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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Managers use a variety of measures to
monitor performance:
Controlling work processes

Regulating employee behavior

Systems for financial resources

Developing human resources

Evaluating profitability

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 Organizational control is the systematic
process through which managers
regulate organizational activities to
make them consistent with expectations
established in plans, targets, and
standards of performance

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  Establish Standards of Performance
 Measure Actual Performance
 Compare Performance to Standards
 Take Corrective Action

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 Balanced perspective of company
performance
 Integrates various areas of the organization
 Managers record, analyze, and discuss the
metrics
 Serves as core management-control system

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 Hierarchical controls include the monitoring
of behavior through rules, policies, reward
systems, and written documentation

 Decentralized controls based on values and

assumptions; rules are only used when
necessary
Culture is adaptive, uniting individuals and
teams

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 9
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  Decentralized philosophy
 Gets every employee thinking like an
owner
 Information sharing and teamwork
 Allows employees to see the financial
condition of company
 Sees how his/her job fits into organizational
success

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 Infuse quality into every aspect of the
business, all day-to-day activities
 Became popular in the U.S. in the 1980s
 Focuses on:
Teamwork
Collaboration
Identifying improvements
 The goal of TQM is zero defects

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  Quality Circles
 Benchmarking
 Six Sigma
 Quality Partnering
 Continuous Improvement

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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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  Setting targets and monitoring expenditures

 Budgets list planned and actual

expenditures

 Budgets are associated with a division or

department
The unit of analysis for budgeting is the
responsibility center

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  Expense Budget
 Revenue Budget
 Cash Budget
 Capital Budget
Top-down Budgeting
Bottom-up Budgeting
 Zero-Based Budget

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 Financial Statements provide basic
information for financial control

Income Statement
profit-and-loss
Balance Sheet
(P&L) statement
shows firm’s
highlights firm’s
financial position
financial
performance

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 Managers need to evaluate financial
reports
 Comparing performance with other data
and industry standards
 Financial Analysis:
Ratios
Statistics
 Review:
Profits, assets, sales, and inventory
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 ISO 9000 standards – International
Organization for Standardization
Organization certification
157 Countries
 Organizations demonstrate a commitment
to quality
 Europe leads in certifications but the United
States has had the greatest number of new
certifications in recent years

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 Goes beyond systems and rules from the
top to safeguard shareholders
 Ensures accountability, fairness, and
transparency in all its dealings
 U.S. Legal Requirements:
 Auditing reforms – internal and external
 Certification of financial reports by top leaders
 Enhanced public financial disclosure
 Justification of Board structure

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