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41 terms

Management chapter VIII

STUDY
PLAY
Controlling
The process whereby managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals.
Control systems
Formal target setting, monitoring, evaluation, and feedback systems that provide managers with information about how well the organization's strategy and structure are working.
Feedforward control
Control that allows managers to anticipate problems before they arise.
Concurrent control
Control that gives managers immediate feedback on how efficiently inputs are being transformed into outputs so that managers can correct problems as they rise.
Feedback control
Control that gives managers information about customers' reactions to goods and services so that corrective action can be taken if necessary.
The control process
Step 1: establish the standards of performance, goals, or targets against which performance is to be evaluated.
Step 2: Measure actual performance.
Step 3: Compare actual performance against chosen standards of performance.
Step 4: Evaluate the result and initiate corrective action if the standard is not being achieved.
Profit ratios
Measure how efficiently managers are using the organization's resources to generate profits.
Liquidity ratios
Measure how well managers have protected organizational resources to be able to meet short term obligations.
Leverage ratio
Measure the degree to which managers use debt or equity to finance ongoing operations.
Activity ratios
Measures of how well managers are creating value from organizational assets.
Operating budget
A budget that states how managers intend to use organizational resources to achieve organizational goals.
Output control
Financial measures of performance
Organizational goals
Operating budgets
Behavior control
Direct supervision
Management by objectives
Rules and standard operating procedures
Organizational culture/clan control
Values
Norms
Socialization
Financial measures
Involves the management of costs and expenses in order to control them in relation to budgeted amounts.
Operating budgets: cost or expense
Amount of goods or services produced from a fixed budget.
Operating budgets: revenue
Max revenues from the sale of goods and services produced.
Operating budgets: profit
Difference between revenues generated and the budgeted costs of making those goods and services.
Problem with output control
Short term vs long term challenges and changes in task environment.
Behavior control
Direct supervision, Management by objectives, Bureaucratic control
Direct supervision
Actively monitor and observe the behavior of their subordinates. Teach subordinates & reinforce the behaviors that are appropriate and inappropriate. Intervene to take corrective action as needed.
Problems with direct supervision
Very expensive, Can demotivate subordinates, Might not be feasible, Privacy issues.
Bureaucratic control
Control through a system of rules and standard operating procedures(SOPs)
Problems with bureaucratic control
Easy to make rules, hard to discard them. Firms become too standardized. Incompatible with innovation.
Organizational culture and clan control
Values
Norms
Socialization
Organizational culture
Set of beliefs, values, norms, expectations and work routines.
Values
What a society believes to be good and desirable.
Norm
Unwritten rules and codes of conduct
Socialization
Internalizing organizational values and norms
Organizational control
The set of values, norms, standards of behavior, and common expectations that controls the ways in which individuals and groups in an organization interact with one another and work to achieve organizational goals.
Clan control
The control exerted on individuals and groups in an organization by shared values, norms, standards of behavior, and expectations.
Adaptive culture
Controls employee attitudes and behaviors.
Inert cultures
Those who lead to values and norms that fail to motivate or inspire employees.
Organizational change process
Assessing the need to change, deciding on what change to make, Implement the change, evaluate the change
Assessing the need to change
Recognizing that there is a problem and identify the source of the problem.
Deciding on what change to make
Decide what the ideal future state would be and identify obstacles to change.
Reducing obstacles to change
Improve communication, emphasizing group or shared goals and empowering employees
Implement the change--Top to down
Quicker to implement. Top managers identify the need to change, decide what to do, and the move quickly to implement it.
Implement the change--Bottom to up
Is more gradual. Top managers consult with middle and first line managers. Develop a plan for change. Reduces resistance from employees.
Evaluate the change--compare pre change to post change
Using various performance measures: market share, profits, or the ability of the managers to meet their goals.
Evaluate the change--use benchmarking
Compared performance on specific dimensions with the performance of high performing organizations.