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Chapter IV – Controlling Objectives: I. Definition of Controlling II. The importance of Controlling III. Levels of Control IV. Major Steps in Controlling Process V. Total Quality Management (TQM) rrrtsss 1-1 I. Definition of Controlling Controlling is the process of monitoring and adjusting organizational activities to ensure they are being accomplished as planned. II. The importance of Controlling Controlling play important roles in assisting managers: • Coping with uncertainty (react quickly to significant changes in environment). • Detecting irregularities (product defects, cost overrun, rising personnel turnover). • Identifying opportunities (highlight situations are going better in the future). • Handling complex situation • Decentralizing authority (foster decision making at lower levels in the organization). III. Levels of Control • Strategic Control: Involves monitoring critical environmental factors that could effects the strategic plans. • Tactical Control: Focuses on assessing the implementation of tactical plans at department levels, monitoring associated periodic results, and taking corrective action as necessary. • Operational control: Involves overseeing the implementation of operating plans, monitoring day-to-day results, and taking corrective action when required. Level of Controlling Strategic Plans Strategic Control Top Manager Tactical Plans Middle Tactical Control Managers Operation Fist-line Managers Operational Plans Control IV. Major Steps in Controlling Process Step 1: Determine areas to control: Manager must decide which major areas will be controlled. Ex: Budget, quality, employees, etc. Step 2: Establish standards: Standards spell out specific criteria for evaluating performance. Ex: Quality of products, man-hour, speeds, volume, costs, etc. Step 3: Measure performance: Measure actual performance will depend on the standards that have been set. Ex: Use quantitative and qualitative performance measures in carrying out the control process. Step 4: Compare performance against standards: Compare the information provided in reports that summarize planned versus actual results. Major Steps in Controlling Process • Step 5: Recognize positive performance: Managers should recognize the positive performance, when performance meets or exceeds the standards set. Take corrective action as necessary: Managers must carefully assess the reasons why and take corrective action when standards are met. • Step 6: Adjust standards and measures as necessary: Manager need to check standards periodically to ensure that the standards and the associated performance measures are still relevant for the future. Existing standards and measures can be inappropriate. Major Steps in Controlling Process Determine Establish Measure Compare Standards area to control Standards Performance Performance met or against Standards Exceeded Standards not met Take corrective Recognize actions as necessary performance Adjust standards and measures as necessary V. Total Quality Management (TQM) • Emphasizes quality in all parts of the organization. Ex: Customer service, sales, operation/production, etc.) • Emphasizes organizational goals/objectives relate to both quantity and quality. • Quality is emphasized in the annual employees’ job performance evaluations of the company. • Quality circle: Some companies establish quality circles or groups in each department, consisting of about 8 to 10 employees. These groups meet about once a week to discuss way to control and improve quality. Training on issues relating to quality control is also provided to these groups by the company. THE EFFECTIVE MANAGEE The four primary types of controls that monitor organizational activities and resources: Control Monitors • personnel Human resources , Job content, performance, safety, and personnel cost • Financial Income, expenditures, flow, asset , acquisition of funds, and investment of funds. • Informational Collection processes; storage security and dissemination of data • Operational Production, marketing finance, and staff processes; inventory control; effectiveness of planning; abilities and methods used to meet customer needs.
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