Chapter 18: Controlling

1. Chapter 18:Controlling

2. Learning Objectives • Definition of control • Planning-controlling link • Three approaches to controlling • The control process • What we measure • How we measure • SPC charting • Taking action • Types of control (input, process, output) • Qualities of an effective control system • Dysfunctional side of control

3. What is Control? • Monitoring activities to: • Make sure they are done correctly • Correct any significant deviations if necessary

4. Control and You • What is something you control or at least measure regularly, either in your life or at work? • What is the target, or standard? • What is acceptable deviation? • What action is taken when the deviation is too large?

5. The Planning-Controlling Link Planning Goals Objectives Strategies Plans Controlling Organizing Standards Measurements Comparisons Action Structure Human resources management Leading Motivation Leadership Communication Individual and group behavior

6. Three Approaches to Control Systems Market Control Bureaucratic Control Clan Control

7. The Control Process Measuring Actual Performance Goals and Objectives - Organizational - Divisional - Departmental - Individual Comparing Actual Performance Against Standard Taking Managerial Action

8. Employee satisfaction Turnover Absenteeism Cost Productivity Quality Revenue ROI Profit Market share Reject rate Work In Progress Responiveness Customer satisfaction What We Measure

9. How We Measure • Direct observation • Statistical reports • Oral reports • Written reports

10. Sales Performance Figures for July, Eastern States Distributors (HUNDREDS OF CASES) BRAND STANDARD ACTUAL OVER (UNDER) Heineken Molson Beck’s Moosehead Labatt’s Corona Amset Light Dos Equis Tecate Total Cases 1,075 630 800 620 540 160 225 80 170 4,300 913 634 912 622 672 140 220 65 286 4,464 (162) 4 112 2 132 (20) (5) (15) 116 164

11. Defining the Acceptable Range of Variation Acceptable upper limit Acceptable range of variation Standard Measurement of Performance Acceptable lower limit t t+1 t+2 t+3 t+4 t+5

12. Taking Action(Fixing the problem) • Do Nothing • Take Immediate Corrective Action • Take Basic Corrective Action • Revise the Standard

13. Managerial Decisions in the Control Process Standard Attained? Do Nothing Yes Compare Performance to Standard No Variance Acceptable? Do Nothing Yes Objectives Measure Performance No Standard Standard Acceptable? Identify Causes Yes No Revise Standard Correct Performance

14. Types of Control Input Process Output Concurrent Control Corrects Problems As They Occur Feedback Control Corrects Problems After They Occur Feedforward Control Anticipates Problems Before They Occur

15. Silocaf • What’s being controlled? • What approach to control is being used (market, bureaucracy or clan)? • What’s the standard? • How measure? (direct observation, statistics, oral reports, written reports?) • What type of control is being used (feedforward, concurrent, feedback)?

16. Qualities of an Effective Control System Corrective action Accuracy Multiple criteria Timeliness Effective Control System Emphasis on exceptions Economy Flexibility Strategic placement Understandability Reasonable criteria

17. The Dysfunctional Side of Controls Inflexible Unreasonable Incomplete Ambiguous