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Chapter 15: Control, Efficiency, effectiveness, High efficiency low and…
Chapter 15: Control
The control process;(5)
aims to detect and eliminate or reduce deviations from an orgs established standard.(requires feedback)
ANAGRAM; Dinah Said Conner Cut Eden
1. Define the subsystem;
- A formal control subsys can be created and maintained for an employee, a department, or even an entire org.
- There is a need to define the employee, group, department, business unit, project, or org as a whole to establish with focus group of the control process.
- Id key characteristics of the subsys
- establishing a formal control process, need an early determination of the characteristics that can be measured, the cost and benefits of obtaining info about each characteristic, whether variations in each characteristic are likely to affect performance.
2. Set performance standards; Standards are criteria for viewing quantitative(measurable) and qualitative(Subjective and non-measurable) characteristics and should be set for each characteristic measured.
- Quantitative standards, are usually expressed in terms of quantity, quality time and monetary value and/or cost.
- Qualitative standards are usually expressed in a descriptive manner and are not measurable
Control systems are based on performance standards, the internal environment(marketing, finances, operations, logs) are used as the functional area refer to page 483
3. Collect information and measure the actual performance;
- Info on actual performance relating to each of the set standards can be collect manually or automatically.
- Measurement must be reliable and have the same result for the same circumstances over the long term.
- Top managers may create special departments, or rely on regular departments, to collect info by monitoring or auditing certain activities.
4. Compare performance against set performance standards;
- Comparisons are needed to determine whether what is happening, is what should be happening
- Info about actual results must be compared with performance standards, Such comparisons allow managers and team members to id and concentrate on deviations or exceptions.
5. Evaluate and correct problems if required;
- Diagnosis involves assessing the types, number and causes of deviations from the set standards.
- Actions can then be taken to eliminate those deviations and problems
Performance management(4),
the performance of an org must measure how efficiently and effectively manager use the resources to fulfil the customers satisfaction to meet the org goals and objectives
- Effectiveness can be best described as how well an org pursues its goals and to what extent it achieves these set goals.
- Efficiency indicates how well resources are applied or used during the process of achieving the goals
thus orgs must be efficient in minimising inputs and maxing outputs or even just maintaining the inputs as outputs grow.
Performance management allows managers and employees to:
- Develop performance standards
- Communicate performance standards as well as any relevant expectations about them
- Conduct observations
- Establishing understanding(situational) issues
- Provide feedback
- Conduct appraisals
These factors enable the indie, team, and management to achieve the optimum results through managing employee performance.
Managing the performance of each member of staff , each team, and each division will eventually contribute to the accumulative result, that indicates the overall effectiveness and efficiency of the org.
Marketing controls;
- market controls involve the use of data to monitor performance in terms of sales, prices, costs, and profits relating to products sold, market share, and services rendered
- Market ctrls are most effective as a performance management control in a context where genuine competition is taking place within the specific industry.
To be effective, market controls generally require that:
- the cost of the resources used in producing in producing outputs the measured monetarily.
- The value of the goods and services produced be defined clearly and priced monetarily.
- The prices of the goods and services produced be set competitively
Financial Ctrls;
- Fin ctrls incl. a wide range of methods, techniques and procedures intended to prevent or correct the misallocation of resources
- Comparative fin analysis,
the evaluation of an orgs fin condition for 2+ time periods(Use fin ratios)
Budgeting;
- Process of categorising proposed expenditures(cost items) and linking them.
- 3 primary purposes when managing performance:
- To help in planning work effectively
- To assist in allocating resources
- To assist in controlling and monitoring resource utilisation during the budget period
Types of Budgets used for performance management;
- Sales; This is a forecast of expected revenue(sales), generally stated by product line on a monthly basis and revised at least annually.
- Materials budget; Expected purchases are stated for specific categories
- Labour budget; Expected staffing is generally stated by the number of indies and the jobs rand value.
- Capital Budget; This refers to targeted spending for major tangible assets
- R&D budget, spending on upgrading the product, the process of designing, manufacturing, assembly equipment, and intense time and cost budgeting.
