The Control Function
Control is the combination of different activities of regulating organizational activities to make them consistent with the expectations established in plans, targets, and standards of performance.
Why are we controlling?
- To face environmental changes
- To find errors
Areas
- Physical resources - For example: Inventory management, quality control and equipment control
- Human Resources - People who are providing their services to organisation. For example : Selection & placement, training & development
- Information resources - Such as, public relations, environment analysis, production scheduling
- Financial resources - Equity and long term liabilities. For example : managing capital funds and cash flow, collection and payment of debts
Controller - A position in an organization that helps line managers with their control activities.
Also, managers are accountable for and involved in activities for which control is their responsibility.
Middle-level managers do controlling functions.
Steps in Control Process
- Establish Stands
- Measure Performance
- Compare Performance against Standards
- Consider Corrective Action
Different Types
A comprehensive management control system that balances traditional financial measures with operational measures leading to a company's critical success factors.
This type can be used to control the identified functions.
- Financial
- Customer - Customer expectations
- Learning growth - we should provide proper learning functions for organization employees.
- Business process - Should satisfy shareholders and customers. Because they are the one who buy business products.
Budgetary Control
Budgets may be established at any organizational level. Such as divisional budgets. Also, this is for one year or less. Budgets may be expressed in financial terms, units of output (Such as a number of units manufacturing), or other quantifiable factors.
- Budget provide four purposes.
- Help managers to coordinate resources and projects - allocating business resources or different business transactions.
- Help to define the established standards for control.
- Provide guidelines about the organization's resources and expectations - Provide guidance to employees and managers to achieve organisational goals and objectives.
- Enable the organization to evaluate the performance of managers and organizational units.
Financial Control
- Financial Statements - This is a profile of some aspects of an organization's financial circumstances.
- Balance sheet - A listing of assets (for example : Current and fixed), Liabilities (For example: Short and long-term) and stockholders equity at a specific point in time (For example :Mid year and year ending) that summarise the financial o the organisation.
- Income statement - This is summery of financial performances over the period of time. Such as, Profit or loss,
- Ratio Analysis
- Liquidity Ratio - Organisation use balance sheet to calculate that
- Debt Ratio - Balance sheet use to measure
- Return Ratio - Use income statement to identify ross profit. Also use balance sheet to identify assets.
- Coverage Ratio - Use income statement
- Operating Ratio - Income statement use to measure
- Financial Audits - An independent appraisal of an organization's accounting, financial, and operational systems.
- External Audits - Experts who are not employees of the organisation.
- Internal audit - Appraisal conducted by employees of the organisation.
Structural Control
- Bureaucratic Control - A form of organization control characterised by formal and mechanistic structural arrangements.
- This based on rules and regulations.
- Decentralized Control - An approach to organisational control characterised by informal and organic structural arrangement. ( Giving the authority for other departments)
Characteristics of Effective Control
- Integration with Planning - This is linked to planning
- Flexibility - Able to change to suite new condition or situation
- Accuracy - Ability to do something skilfully without mistakes.
- Timeless - Should provide information as often as necessary.
- Objectivity - This should free from bias and misrepresentation.
Issues & Challenges
- Over-control - This affects employee behaviour
- Inappropriate Focus - Not focusing organization goals and objectives in proper way. Such as too narrow system, focus too much on quantifiable variables
- Reward for Inefficiency - such as operational inefficiency
- Too much accountability - This resist by poorly performing workers.
How to overcome issues and challenges?
- Need to guide our employees in proper way.
- Focusing for organization goals and objectives.
- Realistic targets supply or employees.
- Friendly environment.
- Providing reward for employee to appropriate works.
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