Management, 7e Schermerhorn Prepared by Michael K. McCuddy Valparaiso University John Wiley & Sons, Inc

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Schermerhorn - Chapter 73 “There is one thing more painful than learning from experience, and that is not learning from experience.” Archibald MacLeish

Schermerhorn - Chapter 74 Chapter Seven Controlling Volant Ski Company formerly manufactured skis in Colorado, and their motto was "Ski the Steel". These new Volants are now being made in Europe by Atomic and feature an entirely new stainless steel cap construction. They have received very strong magazine reviews, and Gold Medal ratings in every category they entered. You will notice a different feel when you "Feel the steel"

Schermerhorn - Chapter 75 What is the control process?  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.

Schermerhorn - Chapter 76 What is the control process?  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

Schermerhorn - Chapter 77 What is 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.

Schermerhorn - Chapter 78 What is the control process?  Step 2—measuring actual performance –Goal is accurate measurement of actual results on output and/or input standards. –Effective control requires measurement.

Schermerhorn - Chapter 79 What is the control process?  Step 3—comparing results with objectives and standards – Control equation – Need for action reflects the difference between desired performance and actual performance

Schermerhorn - Chapter 710 What is the control process?  Step 3—comparing results with objectives and standards – Methods of comparing desired and actual performance Historical comparison Relative comparison Engineering comparison – Benchmarking using different comparison methods

Schermerhorn - Chapter 711 What is the control process?  Step 4—taking corrective action – Taking action when a discrepancy exists between desired and actual performance. –Management by exception Giving priority attention to situations showing the greatest need for action. Types of exceptions –Problem situation –Opportunity situation

Schermerhorn - Chapter 712 Feedforward Controls Three types of Controls Concurrent Controls Feedback Controls Work inputsWork throughputsWork outputs

Schermerhorn - Chapter 713 What is the control process?  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.

Schermerhorn - Chapter 714 What is the control process?  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.

Schermerhorn - Chapter 715 What is the control process?  Feedback controls … –Take place after work is completed. –Focus on quality of end results. –Provide useful information for improving future operations.

Schermerhorn - Chapter 716 What is the control process?  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.

Schermerhorn - Chapter 717 What needs control? 4 People 4 Processes 4 $$$$$$ 4 Equipment 4 Facilities 4 Supplies 4 Outcomes

Schermerhorn - Chapter 718 What control systems are used in organizations?  Compensation and benefits –Attractive and competitive base compensation results in … Attracting and keeping a qualified workforce Having capable, motivated workers who exercise self-control. –Unattractive and uncompetitive base compensation results in … Attracting a less qualified workforce. Greater need for external controls.

Schermerhorn - Chapter 719 What control systems are used in organizations?  Attracting and keeping qualified employees who exercise self-control can be helped or hindered by … –Merit pay incentives –Pay-for-performance incentives –Fringe benefits

Schermerhorn - Chapter 720 What control systems are used in organizations?  Employee discipline systems – Discipline is the act of influencing behavior through reprimand. –Progressive discipline ties reprimands to the severity and frequency of the employee’s infractions.

Schermerhorn - Chapter 721 Discipline Process Verbal Warning Written Warning SuspensionDismissal

Schermerhorn - Chapter 722 Types of Discipline Problems 4 Attendance 4 On-the-job behaviors –insubordination –horseplay –fighting –gambling –substance abuse 4 Dishonesty 4 Outside activities

Schermerhorn - Chapter 723 Disruptive Behavior Is discipline always the solution? Equipment Environment Abilities Training Coaching

Schermerhorn - Chapter 724 Laying the groundwork Advance notice Proper investigation Progressive discipline

Schermerhorn - Chapter 725 Discipline Principles of the “Hot Stove Rule” Warning Immediate Consistent Impersonal

Schermerhorn - Chapter 726 Factors to consider in discipline 4 Seriousness of the problem 4 Duration of the problem 4 Frequency and nature of the problem 4 Employee’s work history 4 Extenuating circumstances 4 Degree of warning 4 History of organizational discipline practices 4 Implications for other employees 4 Company official support

Schermerhorn - Chapter 727 What control systems are used in organizations?  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.

Schermerhorn - Chapter 728 What control systems are used in organizations?  Important financial aspects of organizational performance … –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.

Schermerhorn - Chapter 729 What control systems are used in organizations?  Purchasing control … –A productivity tool –Trends in purchasing control: Leveraging buying power Committing to a small number of suppliers Working together in supplier-purchaser partnerships

Schermerhorn - Chapter 730 What control systems are used in organizations?  Inventory control –Goal is to ensure that inventory is just the right size to meet performance needs, thus minimizing the cost. –Methods of inventory control: Economic order quantity Just-in-time scheduling

Schermerhorn - Chapter 731 What control systems are used in organizations?  Statistical quality control –Quality control involves checking processes, materials, products, and services to ensure that they meet high standards. –Statistical quality control involves: Taking samples of work. Measuring quality in the samples. Determining the acceptability of results.

Schermerhorn - Chapter 732 What control systems are used in organizations?  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.

Schermerhorn - Chapter 733 Steps in the MBO Process 1. Supervisor and employee discuss supervisor’s job responsibilities 2. Supervisor and employee discuss employee’s job 3. Supervisor and employee jointly set employee’s specific measurable objectives for the performance\ period. 4. Supervisor and employee meet periodically to review employee’s progress 5. Supervisor and employee meet at end of period to review performance.

Schermerhorn - Chapter 734 What control systems are used in organizations?  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.

Schermerhorn - Chapter 735 What control systems are used in organizations?  Types of MBO performance objectives –Improvement –Personal development –Maintenance  Criteria for effective performance objectives –Specific –Time defined –Challenging –Measurable

Schermerhorn - Chapter 736 What control systems are used in organizations?  Pitfalls to avoid in using MBO … –Tying MBO to pay. –Focusing too much attention on easily quantifiable objectives. –Requiring excessive paperwork. –Having managers tell workers their objectives.

Schermerhorn - Chapter 737 What control systems are used in organizations?  Advantages of MBO –Focuses worker’s efforts on most important tasks and objectives. –Focuses supervisor’s efforts on important areas of support. –Contributes to relationship building. –Gives worker structured opportunity to participate in decision making.