Welcome to MT140 Introduction to Management Professor Rhonda Shannon

Unit 6 Seminar – Control

This seminar is being recorded

Unit 5 Leadership: ReviewLeaders Provide:

• Vision: A mental image of a possible and desirable future state of the organization.

• Leadership:

- Supervisory Leadership: Behavior that provides day-to-day guidance, support, and corrective feedback.

- Strategic Leadership: Gives purpose and meaning to organizations by anticipating and envisioning a viable future for the organization and working with others to initiate changes that create such a future.

Unit 5 Leadership: Review

• Power is Central to Leadership: 5 Types of Power

-1) Legitimate Power: right and authority

-2) Reward Power: controls rewards

-3) Coercive Power: punishment control

-4) Referent Power: motivational

-5) Expert Power: One in which the leader has certain expertise or knowledge that influences others to follow in order to gain this knowledge or expertise.

Unit 5 Leadership: Review Charismatic vs. Transformational Leaders

• Charismatic Leaders: Leaders who are dominant, self-confident, convinced of the righteousness of his or her beliefs, and able to arouse a sense of excitement and adventure in followers.

• Transformational Leaders: Leaders who motivate people to transcend their personal interests for the good of the group.

• Transactional Leaders: Leaders who manage through their transactions, using their legitimate reward, and coercive powers to give commands and exchange rewards for services rendered.

Any questions ?

Unit 6 Objectives

Tonight we will be covering the following:• The 4 Steps of Control Systems (Bureaucratic Control

Systems)

• Six Sigma

• Management Audits Control Various Systems

• Budgetary Control compared to a plan

Control

Control is one of the four primary functions of management. Any process that directs activities toward the achievement of organizational goals.

Formal Control Systems (also referred to as Bureaucratic Control Systems) measure

progress toward organizational goals, making corrections and adjustments as needed.

Control

Market Controls – Use economic forces (such as budgets, inter-company transactions) to

regulate performance.

Clan Control – Features employment empowerment and focuses on the ability of

motivated employees to be trusted to exercise self-control in their day-to-day activities. This

represents a more current way of viewing control.

4 Steps of Control Systems

1. Setting Performance Standards

2. Measuring Performance

3. Comparing performance against the standards and determining deviations

4. Taking action to correct problems and reinforce successes

Step 1 of Control Systems

1. Setting performance standards

Standard - expected performance for a given goal, a target that establishes a desired performance level; motivates performance, and serves as a benchmark

against which actual performance is assessed

Can you think of an example of a goal and its standard in your workplace?

Step 2 of Control Systems

2. Measuring performance

Performance data can be obtained:• Written Reports• Oral Reports• Personal Observation

How are performance goals measured in your workplace?

Step 3 of Control Systems

3. Comparing performance against the standards and determining deviations

Principle of Exception – Control is enhanced by concentrating on the exceptions to, or significant deviations from, the expected result or standard.

What methods do you or your managers use to perform this step?

Step 4 of Control Systems

4. Taking action to correct problems and reinforce successes

Alternative approach to correct:• Specialist Control• Operator Control

Can you name some methods that managers use to correct problems or reinforce successes in

your workplace?

Bureaucratic Control Systems Control occurs Before, During and After Operations

Combines 3 approaches, defined according to their Timing:

1.Feedforward Control – takes place before operations begin and includes policies, procedures, and rules designed to ensure that planned activities are carried out properly.

2.Concurrent Control – takes place while plans are being carried out.

3.Feedback Control – focuses on the use of information about results to correct deviations form the acceptable standard after they arise.

The Control Process

Any questions ?

Six Sigma

What is Six Sigma?• Developed by Motorola, USA in 1981. As of 2010, it enjoys

widespread application in many sectors of industry.

• Six Sigma is a quality management concept that has the goal of eliminating defects from a company’s product or service.

• It involves adjusting various aspects of and around the product or service until it is consistently what the customers want and need.

• The term “sigma” refers to how far a product or service is from being “perfect”, free of defects (relative to customers’ wants and needs).

• This state of “perfection” or being as free of defects as possible is believed to be achieved at Six Sigma.

Role of Six Sigma

What is the Role of Six Sigma?

The higher the sigma number, the lower the level of variation or defects.

At six-sigma-level, a process is producing fewer than 3.4 defects per million (approximately 99.99966 accuracy)

For those organizations that use this tool, the management works hard to engage the organization in

an effort to eliminate the causes of all defects in the product or service.

Role of Six Sigma

One approach that managers may use to address defects is to place employees in work teams that

focus on finding improvements and solutions that will prevent a certain defect from arising in the first place.

Implementation of Six Sigma

One key innovation of Six Sigma involves the "professionalizing" of quality management functions. Prior to Six Sigma, quality management in practice was largely relegated to the production floor and to

statisticians in a separate quality department. Formal Six Sigma programs borrow martial arts ranking

terminology to define a hierarchy (and career path) that cuts across all business functions.

