BMGT 1327 Final Chap 14 " Basic elements of control"

Budgetary Control

- Budgets may be established at any organizational level. - Budgets are typically for one year or less. - Budgets may be expressed in financial terms, units of output, or other quantifiable factors.

Purposes of Control

- Provides organizations with indications of how well they are performing in relation to their goals. - Provides a mechanism for adjusting performance to keep organizations moving in the right direction.

Control

- The regulation of organizational activities in such a way as to facilitate goal attainment - The regulation of organizational activities so that some targeted element of performance remains within acceptable limits.

Overcoming Resistance to Change

-Encourage active participation in the change process -Provide education and communication about the change process -Facilitate the change process

Characteristics of Effective Control

-integration with planning -flexibility -accuracy -timeliness -objectivity

Characteristics of effective control

-integration with planning -flexibility -accuracy -timeliness -objectivity

Establishing Standards

1. Control standard is a target against which subsequent performance will be compared. - Should be expressed in measurable terms. - Should be consistent with organizational goals. - Should be identifiable indicators of performance. 2. Measuring Performance: - Performance measurement is an ongoing process. - Performance measures must be valid indicators (e.g., sales, costs, units produced) of performance.

Areas of Control

1. Physical resources: Inventory management, quality control, and equipment control. 2. Human resources: Selection and placement, training and development, performance appraisal, and compensation. 3. Information resources: Sales and marketing forecasts, environmental analysis, public relations, production scheduling, and economic forecasting. 4. Financial resources: Managing capital funds and cash flow, collection and payment of debts.

Types of Budgets

1. financial budgets 2. operating budgets 3. non monetary budgets

Bureaucratic Control

A form of organizational control characterized by formal and mechanistic structural arrangements.

Balance sheet

A list of the assets, liabilities, and owner's equity as of a specific date, usually at the close of the last day of a month or a year.

budget

A plan expressed in numerical terms

Controller

A position in organizations that helps line managers with their control activities

Financial statement

A profile of some aspect of an organization's financial circumstances

Adapting to environmental change

A properly designed control system can help managers anticipate , monitor, and respond to changing circumstances.

Income Statement

A summary of the revenue and expenses for a specific period of time, such as a month or a year.

Strategic Control

Aims at maintaining an effective alignment with the environment and achieving strategic goals. Focuses on structure, leadership, technology, human resources, and informational and operational systems. Focuses on the extent to which an implemented strategy achieves the organization's goals.

Decentralized Control

An approach to organizational control characterized by informal and organic structural arrangements.

audits

An independent appraisal of an organization's accounting, financial, and operational systems

Preliminary control

Attempts to monitor the quality or quantity of financial, physical, human, and information resources before they actually become part of the system

Centralization or Decentralization

Centralization creates more control and coordination, whereas decentralization fosters adaptability and innovation.

Structural control

Concerned with how the elements of the organization's structure are serving their intended purpose

financial control

Concerned with the organization's financial resources

Too Much Accountability

Efficient controls are resisted by poorly performing employees.

Strategic control

Focuses on how effectively the organization's strategies are succeeding in helping the organization meet its goals

Operations control

Focuses on the processes the organization uses to transform resources into products or services

International Strategic Control

Focuses on whether to manage the global organization from a centralized or decentralized perspective.

Financial Audit

Is an independent appraisal of an organization's accounting, financial, and operational systems. - External audits—financial appraisals conducted by experts who are not employees of the organization. - Internal audits—appraisals conducted by employees of the organization.

Ratio Analysis

Is calculation of financial ratios to assess some aspect of the organization's financial health. - Liquidity ratios show how readily the firm's assets can be converted to cash. - Debt ratios reflect the firm's ability to meet long-term financial obligations. - Return ratios show how much investment return the firm is generating relative to the value of its assets. - Coverage ratios estimate the ability of the firm to pay the interest expenses on money it has borrowed. - Operating ratios demonstrate the efficiency of the firm's functional operations.

post-action control

Monitors the outputs or results of the organization after the transformation process is complete

Screening control

Relies heavily on feedback processes during the transformation process

Rewards for Inefficiency

Rewarding operational inefficiency can lead employees to behave in ways that are not in the best interests of the organization.

ratio analysis

The calculation of one or more financial ratios to assess some aspect of the organization's financial health

Purpose of Control

To ensure that activities are completed in ways that lead to the accomplishment of organizational goals.

bureaucratic control

a form of organizational control characterized by formal and mechanistic structural arrangements

Decentralized control

an approach to organizational control that is characterized by informal and organic structural arrangements

Develop verification procedures

checks and balances to verify accuracy of performance indicators

Resistance to control

overcontrol, inappropriate focus, rewards for inefficiency, too much accountability

Forms of operational control

preliminary, screening, postaction