Control in Organizations

Control in Organizations

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The process of measuring performance and taking action to ensure desired results.

Importance of Controlling
The purpose of controlling is to make sure that plans are fulfilled and that actual performance meets or surpasses objectives. Controlling sees to it that the right things happen in the right way and at the right time. It helps ensure that the performance contributions of individuals and groups are consistent with organizational plans. It helps that the performance accomplishments throughout an organization are consistent with one another in means-ends fashion. And it helps ensure that people comply with organizational policies and procedures.

Steps in the Control Process
„X Cybernetic control system is self-contained in its performance-monitoring and correction capabilities

Step 1¡Xestablish objectives and standards
Performance objective should represent key results that one want to accomplish. The focus on planning should be on describing ¡§critical¡¨ or ¡§essential¡¨ results that will make a substantial difference in the success of the organization. The standards are important too and they must be considered right from the beginning.
Two types of standards:
„X Output standards-measure performance results in terms of outcomes like quantity, quality, cost, or time of accomplished work.
„X Input standards-measure effort in terms of the amount of work expended in task performance. They are used in situations where outputs are difficult or expensive to measure.

Step 2¡Xmeasure actual performance
The goal is to accurately measure the performance results and or the performance efforts. The measurement must be accurate enough to spot significant differences between what is really taking place and what was originally planned.

Step 3¡Xcompare results with objective and standards
This can be expressed as the following control equation: Need for Action=Desired Performance ¡V Actual Performance
There are different ways to compare desired and actual performance:
„X Historical comparison uses past performance as a benchmark for evaluating current performance
„X Relative comparison uses the performance achievements or other persons, work units, or organizations as the evaluation standard.
„X Engineering comparison uses engineered standards set scientifically through such methods as time and motion studies.

Step 4¡Xtake corrective action as needed

This process can be applied to personal planning as well.
This step is to take any action necessary to correct or improve things and it allows for a judicious use of management by exception the practice of giving priority attention to situations that show the greatest need for actions. This approach can save valuable time, energy, and other resources, while allowing all efforts to be concentrated on the areas of greatest need.

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Two types of exceptions may be encountered:
„X Problem situation in which actual performance is below standard. Corrective action is required to restore performance to the desired level.
„X Opportunity situation in which actual performance is above the standard. Actions should be taken to continue this higher level of accomplishment in the future.

Management by exception focuses managerial attention on substantial differences between actual and desired performance.

An after-action review formally reviews results to identify lessons learned in a complete project, task, force, or special operation.

Types of Controls
Three major types:

„X Feedforward ensure that directions and resources are right before the works begin. Also called preliminary controls, are accomplished before a work activity begins. They ensure that objectives are clear, proper directions are established, and that the right resources are available to accomplish them. They are designed to eliminate the potential for problems later on in the process by asking an important but often-neglected question: ¡§What needs to be done before we begin?¡¨ this is a forward-thinking and proactive approach to control rather than a reactive and defensive.

„X Concurrent focus on what happens during the work process and sometimes called steering controls. They monitor ongoing operation and activities to make sure things are being done according to plan. They also allow corrective actions to be taken before a task is completed. The key question is ¡§what can we do to improve things before we finish?¡¨ the focus is on quality of task activities during the work process. This approach to control can reduce waste in the form of unacceptable finished products or services.

„X Feedback takes place after an action is completed and also called postaction controls. They focus on the quality of end results rather than on inputs and activities. They ask the question ¡§now that we are finished, how well did we do?

Internal and External Controls
„X Internal controls occur through self-discipline and self-control

„X External controls occur through direct supervision or administrative systems such as rules and procedures.

Compensation and Benefits
„X Base compensation plays an important role in attracting a highly qualified workforce to the organization. If compensation is attractive and competitive in the prevailing labor markets, it can make the organization highly desirable as a place of employment. If people get into the right jobs, costs can be reduces and productivity can be boosted.
„X Benefits attractiveness can also affect an organization¡¦s ability to recruit and retain a qualified workforce.

Employee Discipline Systems
„X Discipline is the act of influencing behavior through reprimand. This for managerial control is handled in a fair, consistent, and systematic way

„X Progressive discipline is the process of tying reprimands to the severity and frequency of misbehavior. Under such a system, penalties vary according to how significant a disruptive behavior is and how often it occurs.

Information and Financial Controls
„X Managers should be able to understand and assess for control purposes the following important financial aspects of organizational performance:
1. liquidity- ability to generate cash to pay bills
2. leverage- ability to earn more in returns than the cost of debt
3. asset management- ability to use resources efficiently and operate at minimum cost
4. profitability- ability to earn revenues greater than costs

Operations Management and Control
„X Control is integral to operations management, where the emphasis is always on utilizing people, resources, and technology to best advantage. The areas of purchasing control, inventory control, and statistical quality control are all receiving current managerial attention.

„X Purchasing control controlling the costs through efficient purchasing management is an important productivity tool. To leverage buying power more organizations are centralizing purchasing to allow buying in volume. They are committing to a small number of suppliers with whom they can negotiate special contracts, gain quality assurance and get preferred service.

„X Inventory control inventory is the amount of materials or products kept in storage. Organizations maintain inventories of raw materials, work process, and or finished goods. The goal of inventory control is to meet performance need, thus minimizing the cost.
o Inventory control by economic order quantity orders replacements whenever inventory level falls to a predetermined point
o Just-in-time scheduling minimizes inventory by routing materials to work stations ¡§just in time¡¨ to be used¡¨

„X Statistical quality control checks processes, materials, products, and services to ensure that they meet high standard
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