1. Control
Chapter 8

2. The Control Process Controlling:
Process of measuring performance and taking action to ensure desired results
Has a positive and necessary role in the management process
Ensures right things happen, in the right way, at the right time

3. Steps in the Control Process
1. Set Objectives and Standards
2. Measure Actual Performance
3. Compare Results with Objectives and Standards
4. Take Corrective Action as Needed

4. 1. Establish Objectives & Standards
Output Standards
Measure performance results in terms of quantity, quality, cost or time
Examples:
number of customers served/products produced in a time period
Percentage error rate
Input Standards
Measure effort in terms of amount of work done in task performance
Efficiency in use of resources
Work attendance or punctuality

5. 2. Measuring Actual Performance
An accurate measure of actual results on output and/or input standards is needed
Effective control requires accurate measurement

6. 3. Compare Results with Objectives and Standards
Need for action =
Desired performance – Actual performance
Comparison can be made on a
historical 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

8. Types of Controls
Feedforward
Concurrent
Feedback

9. Feedforward Controls Used before the work activity begins Ensure that:
Objectives are clear
Proper directions are established
Right resources are available
Focuses on quality of resources
Example: Feedforward controls at McDonalds
Ensure 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 plan
Can reduce waste in unacceptable finished products or services
Example: Concurrent controls at McDonalds
Supervisors 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 result
Provide useful information for improving future operations
Example: Feedback at McDonalds
Provide 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 expectations
Comes from within the person/employee
External
Occurs through personal supervision and use of formal administrative systems
Managers direct behaviour of others

13. Internal & External Control
Effective control is combination of internal and external control
People are more likely to exercise internal control when:
They are involved in setting goals
They have clear sense of mission and expectations
They have resources necessary to do their job well
Everyone treats each other with respect

14. Role of Compensation & Benefits
Attractive and competitive base compensation results in:
Attracting and keeping a qualified workforce
Having capable, motivated workers who exercise self-control
Unattractive and competitive base compensation results in:
Attracting a less qualified workforce
Greater 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 incentives
Pay-for-performance incentives
Fringe benefits

16. Management by Objectives (MBO)
A structured process of regular communication
Supervisor/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 specifying
Worker’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 plan
Set goals, standards and actions together
Individually act
Subordinate performs tasks
Supervisor provides support
Jointly control
Reviewing results together
Discuss implications
Renew the MBO cycle
How does this increase control? What kind of control?
Does MBO apply to all jobs?

19. Management by Objectives (MBO)
Types of MBO performance objectives
Improvement
Personal development
Maintenance
Criteria for effective performance objectives
Specific
Time defined
Challenging
Measurable

20. Management by Objectives (MBO)
Pitfalls using MBO
Tying MBO to pay.
Focusing on easily quantifiable objectives.
Requiring excessive paperwork.
Having managers tell workers their objectives.
Advantages of MBO
Focuses 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 reprimand
Progressive discipline:
Ties reprimands to the severity and frequency of the employee’s infractions

22. “Hot Stove Rules” of Employee Discipline
A reprimand should
Be 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 Point
Revenues = Costs
Profit
Total Costs =
Fixed+Variable
Dollar
Costs &
Revenues
Variable Costs
Loss
Fixed Costs
Unit Sales
Management Fundamentals - Schermerhorn & Wright
Chapter 8