Management Control

Summary

This video explores the fourth key function of management: control. It discusses how control helps ensure both effectiveness and efficiency in achieving organizational goals. The control process can be direct, involving face-to-face interactions, or indirect, using reports and digital communication. The script highlights three major control techniques: financial performance (ROI and profit), quality performance (quality control activities), and human resource evaluation, focusing on cultural differences in appraisals. Ultimately, the control function ensures businesses can assess and improve their strategies through periodic evaluations of performance and leadership effectiveness.

Takeaways

• 😀 Management control is the fourth and final function of management, following planning, organization, and decision-making.
• 😀 The primary goal of management control is to evaluate decisions based on their results and take necessary corrective actions.
• 😀 Management control aims to achieve both effectiveness (doing the right thing) and efficiency (doing things right).
• 😀 The control process is influenced by the company’s philosophy, needs, and the level of autonomy it provides to local managers.
• 😀 Direct control involves face-to-face meetings, business trips, and expatriate assignments, though virtual meetings are now more common due to travel constraints.
• 😀 Virtual meetings and digital tools are often more efficient than direct control, but may not be as effective.
• 😀 Indirect control uses reports, including management operating reports and financial statements, to monitor performance.
• 😀 Key financial metrics for management control include revenue, expenses, and net income, which are typically evaluated on a periodic basis.
• 😀 Management control techniques include measuring financial performance (e.g., profit, ROI), quality performance (e.g., quality control activities), and human resource management.
• 😀 Human resource management in a global context requires considering cultural differences when evaluating employee performance and conducting appraisals.
• 😀 Evaluation for higher-level global management positions includes assessing skills in areas such as situational management, teamwork, decision-making, planning, and communication.

Q & A

What is the role of management control in an organization?

Management control is the final function of management that evaluates decisions based on their results and takes necessary actions to ensure effectiveness (doing the right thing) and efficiency (doing things right).

How does management control relate to the company's philosophy and needs?

Management control is shaped by the company's philosophy and its needs, as well as the level of autonomy the company is willing to grant to its local managers.

What are the two types of control processes in management?

The two types of control processes are direct control, which involves face-to-face meetings, business trips, and expatriate assignments, and indirect control, which uses reports and communication forms like management operating reports and financial statements.

How has the approach to direct control changed over time?

Direct control, which was once reliant on physical travel, has become more efficient through the use of virtual meetings and digital tools, though these may not always be as effective as face-to-face interactions.

What are the primary concerns of top management in terms of financial control?

Top management primarily focuses on revenues, cost of revenues, expenses, and net income on a periodic basis, such as monthly, quarterly, or annually.

What are the three main techniques used for management control?

The three main techniques for management control are: 1) financial performance (profit, ROI), 2) quality performance (quality control, statistical quality control), and 3) human resource performance (evaluating managers' abilities and cultural differences).

Why is financial performance a key metric in management control?

Financial performance, including profit and ROI, is a key metric because it serves as an indicator of the company's long-term viability and overall financial health.

How does quality performance factor into management control?

Quality performance focuses on activities that enhance the quality of products and services, such as quality control circles and the use of statistical quality control methods, all of which are important for becoming a globally competitive organization.

Why are human resources an important aspect of management control?

Human resources are a critical aspect of management control as evaluating the abilities of global managers and considering cultural differences in performance appraisals helps ensure the right leaders are in place for high-level positions.

What cultural considerations should be taken into account when evaluating global managers?

When evaluating global managers, it's essential to consider cultural differences in appraisal approaches or priorities, ensuring that evaluations are fair and relevant to the context of diverse global teams.