Chapter 6Chapter 6

CONTROLLING CONTROLLING

By :Nasser A. Kadasah

Chapter 6 will cover:Chapter 6 will cover:

6.1 Controlling and Planning

6.2 Control Process

6.3 Types of Control

ControllingControlling

Definition: Determining what is being accomplished through evaluating performance.

And applying corrective measures if necessary

So that performance takes place according to plans.

6.1 Controlling & Planning6.1 Controlling & Planning

Both bear close relationship How:

Planning identifies commitment to action for future. Controlling to ensure that the commitment are

carried out. When controlling clearly demonstrates that

planning cannot be implemented.

THEN: Modified or new plan must be developed.

6.2 Control Process6.2 Control Process

6.2.1 Measuring Performance

6.2.2 Comparing Performance with Standards

6.2.3 Correcting Deviations

6.2.1 Measuring Performance

6.2.2 Comparing Performance with Standards

6.2.3 Correcting Deviations

6.2 Control Process6.2 Control Process

Measuring performance. Comparing performance with the standard,

and ascertaining the difference, if any. Correcting unfavorable deviation by means

of remedial action.

Control ProcessControl Process

Desired Performance

ActualPerformance

Measurementof Actual

Performance

Comparisonof Actual

Performanceagainst Standards

Identificationof Deviations

Analysis of Causes of

Deviations

Program of Corrective

Action

Implementationof Corrective

Action

6.2.1 Measuring Performance6.2.1 Measuring Performance

Determination of the quantity or capacity of a well-defined entity.

Without measurement: A manager has to guess or use a rule-of-

thumb method.

Measurement requires a measuring unit & account of how many times the entity is under consideration.

6.2.2 Comparing Performance with Standards6.2.2 Comparing Performance with Standards

When there is difference between the performance & the standard, judgment frequently required to assess its significance.

To establish a rigid absolute variation is inadequate.

Relatively small deviation may be approved. While, in other cases just a slight deviation may be serious.

6.2.3 Correcting Deviations…(1)6.2.3 Correcting Deviations…(1)

Ensures that operations are adjusted. Wherever significant variation are

uncovered, vigorous and immediate action is imperative.

Effective control cannot tolerate needless delays, excuses or excessive exceptions.

Correcting Deviations…(2)Correcting Deviations…(2)

For maximum effectiveness, correcting the deviation should be accompanied by fixed & individual responsibility.

Fixed individuals responsibility tends to personalized the work.

6.3 Types of Control6.3 Types of Control

6.3.1 Preliminary Control

6.3.2 Concurrent Control

6.3.3 Feedback Control

6.3.1 Preliminary Control

6.3.2 Concurrent Control

6.3.3 Feedback Control

6.3 Types of Control6.3 Types of Control

Controls have been designated as: Preliminary control Before operation

begins. Concurrent control During the action of

carrying out the plans. Feedback control Focuses on the use of

information about previous result to correct deviation from the acceptable standard.

6.3.1 Preliminary Control 6.3.1 Preliminary Control

Includes the development of policies, procedures and rules that are designed to ensure that planned activities will be carried out properly.

Helps in unifying the understanding of policies & procedures.

Consistency in the use of policies, procedures is aided by the controlling efforts. Example: A sale manager may have a policy that the

manager must authorize any change in price from the published price in writing ; no salesperson is permitted to change any price. In effect, this clarifies the existent policy and provides control to the sale manager.

6.3.2 Concurrent Control6.3.2 Concurrent Control

The heart of any operating control system which includes directing, monitoring and fine-tunings of activities as they occur .

Concurrent Control can assist in guaranteeing that the plan will be carried out at the specific time and under required conditions. Example: On production floor, all efforts directed towards

getting out the right quantity of the right product at the right time.

6.3.3 Feedback Control6.3.3 Feedback Control

Implies that some data have been gathered & analyzed and the results returned to someone or something in the process being controlled so that corrections may be made.

Timing is critical, if feedback control is to have any benefits. Example: Banks which are trying to move towards real

time transactions with the electronics fund transfer systems must cope with slow manual systems that takes day to clear a cheque.