W12 Busn Essen Lecture
Control in Management
Control is a primary function of management.
Defined as measuring results either in real-time or after they have occurred.
Importance of control:
Helps managers know if targets are met.
Facilitates identification of necessary actions to take, either to correct problems or to set new challenging targets.
Recognizing the need for stretch targets that motivate employees.
Nature and Importance of Control
Control is essential for ensuring that organizational goals are achieved.
Three steps in the control process:
Measuring Performance - Evaluate performance against pre-set standards.
Comparing Results - Determine if there is a deviation from standards or goals.
Taking Action - Initiate corrective measures if necessary, or maintain current practices if goals are met.
Examples of Control Mechanisms
Airplane Flight Control:
Pilots monitor altitude, speed, and navigation during flight as a form of real-time control.
Sales Performance Example:
Setting a sales target (e.g., 25 houses/year) and assessing performance based on actual sales (e.g., 24 or 3 houses sold).
Deviation understood in terms of acceptable range (1 house) versus significant deviation (22 houses).
Importance of Measurement
Measurement is the final link in the four functions of management (Planning, Organizing, Leading, Controlling).
It provides feedback on performance and guides decision making.
Performance grades (e.g., A, C) serve as feedback mechanism for students and employees alike.
Types of Control Mechanisms
Feedforward Control: Prevents problems before they occur. E.g., safety mechanisms in nuclear plants.
Concurrent Control: Adjustments made in real-time during the process, such as a manager providing coaching to employees performing tasks.
Feedback Control: Analysis after the fact, commonly used to evaluate overall performance against objectives after the time period has ended.
Sources of Information for Control
Personal Observation: Monitoring employee tasks directly.
Statistical Reports: Tracking productivity, absenteeism, and budget vs. actual financial performance.
Oral Reports: Quick updates during meetings.
Written Reports: Detailed analysis presented at set intervals (e.g., monthly, quarterly).
Key Concepts Related to Control
Productivity: Measure of output given inputs, helps evaluate workplace efficiency.
Effectiveness: Assessment of how well organizational goals are being achieved based on set objectives.
Performance Management: Involves monitoring and managing employee performance.
Disciplinary Actions
Actions taken to enforce work standards and maintain organizational performance can include verbal warnings, formal documentation, and potential termination for chronic issues such as absenteeism or poor performance.
Financial Controls
Evaluation through liquidity, leverage, profitability, and activity ratios to assess the financial health of a business.
Triple Bottom Line and Balanced Scorecard
Balanced assessment involving people, planet, and profit to evaluate overall organizational success.
Organizations are increasingly held accountable not only for financial performance but also ethical behavior and social responsibility.
Benchmarking
The practice of measuring one's against best practices within the industry and across other relevant fields for continuous improvement.
Organizational Governance
Corporations generally have a structure that includes boards of directors overseeing executive management to ensure strategic direction and accountability for performance within legal and ethical boundaries.