CONTROLLING IN MANAGEMENT
SRI LAKSHMI ARUNA REVATHI ANUSHYA BHUVANA SWAPNA PRIYA
INTRODUCTION
PROCESS & TYPES
EFFECTIVE CONTROL
CONTROL TECHNIQUES
INTRODUCTION
WHY CONTROLLING ?
WHY CONTROLLING ?
Adapting to Environmental Change
Limiting the Accumulation of Error
Coping with Organizational Complexity
Minimizing Costs
CONTROLLING IN GENERAL
The word control suggests the operations of checking, testing, regulation, verification, or adjustment. As a management function, control is the process of taking the necessary preventive or corrective actions to ensure that organizations mission and objectives are accomplished as effectively and efficiently as possible.
VARIOUS DEFINITIONS FOR CONTROLLING IN MANAGEMENT
The managerial function of controlling is the measurement and correction of performance in order to make sure that enterprise objectives and plans devised to attain them are being accomplished. - HERALD KOONTZ
Controlling is determining that is being accomplished that is evaluating the performance and if necessary, applying corrective measures so that the performance takes place according to plans. - TERRY FRANKLIN
Controlling is the management function aimed at regulating organizational activities so that actual performance conforms to expected organizational standards or goals. - BATOL AND MARTIN
PLANNING & CONTROLLING
Viewed as the blades of a pairs of scissors.
Planning is a prerequisite for effective controlling.
Without planning there is no predetermined understanding of desired performance.
MANAGERS & CONTROLLERS
Controlling is a function of all managers. Controlling must be carried out by all managers irrespective of their hierarchy level.
NATURE OF CONTROLLING
Measuring of Managerial Application Comparing Basis ofof All Taking Corrective Deviations Continuity Final Step Actions Pervasiveness Planning process Planning
IMPORTANCE OF CONTROLLING
Accountability Rapidity of Change
Controlling Complexity of todays organization Mistakes
PROCESS AND TYPES
CONTROLLING PROCESS
Set Standards Measure Performance Compare and identify deviations
Determine reasons for deviations
Take Corrective actions
TYPES OF CONTROLLING
Feed forward
Input Control
Concurrent
Process Control
Output Control
Feed back
FEED FORWARD CONTROL
(Anticipates Problems)
Most desirable form of controlling. Prevents problems since it takes place in advance. Future directed But, Requires timely and accurate information, which is not possible all times.
FEED FORWARD CONTROL AT Mc DONALDS
When McDonalds opened its first restaurant in Moscow, It sent quality experts to help Russian farmers learn techniques for growing high quality potatoes. Bakers to teach processes for baking high-quality breads.
CONCURRENT CONTROL
Normally termed as real-time control.
Since it takes place while an activity is in progress.
Concurrent control involves monitoring and adjusting ongoing activities and processes to ensure compliance with standards. Concurrent control corrects deviations from standards as they occur, or within an insignificant time lapse.
FEEDBACK CONTROL
The most popular type of control. Feedback control is gathering information about a completed activity, evaluating that information and taking steps to improve similar activities in the future. The major drawback of this type of control is that by the time the manager has the information, the problems have already occurred and led to waste or damage.
TYPES OF CONTROLLING
Timing when controlling occurs
Predictive or Feed Forward Controlling
Characteristics
Forecasts variances from plans before they occur
Examples
Cash forecasts, Customer buying expectations
Quality control operations, Real time management information systems Financial statement, Budgetary controls
Concurrent Controlling
Measures deviations from standards as they occur Locate variances from plans after they happen
Historical or Feed back Controlling
EFFECTIVE CONTROL
ACCURACY
A control system that generates inaccuracies can result in management neglecting to take action when it should or responding to a problem that doesnt exist.
TIMELINESS
Controls should call managements attention to variations in time to prevent serious effects on a units performance. Therefore, an effective control system must provide timely information.
ECONOMY
A control system must be economical to operate. Any system of control should justify the benefits it gives in relation to the costs it incurs.
FLEXIBILITY
Effective controls must be flexible enough to adjust to adverse change or take advantage of new opportunities.
UNDERSTANDABILITY
Controls that cant be understood by users have no value. Its sometimes necessary, therefore, to substitute less complex controls for sophisticated devices.
REASONABLE CRITERIA
Controls standards must be reasonable and attainable. If theyre too high or unreasonable, they no longer motivate.
STRATEGIC PLACEMENTS
Management cant control everything that goes on in an organization. Managers should place controls on those factors that are strategic to the organizations performance.
MULTIPLE CRITERIA
If management controls by using a single measure such as unit profit, work efforts will be focused only on looking good on this standard. Multiple measures of performance decrease this narrow sense.
CORRECTIVE ACTIONS
An effective control system not only indicates when a significant deviation from standards occurs, but also suggests what action should be taken to correct the deviation.
CONTROL TECHNIQUES
CONTROL TECHNIQUES
Control techniques provide managers with the type and amount of information they need to measure and monitor performance. The information from various controls must be tailored to a specific management level, department, unit, or operation. Each area within an organization, however, uses its own specific control techniques,
TYPES OF CONTROL TECHNIQUES
Financial Control Budgeting Control Marketing Control Human Resource Control Computers and Information Control
FINANCIAL CONTROL
FINANCIAL STATEMENTS
Financial statements provide management with information to monitor financial resources and activities.
INCOME STATEMENTS
Income statement shows the results of the organization's operations over a period of time, such as revenues, expenses, and profit or loss.
BALANCE SHEETS
Balance sheet shows what the organization is worth (assets) at a single point in time, and the extent to which those assets were financed through debt (liabilities) or owner's investment (equity).
As money is spent, financial statements are updated
Managers use these statements to monitor the progress of programs and plans.
FINANCIAL AUDITS
Financial audits, or formal investigations, are regularly conducted to ensure that financial management practices follow generally accepted procedures, policies, laws, and ethical guidelines. Audits may be conducted internally or externally.
FINANCIAL RATIO ANALYSIS
Financial ratio analysis examines the relationship between specific figures on the financial statements and helps explain the significance of those figures.
IMPORTANT RATIOS
Liquidity ratios
Measure an organization's ability to generate cash.
Profitability ratios
Measure an organization's ability to generate profits.
IMPORTANT RATIOS
Debt ratios
Measure an organization's ability to pay its debts.
Activity ratios
Measure an organization's efficiency in operations and use of assets.
BUDGET CONTROL
