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Chap 14 Basic Elements of Control, Structural Control - Coggle Diagram
Chap 14
Basic Elements of
Control
The Nature of Control
Control
The regulation of organizational that some targeted element of performance remains within acceptable limits.
The regulation of organizational activities to facilitate goal attainment
The Purposes of Control
Provides organizations with indications of how well they are performing in relation to their goals
Provides a mechanism for adjusting performance to keep organizations moving in the right direction
Bureaucratic control
A form of organizational control characterized by
formal and mechanistic structural arrangements
Decentralized control
An approach to organizational control characterized by
informal and organic structural arrangements
Strategic control
Control aimed at ensuring that the organization is maintaining an effective alignment with its enviroment and moving taward achieving its strategic goals
Operations Control
Screening control
Relies heavily on feedback processes during the transformation process
Preliminary control
Attempts to monitor the quality or quantity of financial, physical, human, and information resources before they actually become part of the system
Postaction control
Monitors the outputs or results of the organization after the transformation process is complete
Operations control
Focuses on the processes the organization uses to transform resources into products or services
Managing Control in Organizations
Characteristics of Effective Control
Integration with planning
The more control is linked to planning, the more effective the
control system.
Flexibility
The control system must be flexible enough to accommodate
change.
Accuracy
Inaccurate information results in bad decision making and
inappropriate managerial actions.
Timeliness
A control system should provide information as often as necessary.
Objectivity
A control system should provide information as often as necessary.
Resistance to Control
Inappropriate focus
The control system may be too narrow or it may focus too much on quantifiable variables and leave no room for analysis or interpretation.
Rewards for inefficiency
rewarding operational inefficiency can lead empoyees to behave in ways that are not in the best interests of the orgaanization
Too much accountability
Efficient controls are resisted by poorly performing
employees.
Overcontrol
Trying to control too many details affects employee behavior when employees perceive control attempts as unreasonable
Types of Control
Areas of control
Physical resources
Inventory management, quality control, and equipment control
Human resources
Selection and placement, training and development,
performance appraisal, and compensation
Information resources
Sales and marketing forecasts, environmental analysis, public
relations, production scheduling, and economic forecasting
Financial resources
Managing capital funds and cash flow, collection and payment
of debts
Levels of control
Operations control
Focuses on the processes that the organization uses to
transform resources into products or services
Financial control
Concerned with the organization’s financial resources
Structural control
Concerned with how the elements of the organization’s
structure are serving their intended purpose
Strategic control
Focuses on how effectively the organization’s strategies are
succeeding in helping the organization meet its goals
Financial Control
Budgetary Control
Budgets :
Budgets are typically for one year or less.
Budgets may be established at any organizational level.
Budgets may be expressed in financial terms, units of output,
or other quantifiable factors.
Purposes of budgets
Provide guidelines about resources and expectations
Evaluate the performance of managers and organizational units
Help define the established standards for control
Help coordinate resources and projects
Strengths
Budgets facilitate coordination and communication between departments.
Budgets establish records of organizational performance, which can enhance planning.
Budgets facilitate effective operational controls.
Weaknesses
Budgets can be time consuming to develop.
Budgets can limit innovation and change.
Budgets can hamper operations if applied too rigidly.
Other Tools of Financial Control
Responsibilities for Control
Managers are accountable for and involved in
activities for which control is their responsibility.
Controller
A position in organizations that helps line managers
with their control activities
Steps in the Control Process
Establishing standards
Control standard
A target against which subsequent performance will be
compared
Should be expressed in measurable terms
Should be consistent with organizational goals
Should be identifiable indicators of performance
Measuring performance
Performance measurement is an ongoing process.
Performance measures must be valid indicators (e.g.,
sales, costs, units produced) of performance.
Comparing performance against standards
Define what is a permissible deviation from the
performance standard
Utilize the appropriate timetable for measurement
Considering corrective action
Maintain the status quo (do nothing)
Correct the deviation to bring operations into
compliance with the standard
Change the standard if it was set too high or too low
Structural Control