CONSIDERATIONS IN PLANNING A BUSINESS VENTURE
There are several considerations before starting a major venture that should be addressed. Many people assert that as nature of organizations have changed, so must the nature of management control. Some people go so far as to claim that management shouldn’t exercise any form of control whatsoever. They claim that management should exist to support employee’s efforts to be fully productive members of organizations and communities therefore, any form of control is completely counter productive to management and employees.
Some people even react strongly against the phrase “management control”. The word itself can have a negative connotation, e.g., it can sound dominating, coercive and heavy-handed. It seems that writers of management literature now prefer use of the term “coordinating” rather than “controlling”. “Coordination” must exist or there’s no Organization only an “Experience”.
Regardless of the negative connotation of the word “control”, it must exist or there is no organization at all. In its most basic form, an organization is two or more people working together to reach a goal. Whether an organization is highly bureaucratic or changing and self-organizing, the organization must exist for some reason, some purpose, some mission (implicit or explicit) or it isn’t an organization at all.
The organization must have some goal. Identifying this goal requires some form of planning, informal or formal. Reaching the goal means identifying some strategies, formal or informal. These strategies are agreed upon by members of the organization through some form of communication, formal or informal. Then members set about to act in accordance with what they agreed to do. They may change their minds but they need to recognize and acknowledge that they’re changing their minds.
This form of ongoing communication to reach a goal, tracking activities toward the goal and then subsequent decisions about what to do is the essence of management coordination. It needs to exist in some manner formal or informal.
The following are rather typical methods of coordination in organizations. They are used as means to communicate direction and guide behaviors in that direction. The function of the following methods is not to “control”, but rather to guide.
From on going communications among management and employees, the direction changes, then the following methods are changed accordingly.
Note that many of the following methods are so common that we often don’t think of them as having anything to do with coordination at all. No matter what one calls the following methods coordination or control they’re important to the success of any organization.
Various Administrative Controls
Organizations often use standardized documents to ensure complete and consistent information is gathered. Documents include titles and dates to detect different versions of the document.
Computers have revolutionized administrative controls through use of integrated management information systems, project management software, human resource information systems, office automation software, etc. Organizations typically require a wide range of reports, e.g., financial reports, status reports, project reports, etc. to monitor what’s being done, by when and how.
Delegation is an approach to get the things done, in conjunction with other employees. Delegation is often viewed as a major means of influence and therefore is categorized as an activity in leading (rather than controlling/coordinating). Delegation generally includes assigning responsibility to an employee to complete a task, granting the employee sufficient authority to gain the resources to do the task and letting the employee decide how that task will be carried out. Typically, the person assigning the task shares accountability with the employee for ensuring the task is completed.
Evaluation is carefully collecting and analyzing information in order to make a decision. There are many types of evaluations in organizations, for example, evaluation of marketing efforts, evaluation of employee performance, program evaluations, etc. Evaluations can focus on many aspects of an organization and its processes, for example, its goals, processes, outcomes, etc.
Once the organization has established goals and associated strategies (or ways to reach the goals), funds are set aside for the resources and labor to the accomplish goals and tasks. As the money is spent, statements are changed to reflect what was spent, how it was spent and what it obtained. Review of financial statements is one of the more common methods to monitor the progress of programs and plans. The most common financial statements include the balance sheet, income statement and cash flow statement. Financial audits are regularly conducted to ensure that financial management practices follow generally accepted standards, as well.
Performance management focuses particularly on the performance of the total organization, including its processes, critical subsystems (departments, programs, projects, etc.) and employees. Most of us have some basic impression of employee performance management, including the role of performance reviews. Performance reviews provide an opportunity for supervisors and their employees to regularly communicate about goals, how well those goals should be met, how well the goals are being met and what must be done to continue to meet (or change) those goals. The employee is rewarded in some form for meeting performance standards, or embarks on a development plan with the supervisor in order to improve performance.
Policies and Procedures:
Policies help ensure that behaviors in the workplace conform to federal and state laws, and also to expectations of the organization. Often, policies are applied to specified situations in the form of procedures. Personnel policies and procedures help ensure that employee laws are followed and minimize the likelihood of costly litigation. A procedure is a step-by-step list of activities required to conduct a certain task. Procedures ensure that routine tasks are carried out in an effective and efficient fashion.
Quality Control and Operations Management:
The concept of quality control has received a great deal of attention over the past twenty years. Many people recognize phrases such as “do it right the first time, “zero defects”, “Total Quality Management”, etc. Very broadly, quality includes specifying a performance standard (often by benchmarking, or comparing to a well-accepted standard), monitoring and measuring results, comparing the results to the standard and then making adjusts as necessary. Recently, the concept of quality management has expanded to include organization-wide programs, such as Total Quality Management, ISO9000, Balanced Scorecard, etc. Operations management includes the overall activities involved in developing, producing and distributing products and services.
Risk, Safety and Liabilities:
For a variety of reasons including the increasing number of lawsuits, organizations are focusing a great deal of attention to activities that minimize risk, avoid liabilities and ensure safety of employees. Several decades ago, it was rare to hear of an organization undertaking contingency planning, disaster recovery planning or critical incident analysis. Now those activities are becoming commonplace.