Job Sequence Analysis

-

Control Techniques: Traditional and Modern

Traditional Techniques

Traditional control techniques have been utilized by businesses for extended periods and continue to be effective today. These techniques include:

  • Personal Observation:
    • Managers directly observe employees' performance, allowing for firsthand information collection.
    • Creates psychological pressure on employees to perform better as they know they are being observed.
    • Not suitable for all jobs due to its time-consuming nature.
  • Statistical Reports:
    • Use of percentages, ratios, averages, etc., to provide performance data.
    • Information presented in tables, graphs, and charts facilitates comparison with standards and past performance.
  • Breakeven Analysis:
    • Studies the relationship between sales volume, costs, and profits.
    • Helps estimate profits at various activity levels.
    • The breakeven point is where total revenue equals total costs, indicating no profit or loss.
    • Formula: Breakeven Point = Fixed CostSelling Price per unit−Variable cost per unit
  • Budgetary Control:
    • Involves preparing budgets for different operations in advance.
    • Budgets act as standards for comparing actual performance.
    • A budget is a quantitative statement of expected results for a future period and should be flexible to adapt to changes.

Modern Techniques

Modern control techniques are newer to the management world, providing innovative aspects for organizational control:

  • Return on Investment (ROI):
    • Measures the efficiency of capital use in generating returns.
    • Formula: ROI = (Net IncomeTotal Investment)×100
    • Useful for comparing performance across departments and identifying problems affecting ROI.
  • Ratio Analysis:
    • Analyzes financial statements by computing various ratios.
    • Helps in understanding the financial health of a business.
  • Responsibility Accounting:
    • Sets up various sections, departments, or divisions as 'Responsibility Centers.'
    • Each center has a head responsible for meeting its targets.
  • Management Audit:
    • Reviews the overall performance of management.
    • Aims to identify deficiencies in management functions and ensure policies are up-to-date.
    • Focuses on improving efficiency and effectiveness.
  • PERT and CPM:
    • PERT (Programme Evaluation and Review Technique):
      • Estimates time required to complete a project using three time estimates: optimistic, most likely, and pessimistic.
    • CPM (Critical Path Method):
      • Identifies the longest path in the project network (critical path) to ensure timely completion.
      • Includes cost estimates.
    • Steps involved:
      • Divide the project into activities and arrange them logically.
      • Prepare a network diagram.
      • Lay down time and cost estimates.
      • Identify and manage the critical path.
      • Make necessary adjustments to meet project deadlines.
  • Management Information System (MIS):
    • A computer-based system providing accurate, timely information for decision-making.
    • Essential for communication and control, allowing managers to take corrective measures promptly.

Conclusion

Both traditional and modern control techniques play vital roles in managerial control. Traditional techniques like personal observation, statistical reports, breakeven analysis, and budgetary control offer foundational approaches. Meanwhile, modern techniques such as ROI, ratio analysis, responsibility accounting, management audit, PERT, CPM, and MIS introduce advanced methodologies to address contemporary challenges and optimize organizational performance. Combining these techniques enables managers to maintain effective control and ensure organizational goals are achieved.