Chapter 16: Control Processes and Systems PowerPoint Presentation to Accompany Management, 2/e John R. Schermerhorn, Jr. and Barry Wright Chapter 16: Control Processes and Systems Prepared by: Jim LoPresti University of Colorado, Boulder Revised by: Dr. Shavin Malhotra Ryerson University, Toronto, Ontario Published by: John Wiley & Sons Canada, Ltd.

Planning Ahead — Chapter 16 Study Questions Why and how do managers control? What are the steps in the control process? What are the common control systems and techniques? Management 2e - Chapter 16

Study Question 1: Why and how do managers control? Controlling The process of measuring performance and taking action to ensure desired results. Has a positive and necessary role in the management process. Ensures that the right things happen, in the right way, at the right time. Organizational learning and after-action review. Management 2e - Chapter 16

Figure 16.1 The role of controlling in the management process. Management 2e - Chapter 16

Study Question 1: Why and how do managers control? Feedforward controls Employed before a work activity begins. Ensures that: Objectives are clear. Proper directions are established. Right resources are available. Focuses on quality of resources. Management 2e - Chapter 16

Study Question 1: Why and how do managers control? Concurrent controls Focus on what happens during work process. Monitor ongoing operations to make sure they are being done according to plan. Can reduce waste in unacceptable finished products or services. Management 2e - Chapter 16

Study Question 1: Why and how do managers control? Feedback controls Take place after work is completed. Focus on quality of end results. Provide useful information for improving future operations. Management 2e - Chapter 16

Figure 16.2 The role of feedforward, concurrent, and feedback controls in organizations. Management 2e - Chapter 16

Study Question 1: Why and how do managers control? Internal and external control Internal control Allows motivated individuals and groups to exercise self-discipline in fulfilling job expectations. External control Occurs through personal supervision and the use of formal administrative systems. Management 2e - Chapter 16

Study Question 1: Why and how do managers control? Bureaucratic control influences behaviour through authority, policies, procedures, job descriptions, budgets, and day-to-day supervision Clan control influences behaviour through norms and expectations set by the organizational culture. Market control influences behaviour through market competition. Management 2e - Chapter 16

Study Question 2: What are the steps in the control process? Step 1 — establish objectives and standards. Step 2 — measure actual performance. Step 3 — compare results with objectives and standards. Step 4 — take corrective action as needed. Management 2e - Chapter 16

Figure 16.3 Four steps in the control process. Management 2e - Chapter 16

Study Question 2: What are the steps in the control process? Step 1 — establishing objectives and standards Output standards Measure performance results in terms of quantity, quality, cost, or time. Input standards Measure effort in terms of amount of work expended in task performance. Management 2e - Chapter 16

Study Question 2: What are the steps in the control process? Step 2 — measuring actual performance Goal is accurate measurement of actual performance results and/or performance efforts. Must identify significant differences between actual results and original plan. Effective control requires measurement. Management 2e - Chapter 16

Study Question 2: What are the steps in the control process? Step 3 — comparing results with objectives and standards Need for action reflects the difference between desired performance and actual performance Comparison methods: Historical comparison Relative comparison Engineering comparison Management 2e - Chapter 16

Study Question 2: What are the steps in the control process? Step 4 — taking corrective action Taking action when a discrepancy exists between desired and actual performance. Management by exception Giving attention to situations showing the greatest need for action. Types of exceptions Problem situation Opportunity situation Management 2e - Chapter 16

Study Question 3: What are the common control systems and techniques? Employee discipline systems Discipline is the act of influencing behaviour through reprimand. Discipline that is applied fairly, consistently, and systematically provides useful control. Management 2e - Chapter 16

Study Question 3: What are the common control systems and techniques? Employee discipline systems Progressive discipline ties reprimands to the severity and frequency of the employee’s infractions. Progressive discipline seeks to achieve compliance with the least extreme reprimand possible. Management 2e - Chapter 16

Study Question 3: What are the common control systems and techniques? To be effective, reprimands should Be immediate. Be directed toward actions, not personality. Be consistently applied. Be informative. Occur in a supportive setting. Support realistic rules. Management 2e - Chapter 16

Study Question 3: What are the common control systems and techniques? Project Management Overall planning, supervision, and control of projects. Projects – unique one-time events that occur within a defined time period Gantt chart – graphic display of scheduled tasks required to complete a project CPM/PERT – combination of the critical path method and program evaluation and review technique Management 2e - Chapter 16

Figure 16.4 Simplified Gantt chart for a new cell phone Management 2e - Chapter 16

Study Question 3: What are the common control systems and techniques? Economic Value Added a performance measure of economic value created in respect to profits being higher than the cost of capital Market Value Added a performance measure of stock market value relative to the cost of capital Management 2e - Chapter 16

Study Question 3: What are the common control systems and techniques? Basic Financial Ratios Liquidity The ability to generate cash to pay bills. Leverage The ability to earn more in returns than the cost of debt. Asset management The ability to use resources efficiently and operate at minimum cost. Profitability The ability to earn revenues greater than costs. Management 2e - Chapter 16

Study Question 3: What are the common control systems and techniques? Balanced Scorecard Factors used to develop scorecard goals and measures: Financial performance Customer Satisfaction Internal process improvement Innovation and learning Management 2e - Chapter 16

Figure 16.5 Sample CPM/PERT Management 2e - Chapter 16

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