Lecture (WK7)

Lecture (WK7) - Lecture (WK7) Controlling Controlling, as...

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Lecture (WK7) Controlling Controlling, as one of the five fundamental management functions, and as defined by Rue and Byars in Management: Skills and Application is the three processes of “(1) measuring of performance against objectives, (2) determining the causes of deviations, and (3) taking corrective action where necessary”. Critical to the three processes is a feedback loop. The feedback loop provides a method of making management aware that something has upset the standard baseline in the development of a product, providing a service, or an employee’s performance. If the deviation from the established baseline (problem) is not corrected, crises could be forthcoming. Events related to corruption at Enron and Worldcom can be directly translated to poor control and where the control resided within the organization. On a personal level control would equate as follows: one does want to have their safety imperiled, walk or lose time because they need to get home (performance against objective), so if one’s gas gauge goes below a quarter of a tank because of driving (determining the cause of a deviation), then one buys gas (takes corrective action). If one runs out of gas on several occasions, one might want to move beyond a visual (feedback) of the gas gauge and buy an alarm (robust feedback mechanism) that makes a loud noise at half a tank. Obviously, control in an organization can be significantly more complicated than just described in this brief example. A reoccurring theme with control is its scope. When is there enough "control", or do we need more? Control is not without significant cost in terms of overhead for an organization. If overzealously implemented it can significantly detract from the organization's bottom line (profit). Large organizations, like accounting firms, have entire staffs solely dedicated to controlling functions. Rue and Byars in Management: Skills and Application suggests the following in order to scope controls: (1) make sure the
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Lecture (WK7) - Lecture (WK7) Controlling Controlling, as...

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