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MGMT (10)
Chapter 16

MGMT 1000 Chapter Notes - Chapter 16: Resource Consumption, Specific Performance


Department
Management
Course Code
MGMT 1000
Professor
David Stuewe
Chapter
16

This preview shows pages 1-2. to view the full 7 pages of the document.
Chapter(16:(Managerial(Controls:(Evidence-Based(Decision(
Making
What’s'in'chapter?
Describe'controls'for'monitoring'and'measuring'
performance'
-
how'to'create'a'well-designed'organizational'control'
system
-
What%Is%Controlling,%and%Why%is%It%Important?
CONTROLLING:
the'process'of'monitoring'activities'to'ensure'that'they'
are'being'accomplished'as'planned,'correcting'any'
significant'deviations'and,'where'necessary,'modifying'the'
plan
-
an'effective'control'system'ensure'that'activities'are'
completed'in'ways'that'lead'to'the'attainment'of'the'
organization’s'goals
-
Why(is(Control(Important?
Control'is'important'because'it'is'the'final'link'in'the'four'
management'functions'(planning,'leading,'organizing,'and'
CONTROL)
only'way'managers'know'whether'organizational'
goals'are'being'met,'and'if'not,'the'reasons'why.
The'value'of'the'control'system'lies'in'its'relation'to'
planning,'empowering'employees'and'protecting'
the'organization'and'workplace.
-
If'managers'did'not'control,'they’d'have'no'way'of'
knowing' whether'their'goals'and'plans'are'on'target'and'
what'future'actions'to'take
-
Another'reason'control'is'Important:"employee"
empowerment
-
DECISION'SUPPORT'SYSTEM'(DSS):
A'computer-based' information'system'that'provides'
decision'makers'with' information'relevant'to'the'
decisions'they' are'making
o
Properly'designed'system'enhances'employee’s'
ability'to'make'better'decisions
o
-
An'effective'control'system'provides'information'and'
feedback'on'employee'performance'to'both'managers'
and'employees
-
The%Control%Process
THE'CONTROL'PROCESS:
A'3-step'process'that'includes;
-
measuring'actual'performance,'
-
comparing'actual'performance'against'a'standard,'and'
-
taking'managerial'action'to'correct'deviations'or'
inadequate'standards
-
Step(1:(Measuring(Performance
How'We'Measure?
Personal'observations
-
Statistical'reports
-
Oral'reports
-
Written'reports'
-
What'We'Measure?
Whatever'we'measure'determines'what'people'will'
attempt'to'excel'at
-
Control'criteria'should'recognize'the'different'activities'
that'managers'supervise
-
Activities'that'can'be'measured'in'quantifiable'or'
subjective'terms
Latter'is'better'than'nothing
o
-
Step(2:(Comparing(Performance(against(Standard
Determining'the'degree'of'variation'between'actual'
performance'and'the'standard
Critical'to'determine'the'acceptable'RANGE'OF'
VARIATION
-
Deviations'that'exceed'this'range'become'significant'and'
need'the'manager’s'attention
-
Managers'are'particularly'concerned'with'the'size'and'
direction'of'the'variation
-
Step(3:(Taking(Managerial(Action
“doing'nothing
Only'if'deviation'is'insignificant
o
1.
“correcting'actual'performance”
Immediate'corrective'action:
Corrects'problems'at'once'to'get'performance'
back'on'track
-
o
Basic'corrective'action:
Looks'at'how'and'why'performance'deviated'
and'then'proceeds'to'correct'the'source'of'
deviation
-
o
2.
“revise'the'standard
determine'whether'standard'is'realistic,'fair'and'
achievable
o
3.
Controlling%for%Organizational%and%Employee% Performance
Performance(Standards
PERFORMANCE:'the'end'result'of'an'activity
-
ORGANIZATIONAL'PERFORMANCE:'the'accumulated'
results'of'all'the'organization’s'work'activities
-
Measures(of(Organizational(Performance
Most'frequently'used'organizational'performance'measures'
include'organizational'productivity,'organizational'
effectiveness,'and'industry'and'company'rankings…
Organizational'Productivity
Productivity is'the'amount'of'goods'or'services'produced'
divided'by' the'inputs' needed'to'generate'that' output
a.
