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Chapter 16 Control © 2014 Cengage Learning MGMT6
© 2014 Cengage Learning 16-1 describe the basic control process 16-2 discuss the various methods that managers can use to maintain control 16-3 describe the behaviors, processes, and outcomes that today’s managers are choosing to control in their organizations
The Control Process © 2014 Cengage Learning Establishment of clear standards of performance Comparing performance to those standards, Corrective action to repair performance deficiencies Dynamic, cybernetic process Three basic methods: feedback control, concurrent control, and feedforward control. Control isn’t always worthwhile or possible. 16-1
Standards Must enable goal achievement Listen to customer’s comments, complaints, and suggestions Benchmarking – determining other companies’ standards © 2014 Cengage Learning 16-1
Comparison to Standards The quality of the comparison depends largely on the measurement and information systems a company uses to keep track of performance. The better the system, the easier it is for a company to track performance and identify problems that need to be fixed. © 2014 Cengage Learning 16-1
Corrective Action © 2014 Cengage Learning Identify performance deviations Analyze deviations Development and implement corrective programs 16-1
© 2014 Cengage Learning 16-1
Control Methods Feedback control Concurrent control Feedforward control © 2014 Cengage Learning 16-1
Control Isn’t Always Worthwhile or Possible Control loss Regulation costs Cybernetic feasibility © 2014 Cengage Learning 16-1
Bureaucratic Control © 2014 Cengage Learning Top-down control; managers try to influence employee behavior by rewarding or punishing employees for compliance or non-compliance. Managers emphasize following rules above all else. Companies are highly resistant to change and slow to respond to customers and competitors. 16-2
Objective Control © 2014 Cengage Learning The use of observable measures of employee behavior or output to assess performance and influence behavior. Behavior control Output control – measures must be reliable, fair, and accurate – employees and managers must believe that they can produce the desired results – rewards must be dependent on achieving established standards of performance 16-2
Normative Controls A company’s widely shared values and beliefs guide workers’ behavior and decisions. Created by… Who companies hire Observing experienced employees and listening to their stories © 2014 Cengage Learning 16-2
Concertive Controls © 2014 Cengage Learning Based on beliefs that are shaped and negotiated by work groups. 16-2
Self-Control (Self-Management) © 2014 Cengage Learning A control system in which managers and workers control their own behavior. 16-2
The Balanced Scorecard Encourages managers to look at four different perspectives on company performance. Customer perspective Internal perspective Innovation and learning perspective Financial perspective © 2014 Cengage Learning 16-3
© 2014 Cengage Learning 16-3
Controlling Financial Performance Traditional approaches Cash flow analysis Balance sheets Income statements Financial ratios Budgets © 2014 Cengage Learning 16-3
Economic Value Added Not the same thing as profits… The amount by which profits exceed the cost of capital in a given year. EVA is positive when company profits exceed the cost of capital in a given year. Includes the cost of capital Can be easily determine for subsets of a company © 2014 Cengage Learning 16-3
© 2014 Cengage Learning 16-3
Controlling Customer Defections Companies can do a better job of answering “How do customers see us?” by identifying which customers are leaving the company and measuring the rate at which they are leaving. Customers who have left are much more likely than current customers to tell you what you were doing wrong. © 2014 Cengage Learning 16-3
Controlling Quality Quality is measured in three ways: Excellence Value Conformance to specifications © 2014 Cengage Learning 16-3
© 2014 Cengage Learning 16-3
© 2014 Cengage Learning 16-3
Controlling Waste and Pollution © 2014 Cengage Learning Waste prevention and reduction – good housekeeping – material/product substitution – process modification Recycle and reuse Waste treatment Waste disposal 16-3
Barcelona Restaurant Group 1.How do managers at Barcelona control the company’s financial performance? 2.What is the “balanced scorecard” approach to measuring corporate performance, and in what ways does Barcelona utilize this approach? 3.Describe the feedback control model and describe an instance where Barcelona followed this process to improve its performance. © 2014 Cengage Learning
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