Principles of Management (MGT 101) PDF

PRINCIPLES OF MANAGEMENT (MGT 101) Controlling and Managing Innovation and Change 1  What is Control and Why Engage in It? Controlling: management function that involves monitoring, comparing, and correcting work performance Control is importa...

PRINCIPLES OF MANAGEMENT (MGT 101) Controlling and Managing Innovation and Change 1  What is Control and Why Engage in It? Controlling: management function that involves monitoring, comparing, and correcting work performance Control is important, therefore, because it is the only way that managers know whether organizational goals are being met and if not, the reasons why. The value of the control function can be seen in three specific areas: planning, empowering employees, and protecting the workplace. Control process is a three-step process include: 1. Measuring actual performance, 2. Comparing actual performance against a standard, and 3. Taking managerial action to correct deviations or inadequate standards Requirements for effective control 1. Objectives: A system of control can work more effectively when it is based on the main objectives or goals of the organisation. 2. Suitability: A business organisation should adopt such a system of control which suits its requirement. 2  3. Active Participation: All members in the organisation should participate in the effective implementation of the control system. Total quality management(TQM) is a system of management based on the principle that every staff member must be committed to maintaining high standards of work in every aspect of a company's operations. Role of control in management Control is a function of management which helps to check errors in order to take corrective actions. This is done to minimize deviation from standards and ensure that the stated goals of the organization are achieved in a desired manner. Importance of control in management Activities done as expected: Controlling is one of the important functions of a manager. It means ensuring that activities in an organization are performed as expected or per plan. Efficient use of resources: It also ensures that an organization’s resources are being used effectively and efficiently for the achievement of predetermined goals. Judging accuracy of standards: Through strategic controlling it can be easily judged whether the standard or target set are accurate or not. Controlling helps in improving the performance of the employees: Controlling helps managers by insisting on continuous check on the employees and control helps in creating an atmosphere of order and discipline. Controlling helps in minimizing the errors: An effective controlling system helps in minimizing the errors by continuous monitoring and check. The managers try to detect the error on time and take remedial steps to minimize the effect of error. 3  Measuring, Monitoring and Modifying Information Control techniques/tools Financial ratios Ratio analysis: Liquidity ratios measure an organization’s ability to meet its current debt obligations. Leverage ratios examine the organization’s use of debt to finance its assets and whether it is able to meet the interest payments on the debt. Activity ratios assess how efficiently a company uses its assets. Profitability ratios measure how efficiently and effectively the company uses its assets to generate profits. Budgeting Budget: a numerical plan for allocating resources to specific activities Budgeting: the process of allocating resources to pay for designated future costs Deviation - In the controlling process, it may be defined as the difference between the set standard and the actual performance. Benchmarking – Is the search for the best practices among competitors or noncompetitors that lead to their superior performance. 4 Managing Operations Information technology (IT) is the use of any computers, storage, networking and other physical devices, infrastructure and processes to create, process, store, secure and exchange all forms of electronic data. E-commerce and E-business o E-commerce - refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. o E-business – is the conduct of business processes on the internet. These e- business processes include buying and selling goods and services, servicing customers, processing payments, managing production control, collaborating with business partners, sharing information, running automated employee services, recruiting; and more Network analysis : A method of planning, scheduling and controlling projects involving interrelated but distinct elements of work, or activities.. Value chain: the entire series of organizational work activities that add value at each step from raw materials to finished product. The goal of value chain management is to create a value chain strategy that meets and exceeds customers’ needs and desires and allows for full and seamless integration among all members of the chain. Enterprise resource planning is a process used by a company to manage and integrate the important parts of its business Customer Relationship Management (CRM) refers to the methodologies and tools that aim to encompass all of a business's interactions with current, past and future customers with the goal of "improving" customers' relationships with that business Knowledge management (KM) is the process of creating, sharing, using and managing the knowledge and information of an organization. Business intelligence (BI) is a technology-driven process for analyzing data and presenting actionable information which helps executives, managers and other corporate end users make informed business decisions. 5 Control and Evaluation of overall performance Direct and preventative controls Feedforward controls are also known as preliminary, preventive or pre-action controls. As the name implies, these controls take place before a process to make sure bad things do not happen in the first place. The controls identify actions to be taken before a problem occurs. For example, a local automobile dealer can focus on activities before, during, or after sales of new cars. Careful inspection of new cars and cautious selection of sales employees are ways to ensure high quality or profitable sales even before those sales take place. Concurrent controls, also known as steering or preventive controls, are ongoing controls that help maintain quality and consistency. They usually involve the monitoring of employees directly involved with customers or the manufacturing process. When developing concurrent controls, an employer sets a standard to measure against and generates a set of guidelines or regulations that employees are expected to follow. For example, monitoring how salespeople act with customers is a control during the sales task. Feedback controls, also known as post-action controls, are controls that occur after a process to gain feedback or information that can determine whether performance standards, sales quotas or other measurable criteria are being met. For example, counting the number of new cars sold during the month and telephoning buyers about their satisfaction with sales transactions are controls after sales have occurred 6  Management by walking around: a term used to describe when a manager is out in the work area interacting directly with employees. Balanced scorecard: a performance measurement tool that looks at more than just the financial perspectives. It typically looks at four areas that contribute to a company’s performance: financial, customer, internal processes, and people/ innovation/growth asset The relationship between planning and control: Planning and controlling are inter-related to each other. Planning sets the goals for the organization and controlling ensures their accomplishment. Managing Innovation and Change Managing change and innovation Change management is a collective term for all approaches to prepare, support, and help individuals, teams, and organizations in making organizational change. Drivers of change may include the ongoing evolution of technology, internal reviews of processes, crisis response, customer demand changes, competitive pressure, acquisitions and mergers, and organizational restructuring. 7  Types of organizational change Transformation or radical change involves changing an organizations' fundamental structure and culture Incremental change is a series of small, often planned steps that take place over time Organization-wide change involves major restructuring or new collaboration Subsystem change may include adding or removing a division, department, product or service. Change Issues Employee resistance Cultural change Communicating the new vision Implementing new procedures and technologies Ways of managing change. Identify and deal with pockets of resistance Provide change management training Ensure clear and concise communication across all levels Entrepreneurship is the ability and readiness to develop, organize and run a business enterprise, along with any of its uncertainties in order to make a profit. Techniques for stimulating innovation and creativity Brainstorming Focus Groups Reverse Brainstorming Free Association The significance of entrepreneurship to organizations. Develop a competitive advantage Adapt to the changing environment and consumer needs Leadership in their industry 8 References: Text Books: Robbins. S, Coulter. M. (2012) , Management 11th edition. New Jersey USA. Pearson Education, Inc. Websites: https://smallbusiness.chron.com/examples-concurrent-control-management-80471.html https://www.cliffsnotes.com/study-guides/principles-of-management/control-the-linking- function/types-of-organizational-controls https://searchcio.techtarget.com/definition/e-business https://www.yourarticlelibrary.com/organization/the-importance-and-limitations-of-controlling- organization-management/8738 https://en.wikipedia.org/wiki/Control_(management) 9