Lecture 8

(09.12.2012)

Discussion on Controlling & Organizing

Chandrasen Kumar
M.Sc. (DU), MPA (LKYSPP, Singapore)

Todays overview
1)

Discussion on answer sheets of Minor Exams

2)

How answers should have been written

Remaining part of Controlling New topic Organizing

3)

4)

Answers should have been

Written after understanding the questions requirement You should have taken time to imagine and recall discussions and concepts read in the text Answers should have been to the point Written in small and grammatically correct sentences Broken into paragraphs with each para giving separate ideas In case of limited time and word limit, bullet points are very handy in explaining the needed answers

What is the control process?

Controlling
The process of measuring performance and taking

action to ensure desired results.

Has a positive and necessary role in the management

process.
Ensures that the right things happen, in the right way,

at the right time.

Organizational learning and after-action review.

What is the control process?

Steps in the control process:

Step 1 establish objectives and standards. Step 2 measure actual performance. Step 3 compare results with objectives and standards.

Step 4 take corrective action as needed.

Four steps in the control process.

What is the control process?

Step 1 establishing objectives and standards

Output standards

Measure performance results in terms of quantity, quality, cost, or time. Measure effort in terms of amount of work expended in task performance.

Input standards

What is the control process?

Step 2 measuring actual performance

Goal is accurate measurement of actual performance results and/or performance efforts.

Must identify significant differences between actual

results and original plan.

Effective control requires measurement.

What is the control process?

Step 3 comparing results with objectives and

standards
Need for action reflects the difference between

desired performance and actual performance

Comparison methods:
Historical comparison Relative comparison Engineering comparison

What is the control process?

Step 4 taking corrective action Taking action when a discrepancy exists between desired and actual performance. Management by exception

Giving attention to situations showing the greatest need for action. Types of exceptions

Problem situation Opportunity situation

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What is the control process?

Feedforward controls
Employed before a work activity begins.

Ensures that:

Objectives are clear. Proper directions are established.

Right resources are available.

Focuses on quality of resources.

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4. What is the control process?

Concurrent controls

Focus on what happens during work process. Monitor ongoing operations to make sure they are being done according to plan. Can reduce waste in unacceptable finished products or services.

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What is the control process?

Feedback controls

Take place after work is completed. Focus on quality of end results. Provide useful information for improving future operations.

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The role of feed-forward, concurrent, and feedback controls in organizations.

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What is the control process?

Internal and external control

Internal control

Allows motivated individuals and groups to exercise selfdiscipline in fulfilling job expectations.

External control

Occurs through personal supervision and the use of formal administrative systems.

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What are the common organizational controls?

Management by Objectives (MBO)

A structured process of regular communication. Supervisor/team leader and workers jointly set performance objectives.

Supervisor/team leader and workers jointly review results.

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Management by objectives as an integrated planning and control framework.

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What are the common organizational controls?

MBO involves a formal agreement specifying

Workers performance objectives for a specific time period. Plans through which performance objectives will be accomplished. Standards for measuring accomplishment of performance objectives . Procedures for reviewing performance results.

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What are the common organizational controls?

The MBO process: Supervisor and workers jointly set objectives, establish standards, and choose actions. Workers act individually to perform tasks; supervisors act individually to provide necessary support. Supervisor and workers jointly review results, discuss implications, and renew the MBO cycle.

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What are the common organizational controls?

Types of MBO performance objectives Improvement Personal development Maintenance Criteria for effective performance objectives Specific Time defined Challenging Measurable

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What are the common organizational controls?

Pitfalls to avoid in using MBO

Tying MBO to pay. Focusing too much attention on easily quantifiable objectives. Requiring excessive paperwork. Having managers tell workers their objectives.

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What are the common organizational controls?

Advantages of MBO Focuses workers on most important tasks and objectives. Focuses supervisors efforts on important areas of support. Contributes to relationship building. Gives workers a structured opportunity to participate in decision making.

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5. What are the common organizational controls?

Employee discipline systems
Discipline is the act of influencing behavior through

reprimand.

Discipline that is applied fairly, consistently, and systematically provides useful control.

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What are the common organizational controls?

To

be effective, reprimands should

Be immediate. Be directed toward actions, not personality. Be consistently applied. Be informative.

Occur in a supportive setting.

Support realistic rules.

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What are the common organizational controls?

Employee discipline systems

Progressive discipline ties reprimands to the severity and frequency of the employees infractions. Progressive discipline seeks to achieve compliance with the least extreme reprimand possible.

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What are the common organizational controls?

Important

financial aspects of organizational performance

Liquidity

The ability to generate cash to pay bills. The ability to earn more in returns than the cost of debt. The ability to use resources efficiently and operate at minimum cost.

Leverage

Asset management

Profitability

The ability to earn revenues greater than costs.

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What are the common organizational controls?

Break-even

analysis

Determination of the point at which sales revenues are sufficient to cover costs. Break-Even Point = Fixed Costs / (Price Variable Costs) Used in evaluating:

New products New program initiatives

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Graphical approach to break-even analysis.

