Principle of Management

1. The process of monitoring, comparing and correcting the
work performance is called controlling.
It shows how to check the employees, their working
capabilities, how they are performing better than their
counterparts, and giving them the correct direction of the
work performance is called controlling. It also covers the
machinery part of the organization too. Whether its working
well or not what are the problems and how to overcome
them. This all is called controlling. If it is not performed
well, the planning can’t work better in an organization.

2. Planning
Goals
Objectives
Strategies
Plans
Organizing
Structure
Human resource
Management
Leading
Motivation
Leadership
Communication
Individual and
Group behavior
Controlling
Standards
Measurements
Comparisons
Actions

3. A three step process of measuring the actual performance,
comparing actual performance against a standard, and taking
managerial action to correct deviations or inadequate standards.
Goals and
objectives
Organizational
Divisional
Departmental
Individual
Measuring
actual
performan
ce
comparing
actual
performance
against
standards
Taking
managerial
actions
Step 1
Step 3
Step 2

4. There are three steps of control process
Measuring actual performance
Comparing actual performance against standards
Taking managerial actions
1.Measuring actual performance
To measure the actual performance the manager must have
the knowledge of the work done
It consists of two steps
 how we measure
 what we measure

5. Personal
observatio
n
Statistical
reports
Oral
reports
Written
reports
Benefits
• Get firsthand knowledge
• Information is not filtered
• Intensive coverage of work
activities
• Easy to visualize
• Effective for showing
relationship
• Fast way to get information
• Allow for verbal and non-
verbal information
• Comprehensive
• Formal
• Easy to file and retrieve
Drawbacks
• Subject to personal biases
• Time consuming
• Obstructive
• Provide limited information
• Ignore subjective factors
• Information is filtered
• Information can’t be
documented
• Take more time to prepare

6. Whatever is measured is probably more critical to the control
process than how it is measured. Why? Because selecting the
wrong criteria can create serious problems. Besides, what is
measured often determines which employee will do it and
what control criteria will manager use?

7. The comparing step determines the variation between
the actual performance and the standards
Range of variation
The acceptable parameters of variance between actual
performance and the standard id called range of
variation

8. Managers can choose three possible courses of the action
Do nothing because it is self explanatory
Correct actual performance
It is of two steps
Immediate corrective action
To correct the problem at spot to get performance
Basic corrective action
To look how and why performance deviate before
correcting the source of deviation

9. The deviation can be due to low or high goals. If there
is such a situation the managers can revise the
standard. If goal is easily obtainable, they can make
higher standards. If it is tough to achieve, they can
lower the standard.

10. compare actual
performance with
standard
Is
standar
d being
attaine
d
yes
Do nothing
No
Is
varianc
e
accepta
ble
Do nothing
yes
no
Is
standar
d
accepta
ble
yes
Identify
cause of
variation
no
Revise standard
Correct
performanc
e
Measure actual
performance
objective
standard

11. Performance
The end result of an activity is called performance
Organizational performance
The accumulated results of all the organization’s
work activities are called the organizational
performance
Productivity
The amount of goal or services produced divided by
the input needed to complete that output is called
productivity.

12. A measure how appropriate organizational
goals are and how well they are being met is
called organizational effectiveness

13. TOPICS
LEVELS OF CONTROL
TYPE OF CONTROL
CHARACTERISTICS OF ORGANATIONAL CONTROL
SYSTEM
CHARACTERISTICS OF DYSFUNCTIONAL CONTROL
SYSTEM
MANAGING FINANCIAL CONTROL
RATIO ANALYSIS
BALANCE SCORECARD
INFORMATIONAL CONTROL

14. LEVELS OF CONTROL
• Strategic control
• Tactical control
• Operational control

15.  Assess and regulate how the organization fits
its external environment and meets its long-
range strategic plans.
Strategic control
Tactical control
 Assess and regulate successful implementation
of departmental level tactical plan, emphasizing
specific internal and external forces affecting them

16. Strategic and tactical control
 Time frame
limited
 Objective
Controls relate to specific,
functional area
 Type of comparison
Comparisons made within
organization
 Focus
Implementation of strategy
 Time frame
Long
 Objective
Controls relate to organization as a
whole
 Type of comparison
Comparisons made to other
organization
 Focus
Determination of overall
organizational strategy
Tactical control Strategic control

17. Operational control
 Assess and regulate successful implementation
of day-to-day operational plans by monitoring
focused internal activities.

18. TYPE OF CONTROL
Preliminary Control
Concurrent Control
Post Action Control

19. Type of control
PRELIMINARY CONTROL
 Sometimes called the Feed Forward controls,
they are accomplished before a work activity
begins.
 They make sure that proper directions are set
and that the right resources are available to
accomplish them.

20. Type of control
 CONCURRENT CONTROL
Focus on what happens during the work
process. Sometimes called Steering Controls,
they monitor ongoing operations and activities to
make sure that things are being done correctly

21. Type of control
 POST ACTION CONTROL
Sometimes called Feedback control, they take
place after an action is completed. They focus
on end results, as opposed to inputs and
activities.

