IE 001 Engineering Management PDF

IE 001 Engineering Management Controlling WHERE WHERE ARE WE WE WANT NOW TO GO (VISION) - PLANNING - ORGANIZING - LEADING - CONTROLLING CONTROLLING INTENDED LEAR...

IE 001 Engineering Management Controlling WHERE WHERE ARE WE WE WANT NOW TO GO (VISION) - PLANNING - ORGANIZING - LEADING - CONTROLLING CONTROLLING INTENDED LEARNING OUTCOMES: 1. Explain the nature and importance of control. 2. Describe the three (3) steps in the control process. 3. Explain how organizational performance is measured. 4. Describe the tools use to measure organizational performance. 5. Discuss contemporary issues in control. CONTROLLING What is Controlling? - the process of monitoring, comparing, and correcting work performance. The Purpose of Control: - To ensure that activities are completed in ways that lead to the accomplishment of organizational goals. CONTROLLING Why is Control Important? 1. Planning Controls let managers know whether their goals and plans are on target and what future actions to take. 2. Empowering Employees Control systems provide managers with information and feedback on employee performance. 3. Protecting the Workplace Controls enhance physical security and help minimize workplace disruptions. CONTROLLING Planning – Controlling Link: CONTROL PROCESS What is the Control Process? - is a three-step process of measuring actual performance, comparing actual performance against a standard, and taking managerial action to correct deviations or inadequate standards. CONTROL PROCESS The Control Process: CONTROL PROCESS Measuring: HOW and WHAT We Measure: CONTROL PROCESS Sources of Information for Measuring Performance: CONTROL PROCESS Comparing Actual Performance Against the Standard: - Determining the degree of variation between actual performance and the standard - Range of variation is the acceptable parameters of variance between actual performance and the standard. CONTROL PROCESS Acceptable Range of Variation: CONTROL PROCESS Example: Comparing Actual Performance Against Standard CONTROL PROCESS Taking Managerial Actions: - Managers can take three (3) possible courses of action namely: a) Do nothing b) Correct actual performance 🡪 Immediate corrective action - corrective action that corrects problems at once in order to get performance back on track. 🡪 Basic corrective action - corrective action that looks at how and why performance deviated before correcting the source of deviation. CONTROL PROCESS Taking Managerial Actions (con’t): c) Revise the standard 🡪 Variance between the performance and standard could be a result of unrealistic standard, either too high or too low. Performance exceeds standards always, standards might be too low or easy Performance always fall short of standards always, standards might be too high 🡪 Caution should always be observed when revising a standard downward. CONTROL PROCESS Managerial Decisions in the Control Process: ROOT CAUSE ANALYSIS 1. FISHBONE DIAGRAM 2. TREE DIAGRAM 3. WHY ANALYSIS ORGANIZATIONAL PERFORMANCE What is Organizational Performance? Performance - the end result of an activity. Organizational performance - the accumulated results of all the organization’s work activities. ORGANIZATIONAL PERFORMANCE Measures of Organizational Performance: 1. Productivity - the amount of goods or services produced divided by the inputs needed to generate that output. Productivity = Output / Input 2. Organizational effectiveness - a measure of how appropriate organizational goals are and how well those goals are being met. ORGANIZATIONAL PERFORMANCE Popular Industry & Company Rankings: TYPES OF CONTROL Types of Control: 1. Feedforward control - control that takes place before a work activity is done, to prevent the problem. 2. Concurrent control - control that takes place while a work activity is in progress. The best known concurrent control is “direct supervision”. Management by walking around, another type of concurrent control, is a term used to describe when a manager is out in the work area interacting directly with employees. TYPES OF CONTROL 3. Feedback control - control that takes place after a work activity is done. This is the most popular type of control. CONTROL TOOLS I. Financial Control: 1. Liquidity ratios - measure an organization’s ability to meet its current debt obligations. 2. Leverage ratios - examine the organization’s use of debt to finance its assets and whether it’s able to meet the interest payments on the debt. 3. Activity ratios - assess how efficiently a company is using its assets. 