Planning and controlling functions
The purpose of this report is to determine how Ceylinco Consolidated (Sri Lanka) managers can regain public trust and credibility in their organisation using the managerial tools available in the planning and controlling functions. Ceylinco Consolidated is one of Sri Lanka’s oldest and largest business conglomerates with over 100 subsidiaries and associated companies and is an empire built on the firm foundation of trust and integrity of its chairman, Deshamanya Lalith Kotelawala.
Ceylinco Consolidated recently expanded into sectors such as banking, insurance, real estate, tourism, jewellery, diamonds and IT and proudly proclaims that the organization’s structure is stabilised by providing efficient services and by practicing the highest professional and ethical standards. In December 2008, Deshamanya (the highest civilian honour awarded by the Sri Lankan government) Lalith Kotelawala was remanded for the misappropriation of 26 billion Sri Lankan Rupees (USD 225 million) of investments from the failed Golden Key Credit Company subsidiary. As a result, Ceylinco Consolidated lost credibility with the general public and is poised to collapse with many of its investors pulling out their monies. Phone interviews were conducted with journalists following the case and a Senior Consultant at Ceylinco Consolidated.
References such as the company website, e-journals and financial papers
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To summarize, the managerial functions of planning and controlling can be effectively used to restore Ceylinco Consolidated’s damaged image in the eyes of the public if they replace the upper management with managers who follow a strong ethical code of conduct and ensure transparency in the management of the company and its subsidiaries. This will help regain their goodwill in the long run, but to do so in the short run, they will have to return all monies to their investors and revamp the company policies.
Introduction Aim The purpose of this report is to determine how Ceylinco Consolidated (Sri Lanka) managers can regain public trust and credibility in their organisation using the managerial tools available in the planning and controlling functions. Methodology The information used in this report was collected by consulting the company website, e-journals, financial papers and magazines. Interviews were conducted with Sri Lankan journalists following the case and a Senior Consultant at Ceylinco Consolidated.
Assumptions It has been assumed that all interviews conducted and literature consulted was accurate. Limitations This report is limited to two of the key functions of management; planning and controlling. Background Ceylinco Consolidated is one of Sri Lanka’s oldest and largest business conglomerates with over 100 subsidiaries and associated companies and is an empire built on the firm foundation of trust and integrity of its chairman, Deshamanya Lalith Kotelawala. In December 2008, Lalith Kotelawala was remanded for financial mismanagement. As a result, Ceylinco Consolidated lost credibility with the general public and is poised to collapse with many of its investors pulling out their monies.
Plan This report will first provide a background of the importance of a strong ethical code of conduct and managerial integrity within the group’s organisation before discussing the managerial functions of planning and controlling. Important functions regarding these two topics will be explained within the report. Furthermore their application to the conglomerate will be analysed and evaluated with appropriate recommendations to management.
Discussion The Importance of Managerial Integrity and a Strong Code of Ethics within Ceylinco Consolidated Investigations revealed that the financial statement and audit report of the company had been altered and adjusted with the consent of the senior management to deceive the board of directors. No board meetings were held during the past four years. The Deputy Solicitor General said these financial statements and audit reports were prepared to show profits but the company was actually running at a loss.
According to the financial statement 2007 the Golden Key Credit Card Company posted a profit of USD 175,000 but the actual loss was amounting to USD 61 million. The auditor’s signature had also been forged and the CEO of the company and the Chairman had allegedly siphoned funds of the company, it was revealed in court (Financial Times, The Sunday Times, Sri Lanka) This scam was brought to light by the employees of the Golden Key Credit Company who brought the matter to the attention of the public after they had not received their salaries for several months.
As a result it became essential that the conglomerate adopts a proactive approach to ensure all ethical issues and practices within its subsidiaries are resolved through the application of enhancing and implementing a strong code of ethics. However, Ceylinco Consolidated and its numerous subsidiaries do not possess a code of ethics. A code of ethics is a formal statement of an organization’s primary values and ethical rules it expects its employees to follow (Robbins, Bergman, Stagg & Coulter, 2006). A code of ethics helps reduce ambiguity about ethical practices within an organization.
Planning Definition of Planning and its Purpose. Planning is a management function that involves defining goals, establishing strategies for achieving those goals and developing plans to integrate and coordinate activities. Planning provides direction, reduces uncertainty, minimizes waste and sets the standard used in controlling (Robbins, Bergman, Stagg & Coulter, 2006, p. 808). According to the California Management Review (O’Donnell) L. Gulick stated, “A clear statement of purpose universally understood is the outstanding guarantee of effective administration.”