22. CHARACTERISTICS OF ORGANATIONAL CONTROL SYSTEM
The management of any organization must develop
a control system in order to achieve its
organization's goals.
Effective control systems share several common
characteristics. These characteristics are as
follows:----

23. CHARACTERISTICS OF EFFECTIVE ORGANIZATIONAL
CONTROL SYSTEMS

24. AVAILABILATY OF INFORMATION WHEN NEEDED
Control data should be provided to the responsible
managers frequently enough to allow them to react to
problems while there is still time to take decisive
action. Without timely control information, problem
situations turn in to major disasters.
COMPREHENSIBILITY
 Controls must be simple and easy to understand.

25. FOCUS ON CRITICAL POINTS
controls are applied where failure cannot be
tolerated or where costs cannot exceed a certain
amount. The critical points include all the areas of
an organization's operations that directly affect the
success of its key operations.

26. ACCURACY
Effective control systems provide factual
information that's useful, reliable, valid, and
consistent.

27. ECONOMIC FEASIBILITY
Effective control systems answer questions such
as, “How much does it cost?” “What will it
save?” or “What are the returns on the
investment?” In short, comparison of the costs
to the benefits ensures that the benefits of
controls outweigh the costs.

28. ACCEPTANCE BY EMPLOYEES
 Employee involvement in the design of controls
can increase acceptance.

29. INTEGRATION INTO ESTABLISHED PROCESSES
 Controls must function harmoniously within these
processes or not.

30. CHARACTERISTICS OF
DYSFUNCTIONAL CONTROL SYSTEM
Over Control
Under Control

31. OVERCONTROL
Excessive regulation of work activities, restricting
individual autonomy and causing ineffective
organizational performance.

32. UNDER CONTROL
 Unregulated work activities, granting employs too
much individual autonomy and causing ineffective
organizational planning

33. MANAGING FINANCIAL CONTROL
Balance sheet
Income statement
Ratio analysis

34. FINANCIAL CONTROLS
 Financial control is a critically important activity to
help the business ensure that the business is meeting
its objectives.
 Financial control provide managers and stakeholders
to evaluate organization performance.
 It shows the organization financial position and its
financial performance and its Ratio analysis.

35. Balance sheet
 A financial statement detailing an organization
assets, liabilities, and shareholders equity at a
specific point in time

36. Financial statement
 A summary of the an organization's revenue,
expenses and profits over a particular period of
time.

37. Ratio analysis
 A managerial process used to compare
organizational performance with historical,
competitive or industry performance

38. RATIOS ANALYSIS
There are four type of ratios
Liquidity ratios
Leverage ratios
Activity ratios
Profitability ratios

39. 1) Liquidity ratios
 Term liquidity refers to conversion of assets into
cash.
 Liquidity ratios are of two type
 Currents ratios
 Acid test

40. a) Current ratio
 Determine the short term debt paying ability &
is computed below.
 Current ratio = Current assets/Current
liabilities

41. b) Acid Test Ratio
 It is also called the quick ratio. To determine
the most immediate position than that indicate
by the current ratio.
 Acid test = Current assets – inventory
current liabilities

42. 2) Leverage ratio
 These ratios are used to analyze an
organization’s ability to meet its long term short
term debt obligation
 Leverage ratios are of two type
 Debt to assets
 Time interest earned

43. a) Debt to assets
 It indicates firms long term debt paying ability. It
also helps how well creditors will be protected
in case of insolvency
 Debt to assets = Total debt/ Total assets

44. b) Time interest earned
 It measures the firms ability to make
contractual interest payment. The higher its
value the better able is the firm to fulfill its
interest obligation.
 Time interest earned= earning before interest &
tax/ interest charges

45. 3) Activity ratios
 Activity ratios are also called the assets
utilization ratios , are analyze an organization's
effectiveness in using its assets to generate
sales
 There are of two type
 Inventory turnover
 Total asset turnover

46. a) Inventory turnover
 # of times inventory will be sold out in a years.
 Increase in turnover of inventory is favorable,
decrease in turnover take more time to be sold
out.
 Its ratios are,
Inventory turnover= sales/ inventory

47. b) Total asset turnover
 It indicate the efficiency with which the firm
uses its assets to generate sales.
 Its ratios are,
 Total assets turnover=sales/total assets

48. 4) Profitability ratios
 Used to analyze an organization's effectiveness
in earning a net return on sales and investment
There are of two type
 Profit margin on sales
 Return on investment

49. a) Profit margin on sales
 Identified the profit that are being generated.
 Its ratio are,
 Profit margin on sales = net profit after tax/
total assets

50. b) Return on investment
 Measures the efficiency of assets to generate
profits
 Return on investment = net profit after tax/
total assets

51. Balance scorecard
 A performance measurement tool that looks at
more than just the financial perspective.
 A balance scorecard typically looks at four
areas that contribute to company performance:
financial, customer, internal processes, and
people/innovation/growth assets.

52. Informational Control
 Managers deals with information controls in
two ways:
 How is information used in controlling?
 Controlling information.

53. How is information used in controlling?
 Managers need the right information at the
right time and in the right amount to monitor
and measure organizational activities and
performance
 A management information system (MIS) Is a
system used to provide managers with
Needed information on a regular basis.

54. Controlling information
 Managers should have to careful that its secret
matters can't be move out of the organization.

55. Benchmarking of best practices
 Benchmarking the search for practices among
competitors or non competitors that lead to
their superior performance.
 Benchmark the standard of excellence against
which to measure and compare.

56. THANK YOU