Output measured'by'sales'revenue'($'x'Quantity)b.
Input"measured'by'costs'of'acquiring'and'transforming'
resources'into'outputs
c.
1.
Organizational'Effectiveness
a'measure'of'how'appropriate'organizational'goals'are'
and'how'well'those'goals'are'being'met
a.
2.
Rankings3.
Controlling(for(Employee(Performance
Follow'the'control'process
-
Disciplinary'actions:'actions'taken'by'a'manager'to'enforce'the'
organization’s'work'standards'and'regulations
Delivering'Effective'Performance'Feedback
Ensures"employees"know"where"they"standa.
Must"feel"heard,"understood"and"respectedb.
1.
Using'Disciplinary'Actions
Discipline"used"to"both"control"and"correct"employee"
performance
a.
2.
Tools%for%Measuring%Organizational%Performance
Feed-Forward(Control: focuses'on'preventing'anticipated'
problems,'since'it'takes'place'before'the'actual'activity
Concurrent(Control:(takes'place'while'an'activity'is'in'progress
Feedback(Control:(takes'place'after'a'work'activity'is'done
FINANCIAL(CONTROLS
Ratio'analysis
Liquidity'ratios: measure'an'organizations'ability'to'meet'
its'current'debt'obligations.
-
Leverage'ratios: examine'the'organizations'use'of'debt'to'
finance'its'assets'and'whether'it’s'able'to'meet'the'
interest'payments'on'the'debt.
-
Activity'ratios: assess'how'efficiently'a'company'uses'its'
assets
-
Probability'ratios: measure'how'efficiently'and'effectively'
the'company'uses'its'assets'to'generate'profits
-
Budgets'analysis:'planning and'control tools
Indicates'which'work'activities'are'important'and'what'
and'how'much'resources'should'be'allocated'to'those'
activities
-
Also,'provide'managers'with'quantitative'standards'
against'which'to'measure'and'compare'resource'
consumption
-
INFORMATION(CONTROLS
Dealt'with'in'two'ways:'(1)'as'a'tool'to'help'them'control'other'
organizational'activities'and'(2)'as'an'organizational'asset'they'
need'to'protect
How(is(information(used(in(controlling?
-
Managers'need'the'right'information'at'the'right'time'and'
in'the'right'amount'to'monitor'and'measure'
organizational'activities
o
A'management'information'system'(MIS) is'a'system'used'
to'provide' managers'with'needed'information'(processed'
and'analyzed'data)'on'a'regular'basis.
o
Emerging'trend'in'MIS'systems'is'the'use'of'a'dashboard:
An'interface'that'presents'managers'with'an'easy-
to-read,'real-time'user'interface,'often'employing'a'
graphical'presentation'of'the'data,'to'enable'
decision'makers'to'make'informed'decisions'quickly
§
o
Controlling(Information
Must'have'comprehensive'and'secure'controls'in'
place'to'protect' information
o
Should'be'monitored'regularly'to'ensure'all'possible'
precautions'are'in'place'to'protect' important'
information
o
-
BALANCED(SCORECARD
Approach'to'evaluating'organizational'performance'from'
more'than'just'the'financial'perspective
-
Looks'at'four'areas:
Financial
o
Customer
o
Internal'processes
o
People/innovation/growth' assets
o
-
Develop'goals'in'each'of'the'four'areas'and'then'measure'
whether' the'goals'are'being'met
-
Benchmarking(of(best(practices
Benchmarking:'the'search'for'the'best'practices'
among'competitors'or'non-competitors'that'lead'to'
their'superior'performance
o
Benchmark:'the'standard'of'excellence'against'
which'to' measure'and'compare
o
can'be'used'to'identify'specific'performance'gaps'
and'potential'areas'of'improvement
o
internal:'employee'suggestion'box
o
-
Contemporary% Issues%in%Control
Include:
controlling'customer'interactions
-
organizational'governance
-
adjusting'controls'for'cross-cultural'differences
-
global'turmoil
-
emerging'workplace'concerns
-
Ch.16%-Managerial%Controls
Friday,'November' 17,'2017
3:34'PM

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

Chapter(16:(Managerial(Controls:(Evidence-Based(Decision(
Making
What’s'in'chapter?
