Foundations of Control Pertemuan 13 (Thirteenth

Meeting)

Matakuliah : J0562 / Management

Tahun : 2010

Learning Outcome

Student should be able to prove that controlling has an important

role to achieve organization goals -> C3

Learning Outline

• What Is Control • Why Is Control Important • The Control Process• Controlling for Organizational Performance• Tools for Controlling Organizational Performance• Contemporary Issues in Control

1. What Is Control

It’s the process of monitoring, comparing, and correcting work performance

b. Characteristic of Three Approaches to Control Systems:

1) Market control2) Bureaucratic control3) Clan control

a. Definition

2. Why Is Control Important

a. The Values of Control:1) Related to planning2) Empowering employees3) Protecting the organization and it’s assets

b. The Planning-Controlling Link

Controlling

Leading

Organizing

Planning

StandardsMeasurementsComparisonActions

GoalsObjectivesStrategiesPlans

StructureHuman Resources Management

MotivatingLeadershipCommunicationIndividual and Group Behavior

3. The Control Process

a. Measuring

1) How We Measure

2) What We Measure

a) Personal Observation

b) Statistical Reportsc) Oral Reportsd) Written Reports

b. Comparing

AcceptableRange ofVariation

Standard

AcceptableUpper Limit

AcceptableLowerlimit

Time Period (t)

t t+1 t+2 t+3 t+4 t+5Mea

sure

men

t o

f P

erfo

rman

ce

c. Taking Managerial Action

1) Correct Actual Performance

a) Immediate corrective action

b) Basic corrective action

2) Revise the Standard

4. Controlling for Organizational Performancea. What Is Organizational Performance

Organizational performance is the accumulated end results of all the organization’s work activities

b. Measures of Organizational Performance

1) Organizational Productivity2) Organizational Effectiveness3) Industry and Company Rankings

Popular Industry andCompany Rankings

Forbes (www.forbes.com)Business Week (www.businessweek.com)

Fortune (www.fortune.com)

5. Tools for Controlling Organizational Performance

a. Feedforward/Concurrent/Feedbak Controll

1) Feedforward Control

2) Concurrent Control

3) Feedback Control

Corrects problems after

they occur

Correctsproblems asthey happen

Anticipatesproblems

Types of Control

Input Processes Output

FeedforwardControl

FeedbackControl

ConcurrentControl

b. Financial Controls1) Traditional Financial Control Measures

Popular Financial Ratios

Liquidity Current ratioCurrent assetsCurrent liabilities

Objective Ratio Calculation

Leverage Debt to assets

Acid test Current assets less inventories Current liabilities

Total debtTotal assets

Time interest earned

Profit before interest and taxes Total interest charges

Popular Financial RatiosObjective Ratio Calculation

Activity Inventory turnover Sales Inventory

Profitability

Total assets turnover Sales Total assets

Profit margin on sales Net profit after taxes Total sales

Net profit after taxes Total assets

Return on ivestment

2) Other Financial Control Measures

a) Economic value added (EVA)b) Market value added (MVA)

c. Balanced Scorecard

3) Internal processes

2) Customer

1) Financial

4) People/innovation/growth assets

d. Information Control

1) How Information Used in Controlling

Management Information System (MIS) is a system used to provide management with needed information on regular basis

2) Controlling Information

e. Benchmarking of Best Practices

6. Contemporary Issues in Control

a. Adjusting control for Cross-cultural Differences

b. Workplace Concerns

3) Workplace Violence

2) Employee Theft

1) Workplace Privacy

c. Controlling Customer Interactions

d. Corporate Governance

1) The role of Boards of Directors

2) Financial Reporting