Management Chapter on Controlling

Controlling

• Controlling is the process of monitoring, comparing, and correcting work performance.
• Managers cannot know if their units are performing properly until activities are evaluated and compared to desired standards.
• Effective controls ensure activities are completed in ways that reach goals.
• Control effectiveness depends on how well it helps employees and managers achieve their goals.

Why Controlling is Important

• Planning allows for organizational structure creation that supports achieving goals.
• Motivated employees are a result of effective leadership.

Planning-Controlling Link

• Planning: Includes goals, objectives, strategies, and plans.
• Organizing: Involves structure and human resource management.
• Leading: Focuses on motivation, leadership, communication, and individual/group behavior.
• Controlling: Features standards, measurements, comparisons, and actions.

Types of Controlling

• Input Control (Feedforward): Anticipates problems.
• Process Control (Concurrent): Corrects problems as they happen.
• Output Control (Feedback): Corrects problems after they occur.

Effective Controlling

• Budgeting: Financial plans outlining expected revenues and expenditures. Comparing actual performance to the budget aids in identifying variances and taking corrective actions to improve financial health.
• Management by Objectives (MBO): A performance management approach where managers and employees set specific objectives aligned with organizational goals.
• Statistical Quality Control: Uses statistical methods to monitor and control processes, ensuring consistency and product quality, most commonly in manufacturing.

Effective Controlling - Further insights

• Audits: Internal and external audits formally examine an organization's financial statements, processes, and operations, verifying compliance, detecting fraud, and evaluating internal control effectiveness.
• Balanced Scorecard: A strategic management tool providing a comprehensive view of organizational performance by considering financial, customer, internal process, and learning/growth perspectives, enabling better alignment with organization's vision and strategy.
• Key Performance Indicators (KPIs): Specific metrics for measuring performance against strategic goals, such as sales growth, profit margins, customer satisfaction, and employee productivity. Monitoring KPIs assesses whether the organization is achieving objectives.

This quiz covers the concept of controlling in management, highlighting its importance in monitoring and correcting work performance. It discusses the relationship between planning and controlling, and the various types of controlling techniques. Test your understanding of how effective controls can help achieve organizational goals.