Tải bản đầy đủ

Management by hitt back porter CH16

Chapter 16
Control

PowerPoint slides by
R. Dennis Middlemist
Colorado State University


Learning Objectives
After studying this chapter, you should be
able to:




2

Discuss the effects of too much or too little
control in an organization.
Describe the four basic elements of the
control process and the issues involved in

each.

©2005


Learning Objectives
After studying this chapter, you should be
able to:




3

Differentiate between the different levels of
control and compare their implications for
managers.
Explain the concept of standards and why
they are so important in organizations.

©2005


Learning Objectives
After studying this chapter, you should be
able to:



4

Compare bureaucratic and clan controls.
Identify the important qualities required for
information to be useful in the control
process.

©2005


Control Function in


Management
 Control
 Regulation of activities and behaviors within
organizations
 Adjustment or conformity to specifications or
objectives
 Effective control depends heavily on other

functions that precede it and feeds back to them
 Planning
 Organizing
 Leading

5

©2005


Control Function in
Management
Ensures adjustment or
conformity to objectives

Control

Ensures adjustment or
conformity to specifications
Regulates activities
Regulates behavior

6

©2005

Adapted from Exhibit 16.1: The Control Function in Management


Control’s Feedback Loop
Planning

Control

Feedback

Changes
in

Organizing

7

©2005

Adapted from Exhibit 16.2: Control’s Feedback Loop


Establish standards

Basic Elements in
Control Process
Establish standards
• Specification starts at the top of the
organization and involves every
level of employee
• Standards are the targets of
performance
• Involving employees in setting
standards
• Commits the employees to
achieving the standards
• Results in more appropriate
standards

8

©2005

Adapted from Exhibit 16.3: The Basic Elements in the Control Process


Level of confusion in
performance measurement

Specificity of Standards and
Performance Measurement

9

High

Low

©2005

Concrete

Specificity of standards

Abstract

Adapted from Exhibit 16.4: The Effect of Specificity of Standards on Performance Measurement


ho
W

th e
yb
e?

Establishing Standards

sp
ec
if

em
?

Ho
w

t th
se
ld

ic

ou

sh
ou
ld

sh

Standards

How difficult should they be to reach?
10

©2005

Adapted from Exhibit 16.5: Issues in Establishing Standards


Establish standards

Measure performance

11

©2005

Basic Elements in
Control Process
Measure performance
• Obtain consensus about how to
assess performance
• If performance involves multiple
activities, measure must be
comprehensive
• Measurement is costly and hence
usefulness of the information must
justify the costs

Adapted from Exhibit 16.3: The Basic Elements in the Control Process


Measurement of
Performance

Is
t
tho here
pe se in con
s
me rform volv ens
as an ed us
a
ure ce
a
d? wil s to mon
l b ho g
e
w

tc
n
me
e
r
u
as
e
?
n m ified
a
C ant
qu

Performance
Measurement
of
s
t
c
pe
s
d?
a
e
r
ry g to asu
a
s
es butin me
c
ne ntri eing
l
l
b
co
ea
Ar ions ance
t
ac rform
pe
12

©2005

ria
e
t
ri

be

Ca
co n ex
ntr pe
ols ns
be ive,
eli bu
mi
t
na non
ted cri
t ic
?

a l,

Adapted from Exhibit 16.6: Issues in the Measurement of Performance


Establish standards

Measure performance

Compare performance
against standards

13

©2005

Basic Elements in
Control Process
Compare performance against
standards
• Comparisons are affected b the
kinds of measurements available
• Managers must interpret the
patterns of comparisons (some
negative/some positive)
• Comparisons often involve
subjective and objective measures

Adapted from Exhibit 16.3: The Basic Elements in the Control Process


Basic Elements in
Control Process

Establish standards

Measure performance

Compare performance
against standards
Evaluate results and
take any necessary
corrective action

14

©2005

Evaluate results/take necessary
corrective action
• Not all results require action
• Evaluate importance and magnitude of
the deviation

• Determine what action to take if
necessary





Diagnosis skills of managers
Level of expertise
Evaluate the standards and the measures
Employees performing better than
“standard” should be recognized and
rewarded
Adapted from Exhibit 16.3: The Basic Elements in the Control Process


Outcomes of Performance
Measurement
Actual performance
better than expected
performance
+
Actual performance
measured against
standard for performance

