MGMT5
16
Control
© 2012 Cengage Learning
1. describe the basic control process
2. discuss the various methods that
managers can use to maintain control
3. describe the behaviors, processes, and
outcomes that today’s managers are
choosing to control in their
organizations
© 2012 Cengage Learning
Basics of Control
1.
describe the basic control process
© 2012 Cengage Learning
The Control Process
• Establishment of clear standards of
performance
• Comparing performance to those standards,
• Corrective action to repair performance
deficiencies
• Dynamic, cybernetic process
• Three basic methods: feedback control,
concurrent control, and feedforward control.
• Control isn’t always worthwhile or possible.
© 2012 Cengage Learning
Standards
• Must enable goal achievement
• Listen to customer’s comments, complaints, and
suggestions
• Benchmarking
– determining other companies’ standards
© 2012 Cengage Learning
Comparison to Standards
The quality of the comparison depends largely on
the measurement and information systems a
company uses to keep track of performance.
The better the system, the easier it is for a company
to track performance and identify problems that
need to be fixed.
© 2012 Cengage Learning
Corrective Action
• Identify performance deviations
• Analyze deviations
• Development and implement corrective
programs
© 2012 Cengage Learning
Cybernetic Control
Process
© 2012 Cengage Learning
Control Methods
• Feedback control
• Concurrent control
• Feedforward control
© 2012 Cengage Learning
Control Isn’t Always
Worthwhile or Possible
• Control loss
• Regulation costs
• Cybernetic feasibility
© 2012 Cengage Learning
How and What to Control
2. discuss the various methods that
managers can use to maintain control
3. describe the behaviors, processes, and
outcomes that today’s managers are
choosing to control in their
organizations
© 2012 Cengage Learning
Bureaucratic Control
Top-down control; managers try to influence
employee behavior by rewarding or punishing
employees for compliance or non-compliance.
•Managers emphasize following rules above all
else.
•Companies are highly resistant to change and
slow to respond to customers and competitors.
© 2012 Cengage Learning
Objective Control
The use of observable measures of employee
behavior or output to assess performance and
influence behavior.
•Behavior control
•Output control
– measures must be reliable, fair, and accurate
– employees and managers must believe that they can
produce the desired results
– rewards must be dependent on achieving established
standards of performance
© 2012 Cengage Learning
Normative Controls
A company’s widely shared values and beliefs
guide workers’ behavior and decisions.
Created by…
•Who companies hire
•Observing experienced employees and listening
to their stories
© 2012 Cengage Learning
Concertive Controls
Based on beliefs that are shaped and
negotiated by work groups.
Develop in two phases:
• Group members learn to work with each other,
supervise each other’s work, and develop
guiding values and beliefs
• The emergence and formalization of objective
rules to guide and control behavior
© 2012 Cengage Learning
Self-Control (SelfManagement)
A control system in which managers and workers
control their own behavior.
•
Leaders and managers provide workers with clear
boundaries within which they may guide and control their
own goals and behaviors.
•
Leaders and managers teach others the skills they need to
maximize and monitor their own goals and theories.
•
Individuals establish self-control by setting their own goals,
monitoring their own progress, rewarding and punishing
themselves, and constructing positive thought patterns.
© 2012 Cengage Learning
The Balanced Scorecard
Encourages managers to look at four different
perspectives on company performance.
•Customer perspective
•Internal perspective
•Innovation and learning perspective
•Financial perspective
© 2012 Cengage Learning
Southwest Airlines’
Balanced Scorecard
© 2012 Cengage Learning
Controlling Financial Performance
Traditional approaches
• Cash flow analysis
• Balance sheets
• Income statements
• Financial ratios
• Budgets
© 2012 Cengage Learning
Economic Value Added
• Not the same thing as profits…
• The amount by which profits exceed the cost of
capital in a given year.
• EVA is positive when company profits exceed the
cost of capital in a given year.
• Includes the cost of capital
• Can be easily determine for subsets of a company
© 2012 Cengage Learning
Calculating Economic
Value Added (EVA)
© 2012 Cengage Learning
Top Ten U.S. Companies
by Market Value Added
and Economic Value
Added
© 2012 Cengage Learning
Controlling Customer Defections
• Companies can do a better job of answering
“How do customers see us?” by identifying
which customers are leaving the company and
measuring the rate at which they are leaving.
• Customers who have left are much more likely
than current customers to tell you what you
were doing wrong.
© 2012 Cengage Learning
Controlling Quality
Quality is measured in three ways:
• Excellence
• Value
• Conformance to specifications
© 2012 Cengage Learning
Conformance to
Specifications Checklist
for Buying Fresh Fish
© 2012 Cengage Learning
Advantages and
Disadvantages of Different
Measures of Quality
© 2012 Cengage Learning
Controlling Waste and Pollution
• Waste prevention and reduction
– good housekeeping
– material/product substitution
– process modification
• Recycle and reuse
• Waste treatment
• Waste disposal
© 2012 Cengage Learning
Four Levels of
Waste Minimization
© 2012 Cengage Learning
REELTOREAL
Friday Night Lights
1.
2.
3.
<click screenshot for video>
© 2012 Cengage Learning
The control process begins when
managers set goals and create
standards. In this scene, what
does Coach Gaines state that he
expects from the members of his
team?
Based on the topics discussed in
this chapter, what similarities
could you draw between what a
coach and the manager of a
company must do to ensure
success for their team?
Which method of control do you
think most football coaches exert
over their teams: bureaucratic,
objective, normative, or
concertive? Why?
REELTOREAL
Barcelona Restaurant Group
1.
2.
3.
<click screenshot for video>
© 2012 Cengage Learning
How do managers at Barcelona
control the company’s financial
performance?
What is the “balanced
scorecard” approach to
measuring corporate
performance, and in what ways
does Barcelona utilize this
approach?
Describe the feedback control
model and describe an instance
where Barcelona followed this
process to improve its
performance.