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11-1© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Chapter 11
Controlling the organisation
11-2© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Lecture outline• Control as a management function• The control process• Types of controls• Managerial approaches to implementing
controls• Assessing control systems
11-3© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Control as a management function
Controlling:
Process of regulating organisational activities so that actual performance conforms to expected organisational standards and goals.
11-4© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Control as a management function
Significance of the control system:
Set of mechanisms designed to increase probability of meeting organisational standards and goals.
Controlling ensures resources are used for organisational objectives, supporting organising and leading functions.
11-5© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Control as a management function
Role of controls:
• Coping with uncertaintyWatching environmental factors for change
• Detecting irregularitiesSuch as quality, cost, or staff turnover
• Identifying opportunitiesAlerting management to opportunities
11-6© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Control as a management function
Role of controls (cont.):
• Handling complex situationsAiding coordination of complex situations
• Decentralising authorityControls allow decision-making at lower levels
11-7© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Control as a management function
Levels of control:
• Strategic controlMonitoring critical environmental factors
• Tactical controlAssessing implementation of tactical plans at department level
• Operational controlOverseeing implementation of operating plans, monitoring day-to-day results
11-8© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Control as a management function
• Levels of control:• Top
management
Middle
management
1st level
management
Strategic planning
Tactical planning
Operational planning
Strategic control
Tactical control
Operational control
11-9© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
The control process
Steps in the control process:
1. Determine areas to control2. Establish standards3. Measure performance4. Compare performance against standards5. Recognise positive performance; take
corrective action as necessary6. Adjust standards and measures as
necessary
11-10© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
The control processSteps in the control process:
Determine areas to controlDetermine areas to control
Establish standardsEstablish standards
Measure performanceMeasure performance
Compare performanceCompare performance
Recognise positive performance
Recognise positive performance
Control processsteps
Control processsteps
Take corrective actionTake corrective action
Adjust standardsAdjust standards
11-11© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
The control processDeciding what to control:
• Resource dependence – Approach that argues that managers need to
control areas where they depend on others for resources.
– Four conditions must be met before a final decision is made.
– Areas meeting all four conditions are known as: Strategic control points
11-12© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
The control processDeciding what to control:• Four conditions for control
1. Is dependence on the resource sufficiently high?
2. Is expected resource flow unacceptable?
3. Is control process feasible?
4. Is control process cost acceptable?
11-13© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
The control processDeciding what to control:
High dependence on the resourceHigh dependence on the resource
Chance that expected resource flow will be unacceptable
Chance that expected resource flow will be unacceptable
Control-process feasibilityControl-process feasibility
Cost acceptabilityCost acceptability
Determining strategic control points
Determining strategic control points Alternatives to control:
•Change dependence relationships•Change nature of dependence relationships
Alternatives to control:•Change dependence relationships•Change nature of dependence relationships
11-14© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
The control processDeciding what to control:• Alternatives to control
If the first of these conditions show a need for control, but such control process is either not feasible or too costly, then managers must develop alternatives to control, e.g.– Change dependence relationship on suppliers etc.– Change nature of dependence relationship– Build reliability– Eliminate dependence
11-15© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
The control process• Major control types by timing
– Feedforward controlRegulation of inputs to ensure they meet standards
– Concurrent controlRegulation of ongoing activities to ensure they conform to standards
– Feedback controlRegulation of completed product to ensure standards are met
11-16© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
The control processControl types by timing:
InputInput Transformationprocesses
Transformationprocesses OutputsOutputs
Feed-forwardcontrol
Anticipatingproblems
Feed-forwardcontrol
Anticipatingproblems
Concurrentcontrol
Attending toproblems asthey occur
Concurrentcontrol
Attending toproblems asthey occur
Feedbackcontrol
Correctingproblems afterproduct/service
is produced
Feedbackcontrol
Correctingproblems afterproduct/service
is produced
11-17© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
The control process• Multiple controls
Systems using two or more of the feedforward, concurrent and feedback control processes and involving several strategic control points.
• Cybernetic controlSelf-regulating control system which, once operating, can automatically monitor the situation and take corrective action when necessary.
• Non-cybernetic controlControl system relying on human discretion as a basic part of its process.
11-18© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Managerial approaches to implementing controls
• Bureaucratic control
• Clan control
• Market control
• Control and innovation
11-19© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Managerial approaches to implementing controls
Bureaucratic control:Managerial approach relying on regulation through rules, policies, supervision, budgets, schedules, reward systems and other administrative mechanisms aimed at ensuring employees exhibit appropriate behaviours and meet performance standards.
11-20© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Managerial approaches to implementing controlsClan control:
Managerial approach relying on values, beliefs, traditions, corporate culture, shared norms and informal relationships to regulate employee behaviours and facilitate reaching of organisational goals.
11-21© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Managerial approaches to implementing controls
Market control:Managerial approach relying on market mechanisms to regulate prices for certain clearly-specified goods and services needed by an organisation.
11-22© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Managerial approaches to implementing controls
Control and innovation:• Four levers for strategic control as well as fostering
innovation– Belief systems– Boundary systems– Performance management systems– Interactive monitoring systems
• Incrementalist approachControl of an innovative project that relies on clan control but also involves a phased set of plans and accompanying bureaucratic controls.
11-23© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing control systems
Potential dysfunctional aspects:
• Behavioural displacement
• Game playing
• Operating delays
• Negative attitudes
11-24© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing control systems
Overcontrol versus undercontrol:• Overcontrol
Limiting individual job autonomy to the point where it seriously inhibits effective job performance.
• UndercontrolGranting autonomy to an employee to the point where the organisation loses its ability to direct individual effort towards achieving organisational goals.
11-25© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing control systems
Characteristics of an effective control system:
• Future-oriented• Multidimensional• Cost effective• Accurate• Realistic
11-26© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Assessing control systems
Characteristics of effective control
Systems (continued):
• Timely
• Monitorable
• Acceptable to organisation members
• Flexible
11-27© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Lecture summary• Control as a management function
– Significance of the control process – Role of controls– Levels of control
• The control process– Steps in the process – Strategic control points
• Types of control– Types by timing, multiple, cybernetic, non-
cybernetic
11-28© 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
Lecture summary
• Managerial approaches to control– Bureaucratic, clan, market– Balancing control and innovation
• Assessing control systems– Dysfunctional aspects– Over-control/under-control– Characteristics of an effective control system