- Cash budget; refers to the expected flow of monetary receipts and expenditure
Fin ratios;
- Profitability(ROI) PAT/Total assets
- Liquidity(Current ratio) Current assets/Current Liabilities
- Activity(Invent ratio) Sales/inventory
- Leverage(Debt ratio) Total debt/Total assets
Activity-based Costing(accounting) ABC;
- a performance management system that focuses on activities as the fundamental cost centres of org
- Activities become the focal point for the org
- An activity is any event that drives costs, including energy consumed, kilos driven, computer hours logged, quality inspection done, shipments made, and scrap or rework orders filled.
Integrated strat control, the balanced scorecard; the format for describing activites of an org through a number for measures for each of the 4 perspectives:
- Financial perspective
- Customer perspective
- Internal or perspective(what needs to be done to improve)
- A learning and innovation perspective(Can the org continue to improve and create value, in other words, can it be sustainable)
In terms of control, the BS allows management to focus on the perspectives to manage org performance.
Fin performance; the org considers the view of the shareholders, and reviews performance via eva
Customer perspective, the org considers the customers views, allows the org to assess how well they have been meeting customer demands
Internal Operations performance, the orgs needs to look at what will make them excel, internally management looks at the quality, so that the product itself can precieved as quality
Learning and innovation performance; org considers whether it is able to continue improving what the org offers and the relearn and redesign the org processes.
The contempary viewpoints support the bs but reframe it so that the perspectives incl. relevant changes, in context and system;
- Fin perspective; Outcomes
- Customer perspective; Stakeholder perspective
- Learning and innovation perspective; Enablers(that allow the business to reflect the diverse capability acorss all participants in the system)
the Integrated balance scorecard, is a method of measurement, through 4 perspectives
Quality control approaches,
- The production environments that utilise modern quality control methods are dependent upon statistical literacy,
The approaches that will discussed,
6 sigma,
a quality-based programme, that ensures that org performance is aligned with an objective of perfection when the performance standard of quality is applied and measured.
6 sigma process(5);
- Define by using the all the necessary tools, bs and flow charts,
- measure, data collection or use sampling techniques to collect historical performance data
- Analyse, a cause and effect diagram, or patero diagram
- improve using modelling and experiments for improvements
- control; us of stats and non stat methods to measure future performance
Just-In-Time,
- lean or stockless production, can be described as an approach with the objective of producing the right part, in the right place, on time and thus Just in Time
- main aim is to minimise waste(activities that add to cost and add no value)
- JIT aims to improve profits and ROI
- JIT is mostly related to mass manufacturing
Total Quality Management; broader than regular quality control
- the main outcome is Kaizen no just accept or decline of the quality of the product
- Principles(4);
- Focusing on delivering customer value
- Continually improving processes and systems
- Focusing on managing process rather than people
- Using teams to improve continually
Source of control(4);
the role players who influence and guide the development of controls within an org
Stakeholder Control;
- expressed as pressures from outside sources on org to change their behaviours
- Categories of stakeholders(Discovery Health);
- Employees
- Clients and financial advisers
- Healthcare providers
- Providers of capital
- Civil society and communication
- Biz partners and their SpCh
- Government regulations.
Org Control,
- incl. the formal rules and procedures for preventing or correcting deviations from plans, and for achieving desired goals
- e.g. rules, standards, procedures and budgets
Group/team Control,
- comprises the norms and values that group members share and maintain through rewards and punishment
- e.g. the appropriate conduct used in the work environment.
Indie self-control;
- comprises the guiding mechanisms that operate both consciously and unconsciously within a person
- e.g. the adoption of skills, jargon and knowledge in a professionalism behaviour.
Types of Control(3),
3 types of org control; Preventive, concurrent and post control
Post Control;
- Post control is a mechanism intended to reduce or eliminate unwanted behaviours or results to meet the orgs regulations and standards
- analysis of the control process
Concurrent control;
- show the control measures that monitor activities while the happen
- concurrent control measures are most effective in situations which are time intensive and where corrective action is essential for the completion of a process.
- e.g. BMW, checks the standard of each stage during production, such as coating, shaping and so forth.
