principles of management the system and process of controlling gtu mba

7/31/2019 Principles Of Management The System and Process of Controlling GTU MBA

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The System and Process ofControlling


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What is Controlling?Controlling is the measurement and

correction of performance in order to makesure that enterprise objectives and theplans devised to attain them are being

accomplished.Planning and controlling are closely related.


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The Basic Control Process

The basic control process involves three steps:

1. Establishing standards: Since plans vary in detail& complexity, and since managers cannot usuallywatch everything, special standards areestablished

2. Measuring performance against these standards:Ideally the measurement of performance shouldbe done on a forward looking basis.


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The Basic Control Process3. Correcting variations from standards and plans:

Managers may correct deviations by

- redrawing their plans or modifying their goals

- through reassignment of duties or clarification

of duties

- by additional staffing, by better selection andtraining of subordinates

- by ultimate re-staffing measure firing

- by fuller explanation of the job or more effectiveleadership techniques


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Critical Point Control

Standards are yardsticks against which actual orexpected performance is measured.

A manager must choose points for special

attention and then watch them to be sure that thewhole operation is proceeding as planned.

The points selected for control should be critical, inthe sense either of being limiting factors in theoperation or being better indicators than other

factors of whether plans are working or not.Principle of Critical Point Control: Effective control

requires attention to those factors critical toevaluating performance against plans.


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Critical Point ControlQuestions for selecting Critical Points of ControlWhat will best reflect the goals of my

department?

What will best show me when these goals are

not being met?What will best measure critical deviation?

What will tell me who is responsible for anyfailure?

What standards will cost the least?

For what standards is information economicallyavailable?


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Types of Critical PointStandards

1. Physical standards

2. Cost standards

3. Capital standards

4. Revenue standards5. Program standards

6. Intangible standards

7. Goals as standards

8. Strategic plans as control points for strategiccontrol.


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What is Benchmarking?Benchmarking is an approach for setting goals

and productivity measures based on best-industry practices.

Three types of benchmarking:

Strategic Benchmarking: Compares variousstrategies and identifies the key strategicelements of success.Operational Benchmarking: Compares relative

costs or possibilities for productdifferentiation.Management Benchmarking: Focuses on

support function such as market planning and

information systems, logistics, humanresource management and so on.


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Control as a FeedbackSystem

Management control is usually perceived as afeedback system similar to that which operates inthe common household thermostat.

When the house temperature falls below thepreset level, an electric message is sent to theheating system, which is then activated. When thetemperature rises and reaches the set level,

another message shuts off the heater.Another example is the mid-term results of the

students


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Feedback Loop of ManagementControl


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Real Time Information andControlReal time information is information about

what is happening while it is happening.

For e.g. airlines have obtained informationabout seat availability

Supermarkets and departmental stores haveelectronic cash registers in operation


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Real Time Information andControl

Real-time information is useful in collecting the datathat measures performance. It may also be possible inmany cases to compare these data with standards andeven to identify deviations.

However it may take considerable time to discoverwhat is causing the deviation, i.e. analysis of causes ofdeviations and developing a program of correctiveaction.

E.g. Quality ControlThis does not mean that prompt measurement of

performance is unimportant.

The sooner the managers know that activities are not

proceeding in accordance wit the plans, the faster theycan take action to make corrections.


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Feedforward & ConcurrentControlManagers need for effective control, a

system that will tell them potential problems,giving them time to take corrective actionbefore those problems occur.

Feedforward Control: Prevents anticipatedproblems since it takes place before theactual performance.

Concurrent Control: Takes place while an

activity is in progress. The best form ofConcurrent control is MBWA.


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Feedforward versus FeedbackSystems

Simple feedback systems measure the outputsof a system and take corrective actions toobtain the desired results.

For most management problems, because of

the time lags in the correction process, this isnot good enough.

Feedforward systems monitor inputs into aprocess to ascertain whether the inputs are as

planned; if they are not, the inputs, or perhapsthe process, are changed in order to obtain thedesired results.

Also, even with a feedforward system, a

manager would still want to measure the finaloutput.


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Requirements for FeedforwardControl

1. Make a thorough and careful analysis of theplanning and control system, and identify themore important input variables.

2. Develop a model of the system.3. Keep the model up to date, reviewing itregularly to see whether the input variablesidentified and their interrelationships continueto represent realities.

4. Collect data on input variables regularly,and put them into the system.

5. Regularly assess the variations of actualinput data from planned for inputs, andevaluate the impact on the expected end result.

6. Take action.


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Control of OverallPerformance

Many overall controls in business arefinancial.

Financial Controls like any other control ,

have to be tailored to the specific needs ofthe enterprise or the position.

The profit and loss statement shows allrevenues and expenses for a given time, so itis a true summary of the results of businessoperations.

Return-on-investment control: It measuresboth the absolute and the relative success ofa company or a company unit.


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Bureaucratic and ClanControl

Bureaucratic control is characterized by the wideuse of rules, regulations, policies, procedures, andformal authority. This type of control requires clear

job descriptions, budgets, and often standardizedtasks.

Clan control is based on norms, shared values,expected behavior, and organizational culture.

Clan control can be illustrated by the use of teamsand by organizations operating in a very dynamicenvironment that requires quick adaptation tochanges.


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Requirements for EffectiveControls

Tailoring controls to plans and positionsTailoring controls to individual managersDesigning controls to point out exceptions at critical

pointsSeeking objectivity of controls

Ensuring flexibility of controls

Fitting the control system to the organization culture

Achieving economy of controls

Establishing controls that lead to corrective action


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Resistance to Control

Over-control: Try to control too many things concerningemployee behaviour i.e. When to report, when to havemorning coffee, etc.

Inappropriate controls: Often, controls are not related tothe objectives of the organization.

Unachievable standards: Unattainable standards oftenproduce negative reactions from employees.

Unpredictable standards: When the control system is

unpredictable and constantly changed, frustration andresentment of the control process can result.

Rewards for inefficiency: Most public sector units inIndia commonly hasten to deplete their budgets as theend of the year approaches


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Overcoming Resistance toControlEmployee participationJustifiable controls: A control system will have

greater acceptability if the reason for the controlappears justifiable

Precise and understandable standards: Vaguestandards and unclear specifications put employeesunder a lot of strain

Realistic standards

Timely communication of findings: Information aboutdeviations should be communicated to employees asquickly as possible.

Accurate findings: Must provide accurate informationabout where things have gone wrong

Positive reinforcement: Employees who comply with

principles of management the system and process of controlling gtu mba

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