2 The Control Process Controlling: Process of measuring performance and taking action to ensure desired resultsHas a positive and necessary role in the management processEnsures right things happen, in the right way, at the right time
3 Steps in the Control Process 1. Set Objectives and Standards2. Measure Actual Performance3. Compare Results with Objectives and Standards4. Take Corrective Action as Needed
4 1. Establish Objectives & Standards Output StandardsMeasure performance results in terms of quantity, quality, cost or timeExamples:number of customers served/products produced in a time periodPercentage error rateInput StandardsMeasure effort in terms of amount of work done in task performanceEfficiency in use of resourcesWork attendance or punctuality
5 2. Measuring Actual Performance An accurate measure of actual results on output and/or input standards is neededEffective control requires accurate measurement
6 3. Compare Results with Objectives and Standards Need for action =Desired performance – Actual performanceComparison can be made on ahistorical basis (past years),relative basis (compare to benchmarks),engineering basis (scientific / mathematical standards)
7 4. Take Corrective Action Take action when discrepancies exist between desired and actual performance
9 Feedforward Controls Used before the work activity begins Ensure that: Objectives are clearProper directions are establishedRight resources are availableFocuses on quality of resourcesExample: Feedforward controls at McDonaldsEnsure suppliers provide product meeting strict specifications, e.g., bun texture, uniformity of colour, etc.
10 Concurrent Controls Used while the work activity is taking place Monitor operations to ensure work is done according to planCan reduce waste in unacceptable finished products or servicesExample: Concurrent controls at McDonaldsSupervisors trained to take action when something is done right or when problem occurs
11 Feedback Controls Used after work is completed Focus on quality of end resultProvide useful information for improving future operationsExample: Feedback at McDonaldsProvide a survey to customers to complete regarding their experience
12 Internal and External Control Allows motivated individuals and groups to exercise self-discipline in fulfilling job expectationsComes from within the person/employeeExternalOccurs through personal supervision and use of formal administrative systemsManagers direct behaviour of others
13 Internal & External Control Effective control is combination of internal and external controlPeople are more likely to exercise internal control when:They are involved in setting goalsThey have clear sense of mission and expectationsThey have resources necessary to do their job wellEveryone treats each other with respect
14 Role of Compensation & Benefits Attractive and competitive base compensation results in:Attracting and keeping a qualified workforceHaving capable, motivated workers who exercise self-controlUnattractive and competitive base compensation results in:Attracting a less qualified workforceGreater need for external control
15 Role of Compensation & Benefits Attracting and keeping qualified employees who exercise self-control can be helped or hindered by:Merit pay incentivesPay-for-performance incentivesFringe benefits
16 Management by Objectives (MBO) A structured process of regular communicationSupervisor/team leader and worker jointly set worker’s performance objectives.Supervisor/team leader and worker jointly review results.
17 Management by Objectives (MBO) MBO involves a formal agreement specifyingWorker’s performance objectives for a specific time period.Plans through which they will be accomplished.Standards for measuring results.Procedures for reviewing results.
18 Management by Objectives (MBO) Jointly planSet goals, standards and actions togetherIndividually actSubordinate performs tasksSupervisor provides supportJointly controlReviewing results togetherDiscuss implicationsRenew the MBO cycleHow does this increase control? What kind of control?Does MBO apply to all jobs?
19 Management by Objectives (MBO) Types of MBO performance objectivesImprovementPersonal developmentMaintenanceCriteria for effective performance objectivesSpecificTime definedChallengingMeasurable
20 Management by Objectives (MBO) Pitfalls using MBOTying MBO to pay.Focusing on easily quantifiable objectives.Requiring excessive paperwork.Having managers tell workers their objectives.Advantages of MBOFocuses worker’s efforts on most important tasks and objectives.Focuses supervisor’s efforts on important areas of support.Builds relationships.Opportunity to participate in decision making.
21 Employee Discipline Systems the act of influencing behaviour through reprimandProgressive discipline:Ties reprimands to the severity and frequency of the employee’s infractions
22 “Hot Stove Rules” of Employee Discipline A reprimand shouldBe immediate;a hot stove burns the first time you touch it.Be directed toward someone’s actions, not the personality;a hot stove doesn’t hold grudges, doesn’t try to humiliate people, and doesn’t accept excuses.Be consistently applied;a hot stove burns anyone who touches it, and it does so every time.Be informative;a hot stove lets a person know what to do to avoid getting burned in the future—”don’t touch.”Occur in a supportive setting;a hot stove conveys warmth but with an inflexible rule—”don’t touch.”Support realistic rules;the don’t-touch-a-hot-stove rule isn’t a power play, a whim, or an emotion of the moment; it is a necessary rule of reason.
23 Profit Loss Dollar Costs & Revenues Unit Sales Total Sales = Revenue Break-even PointRevenues = CostsProfitTotal Costs =Fixed+VariableDollarCosts &RevenuesVariable CostsLossFixed CostsUnit SalesManagement Fundamentals - Schermerhorn & WrightChapter 8