Module 12 Managerial Evaluation and Control

1
Module 12 Managerial Evaluation and Control
2
Outline

• Evaluation and control as a management function
• The control process
• Tools for controlling organisational performance
• Managerial approaches to implementing controls
• Assessing control systems

3

• Evaluation and control as a management functions

Planning Goals Objectives Strategies plans
Controlling Standard (target) Measuring Comparing
Managerial Action
Organising Structure Human resources management
Leading Motivation Leadership communication
4
Evaluation and control as a management function

• Why is control system important?
• To ensure actions taken to achieve the goals
  which has been set.
• To ensures resources are used for organisational
  objectives supporting organising and leading
  functions
• To make sure goals (objectives) are being met
  and take whatever action if necessary to offset
  any deviations or address inadequate objectives.
• To reduce reluctance of managers to delegate
  authority and empower employees
• Protect the organisation and the physical
  workplace

5
Levels of control

• Strategic control
• Monitoring critical environmental factors
• Tactical control
• Assessing implementation of tactical plans at
  department level
• Operational control
• Overseeing implementation of operating plans,
  monitoring day-to-day results

6

• Levels of control
• Top
• 
  management
• Middle
• 
  management
• 1st
  level
• 
  management

Strategic planning
Strategic control
Tactical planning
Tactical control
Operational planning
Operational control
7
Evaluation and control as a management function

• Evaluation
• Evaluation is a part of the overall control
  process, and decision-making depends on good
  evaluation. It will provide benefits as follows
• Providing direction on the right track or not.
• Providing guidance to everybody what is
  happening in the department ? And how does it
  perform comparing to others? Need to improve?
• Inspiring confidence in everybody praise for
  well performance
• Impacting organisational reputation
• Increasing ability to capture customer value

8
The Control Process

• Steps in the control process
• Determine what to measure
• Establish objectives and standards
• Measure performance
• Compare performance against standards
• Take action
• Recognise positive performance take corrective
  action as necessary
• Adjust standards measures as necessary

9
Steps in the control process
Standard met or exceed
Determine what to measure
Establish Objectives and standards
Measure performance
Compare Performance Against standards
Standard Not met
Take Corrective Action as necessary
Recognise performance
Adjust standards and measures as necessary
10
The Control Process

• Measuring
• How we measure?
• Observation (management by walking around)
• Statistical data
• Oral report
• Written report

11
The Control Process

• What we measure?
• performance indicators of a company
• Financial performance
• managerial performance ex market share, growth
  rate, innovation, employee satisfaction, absent
  rate, turnover of employee.
• market performance share price, P/E ratio
• milestone performance or strategic performance
  indicators short term performance indicators
  (ex port operational indicators)

12
The Control Process

• Comparing
• Gap analysis
• How big is the gap? Positive or negative?
• Whats your reaction if you found there is a huge
  deviation between actual performance and expected
  outcome?

13
The Control Process Take actions

• Correct the actual performance
• If the source of deviation is inadequate
  performance, the management would like to change
  strategies, for example, introducing training
  programme, alter remuneration practices or
  redesign jobs.
• Revise the standard of performance or the
  objectives set.
• Source of deviation is from the unrealistic or
  inappropriate objectives

14
Tools for controlling organisational performance

• Major control tool by timing
• Feedforward control (preliminary or preventative
  control) Regulation of inputs to ensure they
  meet standards, ex McDonald in Russia help
  farmers to grow high-quality potatoes and bakers
  to bake high quality bread.
• What actions of feedforward control should a
  marine insurance company take to prevent or
  reduce claims?
• Concurrent controlRegulation of activities to
  ensure they conform to standards, ex budgetary
  control, quality control
• Feedback controlRegulation of completed product
  to ensure standards are met
• Ex financial reports (financial control)

15

• Control types by timing

Feedback control Correcting problems
after product/service is produced
Feed-forward control Anticipating problems
Concurrent control Attending to problems as they
occur
16
Managerial Approaches To Implementing Controls

• How control is exercised? What are mechanisms to
  put controls in place?
• Three approaches are used.
• Bureaucratic control
• Clan control
• Market control

17
Managerial Approaches To Implementing Controls

• Bureaucratic control
• Managerial approach relying on regulation
  through rules, policies, supervision, budgets,
  schedules, reward systems and other
  administrative mechanisms aimed at ensuring
  employees exhibit appropriate behaviours and meet
  performance standards.
• It is do by the book or process control.