Describe'controls'for'monitoring'and'measuring'
performance'
-
how'to'create'a'well-designed'organizational'control'
system
-
What%Is%Controlling,%and%Why%is%It%Important?
CONTROLLING:
the'process'of'monitoring'activities'to'ensure'that'they'
are'being'accomplished'as'planned,'correcting'any'
significant'deviations'and,'where'necessary,'modifying'the'
plan
-
an'effective'control'system'ensure'that'activities'are'
completed'in'ways'that'lead'to'the'attainment'of'the'
organization’s'goals
-
Why(is(Control(Important?
Control'is'important'because'it'is'the'final'link'in'the'four'
management'functions'(planning,'leading,'organizing,'and'
CONTROL)
only'way'managers'know'whether'organizational'
goals'are'being'met,'and'if'not,'the'reasons'why.
o
The'value'of'the'control'system'lies'in'its'relation'to'
planning,'empowering'employees'and'protecting'
the'organization'and'workplace.
o
-
If'managers'did'not'control,'they’d'have'no'way'of'
knowing' whether'their'goals'and'plans'are'on'target'and'
what'future'actions'to'take
-
Another'reason'control'is'Important:"employee"
empowerment
-
DECISION'SUPPORT'SYSTEM'(DSS):
A'computer-based' information'system'that'provides'
decision'makers'with' information'relevant'to'the'
decisions'they' are'making
Properly'designed'system'enhances'employee’s'
ability'to'make'better'decisions
-
An'effective'control'system'provides'information'and'
feedback'on'employee'performance'to'both'managers'
and'employees
-
The%Control%Process
THE'CONTROL'PROCESS:
A'3-step'process'that'includes;
-
measuring'actual'performance,'
-
comparing'actual'performance'against'a'standard,'and'
-
taking'managerial'action'to'correct'deviations'or'
inadequate'standards
-
Step(1:(Measuring(Performance
How'We'Measure?
Personal'observations
-
Statistical'reports
-
Oral'reports
-
Written'reports'
-
What'We'Measure?
Whatever'we'measure'determines'what'people'will'
attempt'to'excel'at
-
Control'criteria'should'recognize'the'different'activities'
that'managers'supervise
-
Activities'that'can'be'measured'in'quantifiable'or'
subjective'terms
Latter'is'better'than'nothing
o
-
Step(2:(Comparing(Performance(against(Standard
Determining'the'degree'of'variation'between'actual'
performance'and'the'standard
Critical'to'determine'the'acceptable'RANGE'OF'
VARIATION
-
Deviations'that'exceed'this'range'become'significant'and'
need'the'manager’s'attention
-
Managers'are'particularly'concerned'with'the'size'and'
direction'of'the'variation
-
Step(3:(Taking(Managerial(Action
“doing'nothing
Only'if'deviation'is'insignificant
o
1.
“correcting'actual'performance”
Immediate'corrective'action:
Corrects'problems'at'once'to'get'performance'
back'on'track
-
o
Basic'corrective'action:
Looks'at'how'and'why'performance'deviated'
and'then'proceeds'to'correct'the'source'of'
deviation
-
o
2.
“revise'the'standard
determine'whether'standard'is'realistic,'fair'and'
achievable
o
3.
Controlling%for%Organizational%and%Employee% Performance
Performance(Standards
PERFORMANCE:'the'end'result'of'an'activity
-
ORGANIZATIONAL'PERFORMANCE:'the'accumulated'
results'of'all'the'organization’s'work'activities
-
Measures(of(Organizational(Performance
Most'frequently'used'organizational'performance'measures'
include'organizational'productivity,'organizational'
effectiveness,'and'industry'and'company'rankings…
Organizational'Productivity
Productivity is'the'amount'of'goods'or'services'produced'
divided'by' the'inputs' needed'to'generate'that' output
a.
