1. Unit 6: Executing and Controlling

5. The Control Process But… control isn’t always worthwhile or possible Begins with establishment of clear standards of performance Involves a comparison of actual performance to desired performance Takes corrective action to repair performance deficiencies Is a dynamic, cybernetic process Consists of feedback control, concurrent control, feedforward control

7. Comparison to Standards Compare actual performance to performance standards. http://www.liedecke.dk/Gallery/

8. Corrective Action Identify performance deviations Analyse those deviations Develop and implement programs to correct them http://www.liedecke.dk/Gallery/

9. Dynamic, Cybernetic Process Develop & Implement Program for Corrective Action Set Standards Measure Performance Compare with Standards Identify Deviations Analyse Deviations

10. Feedback, Concurrent, and Feedforward Control Feedback Control Gather information about performance deficiencies after they occur Concurrent Control Gather information about performance deficiencies as they occur Feedforward Control Monitor performance inputs rather than outputs to prevent or minimise performance deficiencies before they occur

12. Control Loss or Loss Control or Out of Control? Is control worthwhile…? Maybe, maybe not… Managers must assess the regulation costs and the cybernetic feasibility.

13. Control Methods Normative Concertive Self-Control Bureaucratic Objective

15. Objective Control Objective Control Use of observable measures of worker behaviour or outputs to assess performance and influence behaviour Behaviour Control Regulation of the behaviours and actions that workers perform on the job Output Control Regulation of workers’ results or outputs through rewards and incentives

16. Effective Output Control Output control measures must be reliable, fair, and accurate. Employees and managers must believe that they can produce the desired results. The rewards or incentives tied to outcome control measure must be dependent on achieving established standards of performance. http://www.flickr.com/photos/genkigenki/117615171/

17. Normative Control Created by: careful selection of employees observing experienced employees & listening to stories about the company.

20. What to Control? Customer Defections Quality Waste and Pollution Balanced Scorecard Budgets, Cash Flow, EVA

21. Advantages of the Balanced Scorecard Forces managers to set goals and measure performance in each of the four areas Minimises the chances of sub-optimisation – performance improves in one area, but at the expense of others

22. The Financial Perspective Cash flow analysis Predicts how changes in a business will affect its ability to take in more cash than it pays out Balance sheets Provide a snapshot of a company’s financial position at a particular time Income statements Show what has happened to an organization’s income, expenses, and net profit over a period of time Financial ratios Used to track liquidity, efficiency, and profitability over time compared to other businesses in its industry

24. Financial Ratios LIQUIDITY RATIOS Current Ratio Quick (Acid Test) Ratio LEVERAGE RATIOS Debt to Equity Debt Coverage EFFICIENCY RATIOS Inventory Turnover Average Collections Period PROFITABILITY RATIOS Gross Profit Margin Return on Equity

25. Common Kinds of Budgets Cash Budgets Used to forecast the cash a company will have for expenses Expense Budgets Used to determine spending on supplies, projects, or activities Profit Budgets Used by profit centers, which have “profit and loss” responsibility Revenue Budgets Used to project or forecast future sales Variable Budgets Used to project costs across varying levels of sales/revenues Capital Expenditure Budgets Used to forecast large, long-lasting investments

30. The Internal Perspective Controlling Quality Excellence Value Conformance to Expectations

31. The Internal Perspective Controlling Quality

32. Controlling Waste and Pollution Good housekeeping Material/product substitution Process modification