1. 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.

2. 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

3. 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

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

5. 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

6. 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

7. 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

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

9. 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

10. 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

11. 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

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

13. 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

14. 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

15. 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

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

17. 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

18. 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

19. 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

20. 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

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

22. 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

23. 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

24. 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

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

26. COPYRIGHT
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