Output measured'by'sales'revenue'($'x'Quantity)b.
Input"measured'by'costs'of'acquiring'and'transforming'
resources'into'outputs
c.
1.
Organizational'Effectiveness
a'measure'of'how'appropriate'organizational'goals'are'
and'how'well'those'goals'are'being'met
a.
2.
Rankings3.
Controlling(for(Employee(Performance
Follow'the'control'process
-
Disciplinary'actions:'actions'taken'by'a'manager'to'enforce'the'
organization’s'work'standards'and'regulations
Delivering'Effective'Performance'Feedback
Ensures"employees"know"where"they"standa.
Must"feel"heard,"understood"and"respectedb.
1.
Using'Disciplinary'Actions
Discipline"used"to"both"control"and"correct"employee"
performance
a.
2.
Tools%for%Measuring%Organizational%Performance
Feed-Forward(Control: focuses'on'preventing'anticipated'
problems,'since'it'takes'place'before'the'actual'activity
Concurrent(Control:(takes'place'while'an'activity'is'in'progress
Feedback(Control:(takes'place'after'a'work'activity'is'done
FINANCIAL(CONTROLS
Ratio'analysis
Liquidity'ratios: measure'an'organizations'ability'to'meet'
its'current'debt'obligations.
-
Leverage'ratios: examine'the'organizations'use'of'debt'to'
finance'its'assets'and'whether'it’s'able'to'meet'the'
interest'payments'on'the'debt.
-
Activity'ratios: assess'how'efficiently'a'company'uses'its'
assets
-
Probability'ratios: measure'how'efficiently'and'effectively'
the'company'uses'its'assets'to'generate'profits
-
Budgets'analysis:'planning and'control tools
Indicates'which'work'activities'are'important'and'what'
and'how'much'resources'should'be'allocated'to'those'
activities
-
Also,'provide'managers'with'quantitative'standards'
against'which'to'measure'and'compare'resource'
consumption
-
INFORMATION(CONTROLS
Dealt'with'in'two'ways:'(1)'as'a'tool'to'help'them'control'other'
organizational'activities'and'(2)'as'an'organizational'asset'they'
need'to'protect
How(is(information(used(in(controlling?
-
Managers'need'the'right'information'at'the'right'time'and'
in'the'right'amount'to'monitor'and'measure'
organizational'activities
o
A'management'information'system'(MIS) is'a'system'used'
to'provide' managers'with'needed'information'(processed'
and'analyzed'data)'on'a'regular'basis.
o
Emerging'trend'in'MIS'systems'is'the'use'of'a'dashboard:
An'interface'that'presents'managers'with'an'easy-
to-read,'real-time'user'interface,'often'employing'a'
graphical'presentation'of'the'data,'to'enable'
decision'makers'to'make'informed'decisions'quickly
§
o
Controlling(Information
Must'have'comprehensive'and'secure'controls'in'
place'to'protect' information
o
Should'be'monitored'regularly'to'ensure'all'possible'
precautions'are'in'place'to'protect' important'
information
o
-
BALANCED(SCORECARD
Approach'to'evaluating'organizational'performance'from'
more'than'just'the'financial'perspective
-
Looks'at'four'areas:
Financial
o
Customer
o
Internal'processes
o
People/innovation/growth' assets
o
-
Develop'goals'in'each'of'the'four'areas'and'then'measure'
whether' the'goals'are'being'met
-
Benchmarking(of(best(practices
Benchmarking:'the'search'for'the'best'practices'
among'competitors'or'non-competitors'that'lead'to'
their'superior'performance
o
Benchmark:'the'standard'of'excellence'against'
which'to' measure'and'compare
o
can'be'used'to'identify'specific'performance'gaps'
and'potential'areas'of'improvement
o
internal:'employee'suggestion'box
o
-
Contemporary% Issues%in%Control
Include:
controlling'customer'interactions
-
organizational'governance
-
adjusting'controls'for'cross-cultural'differences
-
global'turmoil
-
emerging'workplace'concerns
-
Ch.16%-Managerial%Controls
Friday,'November' 17,'2017 3:34'PM
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