Unit 5 (P 41)Control system: types, process, managing information for effective control

Types of control:

1. Pre –control system/ Feed forward controls: sometimes called preliminary or preventive controls, attempt to identify and prevent deviations in the standards before they occur. Per- control controls focus on human, material, and financial resources within the organization. These controls are evident in the selection and hiring of new employees. For example, organizations attempt to improve the likelihood that employees will perform up to standards by identifying the necessary job skills and by using tests and other screening devices to hire people with those skills.
2. Pre-control focuses on the regulation of inputs to ensure that they meet the standards necessary for the transformation process.
• Pre-control controls are desirable because they allow management to prevent problems rather than having to cure them later. Unfortunately, these controls require timely and accurate information that is often difficult to develop. Pre-control control also is sometimes called preliminary control, Feed forward, preventive control, or steering control.
3. Concurrent controls: monitor ongoing employee activity to ensure consistency with quality standards. These controls rely on performance standards, rules, and regulations for guiding employee tasks and behaviors. Their purpose is to ensure that work activities produce the desired results. As an example, many manufacturing operations include devices that measure whether the items being produced meet quality standards. Employees monitor the measurements; if they see that standards are not being met in some area, they make a correction themselves or let a manager know that a problem is occurring.
• Concurrent control takes place while an activity is in progress. It involves the regulation of ongoing activities that are part of transformation process to ensure that they conform to organizational standards. Concurrent control is designed to ensure that employee work activities produce the correct results.
• Since concurrent control involves regulating ongoing tasks, it requires a thorough understanding of the specific tasks involved and their relationship to the desired and product. Concurrent control sometimes is called screening or yes-no control, because it often involves checkpoints at which determinations are made about whether to continue progress, take corrective action, or stop work altogether on products or services.
4. Feedback controls:  Involve reviewing information to determine whether performance meets established standards. For example, suppose that an organization establishes a goal of increasing its profit by 12 percent next year. To ensure that this goal is reached, the organization must monitor its profit on a monthly basis. After three months, if profit has increased by 3 percent, management might assume that plans are going according to schedule.
• This type of control focuses on the outputs of the organization after transformation is complete. Sometimes called post action or output control, fulfils a number of important functions. For one thing, it often is used when Feed forward and concurrent controls are not feasible or are too costly.
• Sometimes, feedback is the only viable type of control available. Moreover, feedback has two advantages over Feed forward and concurrent control. First, feedback provides managers with meaningful information on how effective its planning effort was. If feedback indicates little variance between standard and actual performance, this is evidence that planning was generally on target.
• If the deviation is great, a manager can use this information when formulating new plans to make them more effective. Second, feedback control can enhance employees’ motivation. The major drawback of this type of control is that, the time the manager has the information and if there is significant problem the damage is already done. But for many activities, feedback control fulfils number of important functions.

The control process

The control process involves carefully collecting information about a system, process, person, or group of people in order to make necessary decisions about each. Managers set up control systems that consist of four key steps:

