CONTROLLING

WHY, HOW AND WHAT

 CONTROLLING

• a process of measuring performance and taking action

to ensure desired results. Its purpose is
straightforward – to make sure that plans are
achieved, that actual performance meets or surpasses
objectives.
• Planning – to set the direction
• Organizing – to create structures
• Leading – to inspire effort
• Controlling – to ensure results
TYPES OF CONTROLS
FEEDFORWARD CONTROLS
• called PRELIMINARY CONTROLS, take place before a work activity
begins. Also, preventive in nature. The goal is to solve problems before
they occur by asking an important but often-neglected question:
“WHAT NEEDS TO BE DONE BEFORE WE BEGIN?”

They ensure:
• Objectives are clear
• Proper directions are established
• Right resources are available to accomplish them
CONCURRENT CONTROLS

• called STEERING CONTROLS, focus on what happens during the work

process. They make sure things are being done according to plan. The
goal is to solve problems as they are occurring. The key question is:
“WHAT CAN WE DO TO IMPROVE THINGS RIGHT NOW?”
FEEDBACK CONTROLS

• Called POSTACTION CONTROLS, take place after work is completed.

They focus on the quality of end results rather than on inputs and
activities. It is largely reactive. The goals are to solve problems after they
occur and prevent future ones. They ask the question: “NOW THAT
WE ARE FINISHED, HOW WELL DID WE DO?”
TWO BROAD OPERATIONS WITH
RESPECT TO CONTROL
INTERNAL CONTROL

• this strategy allows motivated individuals and groups to exercise

self-discipline in fulfilling jobs expectations. Alternatively, managers
can take direct action to control the behavior of others.
EXTERNAL CONTROL

• this strategy occurs through personal supervision and the use of

formal administrative systems.
STEPS IN THE CONTROL PROCESS
FOUR STEPS IN THE
CONTROL PROCESS
• ESTABLISH OBJECTIVES
AND STANDARDS
• MEASURE PERFORMANCE
RESULTS
• COMPARE RESULTS WITH
OBJECTIVES AND
STANDARDS
• TAKE CORRECTIVE ACTION
STEP 1: ESTABLISH OBJECTIVES AND
STANDARDS
• the process begins with planning, when performance objectives and
standards for measuring them are set. It can’t start without them.
• Performance objectives should represent key results that one wants
to accomplish. The word “key” in the prior sentence is important. The
focus in planning should be on describing “critical” or “essential” results
that will make a substantial performance difference.
• Standards are important, too. As key results are identified, one also has
to specify the standards and measures that will be uses to evaluate their
accomplishment.
TWO TYPES OF
STANDARDS
• OUTPUT STANDARDS
-- measure actual outcomes or work results.
• INPUT STANDARDS
--measure work efforts. These are often used in situations
where outputs are difficult or expensive to measure.
STEP 2: MEASURE PERFORMANCE RESULTS

• measure actual performance. The goal is to assess results based on

output standards and/or input standards. Measurement must be
accurate enough to spot significant differences between what is
really taking place and what was originally planned. Without it,
effective control is not possible. And a willingness to measure has
its rewards: what gets measured tends to happen.
STEP 3: COMPARE RESULTS WITH OBJECTIVES
AND STANDARDS
• You can remember Step 3 by this control equation.
Need for action = Desired performance – Actual performance
• Dealing with an identified need for action is like any other problem solving. It
can point toward:
performance threat or deficiency – when actual is less than desired. Or
it can point toward a possible
performance opportunity – when actual is more than desired.

NOTE:
Historical Comparison
Relative Comparison
STEP 4: TAKE CORRECTIVE ACTION

• To take any action necessary to correct problems or make investments.

Management by Exception – the practice of giving attention to situations

that show the greatest need for action. It can save valuable time, energy, and
other resources by focusing attention on high-priority areas.
TWO TYPES OF EXCEPTIONS
• Problem Situation
– must be understood so corrective action can restore performance to the
desired level
• Opportunity Situation
– must be understood with the goal of continuing or increasing the high level of
accomplishment in the future.
CONTROL SYSTEMS AND
TECHNIQUES
EMPLOYEE DISCIPLINE SYSTEMS

• Discipline – the act of influencing behavior through reprimand

• Progressive Discipline – ties reprimands to the severity and frequency

of the employee’s infractions. Penalties for misbehavior vary according to
the significance of the problem.
PROJECT MANAGEMENT

- Is responsibility for the overall planning, supervision and control of projects.

• Projects – one-time events with unique components and an objective that

must be met within a defined time period.
TWO SPECIAL TECHNIQUES
GANTT CHART
• Developed by Henry Gantt, an industrial engineer, it graphically displays the
scheduling of tasks required to complete a project. It has become a mainstay of
project management ever since.
CPM/PERT
• Network modeling approaches that originated separately and have now
converged.
 INFORMATION AND FINANCIAL CONTROLS

• In business, the analysis of a firm’s financial performance is an important

aspect of managerial control. At a minimum, managers should be able to
understand:
1. Liquidity – ability to generate cash to pay bills
2. Leverage – ability to earn more in returns than the cost of debt
3. Asset Management – ability to use resources efficiently and operate at
minimum cost
4. Profitability – ability to earn revenues greater than costs
Liquidity
• Current Ratio = Current Assets / Current Liabilities
Leverage
• Debt Ratio = Total Debts / Total Assets
Asset Management
• Inventory Turnover = Sales / Average Inventory
Profitability
• Net Margin = Net Profit after Taxes / Sales
• Return on Assets = Net Profit after Taxes / Total Assets
END
THANK YOU ☺