The Controlling Function

Explain how planning and controlling are coordinated.

     Control mechanisms complement plans at all levels. Strategic objectives have strategic controls; for example, a company will plan to achieve a certain level of profits by meeting annual sales objectives, and management will use interim financial statements and performance ratios to monitor profitability. At division levels, tactical controls Focus on plans in functional activities, such as production, marketing, human resources, and finances, with more specific and shorter&-term objectives. At the operating level, activity controls are designed to monitor immediate results, such as quality control sampling of work&-in process and tracking of daily work schedules.

Describe the process of controlling operations.

     Controlling is the process of keeping activities directed toward desired results. It begins with predetermined standards of performance, developed in plans, that provide clear and measurable objectives. Organizational activities are then monitored through control systems that measure results and activities.

Describe three major types of controls and their purposes.

     Steering controls are used to fine&-tune most organizational activities on a daily basis. First&-line managers make numerous subtle adjustments to steer work activities. Operating procedures are steering controls that provide guidelines for performance while helping managers check work progress.

     Yes/no controls also called go/no&-go controls are fail&-safe methods of avoiding problems in situations where no tolerance for error exists. These controls require managers to take one of two actions: Stop whatever is going on or go ahead as planned.

     Postaction controls are comparisons of results "after the fact" with  predetermined standards. Most marketing and financial reports are postaction controls whereby managers analyze past performance to make decisions about future plans and activities.

Explain how managers implement effective control systems.

     Managers must first decide what to control. Some activities require controls top expensive to justify them; others require controls without regard for costs. When what is to be controlled is determined, standards are developed that can be measured consistently and are acceptable to employees who must use and understand them. with effective standards, organizations can implement monitoring systems capable of accurately evaluating performance and recording  results. Through the monitoring process, comparisons are made between actual results and standards, and when variances occur, management is prompted to take corrective action. Taking action, however, means taking corrective actions that are understandable and acceptable to employees.

Describe production and operation, human resource, marketing, and financial controls.

     Production and operation controls focus on the daily activities of converting materials into products or performing services for customers. In manufacturing production controls monitor schedules, inventory, human and material resources, quality, equipment utilization, maintenance, shipping and handling, and production methods. Operation controls in service companies are not concerned with products, but otherwise are similar to controls used in manufacturing. They monitor asset utilization, supplies, schedules of services, work processes, quality performance, and all cost factors.

     Human resource controls center on employing the correct number of people with appropriate skills and abilities to achieve organization objectives Human resource managers also control employee wages, labor costs, compensation systems, pension plans, insurance, and training systems.

Describe how budgets and responsibility centers improve control and accountability.

     Budgets have dual purposes, for planning and controlling activities, and by having budgets that set reasonable planning standards, companies can more accurately forecast expected results. Accountability is enhanced when budgets are not used as absolute rules for performance but rather as guidelines for expected results, and when flexible budgets address "controllable" items. Managers cannot be held responsible for results over which they have no control&-thus the concept of responsibility centers where work activities and results from operations are specifically tied to the nature of the organizational unit Consequently, organizations have cost centers, revenue centers, profit centers, and investment centers, and managers in each type of center are accountable for relevant budget activities under their control.

Explain the concepts behind management and social audits.

     Management audits are "system" evaluations that address broad patterns of leadership or management behavior. Instead of focusing on individual behavior and performance results, these audits are designed to give an organization insights into how human resource systems are working, relationships between managers and their employees, and the profile of performance across the organization as compared to past performance or as benchmarked to other companies. The social audit examines whether the company is responsive to environmental and social issues, whether it is supportive of community  constituents, and whether it provides value for its members through internal social programs and an appropriate work environment.