Management Control System Explained

CONTROLLING-
PROCESSES AND
SYSTEMS
LAB MAN
MLS 2
Management Control System –
Why You Should Know About This
https://www.youtube.com/watch?v=1UN1lY1u6sU
TOPIC OUTLINE
1. Controlling
2. Types of organizational controls
3. Steps in the control process
4. Management control system
5. Characteristics of adequate management control
systems
6. Performance appraisal
7. Employee discipline
CONTROLLING
• The process of measuring performance and taking action to ensure

desired results.
• Has a positive and necessary role in the management process.
• Ensures that the right things happen, in the right way, at the right
time
• Organizational learning and after-action review

TH E ROL E OF CON TROL L I N G I N TH E
MA N AG E ME N T PROCE SS
T YPES OF
ORGANIZAT IONAL
CONT ROLS
1. Feedforward /
preliminary /
preventive
2. Concurrent
3. Feedback
T YPES OF
ORGANIZAT IONAL
CONT ROLS
1. Feedforward control
• AKA ‘preliminary’, ‘preventive’
control
• Employed before a work activity
begins
• Ensures that:
1. Objectives are clear
2. Proper directions are
established
3. Right resources are available
• Focuses on quality of resources
T YPES OF
ORGANIZAT IONAL
CONT ROLS
2. Concurrent control
• Focus on what happens
during work process
• Monitor ongoing operations
to make sure they are being
done according to plan
• Can reduce waste in
unacceptable finished
products or services
T YPES OF
ORGANIZAT IONAL
CONT ROLS
3. Feedback control
• AKA ‘corrective’ control
• Take place after work is
completed
• Focus on quality of end
results
• Provide useful information
for improving future
operations
T H E RO L E O F F E E D F O RWA R D , C O N C U R R E N T A N D
F E E D B AC K C O N T RO L S I N O RG A N I Z AT I O N S
T YPES OF
ORGANIZAT IONAL
CONT ROLS
1. Internal
2. External
T YPES OF
ORGANIZAT IONAL
CONT ROLS
1. Internal
• Allows motivated
individuals and groups to
exercise self-discipline in
fulfilling job expectations
T YPES OF
ORGANIZAT IONAL
CONT ROLS
2. External
• Occurs through personal
supervision and the use
of formal administrative
systems
ST EPS IN T HE
CONT ROL PROCESS
1. Step 1 — establish
objectives and standards
2. Step 2 — measure actual

performance
3. Step 3 — compare results

with objectives and
standards
4. Step 4 — take corrective

action as needed
ST EPS IN T HE
CONT ROL PROCESS
Step 1 — establishing
objectives and standards
Output standards
• Measure performance results in
terms of quantity, quality, cost, or
time.
Input standards
• Measure effort in terms of amount
of work expended in task
performance.
ST EPS IN T HE
CONT ROL PROCESS
Step 2 — measuring actual

performance
 Goalis accurate measurement of
actual performance results and/or
performance efforts
 Mustidentify significant differences

between actual results and original
plan
 Effective
control requires
measurement
ST EPS IN T HE
CONT ROL PROCESS
Step 3 — comparing results
with objectives and standards
Need for action reflects the
difference between desired
performance and actual
performance
ST EPS IN T HE
CONT ROL PROCESS
Step 4 — taking corrective

action
Taking action when a
discrepancy exists between
desired and actual performance
Management by exception
Giving attention to situations
showing the greatest need for
action
C ONT R OL S Y S T E M S AND T E C HNI QUE S
Management controls systems
• A system which gathers and uses information to evaluate the performance of
different organizational resources like human, physical, financial considering
the organizational strategies
• Uses tools to aid the management for steering an organization toward its
strategic objectives
• PERFORMANCE APPRAISAL is a type of managerial control system
• EMPLOYEE DISCIPLINE is a form of managerial control; corrective action

for poor job performance
CHARACT ERISTICS
OF ADEQUAT E
M ANAGEMENT
CONT ROL SYST EMS
1. Timeliness
2. Economy
3. Comprehensiveness
4. Specificity and
appropriateness
5. Objectivity
6. Flexibility
7. Responsibility
C H A R A C T E R IS T IC S O F
A D E Q U AT E C O N T R O L S Y S T E M S
1. TIMELINESS
The control signifies a
problem in a timely manner
so corrective action can be
taken before serious harm or
loss is experienced
2. ECONOMY
The control is conducted in a
routine manner that does not
require significant human or
financial costs or resources
3. COMPREHENSIVENESS
The control measures a
sufficient variety and extent
of available data so
problems are caught and are
not inadvertently overlooked
4. SPECIFICITY AND
APPROPRIATENESS
The control is specific to the
process being measured so
false alarms do not consume
time or effort
5. OBJECTIVITY
The control is easily
understood by all personnel
and there is no question as
to when measures fall below
or above pre-established
standards
6. FLEXIBILITY
The control system is
dynamic. A rigid control
system would not be suitable
for a changing environment.
7. RESPONSIBILITY
Responsibility for monitoring
the control on an ongoing
basis is clear to all personnel
so measures are checked
regularly according to a
predetermined schedule
C O N T R O L S YS T E MS AN D
T E C H N IQ U E S
Performance appraisal
• The formal
communication system
used by an
organization to assess
and provide feedback
to employees about job
performance
expectations
PERFORM ANCE APPRAISAL
5 Components of Performance appraisal
process:
1. A medical technologist is expected to
perform a job with a designated job
description
2. Standards and criteria that clearly state what

is expected and how it is measured
3. A measurement instrument to compare

actual performance with desired behavior
4. A judge or assessor trained and competent in

using the measurement instrument to do the
appraisal
5. A feedback mechanism to show the results of

