1. Management, by Williams South-Western College Publishing Copyright © 2000 Chapter 7 Control

2. Management, by Williams South-Western College Publishing Copyright © 2000 2 What Would You Do? 4Safety and security at O’Hare airport will increase. 4Are better trained security personnel needed? 4Will travelers be willing to pay and arrive earlier for greater security?

3. Management, by Williams South-Western College Publishing Copyright © 2000 3 After discussing this section, you should be able to: Learning Objectives Basics of Control ¬describe the basic control process. ­answer the question: Is control necessary or possible?

4. Management, by Williams South-Western College Publishing Copyright © 2000 4 The Control Process Compare actual to desired performance Establish clear standards Take corrective action, if needed Is a dynamic process Consists of three basic methods

5. Management, by Williams South-Western College Publishing Copyright © 2000 5 Setting Standards 4Determine what should be benchmarked 4Identify companies against which to benchmark standards 4Collect data on other companies’ performance standards

6. Management, by Williams South-Western College Publishing Copyright © 2000 6 Cybernetic Control Process Actual Performance Measure Performance Compare with Standard Identify Deviations Desired Performance Implement Program for Corrections Develop Program for Corrections Analyze Deviations Adapted from Figure 7.1

7. Management, by Williams South-Western College Publishing Copyright © 2000 7 Basic Control Methods 4Feedback control Tgather information about performance deficiencies after they occur 4Concurrent control Tgather information about performance deficiencies as they occur 4Feedforward control Tgather information about performance deficiencies before they occur

8. Management, by Williams South-Western College Publishing Copyright © 2000 8 Back to the Future Computers and Control: The Promise and the Perils 4Hand scanners to identify customers 4Computers help reduce costs 4Computers add to costs by: Tincreasing errors Tadding to employee “lost productivity”

9. Management, by Williams South-Western College Publishing Copyright © 2000 9 Is Control Necessary or Possible? What should be done if more control is necessary but not possible? Is more control necessary? Is more control possible?

10. Management, by Williams South-Western College Publishing Copyright © 2000 10 Is More Control Necessary? 4Degree of dependence Tthe extent to which a company needs a particular resource to accomplish its goals 4Resource flow Tthe extent to which a company has easy access to critical resources

11. Management, by Williams South-Western College Publishing Copyright © 2000 11 Is More Control Possible? 4Cost of control Tdirect costs of the control Tunintended costs 4Cybernetic feasibility Tthe extent to which it is possible to implement each step in the control process Tif a step cannot be implemented, the control may not be possible

12. Management, by Williams South-Western College Publishing Copyright © 2000 12 Quasi-Control: When Control Isn’t Possible 4Reducing dependence Tchoose to abandon or change goals Twhen control over a critical resource is not possible 4Restructure dependence Texchange dependence on one critical resource for dependence on another

13. Management, by Williams South-Western College Publishing Copyright © 2000 13 Is Control Necessary or Possible? Dependence sufficiently high? Expected resource flows unacceptable? Cybernetics feasible? Regulation cost acceptable? Goods fixed? Response: Regulate Dependence Restructure Dependence Reduce Dependence Do Nothing yes no Adapted from Figure 7.2

14. Management, by Williams South-Western College Publishing Copyright © 2000 14 After discussing this section, you should be able to: Learning Objectives How and What to Control ®discuss the various methods that managers can use to maintain control. ¯describe the behaviors, processes, and outcomes that managers are choosing to control in today’s organizations.

15. Management, by Williams South-Western College Publishing Copyright © 2000 15 Blast From The Past From 1870 to the Present—Five Eras of Management Control 4Industrial Betterment, 1870-1900 4Scientific Management, 1900-1922 4Human Relations, 1925-1955 4Systems Rationalism, 1955-1980 4Organizational Culture and Quality, 1980- Present

16. Management, by Williams South-Western College Publishing Copyright © 2000 16 Control Methods Bureaucratic Objective Normative Concertive Self-Control

17. Management, by Williams South-Western College Publishing Copyright © 2000 17 Bureaucratic 4Top-down control 4Use rewards and punishment to influence employee behaviors 4Use polices and rules to control employees 4Often inefficient and resistant to change

18. Management, by Williams South-Western College Publishing Copyright © 2000 18 Objective 4The use of observable measures 4Behavioral control Tregulate employee behaviors and actions Tmanagers monitor and shape employee behaviors 4Output control Tmeasure employee outputs Tfocus is on outcomes not behaviors

19. Management, by Williams South-Western College Publishing Copyright © 2000 19 Normative Control 4Company values and beliefs guide employee behavior and decisions 4Cultural norms not rules, guide employees 4Created by: Tcareful selection of employees Trole-modeling and retelling of stories

20. Management, by Williams South-Western College Publishing Copyright © 2000 20 Concertive Controls 4Employees are guided by the beliefs of work groups 4Autonomous work groups Toperate without managers Tgroup members control processes, output, and behaviors

21. Management, by Williams South-Western College Publishing Copyright © 2000 21 Self-Control 4Employees control their own behavior 4Employees make decisions within well- established boundaries 4Management and employees set goals and monitor their own progress

22. Management, by Williams South-Western College Publishing Copyright © 2000 22 What to Control Balanced Scorecard Economic Value Added Customers Defections Quality Waste and Pollution

23. Management, by Williams South-Western College Publishing Copyright © 2000 23 Balanced Scorecard 4Managers look beyond traditional financial measures 4Managers set specific goals in each of four areas 4Helps minimize the chances of suboptimization

24. Management, by Williams South-Western College Publishing Copyright © 2000 24 Controlling Economic Value Added 4The amount by which profits exceed the cost of capital in a given year 4Important because: Tshows if a profit center is paying for itself Tfocuses attention on specific departments Tencourages creative ways to improve organizational performance

25. Management, by Williams South-Western College Publishing Copyright © 2000 25 Been There, Done That EVA at Armstrong World Industries 4It allows them to more closely align them with shareholders’ interests 4Augments traditional measures 4Reinforced with long-term incentives

26. Management, by Williams South-Western College Publishing Copyright © 2000 26 Controlling Customer Defections 4The rate by which customers are leaving the company 4Don’t rely completely on customer satisfaction surveys 4Easier to retain a customer, than get new ones

27. Management, by Williams South-Western College Publishing Copyright © 2000 27 Controlling Quality 4Internal perspective 4Quality is usually measured three ways: Texcellence Tvalue Tconformance to expectations

28. Management, by Williams South-Western College Publishing Copyright © 2000 28 Controlling Waste and Pollution 4Often an over-looked area 4Three strategies for waste prevention and reduction Tgood housekeeping Tmaterial/product substitution Tprocess modification

29. Management, by Williams South-Western College Publishing Copyright © 2000 29 Four Levels of Waste Minimization Waste Disposal Waste Treatment Recycle & Reuse Waste Prevention & Reduction Adapted from Figure 7.4

30. Management, by Williams South-Western College Publishing Copyright © 2000 30 What Really Happened? 4Must first determine current safety and security performance 4New technology makes increased security possible, without significant increases in costs or check-in times