MGMT100 Chapter Notes - Chapter 11: Inventory Control, Operations Management, Quality Control
MGMT100: MANAGING: PEOPLE, SYSTEMS AND CULTURE, WEEK 11
Learning Outcome:
Analyse management functions in the local and international context (LO 8)
Essential Question:
How can an organisation attempt to ensure that its remuneration and benefits program actually increases
organisational control?
Notes:
Controlling
• Controlling – the process of measuring performance and taking action to ensure the planned
outcomes are achieved
Steps in the control process:
1. Establish objectives and standards
• The control process starts with planning; performance objectives should represent key results
to be achieved
• Two types of standards common in the control process:
o Output standards – measure performance results in terms of outcomes like quantity,
quality, cost or time taken to accomplish work
➢ eg. Dollar deviation from budgeted expenditures, number or units produced or
customers served in a time period
o Input standards – measure effort in terms of the amount of work expended in task
performance
➢ eg. Conformance to rules and procedures, efficiency in the use of resources, work
attendance
2. Measure actual performance
• Accurately measure the performance results (output standards) and the performance efforts
(input standards)
• The measurement must be accurate enough to spot significant difference between what is
really taking place and what was originally planned
• Without measurement, effective control is not possible
3. Compare results with objectives
• Control equation:
o Need for action = desired performance – actual performance
o Uses past performance as a benchmark for evaluating current performance
4. Take corrective action as needed
• The control equation indicates that the greater the measure difference between desired and
actual performance, the greater the need for action – this step tries to improve performance
• Management by exception – the practice of giving priority attention to situations that show the
greatest need for action
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