Introduction
In a corporate context, controlling can be seen as the process by which the management of a firm ensures optimization in terms of its use of resources concerning its objectives and goals. From a management standpoint, controlling is the process by which a firm defines its corporate goals, establishes time intervals for their implementation, analyzes performance standards, and institutes any corrective actions. As a working illustration, Samsung electronics has effectively utilized control to encompass all aspects of its operations. It has also set target objectives, which are implemented in distinct time horizons.
Deviations between planned objectives and actualized objectives are then used in formulating corrective actions to improve future efficiency. Samsung’s controlling cycles thus involve establishing performance standards, measuring these standards comparing them with set objectives, and finally taking corrective action. Samsung electronics performance standards criteria are assessed based on various industry benchmarks in the electronics industry.
Establishing Standards to Measure Performance
Virtually every company has control systems in place, which help in measuring its performance in line with various benchmarks. Samsung’s performance frameworks help the company’s management to monitor its progress both in the short-term and in the long-term goals in an effort to gauge the firm’s competitive advantages. Performance standards are information-based management systems, which are set within given time horizons to provide the necessary feedback to the management regarding the performance of the firm. Performance is linked to specified quantifiable attributes such as financial targets, input-output processes, or even lagging or leading indicators.
Samsung electronics has varied performance management systems in place, which are used in monitoring the efficiency of its operations. These systems include financial performance frameworks such as cash flow statements and balance sheets, employee performance measures, ethical performance standards, and multi-tiered risk standards, which vary according to country’s risk profiles. In the recent times, Samsung electronics has tried to focus on employee performance benchmarks as reflective of the company’s overall efficiency.
Measuring Actual Performance
Measuring Samsung’s operational performance against specified objectives involves the collection and analysis of data from various feedback mechanisms. The firm is able to monitor different performance systems to prepare reliable future forecasts from this information feedback. Some of the key areas involved in performance management in Samsung electronics include profitability analysis, financial consolidation, and budget forecasting. Samsung electronics has multi-period performance review cycles in place consisting of a mix of management evaluations, employee evaluations, product reviews, and market evaluations.
These review cycles assist in the firm’s efficiency analysis. One of the key objectives of Samsung Electronics Company is optimizing the level of employee performance. This goal is achieved by initiating interactive employee-management forums, which are aimed at addressing work-related concerns and improving performance per head. Some of the control attributes may include employee satisfaction feedback, rates of absenteeism, and turnover ratios.
Samsung has also adopted the value-based management (VBM) approach of measuring performance. This strategy is an economic valuation approach whereby the firm’s performance is assessed based on its value-addition services to its shareholders. Samsung’s VBM model was initiated as a two-part model. First, it was a way of elevating workers to first-class shareholders and priority claimants in the firm’s equity and secondly a form of ensuring that equity growth is tied to improved work performance
Comparing Performance with the Standards
Effective control is reinforced by minimizing performance deviations from set standards. Comparisons between different internal attributes and their degrees of variation with the actual performance standards form an important management objective in any firm and. They constitute a critical phase in the controlling process. The management measures the actual performance, compares it against the set standards, and analyzes any deviations.
Within any operating business environment such as Samsung, some unavoidable deviations are acceptable and usually factored in when analyzing performance. These include changes in environmental factors, political legislation, and changes in the economic climate. Samsung electronics routinely carries performance analysis by scrutinizing deviations in all of its global holdings against the set company’s values. Investigations are carried out to ascertain whether these deviations arise from internal shortcomings or are because of external aspects. Samsung electronics usually uses feedback reports to detect deviations. It uses variance analysis to predict their future effects on the company’s performance
Taking Corrective Actions
After carrying a comprehensive analysis on the company’s operations and identifying various shortcomings in the company’s structure, a corrective action is then undertaken to address the shortcomings. This strategy usually involves revising the set standards, correcting performance systems, or maintaining the status quo if no inconsistencies are identified, with the firm’s performance matching the organizational standards. Some of the causes of deviations may include misplaced objectives, unrealistic standards, or even faulty company strategies. The form of corrective actions to be implemented will depend on the reasons for the deviation.
In large multinational firms, which cover many national jurisdictions as is with the case with Samsung electronics, instituting corrective actions may be a complicated task, as the deviations have to be investigated on a country-by-country basis. Samsung electronics usually adopts different mechanisms when dealing with performance deviations. One of these mechanisms includes revising the company’s objectives in line with the changing business conditions.
It can also revise changes in training programs to improve the quality of its workforce, or in extreme cases make changes to its organizational structure. In rare instances, Samsung electronics has also been known to revise its standards. This strategy is usually the case when the set standards are too ambitious, or in the reverse case, too limiting to its competitive ability.