Controlling as a Management Function

Controlling as a Management Function

• Controlling is a process of monitoring performance and taking action to ensure desired results.
• It ensures that actions align with short and long-range plans and objectives.
• It ensures consistency between objectives and accomplishments throughout an organization.
• Maintaining compliance with organizational rules and policies is a key aspect of controlling.
• Managers monitor performance and stimulate action to achieve desired outcomes.

Cybernetic Control System

• A self-contained system for performance monitoring and correction.
• An example of a cybernetic control system is a thermostat.

The Controlling Process

• Establishing objectives and standards are the first step in controlling.
• Measuring actual performance is crucial for identifying deviations.
• Comparing results with objectives and standards helps identify deviations.
• Taking corrective action based on comparisons is essential for improvement.

Establishing Objectives and Standards

• The control process starts with planning and defining performance objectives.
• Standards for measuring performance objectives are established.
• Two types of standards exist: output standards and input standards.
• Output standards measure performance results in terms of quantity, quality, cost, or time; input standards measure work efforts.

Measuring Actual Performance

• Accurate measurements are necessary to detect deviations between desired and actual performance.
• Measurement is essential for effective control.

Comparing Results with Objectives and Standards

• Comparing actual performance with desired performance highlights the need for action.
• Ways of making comparisons include historical analysis or benchmarking.

Taking Corrective Action

• Taking appropriate action to correct or improve things is part of controlling.
• Management-by-exception focuses on major differences between actual and desired performance.
• Two types of exceptions are problems (below standard) and opportunities (above standard).

Effective Controls

• Effective controls in organizations are strategic, result-oriented, understandable, and encourage self-control.
• Furthermore, effective controls are timely, positive in nature, fair, objective, flexible, accurate, and cost-effective.

Types of Control

• Preliminary Control: Set before a work activity begins to make sure directions are proper and resources are available.
• Concurrent Control: Focuses on what happens during the work process, monitors operations and activities to ensure things are done correctly.
• Post-action Control: Takes place after an action is completed, focusing on end results.

Types of Controls (Internal vs. External)

• Internal Control: Motivated individuals exercising self-control over their behavior, enhanced by clear performance objectives and necessary resource support.
• External Control: Personal supervision and formal administrative systems; includes performance appraisals, compensation/benefits, employee discipline systems, and management by objectives.

Organizational Control Mechanisms

• Organizational control mechanisms include strategy, objectives, policies, procedures, recruitment, training, performance appraisals, job design, work structures, and organizational culture.

Compensation and Benefits (Organizational Control Mechanism)

• Compensation and benefits attract and retain talent in an organization.
• They motivate employees to exert maximum effort.
• They acknowledge the significant contributions of employees.

Operations Management and Control

• Purchasing: Components, like Economic Order Quantity (EOQ) and Just-In-Time (JIT) Scheduling, are crucial in operations control.
• Project Management: Techniques like Program Evaluation and Review Technique (PERT) identify and manage complex projects.
• Statistical Quality Control: Uses upper and lower control limits to ensure products meet standards.

Information Technology in Controlling

• IT is used for monitoring and managing business operations and aligning activities with performance standards.
• Computer systems provide the necessary data and tools for effective control.

Importance of IT in Controlling

• IT supports business management operations and provides controls over policies, processes, systems, and people that comprise the IT infrastructure.
• IT facilitates automated reporting, information security, access control, and deviation detection.
• Additionally, IT enables the analysis and mitigation of risks, aids in monitoring and assessment, and facilitates the segregation of duties and proper financial controls.

Examples of IT Applications in Controlling

• Budgeting and Forecasting tools, Inventory Management Systems, Performance Management Dashboards.

Organization and Management

• Separate duties for initiating, authorizing, inputting, processing, and checking data.

This quiz covers the essential concepts of controlling as a management function, including performance monitoring, goal alignment, and corrective actions. It also discusses cybernetic control systems and the importance of establishing objectives and standards. Test your knowledge on these crucial management practices.