Gap
Detected

Actual performance
worse than expected
performance
15

©2005

Reinforcing Action Taken
(e.g., increase rewards and
recognition, consider
increasing production targets,
add new product lines)

Corrective Action Taken
(e.g., increase training, modify
supervision, invest in newer
equipment)

Adapted from Exhibit 16.7: Outcomes of Performance Measurement


Scope of Control
Strategic Control
 Assess and regulate how the

organization fits its external
environment and meets its
long-range objectives and
goals
 Control becomes less
efficient in uncertain or
changing environments

16

©2005


Types and Scope of Control
Strategic Controls
Tactical Controls
Operational Controls
(Narrow)

17

©2005

Scope

(Broad)

Adapted from Exhibit 16.8: Types and Scope of Control


Centralization of Control and
Environmental Stability
Degree of centralization

Decentralized

Centralized

18

©2005

Stable

Environmental stability

Turbulent

Adapted from Exhibit 16.9: Degree of Centralization of Control in Relation to Environmental Stability


High
Low

Environmental turbulence

Approaches to Strategic Control

Easy

Difficult

Ability to specify and measure
precise strategic objectives
19

©2005

Adapted from Exhibit 16.10: Approaches to Strategic Control


Scope of Control
Tactical Control
 Assess and regulate day-to-day functions of the

organization and its major units in implementing
its strategy
 Financial controls
 Budgetary controls
 Supervisory structure controls
 Human resource controls
 Contrasting approaches to using tactical controls
 Bureaucratic control
 Commitment, or clan, control

20

©2005


Strategic and Tactical Controls
Tactical
Controls

Time Frame

Limited

Strategic
Controls
Long, unspecific

Objective
Controls relate to
specific,
functional areas

Types of Comparisons

Comparisons
made within
organization

Controls relate to
organization as a
whole
Comparisons
made to other
organization

Focus
Implementation
of strategy

21

©2005

Determination of
overall
organizational
strategy
Adapted from Exhibit 16.11: Characteristics of Strategic and Tactical Controls


Company Financial Ratios
Ratio

Formula

Company
The GAP, Inc.
2001 in $ millions

Net Profit
before taxes
Total Assets

241
7,591

0.03

904
4,719

0.19

Liquidity
Current
Ratio

Current
Assets
Current
Liabilities

3,044
2,056

1.4

2,682
1,319

2.0

Liabilities
Leverage
Debt to
Assets

Total Debts
Total Assets

2,525
7,591

0.33

1,975
4,719

0.42

Profit
Return on
Investment

22

The Limited, Inc.
2001 in $ millions

©2005

Adapted from exhibit 16.12: Examples of Company Financial Ratios


Company Financial Ratios
Ratio

Formula

Company
The GAP, Inc.
2001 in $ millions

Activity
Inventory
Turnover

23

©2005

Sales
Inventory

13,847
1,677

8.3

The Limited, Inc.
2001 in $ millions
9,363
966

9.7

Adapted from exhibit 16.12: Examples of Company Financial Ratios


Budgetary Control

24

Issue

Questions

Rolling budgets
and revision

Should the budget period be for 12 months followed by
another 12-month budget a year later, or should a
calendar quarter be added each time a new calendar
quarter begins?
Should the budget remain fixed for the budget period or
should it be revised periodically during the period?

Fixed or flexible
budgets

Should performance be evaluated against the original
budget or against a budget that incorporates the actual
activity level of the business?

Bonuses based on
budgets

Should incentive compensation, if any, be based on actual
versus budgeted performance, or on actual performance
against some other standard?

©2005

Adapted from exhibit 16.13: Issues in Budgetary Control


Budgetary Control
Issue

Questions

Evaluation criteria

Should the budget used to evaluate performance include
only those items over which the evaluated manager has
control, or should it include all unit costs and revenues
appropriate to the managerial unit?

Tightness of the
budget

What degree of “stretch” should there be in the budget?

Source: Adapted from N. C. Churchill, “Budget Choices: Planning vs. Control,” Harvard Business Review 62, no. 4 (1984), pp.
150–164, (p. 151).

25

©2005

Adapted from exhibit 16.13: Issues in Budgetary Control


Tài liệu bạn tìm kiếm đã sẵn sàng tải về

Tải bản đầy đủ ngay

×