What is controlling and the control process PDF

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Summary

Explanation of the control process. ...

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What is controlling? Controlling is the process of monitoring, comparing and correcting work performance. All managers should be involved in the control function even if their units are performing as planned.

What is the control process? The control process is a three-step process of measuring actual performance, comparing actual performance against a standard and taking managerial actions to correct deviations or to address inadequate standards.

What is the first stage of the control process? The first step is measuring actual performance. We need to consider how we measure and what we measure. Managers use 4 methods to measure and report actual performance. They are:    

Personal observation Statistical reports Oral reports Written reports

We also need to know the advantages and disadvantages of each method. Mangers usually use a combination of these methods.

What are the advantages and disadvantages of each method?

What does it mean by ‘what we measure’? What we measure is more important to the control process than how we measure. Selecting the wrong criteria can create serious problems. What is measured determines what employees will do. As managers coordinate the work activities of employees, criteria such as employee satisfaction, turnover rates and absenteeism can be measured. However, a complete control systems needs to consider the range of activities performed by a manager.

Manager of a pizza store may use measures such as:  Number of pizzas’ delivered per day

 Average delivery time Manager of an administrative unit in a government agency may use measures such as:  Number of document pages typed up  Average time required to process paper work Marketing manager may use measures such as:  Number of customer visits per sales person  Percentage of market held

What is the second stage of the control process? Comparing actual performance against the standard. The comparing stage determines the degree of variation there can be between the actual performance and the standard. In majority of activities, it is likely there will be variations. However, it is important to determine an acceptable range of variation. The acceptable parameters of variation between actual performance and the standard. Deviations which exceed this range are significant and requires the manager’s attention. In general, the managers are concerned about the size and direction of the variation.

In this example, both over variances and under variances require manager’s attention. Especially the 3 digit figures. Cowley Wines New Zealand’s sales performance for July Brand

Standar

Actua

Over

d

l

(under)

Wy nnsCoonawar r aShi r az

1075

913

( 162)

Wy nnsCoonawar r aCaber netSauv i gnon

630

634

4

Wol fBl as sYel l owLabel Caber netSauv i gnon

800

912

112

Wy nnsCoonawar r aEs t at eRi es l i ng

620

622

2

Wy nnsCoonawar r aEs t at eChar donnay

540

672

132

Yal umbaBar os saShi r az

160

140

( 20)

Wol fBl as sYel l owLabelChar donna y

225

220

( 5)

Li ndeman’ sStGeor geCaber netSauv i gnon

80

65

( 15)

Ros emountDi amondLabel Shi r az

170

286

116

T ot al c as es

4300

4464

164

What is the third stage of the control process? Taking managerial action. Managers can decide between three possible courses of actions. They can do nothing, they can correct the actual performance or revise the standards.

What does it mean to correct actual performance?

Sports coaches understand the importance of correcting actual performance. During a game, they often correct a player’s actions. This is known as Immediate corrective action. Although, if the problems revolves around many players, they would devote time before the next game to correct the actions. This is known as basic corrective actions.

What is Immediate corrective action? Corrective actions which correct problems at once to get performance back on track.

What is Basic corrective action? Looks at how and why performance has deviated and then proceeds to correct the source of deviation.

Immediate corrective action and Basic corrective action in practise Relating back to the example of Cowley Wines New Zealand, to

What does it mean to revise the standard?

Heathrow Terminal 5 failure...