isknown as breakeven point.It can be calculated as ,


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FINANCIAL STATEMENTFinancial statements shows financial position ofa firm over a period of time, generally one year.These are prepared along with last yearstatements, so that firm can compare its presentperformance with last years performance &improve its future performance.

It offers information on ,1. Liquidity2. Financial strength3. profitability


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STATISTICAL DATA & REPORTStatistical analysis in the form ofaverages,percentages,ratios,..etc.

Data can be used for diagrammatic representationslike histograms, pie chart, bar graphs..etc.

A Report is a statement that represents data in theform of information for carrying out the controllingfunction.


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SETTING EXAMPLESIt is old saying that example is better than precepts

Some managers follow this and put good examples ofperformance before subordinates and expect the samefrom them.Behaviour and actions of subordinates can be

controlled through exemplary behaviour of themanager.


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WRITTEN INSTRUCTIONS

These instructions are issued time to time to theorganization members.These provide latest information and instructions inthe light of changing rules and conditions.

These are supplementary control technique.


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MODERN TECHNIQUES

1. Return on investment.2. Management audit.3. Management information system (MIS).4. PERT/CPM.


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RETURN ON INVESTMENTInvestment consists of fixed asset

and working capital used in business.Profit on the investment is a reward for risk taking.If the ROI is high then the financial performance of abusiness is good and vice-versa.

It also shows the areas where corrective actions areneeded.


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MANAGEMENT AUDITManagement Audit is an evaluation of the

management as a whole. It critically examines thefull management process.It finds out the efficiency of the management.Management auditing is conducted by a team of

experts.The data is analyzed and conclusions are drawn aboutmanagerial performance and efficiency.


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MANAGEMENT INFORMATION

SYSTEMIn order to control the organisation properly themanagement needs accurate information.

Information is collected continuously to identifyproblems and find out solutions.They need information about the internal working ofthe organisation and also about the external

environment.MIS collects data, processes it and provides it to themanagers.


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PERT/CPMProgramme Evaluation and Review Technique ( PERT )and Critical Path Method ( CPM ) techniques weredeveloped in USA in the late 50's. Any programme consists of various activities and sub-activities.Importance is given to identifying the critical activities.by controlling the time of the critical activities, the total

time and cost of the job are minimized.


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THANKS

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