new controling process
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The Controlling Process
Ms. R. Senathiraja, Senior Lecturer, Department of Management and Organization
Studies, Faculty of Management and Finance,
University of Colombo
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Management in Organization
Input from theEnvironment
Human ResourcesFinancial resourcesPhysical Resources
Information Resources
Planning and DecisionMaking
LeadingControlling
Organizing
Goals AttainedEfficientlyEffectively
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What is control?
• The regulation of organizational activities in such a way to facilitate goal attainment.
• Monitoring organizational progress towards goal attainment
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Purpose of control
Adapting to environmental change
Control help the organization
Cope with organizational complexity Minimize costs
Limit the accumulation of error
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Steps in control process
EstablishStandards
Measure Performance
Compare performance
Against standards
Determine need For corrective
action
MaintainThe status quo
Correct the deviation
Change standards
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In your work , determine which areas and levels of control exists for you on your job?
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Types of control
Based on Areas
Control of physical resourcesControl of human resourcesControl of InformationControl of financial Resources
Based on the organizational Levels
Operational ControlFinancial controlStructural controlStrategic control
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Control of physical resources
• Inventory Management
• Quality Control
• Equipment Control
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Inventory Management
• Managing the organization’s raw materials, work-in-process, finished goods and products in transit.
• JIT-Just In Time
It is an inventory system that has necessary materials arriving as soon as they are needed so that production process is not interrupted
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Quality ControlFeatures and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
Dimensions of Quality• Performance: A product primary operating characteristics.• Features: Supplements to a product’s basic functioning
characteristics.• Reliability : A Probability of not malfunctioning during a specific
period• Conformance: The degree to which a product design and
operating characteristics meet established standards. • Durability: A measure of product life• Serviceability: The speed and easy of repair• Aesthetics: How a product look, feels, tastes, and smells• Perceived quality: As seen by a customer
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Total Quality Management (TQM)
• A strategic commitment by top management to change its whole approach to business in order to make quality a guiding factor in everything it does.
• Dimensions of TQM Strategic commitment Employee involvement Technology Materials Methods
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Control of human resources
• Selection and placement• Training and development• Performance appraisal• Compensation
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Control of Information
• Sales and marketing forecasting
• Environmental analysis
• Public relations
• Production scheduling and economic forecasting
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Types of Control -based on Levels-
• Operational Control
• Financial control
• Structural control
• Strategic control
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Operations controlFocuses on the processes the organization uses to transform resources into products or services
Preliminary controlFocus is on inputs
to the organizational system
Screening ControlFocus is on
how inputs are being transformed into outputs
Post action ControlFocus is on outputs
from the organizationalsystem
Inputs Transformation Outputs
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Financial control
• It is the control of finance as they flow into the organization, are held by the organization, and flow out of the organization.
• Financial control tools -Budgetary control (A plan expressed in
numerical terms)There are three types of budgets-A financial budget-Operating budget-Non-monetary budget
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Financial Budget
• It indicates where the organization expects to get its cash for the coming period and how it plan to use it.
• Sources and uses of cash
Cash budget: All sources of cash income and cash expenditures in monthly, weekly, or daily
Capital expenditure budget: Cost of major assets such as new plant, machinery or land
Balanced sheet Budget: Forecast of the organization's assets and liabilities
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Operating Budget• It indicates what quantities of products or
services the organization expects to produce and what resources will be used to create them.
• Planned operation in financial terms
Sales or revenue budget: Income the organization expect to receive from normal operation
Expense budget: Anticipated expenses for the organization duringThe coming period
Profit Budget: Anticipated differences between sales or revenue and expenses
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Non Monetary Budget• Planed operation in non financial terms
such as units of output, hours of direct labour, machine hours .
Labour budget: Hours of direct labour available for use Space budget: Square feet or meters of space available for various functions
Production budget: Number of units to be produced during the coming time period.
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Other tools of financial controlFinancial Statement: A profile of some aspects of an
organization’s financial circumstances.Balance sheet: List of assets and liabilities of an
organization at a specific point of time. Income statement: A summary of financial
performance over a period of time.Ratio analysis: The calculation of one or more
financial ratios to assess some aspects of the organization financial health.
Financial Audit: An independent appraisal of an organization’s accounting, financial, and operating systems. External audit conducted by external accountants, an internal audit conducted by employees of the organization.
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-Structural Control-It addresses how well an organization’s structural
elements serve their intended purpose.Bureaucratic Control Dimensions Decentralized Control
Employee compliance Goal of control approach Employee commitment
Strict rules, formal controls, rigid hierarchy
Group norms, culture self control
Directed towards minimum levels of acceptable performance
Directed toward enhanced performance above and beyond the minimum
Tall structure, Top-down influence
Flat structure, shared influence
Directed at individual performance
Directed at group performance
Limited and formal Extended and informal
Degree of formality
Organization Design
Reward system
Participation
Performance Expectations
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Strategic Control• It aimed at ensuring that the organization is
maintaining an effective alignment with its environment and moving toward achieving its strategic goals.
• It focuses on the extent to which implemented strategy achieve the organization’s strategic goal
Alter
organizational structureLeadershipAdopt new TechnologyModify human resourcesChange its information And operational control system
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How does manager determine whether his or her firm needs improvement in control?
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How to increase the effective control system
1) Integration with planning
2) Flexibility
3) Accuracy
4) Timeliness
5) Objectivity
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Why do employee resist organizational control?
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• Over control: try to control too many things
• Inappropriate focus: Focus too much on quantifiable variables.
• Rewards for inefficiency
• Too much accountability