Controlling
Control
The process of monitoring activities to
ensure that they are being accomplished
as planned and of correcting any
significant deviations.
Effective control systems ensures
achievement of organizational goals.
Approaches
Market control: using external market
mechanisms (price competition, market
share etc).
Bureaucratic control: emphasis on
organizational authority (administrative
rules, regulations, procedures and
policies).
Clan control: based on organizational
culture (shared values, norms, traditions,
rituals and beliefs).
Importance of Control
Ensures plans are executed
Helps in future plans
Helps in delegation through control
systems
Control Process
Measuring actual performance
Comparing actual performance against
standards
Managerial action to correct deviation
Measuring
Sources of information
Personal observation (management by walking
around!!)
Statistical reports
Oral reports
Written reports
Measuring…
Indices
ROI
Unit cost
Unit per day
Profit after tax
Cost per employee
Absenteeism
Employee engagement
Comparing
Acceptable range of variation
Determining significance of deviation
Taking Action
Do nothing
Correct actual performance
Long term
Short term
Revise standards
Types of Control
Feed-forward control (eg. Preventive
maintenance)
Concurrent control (eg. Monthly reports)
Feedback control
Contingency Factors
Organizational size
Small: informal and personal
Large: formal and impersonal
Position and level
High: many criteria
Low: few and easy to measure criteria
Degree of de-centralization
High: increased number and breadth of
controls
Low: reduced number of controls
Contingency Factors….
Organizational culture
Open: informal and self control
Threatening: formal and externally imposed
Importance of activity
High: elaborate, comprehensive controls
Low: loose and informal controls
Other issues
Cultural differences
Employee privacy
Controlling for Organizational
Performance
Dimensions of performance
Asset management
Ability to provide customer value
Knowledge management
Organizational reputation
Measures of Organizational
Performance
Productivity
Organizational effectiveness
Industry ranking
Tools to Monitor
Organizational Performance
Financial controls
Traditional measures: financial ratios, budget
etc
Modern measures: EVA, PAT, MVA
Information Controls
MIS
Balanced Score Card
Benchmarks
Operations Management
The design, operation and control of the
transformation process that converts
resources into finished goods or services.
Productivity = output/input
Interplay between people and processes
Value Chain Management
Value: characteristics and attributes of
goods and services for which customers
are willing to pay.
Value chain: series of work activities that
add value at each step.
SCM Vs VCM
SCM VCM
Internally oriented Externally oriented
Efficiency oriented (customer focus)
Effectiveness oriented
Requirements for VCM
Coordination and collaboration
Investment in technology
Organizational processes
Leadership
Employee commitment
Organizational culture
Advantages of VCM
Requires paradigm shift
Improves cooperation between functions
Reduces inter functional conflicts
Improved customer service
Cost savings (inventory, wastage etc)
Quick delivery time
Obstacles to VCM
Security
Intellectual Property related issues
Investment for new technology
People and other resources
Resistance to change