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Management And Control Essay

3158 words - 13 pages

Management and control
Chapter 1

Management relates to the process of organizing resources and directing activities for the purpose of achieving organizational objectives; consist of 4 phases:
1. planning
• mission; reason of company’s existence
• vision; what to do to reach the mission
• objective
• strategy; Corporate S.(expansion/ shutdown/ no change)
Business unit S. (Differentiation, cost leadership, focus)
Operational S. (mktg, finance, HR, R&D)
2. organizing
• organization structure
• amount of resources
• task
• Standard Operation Procedure
3. ...view middle of the document...

Motivational problems: employees are reluctant to give 100% effort, because individual and company goal don’t naturally coincide
3. personal limitation: caused by lack of knowledge, training, experience, or jobs that are not designed properly

Characteristics of good management control:
Good management control: management are confident that no major unpleasant surprise will occur, but still allows probability of failure because perfect control is rare and the control loss(cost of not having perfect control) must be achieved to reach optimal control (cost of implementing more control > control loss)
• future oriented (no unpleasant surprises in future)
• objective driven (objective represents what the organization seeks)

Control problem avoidance:
• activity elimination; potential risk in particular activity can be turned over to 3rd party (Subcontract, licensing agreements, divestment)
• Automation; automated devices can be set to behave consistently in accordance to the company’s wants (lower inaccuracy, inconsistency, lack of motivation, unlike human) but maybe costly and lack of feasibility
• Centralization; centralization in decision making of key risk areas is needed (Mergers and divestment)
• Risk sharing; to limit loss; thru insurance

Chapter 2: Result control

Result control:
• Rewarding for good result (meritocracies), punishing for bad results
• Reminds employees of the consequences of actions taken
• Employees are empowered to take any actions, not dictated by the company
• Cannot be used in every situation, effective only where the desired result areas can be controlled (to a considerable extent) by the employees whose actions are being influenced and where the controllable result areas can be measured effectively
• Preventive type control, effective in addressing motivational problems, personal limitation problems

Steps in result control:
1. defining performance dimensions
“what you measure is what u get”; goals and measurement are the factors that shape up the employees’ mind of what is important, therefore it must be clear
2. measuring performance
measurement is done in a specific period
3. setting performance targets
affect behavior in 2: stimulate action and motivation; allow employee to self evaluation
4. providing rewards/punishments
extrinsic(bonus, promotions) / intrinsic(self-esteem)

conditions determining the effectiveness of result controls:
✓ knowledge of desired results
must be communicated effectively to employees, result desirability(more of the quality represented by the result measure is preferred to less, everything else being equal
✓ ability to influence desired results (controllability)
person whose behavior are being controlled must be able to affect the result in a material way in a given timespan; a manager only accountable for mistakes made...

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