hftt

• Control

  The management task where performance is monitored to find errors to help the organisation achieve set goals and objectives
• Controlling

  • Defines the term 'control'
  • Explains why controlling is an important management task
  • Identifies and classifies the different types of control
  • Analyses the different types of control in terms of the transformation process and systems theory
  • Describes the steps in the control process
  • Understands various modern approaches to control
• Transformation process

  Converting resources (input factors) into final goods and services (outputs)
• Types of control

  • Pre-control
  • Concurrent control
  • Post-control
• Pre-control

  • Focuses on the quality control of activities in the transformation process
• Concurrent control

  • Focuses on the quality control of activities in the transformation process
• Post-control

  • Focuses on output factors, such as final goods provided, and services given
• The control process

  1. Develop performance standards

  2. Measure actual performance

  3. Compare actual performance with performance standards

  4. Reinforce good performance, and correct if necessary
• Developing performance standards

  • All standards must be linked to the set objectives or goals of the organisation, department, group or individual
  • Standards cannot be developed separately from the planning process
  • Standards first consider objectives set during the planning process, and are then formulated to judge performance that will produce these objectives
• Ways of describing performance standards

  • Quantitative
  • Qualitative
  • Behavioural
  • Time-based
• Measuring actual performance

  • Performance measurement reflects whether an organisation, department, team, or individual is successful and how successful it is or, if it is not, at what level of performance it is, and where it must improve
  • Management needs to consider what to measure and how often to measure it
  • Measurement should be done objectively
  • Measurement must be reliable, valid and linked to the objectives
  • It must focus on the critical performance areas of the job and it must result in the reinforcement of good performance or else the taking of corrective action
• Reinforcing good performance, and correcting if necessary

  • Reinforcement is needed if performance matches or exceeds the set standards, and corrective action is needed if performance does not meet the set standards
  • Corrective action must focus on defining the actual problem, based on the results in the third step. Once the reason for the problem is understood, corrective action can be taken
  • Where the problem is small, reinforcement can still be used to encourage improvement
• When to use a control measure

  • The advantage must be bigger than its cost, time and effort
  • Innovation and adaptability: Over-strict controls can limit entrepreneurial (creative, enthusiastic) behaviour in an organisation
  • Economic factors: The cost of applying controls should not exceed the benefit
  • Behavioural factors: If controls are applied in an autocratic ('bossy') way, they could spoil the motivation of employees
• Financial controls

  • Techniques to prevent or correct a wrong allocation of resources
  • Managers use financial information like financial statements, financial ratios and budgets
  • Various calculations, such as break-even analysis, are used to work out what will be profitable
  • Budgeting is used to establish standards, and statements of comprehensive income and loss and statements of financial position are used to compare current performance with those of previous years
• The balanced scorecard

  • A strategic instrument that can be seen as a comprehensive management system
  • Considers the targets, measures the performance, and interprets the outcomes, and then finally proposes an initiative for improvement
  • Can be utilised as a strategic control tool
• The benefits of controlling

  • Revise and update plans
  • Standardise
  • Judge employee performance
  • Prevent problems and crises
  • Protect the organisation
• Planning and control are interactive management tasks and should therefore always work in conjunction to be optimally effective
• For effective control, management must work with employees and create a win–win situation for all the parties involved
• Management must not focus only on financial controls to control performance. Organisations depend on their employees, and managers must remember that they are controlling employees and not finances