Business Administration

Section (6)
Chapter 5
Controlling
PRESESNTED BY

Wael Adel Kharoub

TEACHING ASSISTANT IN BUSINESS ADMINISTRATION
DEPARTMENT
Fundamentals of Controlling

controlling is a systematic effort by business management to compare

performance to predetermined standards, plans, or objectives to determine
whether performance is in line with these standards and presumably to take any
remedial action required to see that human and other corporate resources are
being used in the most effective and efficient way possible in achieving
corporate objectives

For example, production workers generally have production goals they must
achieve per day and week. At the end of each working day, the number of units
produced by each worker is recorded so weekly production levels can be deter-
mined
Fundamentals of Controlling
 The Controlling Process
 the three main steps of the controlling process
1) Measuring performance
2) Comparing measured performance to standards

3) Taking corrective action.

1. Measuring performance :Before managers can determine what must be done

to make an organization more effective and efficient, they must measure
current organizational performance
Fundamentals of Controlling
2. Comparing Measured Performance to Standards.
A standard is the level of activity established to serve as a model for evaluating organizational
performance. In essence, standards are the yardsticks that determine if organizational performance
is adequate or inadequate
Studying operations at General Electric gives insight into the different kinds of standards
managers can establish, such as the following
1) Profitability standards
2) Market position standards
3) Productivity standards
4) Product leadership standards
5) Personnel development standards
6) Employee attitudes standards
7) Social responsibility standards
8) Standards reflecting relative balance between short- and long-range goals
Fundamentals of Controlling

3. Taking Corrective Action.

Once managers have measured actual performance and compared this

performance with established performance standards, they should take
corrective action if necessary. Corrective action is managerial activity aimed at
bringing organizational performance up to the level of performance standards.
In other words, corrective action focuses on correcting the mistakes in the
organization that are hindering organizational performance.
Fundamentals of Controlling
 Types of Control
 There are three types of management control:

(1) precontrol

(2) Concurrent control

(3) Feedback control

Precontrol: Control that takes place before work is performed is called

precontrol, or feed forward control. In this regard, management creates policies,
procedures, and rules aimed at eliminating behavior that will cause undesirable
work results. Precontrol focuses on eliminating predicted problems
Fundamentals of Controlling
2. Concurrent control:
Control that takes place as work is being performed is called concurrent control.
It relates not only to human performance but also to such areas as equipment
performance and department appearance

3. Feedback Control:
Control that concentrates on past organizational performance is called feedback
control. Managers exercising this type of control are attempting to take corrective
action within the organization by looking at organizational history over a
specified time period.
Fundamentals of Controlling
 The Controller and Control
Organization charts developed for medium-and large-sized companies typically
contain a position called controller
The controller (also sometimes called the comptroller) is usually a staff person
who gathers information that helps managers control. From the preceding discus-
sion, it is clear that managers have the responsibility of comparing planned and
actual performance and of taking corrective action when necessary.

The controller usually works with information about the following financial
dimensions of the organization: (1) profits, (2) revenues, (3) costs, (4)
investments, and (5) discretionary expenses.
Fundamentals of Controlling
Power and Control
To control successfully, managers must understand not only the control process
itself but also how organization members relate to it. Up to this point, the
chapter has emphasized nonhuman variables of controlling
A Definition of Power
Authority was defined as the right to command or give orders. The extent to
which an individual is able to influence others so that they respond to orders is
called power. The greater this ability, the more power an individual is said to
have
Fundamentals of Controlling
Steps for Increasing Total Power
Managers can increase their total power by increasing their position power or
their personal power. Position power generally can be increased by a move to a
higher organizational position
1-A sense of obligation in other organization members that is directed toward
the manager
2.A belief in other organization members that the manager possesses a high
level of expertise within the organization.
3. A sense of identification that other organization members have with the
manager
4. The perception in other organization members that they are dependent on
the manager
Fundamentals of Controlling
 Potential Barriers to Successful Controlling
1-Control activities can create an undesirable overemphasis on short-term
production as opposed to long-term production. As an example, in striving to
meet planned weekly production quotas, a manager might "push" machines in a
particular area and not allow these machines to be serviced properly.