the performance evaluation
Performance criterion
• A standard, test, guideline or
rule upon which a judgment
can be based
Performance standards
• An item (statistics) against
which the performance or
behavior of an employee can
be compared to obtain a
relative measurement
PERFORM ANCE
APPRAISAL
TYPES
1. Traditional methods
• Focus on personality
traits (e.g. Initiative,
dependability, integrity,
intelligence, creativity,
leadership, etc)
2. Modern methods
• Focus on work results
(e.g. Job
achievements)
Traditional methods
1. Ranking – Straight
ranking
• The simplest method of
ranking where employees are
rated as rank 1, 2, 3, 4, 5
• Employees are compared to
each other and are given
ranks on the basis of their
traits
Traditional methods
2. Ranking - Alternate
ranking
• The rater first pick up the best
and give him rank 1, then the
worst and give him rank 20,
then pick up workers to be
ranked as 2 and 19 and
proceed this way until all
employees are ranked
Traditional methods
3. Paired/peer comparison
• Each employee is compared with
other employees on one-on-one
basis, usually based on one trait
only
• Note: (+) means ‘better than’, (-)
means worse than
• For each chart, add up the most
number of (+) in each column to
get the highest-rank employee
Traditional methods
4. Grading
• Certain categories of worth
are established in advance
and carefully defined
• The employee is then
allocated to the grade that
best describes his/her
performance
Traditional methods
5. Forced distribution
• The raters are ‘forced’ to
distribute ratings for the
individuals being evaluated into
a pre-specified performance
distribution
• Similar to grading on a curve
• Predetermined percentages of
employees are placed in
various performance categories
Traditional methods
6. Forced choice
• The reviewer is forced to
make a choice --- by deciding
whether each statement that
apply to the employee is true
or false (or most or least)
Traditional methods
7. Checklist
• A series of statements, i.e.
questions with answers in
‘yes’ or ‘no’
• The rater ticks appropriate
answers relevant to the
appraisee
Traditional methods
8. Critical incident
• Gives emphasis on critical
behaviors or employees such
as reaction to a situation
• The performance is evaluated
against a list of critical
behaviors
Traditional methods
9. Graphic rating scale
• One of the most popular and
simplest technique
• AKA ‘linear rating scale’
• This form list traits (e.g. quality)
and a range of job performance
characteristics (e.g.
Unsatisfactory to outstanding)
• The rater checks the score that
best describes performance for
each trait
Traditional methods
10. Essay
• The rater writes a description about
the behavior and performance of
the employee
• The description includes all
relevant information such as
attitude, job knowledge, current
performance and potential for
growth
• Commonly used in combination
with other methods
• Useful in filling information gaps
about employees
Traditional methods
11. Field review
• This is an appraisal by someone
outside the employee’s own
department (e.g. HR)
• The appraiser goes to the field and
obtains information about the work
performance of the employee by
way of questioning the said
individual, peers and superiors
• This method is primarily used for
making promotional decision at the
managerial level
Traditional methods
12. Confidential report
• A traditional way of appraising
employees in government
departments
• Evaluation is made by the
immediate supervisor for giving
effect to promotion or transfer
• A structured format is devised to
collect information on
employee’s strength, weakness,
attendance, discipline, attitude,
etc
Modern methods
1. Management by objectives
(MBO)
• The targets or goals are set
jointly by the superior and
employees; also includes
contents of the job and key
areas of results
• A target is fixed for performance
and is rated on the basis of
achievement of the target
Modern methods
2. Behaviorally anchored
rating scale (BARS)
• An appraisal method that uses
quantified scale with specific
narrative examples of good and
poor performance
• The appraiser observes the
behavior of employees. This
observed behavior of
employees is compared with
expected behavior
Modern methods
3. 360-degree feedback
• A systematic collection of
performance data on an
individual or group derived
from a number of
stakeholders (e.g. Peer,
superior, subordinate) and
self
Modern method
4. Cost-accounting
• AKA ‘human resource
accounting(HRA)’
• The performance appraisal of
employees is judged in terms of
cost and contribution of the
employees
• The rater evaluates the
employee in terms of the cost of
retaining the employee and the
benefits the organization
derives from him/her
Modern methods
5. Assessment centers
• Mainly used to evaluate
executive and supervisory
potential
• Employee is taken away from
work and a series of tests and
exercises are administered
• Performance of the employee is
evaluated in each of these tests
and feedback is provided to the
ratee in terms of strengths and
weaknesses
T E C H N IQ U E S
EMPLOYEE DISCIPLINE
SYSTEMS
• Discipline is the act of
influencing behavior
through reprimand (public
or formal expression of
disapproval)
• Discipline that is applied
fairly, consistently, and
systematically provides
useful control
T E C H N IQ U E S
EMPLOYEE DISCIPLINE
SYSTEMS
 To be effective, reprimands should:
1. Be immediate.
2. Be directed toward actions, not
personality.
3. Be consistently applied.
4. Be informative.
5. Occur in a supportive setting.
6. Support realistic rules.

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CONTROLLING-

• The process of measuring performance and taking action to ensure

• Has a positive and necessary role in the management process.

• Organizational learning and after-action review

2. Step 2 — measure actual

3. Step 3 — compare results

4. Step 4 — take corrective

Step 2 — measuring actual

 Mustidentify significant differences

Step 4 — taking corrective

• PERFORMANCE APPRAISAL is a type of managerial control system

• EMPLOYEE DISCIPLINE is a form of managerial control; corrective action

2. Standards and criteria that clearly state what

3. A measurement instrument to compare

4. A judge or assessor trained and competent in

5. A feedback mechanism to show the results of

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