Implementation of Six Sigma

Six Sigma roles for successful implementation:• Executive Leadership - includes the CEO and other

members of top management. They are responsible for setting up a vision for Six Sigma implementation. They also empower the other role holders with the freedom and resources to explore new ideas for breakthrough improvements.

• Champions - take responsibility for Six Sigma implementation across the organization in an integrated manner. The Executive Leadership draws them from upper management. Champions also act as mentors to Black Belts.

• Master Black Belts - identified by champions, act as in-house coaches on Six Sigma. They devote 100% of their time to Six Sigma. They assist champions and guide Black Belts and Green Belts. Apart from statistical tasks, they spend their time on ensuring consistent application of Six Sigma across various functions and departments.

Implementation of Six Sigma

• Black Belts - operate under Master Black Belts to apply Six Sigma methodology to specific projects. They devote 100% of their time to Six Sigma. They primarily focus on Six Sigma project execution, whereas Champions and Master Black Belts focus on identifying projects/functions for Six Sigma.

• Green Belts - the employees who take up Six Sigma implementation along with their other job responsibilities, operate under the guidance of Black Belts.

• Yellow Belts - trained in the basic application of Six Sigma management tools, work with the Black Belt throughout the project stages and are often the closest to the work.

Any questions ?

Internal and external Audits

What is an internal audit?

What is an external audit?

External Audits

An independent Public accounting firm engaged by the company subject to the audit, to express an opinion on whether the company's financial statements are free of material misstatements, whether due to fraud or error.

For publicly-traded companies, external auditors may also be required to express an opinion over the effectiveness

of internal controls over financial reporting. External auditors may also be engaged to perform other agreed-

upon procedures, related or unrelated to financial statements. Most importantly, external auditors, though engaged and paid by the company being audited, are

regarded as independent auditors.

Internal AuditsInternal auditors are employed by the organization they audit.

Internal auditors perform various audit procedures, primarily related to procedures over the effectiveness of the company's

internal controls over financial reporting.

Due to the requirement of Section 404 of the Sarbanes Oxley Act of 2002 for management to also assess the effectiveness of

their internal controls over financial reporting (as also required of the external auditor), internal auditors are utilized

to make this assessment.

Though internal auditors are not considered independent of the company they perform audit procedures for, internal auditors of publicly-traded companies are required to report directly to

the board of directors, or a sub-committee of the board of directors, and not to management, so to reduce the risk that

internal auditors will be pressured to produce favorable assessments.

Have you ever participated in an audit at your workplace? What type of audit was it? What were some of the pros

and cons of the audit experience that you noticed?

Audit experience?

One of the most widely recognized and commonly used methods of managerial control.

It ties together feedforward control, concurrent control and feedback control, depending on the point at which it

is applied.

The process of finding out what’s being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences.

Budgetary Control

Budgetary control proceeds through 3 stages:

1.Establishing expectancies

2.Budgetary Operations

3.Responding appropriately

Budgetary Control

Common Types of Budgets:

1.Sales Budget- Forecasts of sales by month- Sales area- Product

2.Cost Budget - Human resources- Other support departments

Types of Budgets

3. Cash Budget- Anticipated receipts- Working Capital Available- Periods and amounts of Cash Available

4. Capital Budget - Cost of fixed assets- Investments

5. Master Budget - Major Activities of the business

Types of Budgets

Special Notes: Unit 6 Quiz!

In this unit, you will have a special 20 question quiz covering material from present and past units in your Bateman & Snell Text: Chapters 1, 4, 6, 9, and 13.

Tip: By looking at each Unit’s reading, you can narrow the actual page range from which these questions come. For example, Unit 6 has assigned Chapter 13 reading in pp. 286-307.

This will be multiple choice and you will have 2 hours to complete this.

This quiz is more comprehensive than you have previously encountered in this class. Therefore, I suggest that you use your book to your advantage. This includes a good review of the material.

Note: When you enter the quiz area be sure to complete the quiz and submit it or it will not let you re-enter! The only way you can re-enter in such situations is to contact me and I will have to clear out all of your answers and reset the quiz before you are allowed to re-enter.

Please Note: This quiz is designed not to show you the questions you missed! Therefore, if you desire to know what questions you missed, contact me after Unit 6 closes and I will provide you with these.

Any questions ?

Instructor Contact Information

Professor Rhonda Shannon. MBA (Eastern Time Zone)

Email” rshannon@kaplan.edu

Phone: (317) 885-0469

Cell: (317) 690-9917

AIM: RhondaShannon1

I am only a mouse click or a call away!

Also, don’t forget I will be posting my notes, PowerPoint and transcripts out on doc sharing and will also be emailing you those as well.

You are always welcome to listen to the archives after the Seminar.

Thanks for attending seminar

I look forward to seeing you next week.

Everyone have a great night!