2. Control activities can increase employee frustration with their jobs and
thereby reduce morale. This reaction tends to occur primarily when
management exerts too much control. Employees get frustrated because they
perceive management as being too rigid in its thinking and not allowing the
freedom necessary to do a good job
Fundamentals of Controlling

3. Control activities can encourage the falsification of reports:

. Employees may perceive management as basing corrective action solely on
department records with no regard to extenuating circumstances. If this is the case,
employees may feel pressured to falsify reports so that corrective action regarding
their organizational unit will not be too drastic

4. Control activities can cause the perspective of organization members to be too

narrow for the good of the organization.
Although controls can be designed to focus on relatively narrow aspects of an
organization, managers must keep in mind that any corrective action should be
considered not only in relation to the specific activity being controlled but also in
relation to all other organizational units
Fundamentals of Controlling
 Making Controlling Successful
In addition to avoiding the potential barriers to successful controlling mentioned
in the previous section, managers can perform certain activities to make the
control process more effective. In this regard, managers should make sure that

1. Various facets of the control process are appropriate for the specific
organizational activity being focused on
2. Control activities are used to achieve many different kinds of goals
3. Information used as the basis for taking corrective action is timely
4. The mechanics of the control process are understandable to all individuals
who are in any way involved with implementing the process
True&False Questions
1. managers should continually control, check to make sure that organizational activities and
processes are going as planned

2. the three main steps of the controlling process are Measuring performance, comparing
measured performance to standards and Taking corrective action.

3. Measuring Performance. Before managers can determine what must be done to make an
organization more effective and inefficient
True&False Questions
4. the three main steps of the controlling process are Measuring inputs , comparing measured
performance to standards and Taking corrective action

5. A standard is the level of activity established to serve as a model for evaluating organizational
performance

6. Product leadership standards. General Electric would like to assume one of the lead positions in its
field in product innovation.
True&False Questions
7. Market position standards, Standards in this area indicate the type of training programs to which General
Electric personnel should be exposed to develop appropriately

8. Employee attitudes standards. These standards indicate the types of attitudes that General Electric
management should strive to develop in its employees

9. Corrective action is managerial activity aimed at bringing organizational performance up to the level of
market standards
True&False Questions
10.Control that takes place before work is performed is called precontrol

11. Control that takes place as work is being performed is called pre control
MCQ
1. -……….is making something happen the way it was planned to happen.

A. Planning

B. Organizing

C. Influencing

D. Control
MCQ
2. The two functions that have been called the Siamese twins of management:

A. Planning and controlling

B. Planning and influencing

C. Planning and organizing

D. Influencing and organizing

MCQ
3-…………is the process managers go through to control, ……… is making something happen the
way it was planned to happen.

A. Control, organizing

B. Controlling, control

C. Controlling, influencing

D. Control, planning
MCQ
4.………… is to help managers enhance the success of the overall management system through
effective controlling.

A. Control

B. Controlling subsystem

C. Organizing

D. Planning
MCQ
5.…………are standards indicate how much money General Electric would like to make as profit over a given
time period-that is, its return on investment.

A. Market position standards

B. Productivity standards

C. Profitability standards

D. Product leadership standards

MCQ
6. are standards indicate the share of total sales in a particular market that General Electric would
like to have relative to its competitors.

A. Market position standards

B. Productivity standards

C. Profitability standards

D. Product leadership standards

MCQ
7.Types of Control

A. precontrol

B. Concurrent control

C. Feedback control

D. All of the above

MCQ
8. Control that takes place before work is performed is called……

A. Precontrol

B. Concurrent control

C. Feedback control

D. controlling
MCQ
9. The extent to which an individual is able to influence others so that they respond to orders is called……

A. Authority

B. Power

C. Controlling

D. Organizing
Thank You