CHAPTER 10 The Controlling Process

10
Ready Notes
The Controlling
Process
Prof. Begum Khaleda Khanam
Slide content created by Joseph B. Mosca, Monmouth University.

Copyright Houghton Mifflin Company. All rights reserved.
Why Control?
Control is an issue every
manager faces.
How does control help
the manager?
Control is a process to
regulate organizational
activities to make them
consistent with
established:
Plans
Targets
Standards
20 - 2
What Is the Purpose of Control?

It is one of the four
basic management
functions and has four
basic functions. What
are the functions?
Adapts to change.
Limits accumulation of
error.
Helps coping with
complexity.
Helps minimize costs.
20 - 3
The Purpose of Control
Adapt to
environmental change
Limit the
accumulation of error
Control helps the organization
Cope with organizational

complexity
Minimize costs
20 - 4
Name the Levels of Control?

Operational control:
Focuses on the processes used to transform
resources into products or services.
Financial control:
Concerned with financial resources.
Structural control:
How the elements of structure are serving the
intended purposes.
Strategic control:
How effective are the functional strategies helping
the organization meet its goals.
20 - 5
Figure 20.2: Levels of Control
20 - 6
Who Is Responsible for Control?

Control rests with all
managers.
Large corporations
have a controller.
What does a
controller do?
Helps line managers
with their control
activities.
20 - 7
What Are the Steps in the Control Process?

Establish standards.
Measure performance.
Compare performance against
standards.
Determine need for corrective action.
The sub-steps:
Maintain status quo.
Correct deviation.
Change standards.
20 - 8
Figure 20.3: Steps in the Control Process
20 - 9
What Does Preliminary Control Monitor?

It attempts to monitor quality and
quantity of:
Financial resources.
Material resources.
Human resources.
Information resources.
Why?
Before they become part of the system.
20 - 10
What Is the Purpose of Screening Controls?

They focus on how
inputs are being
transformed into
outputs.
They also rely
heavily on feedback
processes during
the transformation
process.
20 - 11
What Do Postaction Controls Focus On?

Focus is on outputs from
the organizational system.
What do they monitor?
They monitor the output
results of the organization
after the transformation
process is complete.
(see Figure 20.4 illustration)
20 - 12
Figure 20.4: Forms of Operational Control
20 - 13
What Are the Reasons for Financial Controls?

They control the financial resources as
they flow into the organization.
Then they are held by the organization.
Then they flow out of the organization.
Businesses must manage their finances
so that revenues are sufficient to cover
expenses and still return a profit.
20 - 14
What Is a Budget?
It is a plan expressed in numerical
terms.
What is the time frame for a budget?
Usually a year, but sometimes broken
down into quarters and months.
Budgets are quantitative in nature and

provide yardsticks for measuring
performance and facilitating
comparisons.
20 - 15
What Are the Types of Budgets?

Types of budget:
Financial
Operating
Non-monetary
What the budget

shows:
Sources and use of

cash.
Operations in
financial terms.
Operations in nonfinancial terms.
20 - 16
20 - 17
Developing Budgets
Operating
Unit
Budget
Request
Division
Budget
Request
Organizational
Budget Prepared
by Budget
Committee
Approved by
Budget
Committee
20 - 18
Figure 20.5: Developing Budgets in

Organizations
20 - 19
Other Tools for Financial Control

Financial Statement:
A profile of
some aspect of an
organizations financial
circumstances.
Income Statement: A
summary of financial
performance over a period of
time, usually one year.
Balance Sheet: List of assets

and liabilities of an
organization at a specific
point in time, usually the last
day of the fiscal year.
Ratio Analysis: The
calculation of one or more
financial ratios to assess
some aspect of the
organizations financial
health.
Audit: An independent appraisal of an organizations

accounting, financial, and operational system.
20 - 20
What Is Bureaucratic Control?

A form of organizational
control characterized by
formal and mechanistic
structural
arrangements.
What is clan control?
An approach to
organizational control
characterized by informal
and organic structural
arrangements.
20 - 21
Figure 20.6: Organizational Control
20 - 22
What Is Meant by Strategic Control

Control aimed at
ensuring that the
organization is
maintaining an
effective alignment
with its environment
and moving toward
achieving its
strategic goals.
20 - 23
Characteristics of Effective Control
Integration with
planning
Flexibility
Accuracy
Timeliness
Objectivity
20 - 24
What Influences Resistance to Control?

Over-control
Inappropriate focus
Rewards for
inefficiency
Too much
accountability
20 - 25
How Can Resistance to Control Be

Overcome?
When employees are
involved with planning
and implementing the
control system, they are
less likely to resist.
Verification procedures
need to be developed to
provide checks and
balances in order for
managers to verify the
accuracy of
performance indicators.
20 - 26

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CHAPTER 10 The Controlling Process

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Slide content created by Joseph B. Mosca, Monmouth University.

Copyright Houghton Mifflin Company. All rights reserved.

What Is the Purpose of Control?

Copyright Houghton Mifflin Company. All rights reserved.

The Purpose of Control

Control helps the organization

Cope with organizational

Copyright Houghton Mifflin Company. All rights reserved.

Name the Levels of Control?

Figure 20.2: Levels of Control

Copyright Houghton Mifflin Company. All rights reserved.

Who Is Responsible for Control?

Copyright Houghton Mifflin Company. All rights reserved.

What Are the Steps in the Control Process?

Figure 20.3: Steps in the Control Process

Copyright Houghton Mifflin Company. All rights reserved.

What Does Preliminary Control Monitor?

Copyright Houghton Mifflin Company. All rights reserved.

What Is the Purpose of Screening Controls?

Copyright Houghton Mifflin Company. All rights reserved.

What Do Postaction Controls Focus On?

Copyright Houghton Mifflin Company. All rights reserved.

Figure 20.4: Forms of Operational Control

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What Are the Reasons for Financial Controls?

Copyright Houghton Mifflin Company. All rights reserved.

Budgets are quantitative in nature and

What Are the Types of Budgets?

What the budget

Copyright Houghton Mifflin Company. All rights reserved.

Sources and use of

Copyright Houghton Mifflin Company. All rights reserved.

Copyright Houghton Mifflin Company. All rights reserved.

Figure 20.5: Developing Budgets in

Copyright Houghton Mifflin Company. All rights reserved.

Other Tools for Financial Control

Balance Sheet: List of assets

Audit: An independent appraisal of an organizations

What Is Bureaucratic Control?

Copyright Houghton Mifflin Company. All rights reserved.

Figure 20.6: Organizational Control

Copyright Houghton Mifflin Company. All rights reserved.

What Is Meant by Strategic Control

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Characteristics of Effective Control

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What Influences Resistance to Control?

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How Can Resistance to Control Be

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