18
Managerial Approaches To Implementing Controls

• Clan control
• Managerial approach relying on values, beliefs,
  traditions, corporate culture, shared norms and
  informal relationships to regulate employee
  behaviours and facilitate reaching of
  organisational goals.

19
Managerial Approaches To Implementing Controls

• Market control
• An approach to control that emphasises the use
  of external mechanisms such as price competition
  and relative market share to establish the
  standards used in the control system.
• -it is typically used by organisations in which
  the firms products or services are clearly
  specified and distinct and in which there is
  considerable marketplace competition.

20
Assessing Control Systems

• Good or poor designed control system?
• A reliable and effective control system should
  be designed and tailored to meet the requirements
  and uniqueness of each organisation.

21
Assessing Control Systems

• Overcontrol versus undercontrol
• Overcontrol
• Cutting job autonomy to the point where it
  seriously inhibits effective job performance.
• Undercontrol
• Granting autonomy to an employee to the point
  where the organisation loses its ability to
  direct individual effort towards achieving
  organisational goals.
• Thinking question.
• What is the basis of a successful leadership and
  control process?

22
Assessing Control Systems

• Characteristics of effective control systems
• Future-oriented
• Multidimensional (ex quality and quantity)
• Cost-effective benefit of control should
  outweigh its costs
• Accurate control data
• Realistic control system should have realistic
  views about what is achievable.

23
Assessing Control Systems

• Characteristics of effective control systems
  (cont.)
• Timely control systems give production cycle or
  process data at a specific time, for example, a
  monthly sales report.
• Monitorable control systems must be designed for
  monitoring ease to ensure expected performance
• Acceptable to organisation members
• Flexible organisations must be flexible to
  changing environments, so control systems must be
  able to meet new revised needs because

24
Major control systems (supplement)

• Managerial level
• Financial control
• Budgetary control
• Total quality management
• Inventory control
• Operational level
• Computer-based information systems

25
TOTAL QUALITY MANAGEMENT

• Management system integral to an organisations
  strategy and aimed at continually improving
  product and service quality so as to achieve high
  levels of customer satisfaction and build strong
  customer loyalty.

26
TOTAL QUALITY MANAGEMENT

• TQM Philosophy
• Good quality costs less than poor quality
• Employees try to improve quality if supported
• Quality improvement needs cross-functional efforts

27
TOTAL QUALITY MANAGEMENT

• TQM change principles
• Focus on work processes
• Analyse and understand variability
• Manage by fact
• Emphasise continuous learning/improvement
• TQM intervention techniques
• Quality improvement teams
• Benchmarking
• Statistical process control

28
FINANCIAL CONTROL

• Financial statements
• Balance sheet
• Income statement
• Ratio analysis
• Liquidity ratios
• Asset management ratios
• Debt management ratios
• Profitability ratios
• Comparative financial analysis

29
BUDGETARY CONTROL

• Responsibility centres
• Standard cost centres
• Discretionary expense centres
• Revenue centres
• Profit centres
• Investment centres
• Uses of responsibility centres
• Budget types
• Operating budgets
• Capital expenditures budgets

30
INVENTORY CONTROL

• Raw materials inventory
• Work-in-process inventory
• Finished-goods inventory
• Significance of inventory
• Inventory costs
• Economic order quantity
• Just-in-time inventory control

31
OPERATIONS MANAGEMENT

• Defining operations management
• Productivityoperations management linkage
• Manufacturing versus service organisations
• Operations management process

32
OPERATIONS MANAGEMENT

• Developing and implementing operating systems
• Forecasting
• Capacity planning
• Aggregate-production planning
• Scheduling
• Materials-requirements planning
• Purchasing
• The service delivery system

33
BSC

• Balanced Scorecard (good for implementing and
  measuring strategies)
• This concept was developed by Kaplan and Norton
  (1992) at Harvard Business School.
• It is a framework that translates an
  organisations strategy into a coherent set of
  initiatives and performance measures.

34
Balanced Scorecard

• Balanced Scorecard
• Evaluate strategies from 4 perspectives
• 1. Financial performance how do we appear to
  shareholders?
• 2. Customer knowledge how do customers view us?
• 3. Internal business processes what must excel
  us?
• 4. Learning growth Can we continue to improve
  and create value?
• Besides, performance of people and performance
  according to stakeholders can be added.

35
(No Transcript)