Chapter 17: Introduction to Controlling (Management)

Management tenth edition Stephen P. Robbins Mary Coulter Chapter Introduction 17 to...

Management tenth edition Stephen P. Robbins Mary Coulter Chapter Introduction 17 to Controlling Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–1 Learning Outcomes Follow this Learning Outline as you read and study this chapter. 17.1 What Is Control and Why Is It Important? Define controlling. Discuss the reasons why control is important. Explain the planning-controlling link. 17.2 The Control Process Describe the three steps in the control process. Explain why what is measured is more critical than how it’s measured. Explain the three courses of action managers can take in controlling. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–2 Learning Outcomes 17.3 Controlling Organizational Performance Define organizational performance. Describe three most frequently used measures of organizational performance. 17.4 Tools for Measuring Organizational Performance Contrast feedforward, concurrent, and feedback controls. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–3 What Is Control? Controlling  The process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations. The Purpose of Control  To ensure that activities are completed in ways that lead to accomplishment of organizational goals. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–4 Why Is Control Important? As the final link in management functions:  Planning  Controls let managers know whether their goals and plans are on target and what future actions to take.  Empowering employees  Control systems provide managers with information and feedback on employee performance.  Protecting the workplace  Controls enhance physical security and help minimize workplace disruptions. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–5 Exhibit 17–1 The Planning–Controlling Link Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–6 The Control Process The Process of Control 1. Measuring actual performance. 2. Comparing actual performance against a standard. 3. Taking action to correct deviations or inadequate standards. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–7 Exhibit 17–2 The Control Process Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–8 1. Measuring: How & What We Measure Sources of Control Criteria Information (How) (What)  Personal observation  Employees  Statistical reports  Satisfaction  Oral reports  Turnover  Absenteeism  Written reports  Budgets  Costs  Output Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall  Sales 17–9 Exhibit 17–3 Common Sources of Information for Measuring Performance Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–10 2. Comparing Determining the degree of variation between actual performance and the standard.  Significance of variation is determined by:  The acceptable range of variation from the standard (forecast or budget).  The size (large or small) and direction (over or under) of the variation from the standard (forecast or budget). Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–11 Exhibit 17–4 Defining the Acceptable Range of Variation Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–12 Exhibit 17–5 Example of Determining Significant Variation Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–13 3. Taking Managerial Action Courses of Action  “Doing nothing”  Only if deviation is judged to be insignificant.  Correcting actual (current) performance  Immediate corrective action to correct the problem at once.  Basic corrective action to locate and to correct the source of the deviation.  Corrective Actions – Change strategy, structure, compensation scheme, or training programs; redesign jobs; or fire employees Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–14 Taking Managerial Action Courses of Action (cont’d)  Revising the standard  Examining the standard to ascertain whether or not the standard is realistic, fair, and achievable. – Upholding the validity of the standard. – Resetting goals that were initially set too low or too high. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–15 Exhibit 17–6 Managerial Decisions in the Control Process Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–16 Controlling for Organizational Performance What Is Performance?  The end result of an activity What Is Organizational Performance?  The accumulated end results of all of the organization’s work processes and activities  Designing strategies, work processes, and work activities.  Coordinating the work of employees. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–17 Organizational Performance Measures Organizational Productivity  Productivity: the overall output of goods and/or services divided by the inputs needed to generate that output.  Output: sales revenues  Inputs: costs of resources (materials, labor expense, and facilities)  Ultimately, productivity is a measure of how efficiently employees do their work. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–18 Organizational Performance Measures Organizational Effectiveness (cont’d)  Measuring how appropriate organizational goals are and how well the organization is achieving its goals. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–19 Industry and Company Rankings Industry rankings on: Corporate Culture  Profits Audits  Return on revenue Compensation and  Return on shareholders’ benefits surveys equity Customer satisfaction  Growth in profits surveys  Revenues per employee  Revenues per dollar of assets  Revenues per dollar of equity Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–20 Tools for Measuring Organizational Performance Feedforward Control  A control that prevents anticipated problems before actual occurrences of the problem.  Building in quality through design.  Requiring suppliers conform to ISO 9002. Concurrent Control  A control that takes place while the monitored activity is in progress.  Direct supervision: management by walking around. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–21 Tools for Measuring Organizational Performance (cont’d) Feedback Control  A control that takes place after an activity is done.  Corrective action is after-the-fact, when the problem has already occurred.  Advantages of feedback controls:  Provide managers with information on the effectiveness of their planning efforts.  Enhance employee motivation by providing them with information on how well they are doing. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–22 Exhibit 17–8 Types of Control Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 17–23