- Decide how you are going to measure and review perform-
ance. - Use ratio analysis to make comparisons and to identify vari-
ations and problems. - Set up a control system.
- Manage by exception.
CONTROLLING INPUTS AND OUTPUTS
In controlling input and output, and hence productivity, an
overview is essential. It is no good concentrating on inputs,
mainly expressed as costs, unless you look at the benefits arising
from these expenditures and the effectiveness with which the
costs have been incurred. Cost–benefit and cost-effectiveness
studies are an essential part of the control process.
Input control
When you control inputs you should aim to measure and assess
the performance of:
■ Money– its productivity, flow, liquidity and conservation.
You need to know what return you are getting on invest-
ments compared with the return you want.
You should ensure that you have the cash and working
capital to run the business. Cash-flow analysis is vital. One of
the golden rules of management, as stated by Robert Heller,
is ‘cash in must exceed cash out’.
You must conserve and provide the money needed to
finance future trading and development projects and for
capital investment.
Management has to know how effectively its financial
resources are being used to produce goods, services and
profits and this requires continuous and close attention to the
control of direct and indirect costs and overheads generally.
■ People– the effectiveness of the people you employ in terms
of their quality and performance.
■ Materials– their availability, condition, convertibility and
waste.
■ Equipment– machine utilization and capability.
42 How to be an Even Better Manager