Coping with changes Each and every modern organization has to cope with changes in the environment. It is difficult to see the linkage between strategic endeavors and the day-to-day corporate activities associated with delivering goods and services to customers. Global Trade and Transfer — The management accountant frequently performs significant and complex analysis related to global activities. The more detailed objectives and processes you can set, the better the plan is. Responsibility Considerations — Enabling and motivating employees to work at peak performance is an important managerial role.
Hence, it helps in reducing the dishonest behaviour of the employees and in creating order and discipline in an organization. Understand the need for defining the core values of an organization. There is a danger, however, that we may measure characteristics that do not represent effective performance as in the case of the speaker who requested that all of the people who could not hear what he was saying should raise their hands , or that improper may be communicated. Furthermore, it requires the whole organization to work together as the different departments or team plans need to link to each other and align with the organizational objective. The objective of the system is to perform some specified function.
You would essentially be looking at the tasks ahead of you and determining who should do what and if you have the right manpower to achieve the objectives you want. If your task were to increase sales, you would look at the plan and determine how to divide the resources you have in order to put your plan in place. This may be a pricing change, an added value to a customer, a new target market or even disciplining employees. This is a customer service-related goal. It is clear that the most successful companies try to personalize things and tailor them to individual needs.
Yet, good controls can be established and maintained using other techniques. It helps to check the errors and take the corrective action, so it is known as an important function of management. Costing Concepts — In addition to alternative methods of costing, a good manager will need to understand different theories or concepts about costing. Some companies produce homogenous products in continuous processes. Standards are the criteria against which actual performance will be measured. Thus, it is a pervasive function.
An example of planning would be a situation where you have an objective, such as increasing the sales by 20% in the following month. For instance- deviation of workers attitudes, the performance of a manager, etc. Without controlling planning is meaningless. And, if it does, is mental fatigue a function of the lack of a challenging assignment or the fear of a potential injury? One important class of problems against which control systems guard may be called personal limitations. Control in management means setting standards, measuring actual performance and taking corrective action.
Furthermore, each five functions — planning, organizing, staffing, directing and controlling — are linked to each other. Let's review the process as a whole to better understand how controlling fits. Methods include calculating break-even points and determining how to manage to achieve target income levels. It involves comparing actual performance to expected performance. Depending on your management level, and resources to organize. The reasons why controlling is important are elaborated below.
For example, consider production of paint or bricks used in building a home. Doing so the process gives out a clear picture that the plans are superior to individual actions and must be followed. We select a specific characteristic because a correlation exists between it and how the system is performing. Under this approach, an entire process is mapped and studied with the goal of identifying any steps that are unnecessary or that do not add value. In essence, controlling is about quality monitoring. This does not happen by accident and requires extensive systems development work, as well as training and explanation, on the part of management accountants. Let us suppose, for example, that the decisions made by an executive are rated from 1 to 10, 10 being the perfect decision.
Because each management action is predicated upon some specific decision, good decision making is crucial to being a successful manager. There is no doubt that some of the actual performances will fall short of the standards set in the first step. They engage in many activities that drive costs but do not produce revenues. The traditional process for management control consists of the following steps: Step 01: Actual performance is compared with planned performance, Step 02: The difference between the two is measured, Step 03: Causes contributing to the difference are identified, and Step 04: Corrective action is taken to eliminate or minimize the difference. The comparison helps you to identify the problem areas or notice patterns that are actually working more efficiently. Create culture to control costs: When employees are given the directives to control costs, it becomes a mantra for the entire company. They provide yardsticks for measuring performance and facilitate comparisons across divisions, between levels in the organization, and from one time period to another.