There are two types of planning: formal and informal. This report will be concentrating on formal planning. In formal planning, a specific set of goals covering a period of years are defined. These goals are written down and shared with organizational members. Finally, managers clearly define the path they want to take to get the organization and the various work units from where they are to where they want them to be (Robbins, Bergman, Stagg & Coulter, 2006).
The Roles of Goals and Plans in Planning Goals are desired outcomes and are also known as objectives. They provide direction for all management decisions and form the criterion against which actual accomplishments can be measured (Robbins, Bergman, Stagg & Coulter, 2006). Plans are documents that outline how goals are going to be met and involves. Operational Plans are plans that specify the details of how the overall goals are to be achieved (Robbins, Bergman, Stagg & Coulter, 2006).Operational plans are short term plans.
Long-Term Plans are those with a time frame longer than three years, while short-term plans are those that cover one year or less. Directional Plans are flexible and set out general guidelines and are used when uncertainty is high and the environment is dynamic. Single-Use Plans are plans that are specifically designed to meet the needs of a unique situation (Robbins, Bergman, Stagg & Coulter, 2006). According to Robbins, Bergman, Stagg & Coulter, 2006, well-designed goals should be “written in terms of outcomes, rather than actions”, be measurable, have a clear time frame, be challenging yet attainable, written down and “communicated to all necessary organizational members”.
Strategic management is “a set of managerial decisions and actions that determines the long-run performance of an organization and is a six-step process that encompasses strategic planning, implementation and evaluation” (Robbins, Bergman, Stagg & Coulter, 2006). The strategic management process helps managers examine the relevant variables to decide what to do and how to do it. This helps them cope with uncertain environments. Strategic management also helps coordinate the different divisions in an organization and enables them to focus on achieving the organization’s goals.
As illustrated above, the strategic management process is a six-step process that covers strategic planning, implementation and evaluation. The first four steps describe the planning that takes place, implementation and evaluation are just as important because the best strategies could fail if they were not implemented or evaluated properly. The top management at Ceylinco Consolidated could set operational plans, thus helping them to define ways that will enable them to reach their goal of regaining trust and credibility in the eyes of the public and their investors. Operational plans will help the management to set goals on a monthly, weekly and day to day basis, thus enabling them to monitor and evaluate progress as time passes.
The management could also use short-term plans in which they would endeavour to pay back the monies defrauded by the Chairman to their depositors and investors and replace the current top management with leaders who are known for their ethical conduct. Directional plans have guidelines that provide focus for the managers and their subordinates and allow a certain degree of flexibility, thus enabling them to work in an uncertain environment. The management could also use single-use plans which are specifically designed for the purpose of restoring the company’s image.
As goals are defined as “desired outcomes for organizations” (Robbins, Bergman, Stagg & Coulter, 2006), they are measurable, time oriented (for example, giving Ceylinco Consolidated a suitable time frame of three years in which to rectify their ethical issues), written down, challenging but attainable and must be communicated to every employee in the conglomerate. This would help the managers to achieve their task.
According to Harrison (1996), strategic decisions set the tone and tempo of managerial decision making for every individual and unit throughout the entire organization. If the decision making at the top of the organization is ineffective, then the choices made at lower levels of management will be the same. Similarly, if top management’s strategic choices tend to be successful, it reflects favourably on choices made in other parts of the organization.
Controlling is “the process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations” (Robbins, Bergman, Stagg & Coulter, 2006). An effective control system ascertains that activities are completed in ways that lead to the achievement of the organization’s goals. The more it helps managers to achieve their goals, the more According to (Robbins, Bergman, & Stagg, 2006) bureaucratic control is an approach to control that emphasises organisational authority and relies on administrative rules, regulations, procedures and policies. This ensures that the employees demonstrate appropriate behaviours and meet performance standards, thus managers are expected stay within corporate guidelines even thought they are given autonomy and freedom to run their respective divisions.
Control is the final link in the management functions of Planning, Organizing, Leading and Controlling (POLC) and it is the only way managers know whether goals are being met and the reason why if they are not. As mentioned earlier in the report, goals were described as the foundation of planning as they give specific direction to the managers. But this does not mean that the goals are being met. Therefore the managers at Ceylinco Consolidated need to follow up to ensure that every employee is doing what he or she is supposed to do and that the goal to redesign the modern corporation [Ceylinco Consolidated] in order to make it amenable to the ethical actions of its employees (Roper, 2005) and managers is being met.