1. Establish standards to measure performance: - Standards are the plans or the targets which have to be achieved in the course of business function. They can also be called as the criterions for judging the performance. Standards generally are classified into two-
• Measurable or tangible - Those standards which can be measured and expressed are called as measurable standards. They can be in form of cost, output, expenditure, time, profit, etc.
• Non-measurable or intangible- There are standards which cannot be measured monetarily. For example- performance of a manager, deviation of workers, their attitudes towards a concern. These are called as intangible standards.
• Controlling becomes easy through establishment of these standards because controlling is exercised on the basis of these standards. Managers define goals for organizational departments in specific, operational terms that include standards of performance to compare with organizational activities.
2. Measure actual performance: Finding out deviations becomes easy through measuring the actual performance. Performance levels are sometimes easy to measure and sometimes difficult. Measurement of tangible standards is easy as it can be expressed in units, cost, money terms, etc. Quantitative measurement becomes difficult when performance of manager has to be measured. 
• Most organizations prepare formal reports of performance measurements that manager’s review regularly. These measurements should be related to the standards set in the first step of the control process. For example, if sales growth is a target, the organization should have a means of gathering and reporting sales data.
3. Compare performance with the standards: This step compares actual activities to performance standards. When managers read computer reports or walk through their plants, they identify whether actual performance meets, exceed, or fall short of standards or deviated from standard. Deviation can be defined as the gap between actual performance and the planned targets. The manager has to find out two things here- extent of deviation and cause of deviation. Extent of deviation means that the manager has to find out whether the deviation is positive or negative or whether the actual performance is in conformity with the planned performance. The managers have to exercise control by exception. He has to find out those deviations which are critical and important for business. Minor deviations have to be ignored.
4. Take corrective actions: Once the causes and extent of deviations are known, the manager has to detect those errors and take remedial measures for it. There are two alternatives here-
• Taking corrective measures for deviations which have occurred; and
• After taking the corrective measures, if the actual performance is not in conformity with plans, the manager can revise the targets. It is here the controlling process comes to an end. 

Follow up is an important step because it is only through taking corrective measures, a manager can exercise controlling.

When performance deviates from standards, managers must determine what changes, if any, are necessary and how to apply them. In the productivity and quality-centered environment, workers and managers are often empowered to evaluate their own work. After the evaluator determines the cause or causes of deviation, he or she can take the fourth step—corrective action. The most effective course may be prescribed by policies or may be best left up to employees' judgment and initiative.

These steps must be repeated periodically until the organizational goal is achieved

Managing control in organization:

• Initiate effective control: Determine the rational control system.
• Appropriate focus: focus should be Reward for efficiency
• Parity in authority and responsibility
• Participative management
• Proper coordination
• Effective communication

Managing Information for effective control:

1. MIS: Management information system is a network established within an organization to provide manager with information that will assist them in decision making. Management information systems are distinct from other information systems in that they are used to analyze operational activities in the organization. MIS is a type of link that assists in the communication between managers of various disciplines in a business firm or an organization. MIS focuses more on the information gathered and the information that has poured from different quarters. MIS focuses on operational efficiency. MIS is all about theory. Steps in MIS are:
• Assembly: searching and collecting raw data and putting them into file
• Processing: the act of editing and summarizing to data
• Analysis: Examining and scrutinizing the data into useful statistics such as percentage, ratio etc.
• Storage and retrieval: properly storing of information using proper file storage system for retrieval as needed.
• Evaluation: the evaluation of the data with the standard.
• Dissemination:  Providing the evaluated information as per the need at different level of the organization.
2. DSS: A decision support system (DSS) is a computer-based information system that supports business or organizational decision-making activities. DSSs serve the management, operations, and planning levels of an organization and help to make decisions, which may be rapidly changing and not easily specified in advance. DSS focuses more on making effective decision or in other words helping the company to do the right thing. DSS is all about practice and analysis.
1. A Decision Support System (DSS), a collection of integrated software applications and hardware that form the backbone of an organization’s decision making process. Companies across all industries rely on decision support tools, techniques, and models to help them assess and resolve everyday business questions. The decision support system is data-driven, as the entire process feeds off of the collection and availability of data to analyze. Business Intelligence (BI) reporting tools, processes, and methodologies are key components to any decision support system and provide end users with rich reporting, monitoring, and data analysis. High-level Decision Support System Requirements:
• Data collection from multiple sources (sales data, inventory data, supplier data, market research data. etc.)
• Data formatting and collation.
• A suitable database location and format built for decision support -based reporting and analysis
• Robust tools and applications to report, monitor, and analyze the data
• Decision support systems have become critical and ubiquitous across all types of business. In today’s global marketplace, it is imperative that companies respond quickly to market changes. Companies with comprehensive decision support systems have a significant competitive advantage.