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College: Lecturer: Course: Date: Controlling and planning Outline of contents Contents Page Abstract 3 Introduction 3 Power centralization in home depot 3 Reason for power centralization 4 Planning and implementation of the control system 5 Abstract This paper describes the concepts of controlling and planning, and expounds their significance using the backdrop of a major business move in a major company. The paper also discusses the interrelationship between the two concepts. Introduction In business practices, the two terms, controlling and planning, are literally joined in a seamless bond. This is because none can operate without the other.
Control in business focuses on what is happening at present, and hence plays a part in determining the consequences of any situation. Planning deals with the future, determining future events and trying to foresee the consequences of all present actions. At the managerial level, a business person needs to have both the control and planning capability in order for the business to succeed. The actual type of control and planning exhibited, however, is unique to the individual. Power Centralization in Home Depot Robert Nardelli introduced a radical form of control in Home Depot. As the CEO, he reorganized the control structure of the company in such a way as to make all power centralized.
This run contrary to the common trend in business entities, whereby the control structure was becoming more and more decentralized. According to Robert, Home Depot would do better if all the employees were controlled from a central point, and if a strict set of guidelines were followed by everybody. Most companies have evolved to such a state that every employees input is taken heed of so that the overall decisions made become an amalgamation of many minds. With Roberts style of leadership, this kind of collaboration with every other employee is not necessary for the success of the company, and hence he got rid of it.
Robert sought a way of controlling every other employee in the company, and having them heed his every instruction. A major assumption that he made in all this was that his years of experience were adequate to launch the company to higher heights of performance. This assumption implied that Roberts decisions would be faultless, or nearly so, and hence the company would be better off with a centralized form of control. Robert Nardelli's move with Home Depot also essentially relegated company planning to a few elite individuals therein. All major decisions would be issued out from these elite people, and the rest of the employees would be expected to obey them strictly. No room for maneuver or adaptability to the individuals unique approach to company challenges.
Innovation by the employees was hence no longer an asset. In such a strict control environment, an employee is judged on ability to follow instructions and rules, rather than on output. The company hence becomes process-focused, instead of goal-oriented. Reason for power centralization The move to a higher level of top management and a strict hierarchy system was inspired by the observed failure of the previous management regimes within Home Depot. The founders of the company had encouraged free expression of creativity, but this had encouraged an out-of-control expansion by the company.
It became hard to control the store managers, whose powers were becoming retrogressive to the rest of the company. In Roberts view, allowing free expression of unique approaches to business by all employees was tantamount to surrendering the control of the business to their diverse whims a potentially catastrophic situation. Robert Nardelli introduced a form of control within Home Depot called hard ball. In this control system, the top, experienced managers spell out what the subordinates will do: the targets, the deadlines, and the methods. The idea behind this was that a centralized control system would render coherence to all the business operations, such that everybody would be working towards a common goal.
The employees would also be working with tried and tested methodologies that were already known to be both sustainable and profitable for the business as a whole. Hence even if the new conditions were stifling to the creative employees, the profitable ends would justify the uncomfortable means. Planning and Implementation of the control system The planning behind this centralized form of control was well thought out by Robert Nardelli, and it was executed in several stages. First of all, all major functions within the company were to be centralized and hence afford coherence and lower managerial expenses.
The higher purchase volumes emanating from such central controls would also result in lower costs to the products. It would be easier then to observe any significant improvements or deterioration in the companys performance, and hence take the relevant steps. With a centralized control system in place, the explosive growth of the company that had almost destroyed it in previous regimes due to resource scarcity could be kept in check. A slow down in the companys growth rate could be enforced, so that the companys resources were kept at pace with the expansion. This would also be further enhanced by the emergent capability to maintain all company operations at close scrutiny. All inputs and outputs could be kept accurately measured and compared with the past parameters, or projected into future performances.
In carrying out the centralized control system, any non performing employee was a potential impediment to the realization of the plans. To this end, Robert demonstrated the seriousness of his plans by getting rid of 98 % of top managers. The managers who got replaced were obviously the ones who couldnt fit in with his plans for control. The replacement demonstrated that controlling and planning are not all-inclusive activities within a company. When initiated by one person, the only guarantee from them is that a certain goal will be achieved, regardless of the mid-way costs. For Robert, the goal was higher sales, and such indeed were observed, although the customer satisfaction rate dropped.
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Research essay sample on Control System Home Depot