4. Profitability ratios - measure how efficiently and effectively the company is using its assets to generate profits. CONTROL TOOLS Popular Financial Ratios: CONTROL TOOLS Popular Financial Ratios (con’t): CONTROL TOOLS II. The Balanced Scorecard - a performance measurement tool that examines more than just the financial perspective. - measures a company’s performance in four areas: Financial Customer Internal processes People/innovation/growth assets CONTROL TOOLS III. Information Controls - Management information system (MIS) - a system used to provide management with needed information on a regular basis. - Data is an unorganized collection of raw, unanalyzed facts (e.g., an unsorted list of customer names). - Information is data that has been analyzed and organized such that it has value and relevance to managers. CONTROL TOOLS IV. Benchmarking - the search for the best practices among competitors or non-competitors that lead to their superior performance. Benchmark - the standard of excellence to measure and compare against. CONTROL TOOLS Suggestions for Internal Benchmarking: CONTEMPORARY ISSUES IN CONTROL I. Adjusting controls for cross- cultural differences - The concept of control for companies may vary as affected by: 🡪 distance 🡪 technology 🡪 the country’s laws and regulations 🡪 comparability CONTEMPORARY ISSUES IN CONTROL II. Workplace concerns - Today’s workplaces present considerable control challenges for managers. a) Workplace Privacy 🡪 26% of companies have fired an employee for e-mail misuse 🡪 26% have fired workers for Internet misuse 🡪 6% have fired employees for inappropriate cell phone use 🡪 4% have fired employees for instant messaging misuse 🡪 3% have fired someone for inappropriate text messaging CONTEMPORARY ISSUES IN CONTROL b) Employee theft - is defined as any unauthorized taking of company property by employees for their personal use. - 85% of all organizational theft and fraud is committed by employees. - employees steal because: 🡪 the opportunity presents itself through lax controls and favorable circumstances 🡪 people have financial-based pressures or vice pressures 🡪 they can rationalize whatever they’re doing as being correct and appropriate behavior CONTEMPORARY ISSUES IN CONTROL Controlling Employee Theft: CONTEMPORARY ISSUES IN CONTROL III. Workplace violence 🡪 2 million American workers are victims of some form of workplace violence each year 🡪 each week, 1 employee is killed and 25 are seriously injured in violent assault by current or previous coworkers 🡪 58% of firms in the US reported to the Department of Labor that their managers received verbal threats from workers CONTEMPORARY ISSUES IN CONTROL Primary Contributors to Workplace Violence: 1. Employee work driven by TNC (time, numbers and crises). 2. Rapid and unpredictable change where instability and uncertainty plague employees. 3. Destructive communication style where managers communicate in an excessively aggressive, condescending, explosive, or passive-aggressive styles; excessive workplace teasing or scapegoating. 4. Authoritarian leadership with a rigid, militaristic mind-set of managers versus employees; employees aren’t allowed to challenge ideas, participate in decision making, or engage in team-building efforts. 5. Defensive attitude where little or no performance feedback is given; only numbers count; and yelling, CONTEMPORARY ISSUES IN CONTROL Primary Contributors to Workplace Violence (con’t): 6. Double standards in terms of policies, procedures, and training opportunities for managers and employees. 7. Unresolved grievances because the organization provides no mechanisms or only adversarial ones for resolving them; dysfunctional individuals may be protected or ignored because of long- standing rules, union contract provisions, or reluctance to take care of problems. 8. Emotionally troubled employees and no attempt by managers to get help for these people. 9. Repetitive, boring work with no chance for doing something else or for new people coming in. 10. Faulty or unsafe equipment or deficient training, which keeps employees from being able to work CONTEMPORARY ISSUES IN CONTROL Primary Contributors to Workplace Violence (con’t): 11. Hazardous work environment in terms of temperature, air quality, repetitive motions, overcrowded spaces, noise levels, excessive overtime, and so forth. 12. Culture of violence that has a history of individual violence or abuse; violent or explosive role models; or tolerance of on-the-job alcohol or drug abuse. CONTEMPORARY ISSUES IN CONTROL Controlling Workplace Violence: CONTEMPORARY ISSUES IN CONTROL IV. Controlling customer interactions: 1. Service profit chain is the service sequence from employees to customers to profit. - the company’s strategy and service delivery system influence how employees deal with customers (service productivity & quality); influences customer perceptions of service value which leads to customer satisfaction and loyalty. - work environment should enable employees to deliver high levels of quality service and make them feel they’re capable of delivering top-quality service. CONTEMPORARY ISSUES IN CONTROL 2. Corporate governance - the system used to govern a corporation so that the interests of corporate owners are protected. - The Board of Directors of a company is a group independent from management, looking out for the interests of shareholders, who were not involved in the day-to-day management of the organization. - Sarbanes-Oxley Act called for more disclosure and transparency of corporate financial information. Senior managers in the US are now required to certify their companies’ financial Assignment: This will be used for your groupwork next meeting: a) Watch the movie “Deepwater Horizon” released in 2016 or b) Research in the internet the case of British Petroleum Deepwater Horizon Oil Spill.