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Preventive controls;
- tools meant to reduce errors proactively, thereby Lessing the need for corrective action.
- controls are made and set to input factors of transformation processes and proactively ensure that any deviations from set standards are i'dable
- e.g. Nike implementing a quality check, they test the standard of quality of components needed for quality progress.
The difference between the 2 is the Preventive controls check the inputs, and process before the activity occurs, where as concurrent checks the products or production and compares it to a standard.
Creating effective controls, a way to develope and measure the effectiveness of formal org controls is to compare their costs and benefits
- with the use of cost-benefit analysis address 3 basic questions,
- For what desired behaviours and results should orgs controls be developed?
- What are the cost and benefits of the org controls required to achieve desired behaviours and results?
- What are the cost and benefits of utilising alt org controls to obtain the desired behaviours and results?
Cost-benefit model;
manager consider trade-offs when choosing the amount of org control to use.
- with too little control, cost exceed the benefit on the oppisite end, control need to be effective there is a point when effectiveness decrease and more control is required.
Org controls that fail to satisfy the ided criteria to some degreee may do more harm than good, criteria for effective control(7);
- Linkage to desired goals;
control systems should be linked to goals that incl. improving customer service and protecting org systems
- Objective;
an objective control is set to be impartial and can not be manipulated for personal gain
- Complete;
a complete control system encompasses all the desired behaviours and goals.
- Timely;
provides info when it is most needed
- Acceptable;
is recognised as necessary and appropriate
- Understandable;
indies exposed to a ctrl sys must fully understand the meaning of the ctrls and the implications of misinterpretation.
- Economical;
the cost-benefit scenario regarding control must be clearly evaluated to establish viability of the measure.
Understanding and defining control;
- the process of establishing performance standards, monitoring performance, taking corrective action, when necessary to ensure the achievement of the orgs goals.
- Can be described as a management process whereby the actual performance of employees is monitored against set performance standards to optimise org goal achievement and overall performance, and which requires corrective action if the actual performance does not meet the required standards.
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High efficiency low and Low effectiveness;
- the managers selected inappropriate goals to pursue but optimally applied the resources to achieve these chosen goals
Low efficiency and Low effectiveness;
- the manager selected inappropriate goals to pursue and did not optimally apply the resources to achieve these chosen goals
High efficiency and high effectiveness;
- the manager selected the appropriate goals to pursue and optimally apply the resources to achieve these chosen goals
Low Efficiency and high effectiveness;
- the manager selected the appropriate goals to pursue but did not optimally apply the resources to achieve these chosen goals
DEF: Setting at quota ,monitoring how the company matches that quote, and what is need to meet that quota(quality standard)
understanding
watching the employees production output, to match the quota, if not matched then required to correct in order to meet those standards are needed.
Preventive ctrls, are used to reduce the number of errors proactively by ensuring the equipment and materials are of higher quality.
Concurrent, uses the method or correcting and monitoring activites, and heavily relant on constant feedback and corrective action in order to progress
post control; a mechanism used to reduce waste, unwanted behaviours compares them to the standard.
- Define the subsystem,
needed to make a focused control group for an employee/org/department, with iding the characteristics, the org can measure the cost to benefits for getting info, characteristics and if change in characteristics will affect performance
- Set performance standards,
quantitative which are measurable by input and output and qualitative, measured by description not so much tangible marks like income and costs
3. Collect info and measure performance, used by comparing the standards from info collected, measuring must be fair and consistent and measured in different climates
- TMs rely on departments to do this
4. Compare Performance standards;
are things happening as they should, allows for managers to crack down on the deviations and flaws.
5. Evaluate and correct problems if required;
- what is the deviation of standard, how many and the level of magnitude
Performance management, deals with the how efficiently resources are being used to meet customer satisfaction and the org goals.
Marketing controls, has to do with monitoring the of sales, ads, profit, everything that has to do with the services rendered
Quality control approaches,
require the stat literacy and utilizing the modern control methods.
Fin ctrls,
Deals with the accurate allocation of funds, cost to benefit ratios for performance, and factors.