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What are the common organizational controls?

Purchasing

control

A productivity tool Trends in purchasing control:

Leveraging buying power

Committing to a small number of suppliers

Working together in supplier-purchaser partnerships

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What are the common organizational controls?

Inventory

control

Goal is to ensure that inventory is just the right size to meet performance needs, thus minimizing the cost. Methods of inventory control:

Economic order quantity

Just-in-time scheduling

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What are the common organizational controls?

Statistical

quality control

Quality control involves checking processes, materials, products, and services to ensure that they meet high standards. Statistical quality control involves:

Taking samples of work. Measuring quality in the samples. Determining the acceptability of results.

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Organizing

Organizing
What is organizing as a management function? What are the major types of organization structures? What are the new developments in organization

structures? What organizing trends are changing the workplace?

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What is organizing as a management function?

Organizing and organization structure
Organizing
The process of arranging people and other resources to work

together to accomplish a goal.

Organization structure

The system of tasks, workflows, reporting relationships, and communication channels that link together diverse individuals and groups.

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Organizing viewed in relationship with the other management functions.

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What is organizing as a management function? Formal structures

The structure of the organization in its official state. An organization chart is a diagram describing reporting relationships and the formal arrangement of work positions within an organization. An organization chart identifies the following aspects of formal structure:

The division of work. Supervisory relationships. Communication channels. Major subunits. Levels of management.

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What is organizing as a management function?

Informal

structures

A shadow organization made up of the unofficial, but

often critical, working relationships between organization members.

Potential advantages of informal structures:

Helping people accomplish their work. Overcoming limits of formal structure. Gaining access to interpersonal networks.

Informal learning.

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What is organizing as a management function?

Informal

structures (cont.)

Potential disadvantages of informal structures:

May work against best interests of entire organization. Susceptibility to rumor. May carry inaccurate information. May breed resistance to change. Diversion of work efforts from important objectives. Feeling of alienation by outsiders.

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What are the major types of organization structures?

Functional structures People with similar skills and performing similar tasks are grouped together into formal work units. Members work in their functional areas of expertise. Are not limited to businesses. Work well for small organizations producing few products or services.

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Functional structures in a business, branch bank, and community hospital.

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What are the major types of organization structures?

Potential advantages of functional structures: Economies of scale. Task assignments consistent with expertise and training. High-quality technical problem solving, In-depth training and skill development. Clear career paths within functions.

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What are the major types of organization structures?

Potential disadvantages of functional structures: Difficulties in pinpointing responsibilities. Functional chimneys problem. Sense of cooperation and common purpose break down. Narrow view of performance objectives. Excessive upward referral of decisions.

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What are the major types of organization structures?

Divisional

structures

Group together people who work on the same product or process, serve similar customers, and/or are located in the same area or geographical region. Common in complex organizations. Avoid problems associated with functional structures.

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Divisional structures based on product, geography, customer, and process.

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What are the major types of organization structures?

Potential advantages of divisional structures: More flexibility in responding to environmental changes. Improved coordination. Clear points of responsibility. Expertise focused on specific customers, products, and regions. Greater ease in restructuring.

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What are the major types of organization structures?

Potential disadvantages of divisional structures: Duplication of resources and efforts across divisions. Competition and poor coordination across divisions. Emphasis on divisional goals at expense of organizational goals.

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What are the major types of organization structures?

Types of divisional structures and how they

group job and activities:

Product structures focus on a single product or service. Geographical structures focus on the same location or

geographical region.
Customer structures focus on the same customers or

clients.
Process structures focus on the same processes.

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What are the major types of organization structures?

Matrix structure

Combines functional and divisional structures to gain advantages and minimize disadvantages of each. Used in:

Manufacturing

Service industries
Professional fields Non-profit sector Multi-national corporations

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Matrix structure in a small multi-project business firm.

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What are the major types of organization structures?

Potential advantages of matrix structures:

Better cooperation across functions. Improved decision making. Increased flexibility in restructuring.

Better customer service.

Better performance accountability. Improved strategic management.

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What are the major types of organization structures?

Potential disadvantages of matrix structures:

Two-boss system is susceptible to power struggles. Two-boss system can create task confusion and conflict in work priorities. Team meetings are time consuming. Team may develop groupitis. Increased costs due to adding team leers to structure.

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What are the new developments in organization structures?

Guidelines for horizontal structures:

Focus the organization around processes, not functions.

Put people in charge of core processes. Decrease hierarchy and increase the use of teams. Empower people to make decisions critical to performance. Utilize information technology. Emphasize multiskilling and multiple competencies. Teach people how to work in partnership with others.

Build a culture of openness, collaboration, and performance commitment.

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What are the new developments in organization structures?

Team structures
Extensively use permanent and temporary teams to

solve problems, complete special projects, and

accomplish day-to-day tasks.

Often use cross-functional teams.

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How a team structure uses cross-functional teams for improved lateral relations.

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What are the new developments in organization structures?

Potential advantages of team structures: Eliminates difficulties with communication and decision making. Eliminates barriers between operating departments. Improved morale. Greater sense of involvement and identification. Increased enthusiasm for work. Improved quality and speed of decision making.

