Controlling (principles Of Management)

CONTROLLING Effective Control Operations Management Information Systems

Effective Control System n

“Designing effective control systems can be difficult. If managers try to control too many elements in a rigid way, staff morale will probably suffer and valuable time, money, and energy will be wasted. These problems can be minimised if managers focus on controlling key performance areas and strategic control points” (Stoner et al. 1995, p. 576)

Basic Steps in the Control Process

Establish standards and methods for measuring performance Goals and objectives established during the planning process will already be stated clearly, measurable and include deadlines

Measure performance

Measuremen t is ongoing, repetitive process

Does performance match the standards?

Do nothing

No

Take corrective action and re-evaluate standards

Easiest step. If it matches, ‘everything is under control’. If not corrective measure must be taken

Why control is needed? n

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To create better quality – TQM – Spotting process flaws – Correcting mistakes To cope with change – Change is inevitable – To compete with competitors – New materials and technologies

To create faster cycles – Speed is essential

Why control is needed? n

To add value – Speed to add value, competitive edge – Adding value circumvents expensive and rigorous activities to compete with competitors n

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One way is to incorporate technological enhancements

To facilitate delegation and teamwork – Participative management – Encourage employees to work together as teams – This helps manager in carrying out duties and he/she monitors employee progress.

Identifying Key Performance Areas n Aspects of the unit or organisation that must function effectively for the entire unit or organisation to succeed.

Standards Used in Functional Areas to Gauge Performance

Financial Controls n n n n

Financial statements Balance sheet Income statement Cash flow: Sources and uses-offunds statements

Budgetary Control Methods n

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Budgets are stated in monetary terms It conveys capital resources available Budgets run usually over a year.

Type of Budgets n

Operating budgets – Expense budgets – Revenue budgets – Profit budgets

Auditing n n

External auditing Internal auditing – Usually evaluates organisation’s operational efficiency and the performance of its control systems

2. Operations System n

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An organisation can be viewed as a system, a set of related and interacting subsystems that perform functions directed at reaching a desired goal. Resources/Input include human, capital, technology and information INPUT

OUTPU T

Conceptual Model of an Operation System EXTERNAL ENVIRONMENT INPUT (resources) •Human •Capital - Land - Equipment - Building •Technology •Information

TRANSFORMATIO N OR CONVERSION PROCESS

FEEDBACK

OUTPUT • Goods • Services • Other

The Transformation Process n

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Input to output varies from one org to another. Physical transformation of raw materials into finished goods occur in production organisations. Service organisations transform also transform materials (forms and writing equipment) into finished goods (completed tax forms). Mostly intangible (cannot be stored) Transportation involves locational transformations Retailing involves exchange transformations (money for goods) Legal and accounting firms involve information transformed from one form into another

(see figure again – loop)

The Importance of Operations Management n

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Operations management refers to the complex set of management activities involved in planning, organising, leading and controlling an organisation’s operations. Important because – It can improve productivity – Helps organisation meet customers’ competitive priorities

The Importance of Operations Management n improve productivity – Total productivity – Partial productivity n

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Labour productivity index / output per work-hour ratio

competitive priorities – – – –

Pricing Quality level Quality reliability Flexibility (product – eg. custom-made, volume flexi – eg. rate of production to meet customer demands – such as employed by McDonalds)

Designing Operations Systems n

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Operational plans must meet strategic plans Operational plans affect design of operations systems Designing OS involve making decisions on what, how many, how and where products will be produced, and who will produce them.