BUSN 350 Foundations of Management

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BUSN 350 Foundations of Management
Professor Joseph Szmerekovsky
Organizational Control
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Organizational Control

• Control Monitoring and evaluating whether the
  organizations strategy and structure are working
  as intended, how they could be improved and how
  they might be changed if they are not working.

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Organizational Control

• Organizational Control helps managers improve
• Efficiency
• Quality
• Responsiveness to Customers
• Innovation

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Types for Control

• Three types of control
• Feedforward (input stage)
• Concurrent (conversion stage)
• Feedback (output stage)

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Four Steps of Control

• Step 1 Establish the standards of performance,
  goals or targets against which performance is to
  be evaluated.
• Step 2 Measure actual performance.

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Four Steps of Control

• 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.

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Organizational Control

• Three Control Systems
• Output Control
• Behavioral Control
• Organizational Culture/Clan Control

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Output Control

• Mechanisms for Output Control
• Organizational Goals
• Operating Budgets
• Financial Measures of Performance

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Output Control

• Profit Ratios measure how efficiently managers
  are using resources to generate profits.
• Return on Investment (ROI)
• Gross Profit Margin

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Output Control

• Return on Investment
• Net profit before taxes
• Total assets

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Output Control

• Gross Profit Margin
• Sales revenues cost of goods sold
• Sales revenues

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Output Control

• Liquidity Ratios measure how well managers have
  protected organizational resources to meet
  short-term obligations.
• Current Ratio
• Quick Ratio

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Output Control

• Leverage Ratios measure how managers use debt or
  equity to finance ongoing operations.
• Debt-to-assets Ratio
• Times-covered Ratio

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Output Control

• Activity Ratios measure how well managers are
  creating value from organizational assets.
• Inventory Turnover
• Days Sales Outstanding

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Behavior Control

• Each mechanism for Behavior Control has its own
  advantages/disadvantages
• Direct Supervision
• Bureaucratic Control
• Management by Objectives
• Organizational Goals Set
• Individual Goals Set
• Periodic Review

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Clan Control

• Methods of instilling Organizational Culture
• Values of the Founder
• Socialization
• Stories and Language
• Ceremonies and Rites

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Clan Control

• Three kinds of Rites
• Rite of Passage
• Rite of Integration
• Rite of Enhancement