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Unit 12 Organizational Control. Discussion Topics describe the basic control process discuss some of the methods that managers can use to maintain control.

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Presentation on theme: "Unit 12 Organizational Control. Discussion Topics describe the basic control process discuss some of the methods that managers can use to maintain control."— Presentation transcript:

1 Unit 12 Organizational Control

2 Discussion Topics describe the basic control process discuss some of the methods that managers can use to maintain control describe the behaviors, processes, and outcomes that today’s managers are choosing to control in their organizations

3 The Control Process: Establishment of clear standards of performance Comparing performance to those standards, Corrective action to repair performance deficiencies Three basic methods: feedback control, concurrent control, and feed-forward control. Control isn’t always worthwhile or possible.

4 Standards: Must enable goal achievement How to set the standards o A standard must enable goal achievement o Determined by benchmarking (anything from cycle time to quality and price) other companies’ standards. o Listen to customer’s comments, complaints, and suggestions

5 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.

6 Corrective Action: Identify performance deviations Analyze deviations Development and implement corrective programs

7 Control Isn’t Always Worthwhile or Possible Control loss Regulation costs Cybernetic feasibility

8 Methods of Process Control Feedback control Concurrent control Feed-forward control

9 Bureaucratic Control Managers try to influence employee behavior by rewarding or punishing employees for compliance or non-compliance with... Managers emphasize following rules above all else. Rules and regulations typically set the standards at a minimum acceptable level. Companies are highly resistant to change and slow to respond to customers and competitors.

10 Objective Control The use of observable measures of employee behavior or output to assess performance and influence behavior. Behavior control – management-based control Output control - employee-based control o measures must be reliable, fair, and accurate o employees and managers must believe that they can produce the desired results o rewards must be dependent on achieving established standards of performance

11 Normative Controls A company’s widely shared values and beliefs guide workers’ behavior and decisions. Created in two ways: o Normatively controlled companies are careful about who they hire attitude and value, not just ability. Employees are then empowered to run the business as they see fit. o Managers and employees learn by observing experienced employees

12 Self-control (Self-management) A control system in which managers and workers control their own behavior Workers need be empowered for self-control

13 The Balanced Scorecard Encourages managers to look at four different perspectives on company performance. Customer perspective Internal perspective Innovation and learning perspective Financial perspective

14 Balanced Scorecard of Southwest Airlines 16-3 © 2015 Cengage Learning

15 Controlling Financial Performance Traditional approaches Cash flow analysis Balance sheets Income statements Financial ratios Budgets

16 Economic Value Added (EVA) 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

17 Calculating Economic Value Added (EVA)

18 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.

19 Controlling Quality Quality is measured in three ways: Excellence Value Conformance to specifications

20 Conformance to Specifications Checklist for Buying Fresh Fish

21 Advantages and Disadvantages of Different Measures of Quality

22 Controlling Waste and Pollution Waste prevention and reduction o good housekeeping o material/product substitution o process modification Recycle and reuse Waste treatment Waste disposal


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