Summary MNG2601 Learning Unit 11 Principles of control

11.1 Definition of control:

CONTROL = the regulatory task of management that determines whether there has been a deviation
in org plans so that steps can be taken to prevent &/or rectify errors or deviations from plans

 Final step in management process
 Without control = org have no indication of how well they are performing in relation to goals
 Keep org moving in proper direction
 At any point in time – control compare where org is in terms of performance to where it is
supposed to be
 Provide org with mechanism for adjusting its course if performance falls outside acceptable
boundaries
 Without effective control procedures in place – org unlikely to reach goals
 Continuous process & intertwined with planning, organising & leading



11.2 The importance of control:

REASONS WHY CONTROL IS IMPORTANT

 Ensure activities at all levels are in accordance with orgs overall objectives – provide coordinating
mechanism linking planning & control processes
 Ensure resources are deployed in way attaining objectives
 Increase quality & enables management to cope with environmental change & uncertainty – help
managers anticipate, monitor & respond to changing circumstances
 Ensure costly mistakes are avoided
 Ensure orgs are tightly run in order to compete – reduce costs & increase outputs
 Facilitates delegation & team work



11.3 The control process:

CONTROL PROCESS = process that ensure org goals & objectives are realised or that actual
performance ties with predetermined performance



CONTROL PROCESS ENTAINS FOUR STEPS

1. Establish standards of performance
2. Measure actual performance
3. Evaluate deviations
4. Take corrective actions




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,11.3.1 Establish standards of performance:

CONTROL STANDARD = a target against which subsequent performance will be compared



CONTROL STANDARDS CRITERIA

 Expressed in measurable terms
 Consistent with org goals
 Realistic
 Identify performance indicators



PERFORMANCE INDICATORS = measures of performance that provide info that’s directly relevant to
what is being controlled

 Example = when control focused on revenue – monthly sales increases are relevant (spending
funds on research & development less relevant)




11.3.2 Measure actual performance:

= collecting data & reporting on actual performance

VARIABLES OF MEANINGFUL COMPARISON

 Reliable info
 Quantifiable info



Observation & measurement should be in accordance with control system:

 They should occur at strategic points &
 According to standards determined by control system



EXAMPLE

o Daily, weekly, monthly sales figures – measure sales performance
o Unit costs, product quality or volume produced – production performance
o Quality or quantity of output – employee performance




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, 11.3.3 Evaluate deviations:

= comparing measured performance against established standards

 Actual performance higher than standard = standard determined too low & must be higher in
future
 Actual performance lower than standard = how much deviation from standard to allow before
taking remedial action

CONTROL BY EXCEPTION

= Only exceptional differences between actual & planned performance should be communicated to
top management whereas subordinates deal with less significant deviations




11.3.4 Take corrective action:

= determine need for corrective action

 Aimed at achieving or bettering performance standard &
 Ensuring differences do not recur
 Serve as input to the subsequent control process &
 Indicates the standard of performance



If there’s significant deviation – corrective action may include:

o Improving actual performance
o Revising strategy or
o Lowering performance standards



11.4 The levels of control:

TWO BASIC LEVELS OF CONTROL

1. Strategic control
2. Operations control



Strategic control

Exercised at top management level & entails a close study of org’s:

o Total effectiveness
o Productivity
o Management effectiveness
o Maturity


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