Control Chapter 8

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

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

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

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

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)

4. Take Corrective Action Take action when discrepancies exist between desired and actual performance

Types of Controls Feedforward Concurrent Feedback

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.

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

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

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

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

Employee Discipline Systems the act of influencing behaviour through reprimand Progressive discipline: Ties reprimands to the severity and frequency of the employee’s infractions

Effective Discipline 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

Inventory Jargon Economic Order Quantity- (EOQ) computer orders a fixed number of items every time the inventory level falls to a preset point. Just-in-time delivery: A Japanese industry system of having parts delivered to the factory just as they are needed to save $ by not stockpiling items. Statistical Quality Control: checking processes, materials, products and services to ensure they meet high standards.

Management by Objectives (MBO) Structured process of regular communication in which a supervisor and subordinate jointly set performance objectives and review results accomplished Regular communication is essential

MBO Jointly plan Individually act Jointly control 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?

MBO Criteria for effective performance objectives Specific Time defined Challenging Measurable   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

MBO 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.

Objectives Improvement Objectives : Intention for improving performance in a specific way. (Reduce quality rejects by 10%) Personal Objectives : personal growth so as to expand job knowledge or skills . (take Excel spreadsheet course)   Maintenance Objectives: Maintain performance (continue to sell 3 cars a week)