Chapter 18: Managerial Function of Controlling

Overview

• The final managerial function: controlling
• Previous functions: Planning, Organizing, Leading
• Importance: Monitoring, comparing, and correcting performance

Importance of Controlling

• Evaluating ongoing processes to assess goal achievement
• Monitoring and comparing actual performance against desired performance
• Ensures efforts in planning, organizing, and leading are effective

Key Reasons for Control

1. Assessment of Effectiveness
   • Without controls, effectiveness and goal achievement are unknown.
2. Employee Empowerment
   • Control allows safe delegation and empowers employees.
3. Protection and Risk Management
   • Protects against financial scandals, violence, disasters, and terrorism.

Control Process

1. Measure Actual Performance
   • Methods: Personal observation, statistical reports, oral and written reports
   • Importance of selecting correct criteria (e.g., KPIs)
2. Compare Actual Performance Against Standards
   • Determine acceptable range of variations
   • Examples: Production targets (e.g., mobile phones per hour)
3. Take Corrective Actions
   • Options: Correct actual performance (immediate/basic corrective action) or revise standards
   • Importance of realistic and challenging goals

Types of Managerial Actions

• Do nothing if standards are met
• Correct performance if not up to standard
• Revise standards if they are unrealistic

Measuring Performance

• Organizational Performance: Accumulated result of activities
• Productivity: Output over input
• Organizational Effectiveness: Appropriateness of goals and achievement level

Employee Performance and Disciplinary Actions

• Importance of feedback and disciplinary actions
• Progressive Disciplinary Action: Minimum penalty for offenses
• Issues needing control: Attendance, behavior, dishonesty, outside activities

Types of Control

1. Feedforward Control
   • Prevents problems before they occur
2. Concurrent Control
   • Observes and corrects problems as they occur
3. Feedback Control
   • Evaluates after activity is done

Financial Controls

• Use of financial ratios (liquidity, profitability, leverage)
• Budgets used in planning and controlling

Balanced Scorecard

• Focuses on financial, customer, internal processes, and people perspectives
• Encourages holistic view beyond just financial data

Benchmarking

• Comparing against best practices in the field
• Internal Benchmarking: Best practices within the organization

Global and Cultural Considerations

• Challenges of managing across cultures
• Importance of formalized controls and understanding local laws

Workplace Privacy

• Employers' rights to monitor employees for productivity, appropriateness, and confidentiality

Employee Theft and Controls

• Unauthorized taking of company property
• Control methods: Feedforward, concurrent, feedback
• Emphasizing hiring criteria, policies, employee involvement

Workplace Violence

• A vital issue for employee safety
• Control measures: Pre-hiring screening, conflict resolution

Customer Relations and Service Profit Chain

• Employees' impact on customer satisfaction and profits
• Importance of strategies and delivery systems

Corporate Governance

• System controlling organization for owners' interests
• Addresses manager-owner conflicts

Conclusion

• Controlling is crucial for ensuring that all managerial functions align with organizational goals.

These notes capture the key points from the lecture on managerial controlling functions, providing a comprehensive overview for review and study.