Control in a Business Setup

Control in a Business Setup

Introduction

Every organization’s success hinges on how effective the management handles the implementation process of the control function.  Verburg and other scholars believe that the central role of control is to utilize the set procedures and processes efficiently within an organization to maximize a company’s sales, reduce possible wastes and accentuate the quality of its products (Verburg et al., n.d.). The purpose of the following analysis is to provide an advisory opinion to the management of Sleek Motors on the role of controls in business setup and outline the most important aspects of control functions that ensure smooth operations of the business. Also, the paper highlights the performance of every branch of the company based on the company’s set of standards of services. Finally, the article comprehensively highlights the required corrective actions that Sleek Motors should embrace to enhance the organization’s control system.

Controls

Control is one of the most fundamental facets of the company’s operations that require the management’s entire focus consistently to ensure that all the departments within the organization are effectively running both collectively and individually with the singular aim of realizing the company’s goal (Verburg et al., 2018). Proper control influences the success of every department in an organization. 

Control, as a critical management function, ensures that every operation within the company is conducted according to the stipulated laws and that all the employees, activities, and processes in the organization are appropriately structured (Verburg et al., n.d.). It also outlines the corrective measures that can be applied if the company’s operations do not meet the required standards. Every management and organizational leadership team has four primary functions, which are crucial to the running of the organization. The tasks include control, planning, organizing, and leading. Control is the function mainly concerned with evaluating the actual performance of each department based on the established standards of operations to ensure that all the activities are carried out per the company’s required procedures. The management of Sleek Motors Company must review the adherence by the employees and junior managers on the set standards and methods of the company ranging from the time set for the monthly training to the rate of production as well as the cost of unit production.  It is worrying that none of the branches attains the required hours of training per month, and that has a significant effect on the quality and quantity of production as reflected on the total annual manufacture against the set target over the same time. Besides, redoing cars due to production issues is a great challenge that affects around 4.85% of all produced vehicles. Therefore, all the branches need to strictly adhere to the set standards to meet the target production goals and the company’s objectives.

Standard Specifications

Georgetown reports a scrap rate of 3%, which is way above the 1% target. The branch has only managed to produce 27,000 vehicles in one year compared to the targeted 45,000 cars. Therefore, the company needs to adjust its operations to meet the target goals. The branch only spends 3 hours every month on training, even though the company requires every department to allocate at least 8 hours on personnel training. Therefore, the branch lags behind the target goals and has the heist number of cases shipping defaults out of all the company branches.

Additionally, among all other branches, Georgetown has the lowest utility rate, which does not allow the company to meet the set standards. The machines at the department have better uptime than most of the branches since they report production downtime slightly below the expected average compared to the rate of downtime in other offices. Ironically, they spend one more hour on every produced car, which adds up to 600 extra hours on production every year.

Additionally, the prevailing safety incidences at Fort Wayne are 0.75% higher than the set standards, being recorded at 2.25% against the target of 1.5%. The branch has the highest dispersion regarding the cost of manufacturing each car and the time taken to complete one vehicle. The department has also failed to achieve the target utilization rate at 78.18% compared to the required 81.82%. The department is also 2000 vehicles short of the target 45,000 units. The branch spends 6 hours every month on training instead of the expected goal of 8 hours per month. However, the office records the highest precision rate since its cars are produced per the specifications 99% of the time, which is the highest overall score. The Lingotto Branch often hits its targets on time utilization time and total number of cars manufactured yearly but unfortunately fails all the other performance indices. On the other hand, Kansas City performed well in the scrap and utilization rates, the number of annually manufactured units, as well as the manufacturing cycle time.

The cost to manufacture a single unit and the number of hours taken to make it are areas Koenigsegg Branch performed exemplary well. However, it reported relatively poor performance in all other areas, including the annual number of produced units, recall rate, utilization rate, the number of cars produced according to specification, and does not meet the target for the first time as well as the number of safety incidents per employee. The management needs to move in and tighten various aspects of controls surrounding the cost of production, adherence to training, production output, and time taken to manufacture each unit. Without adjustments in the highlighted areas, the situation may worsen, affecting the overall performance of the company.

Corrective Measures

Training is a significant part of the manufacturing process in such companies as Sleek Motors. No single branch has adhered to the company’s established training schedule, which is a serious issue that must be corrected immediately. The management must introduce a proper system of checks and balances to ensure that every branch spends enough time on training its employees and the manufacturing process. Such issues as spending more time on each production unit, fewer cars produced per year, and an extra cost on each vehicle may be as a result of the lack of adequate training.

Additionally, the success of the company will depend on the efficiency and quality of its product and production processes.  The management must ensure that the machines are operating maximally without frequent downtime. This can only be achieved by investing in quality and constant maintenance practice (Verburg et al., n.d). Finally, the safety standards must be improved to guarantee employee wellbeing and reduce incidences that are reported to harm workers.

Conclusion

Every organization has a set of standards and specifications that serve as a significant benchmark against operations and the day to day running of its businesses.  These standards are consistently and continually engaged to ensure that all departments within the organization are working towards realizing the specific and collective goals of the organization. Through the function of control, managers have dependable means to evaluate actual performance against the interest of all the stakeholders as well as steps to take if desired results are not being realized. Since the corrective measures are duly stipulated, Sleek Motors can review the reasons why some branches are not meeting targets. In contrast, others manage to achieve the goals and adjust specific control mechanisms.

 

References

Sihag, V., & Rijsdijk, S. A. (2018). Organizational controls and performance outcomes: A meta-analytic assessment and extension. Journal of Management Studies, 56(1), 91–133. doi: 10.1111/joms.12342

Verburg, R. M., Nienaber, A.-M., Searle, R. H., Weibel, A., Hartog, D. N. D., & Rupp, D. E. (n.d.). The role of organizational control systems in employees’ organizational trust and performance outcomes. Retrieved from https://journals.sagepub.com/doi/full/10.1177/1059601117725191