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What are the new developments in organization structures?

Potential disadvantages of team structures:

Conflicting loyalties among members. Excessive time spent in meetings. Effective use of time depends on quality of interpersonal

relations, group dynamics, and team management.

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What are the new developments in organization structures?

Network structures

A central core that is linked through networks of relationships with outside contractors and suppliers of essential services. Own only core components and use strategic alliances or outsourcing to provide other components.

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A network structure for a Web-based retail business.

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What are the new developments in organization structures?

Potential advantages of network structures:

Firms can operate with fewer full-time employees and less complex internal systems.

Reduced overhead costs and increased operating

efficiency.

Permits operations across great distances.

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What are the new developments in organization structures?

Potential disadvantages of network structures: Control and coordination problems may arise from network complexity. Potential loss of control over outsourced activities. Potential lack of loyalty among infrequently used contractors. Excessively aggressive outsourcing can be dangerous.

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What are the new developments in organization structures?

Deadly

sins of outsourcing:

Outsourcing activities that are part of the core. Outsourcing to untrustworthy vendors. Not having good contracts with the vendor. Overlooking impact on existing employees. Not maintaining oversight; losing control to vendors. Overlooking hidden costs of managing contracts. Failing to anticipate need to change vendors, cease outsourcing.

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What are the new developments in organization structures?

Boundaryless

organizations

Eliminate internal boundaries among subsystems and external boundaries with the external environment. A combination of team and network structures, with the addition of temporariness. Key requirements:

Absence of hierarchy. Empowerment of team members. Technology utilization. Acceptance of impermanence.

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The boundary-less organization eliminates internal and external barriers.

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What are the new developments in organization structures?

Boundaryless

organizations (cont.)

Encourage creativity, quality, timeliness, flexibility, and efficiency. Knowledge sharing is both a goal and essential component. Virtual organization.

A special form of boundaryless organization. Operates in a shifting network of external alliances that are engaged as needed, using IT and the Internet.

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What organizing trends are changing the workplace?

Contemporary

organizing trends include:

Shorter chains of command. Less unity of command. Wider spans of control. More delegation and empowerment.

Decentralization with centralization.

Reduced use of staff.

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What organizing trends are changing the workplace?

Shorter

chains of command

The line of authority that vertically links all persons with successively higher levels of management. Organizing trend:

Organizations are being streamlined by cutting unnecessary levels of management. Flatter structures are viewed as a competitive advantage.

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What organizing trends are changing the workplace?

Less

unity of command

Each person in an organization should report to one and only one supervisor. Organizing trend:

Organizations are using more cross-functional teams, task forces, and horizontal structures. Organizations are becoming more customer conscious. Employees often find themselves working for more than one boss.

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What organizing trends are changing the workplace?

Wider

spans of control

The number of persons directly reporting to a manager. Organizing trend:

Many organizations are shifting to wider spans of control as levels of management are eliminated. Managers have responsibility for a larger number of subordinates who operate with less direct supervision.

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Spans of control in flat versus tall structures.

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What organizing trends are changing the workplace?

More

delegation and empowerment

Delegation is the process of entrusting work to others by giving them the right to make decisions and take action. The manager assigns responsibility, grants authority to act, and creates accountability. Authority should be commensurate with responsibility.

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What organizing trends are changing the workplace?

Guidelines

for effective delegation:

Carefully choose the person to whom you delegate. Define the responsibility; make the assignment clear. Agree on performance objectives and standards. Agree on a performance timetable. Give authority; allow the other person to act independently. Show trust in the other person. Provide performance support. Give performance feedback Recognize and reinforce progress. Help when things go wrong. Dont forget your accountability for performance results.

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What organizing trends are changing the workplace?

More

delegation and empowerment (cont.)

A common management failure is unwillingness to delegate. Delegation leads to empowerment. Organizing trend:

Managers are delegating more and finding more ways to empower people at all levels.

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What organizing trends are changing the workplace?

Decentralization

with centralization

Centralization is the concentration of authority for making most decisions at the top levels of the organization. Decentralization is the dispersion of authority to make decisions throughout all levels of the organization.

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What organizing trends are changing the workplace?

Decentralization

with centralization (cont.)

Centralization and decentralization not an either/or choice. Organizing trend:

Delegation, empowerment, and horizontal structures contribute to more decentralization in organizations. Advances in information technology allow for the retention of centralized control.

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What organizing trends are changing the workplace?

Reduced

use of staff

Specialized staff
People who perform a technical service or provide special problem-solving expertise to other parts of the organization. People working in assistant-to positions that provide special support to higher-level managers.

Personal staff

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What organizing trends are changing the workplace?

Reduced use of staff (cont.) Line and staff managers may disagree over staff authority.

Advisory Authority. Functional authority.

No one best solution for dividing line-staff responsibilities. Organizing trend:

Organizations are reducing staff size. Organizations are seeking increased operating efficiency by employing fewer staff personnel and smaller staff units.

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THANKS