1101IBA Lecture Notes - Lecture 5: Economic Order Quantity, Asset Management, Merit Pay
30 May 2018
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Week 5 Management Concepts Lecture Notes
Controlling
Organisational control
• The management function of control refers to all processes that keep the manager
up to date ith hat is happeig i ke areas of the orgaisatios operatios, ad
facilitate any necessary organisational changes being made
• Controlling
o The process of measuring performance and taking action to ensure the
planned outcomes are achieved
Control
• Provides:
o A measure of what is happening
o Check those measurements against some defined objective
o Determine whether the business is on track
• Appropriate controls can help identify specific performance gaps and areas for
improvement
The role of controlling in the management process
Why control is important
• Because it is the final link in the management functions
o The only way managers know whether organisational goals are being met
and, if not, the reason why
• Employee empowerment
o Encourages manager to delegate
• Protects the organisation and its assets
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Steps in the control process
• A cybernetic control system
o One that is self-contained in its performance-monitoring and correction
capabilities
• The management control process involves four steps:
o 1. Establish objectives and standards
o 2. Measure actual performance
o 3. Compare results with objectives and standards
o 4. Take corrective action as needed
Step 1: Establish objectives and standards
• performance objectives should represent key results to be achieved (KPI)
• Output standards measure performance results in terms of quantity, quality, cost or
time. E.g. % error
• Input standards measure work efforts that go into a performance task. E.g.
conformance to rules and procedures such as safety
Step 2: Measure actual performance
• Goal here is to accurately measure the performance results (output standards)
and/or the performance efforts (input standards)
o Use a combination of approaches increase both the number of input sources
and the probability of getting reliable information
o What we measure is probably more critical to the control process than how
we measure
Step 3: Compare results with objectives and standards
• Acceptable range of variation- deviations that exceed this range become significant
ad eed the aagers attetio
• A historical comparison uses past performance as a benchmark for evaluation
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Control: provides, a measure of what is happening, check those measurements against some defined objective, determine whether the business is on track, appropriate controls can help identify specific performance gaps and areas for improvement. The role of controlling in the management process. Steps in the control process: a cybernetic control system, one that is self-contained in its performance-monitoring and correction capabilities, the management control process involves four steps, 1. Compare results with objectives and standards: 4. Step 1: establish objectives and standards: performance objectives should represent key results to be achieved (kpi, output standards measure performance results in terms of quantity, quality, cost or time. Input standards measure work efforts that go into a performance task. E. g. conformance to rules and procedures such as safety. Remuneration and benefits: base remuneration attracts people to jobs, can also add, performance related pay, merit pay, commission, fringe benefits, salary sacrifices. Inventory control: the amount of materials or products kept in storage.
