Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 18 1 Controlling: Purpose and Process MANAGEMENT Meeting and Exceeding Customer Expectations EIGHTH EDITION Prepared by Deborah Baker Texas Christian University

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 18 2 learning objectives 1. Describe the relationship between controlling and the other four functions of management 2. List and describe the four steps in the control process 3. Describe the nature and importance of feedforward, concurrent, and feedback controls 4. Describe the importance of a control system 5. Explain the characteristics of effective controls 6. Explain the steps managers can take to make controls more effective

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 18 3 Controlling Six Sigma A highly disciplined process that helps companies focus on developing and delivering near-perfect products and services. Process quality goal. Statistical goal: only 3.4 defects per million transactions

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 18 4 Controlling The process through which standards for the performance of people and processes are set, communicated, and applied Standard Any established rule or basis of comparison used to measure capacity, quantity, content, value, cost, quality, or performance

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 18 5 Risk Managers. Monitor people and processes. Help transform functional managers into advisers and consultants. Teach others how to deal with the risks that haunt their areas of expertise

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 18 6 Controlling 1 1 Planning and controlling Organizing and controlling Leading and controlling Staffing and controlling The role of controlling in other management functions

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 18 7 The Control Process 2 2 Establishing performance standards Measuring performance Taking corrective action Comparing measured performance to established standards Step 1 Step 2 Step 4 Step 3

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 18 8 The Control Process 2 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 18 9 Establishing Performance Standards 2 2 designs, works with, and receives the output from controls is being monitored monitoring efforts will take place controls will be used monitoring will be used resources are available to expend on the controls Who What Where When How What

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Productivity 2 2 The amount of output achieved from the use of a given amount of inputs. Measured: –Quantitatively –Qualitatively

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Quality 2 2 Quality…. Is customer satisfaction. Begins with the standards and methods used to recruit, hire, train, evaluate, and reward employees. Must exist within every person and process. Must be a core value within an organization’s culture

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Quality 2 2 Controlling Quality…. Companies create standards and quality assurance (QA) systems. A QA system focuses on constant incremental quality improvement [kaizen] measurements and results

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Performance 2 2 Measuring Performance. Measure actual performance to determine variation from standard. Mechanisms for this purpose can be extremely sensitive. Computers are increasingly important as tools for measuring performance

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Comparing Performance to Standards 2 2 Comparing Measured Performance to Established Standards 1. Compare actual performance to the standards set for that performance 2. If deviations exist, the evaluator must decide if they are significant 3. The evaluator must determine what is causing the variance 4. The source of a deviation may be beyond the employee who first discovers it 5. The cause may require examining the standards being applied and the accuracy of measurement and comparison processes

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Taking Corrective Action 2 2. Policies and procedures may prescribe the actions. May be automatic. May call for exceptions to prescribed modes of behavior

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Types of Controls 3 3 Feedforward Control A control that prevents defects and deviations from standards. Focuses on operations before they begin Concurrent Control A control that applies to processes as they are happening Feedback Control A control that focuses on the outputs or results of operations

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Types of Controls 3 3

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Control Systems 4 4 Feedforward, concurrent, and feedback controls operate in harmony to ensure that standards are enforced, goals are reached, and resources are used effectively and efficiently

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Effective Controls 5 5 What Makes Controls Effective? Focus on Critical Control Points Integration Accuracy Comprehensibility Economic Feasibility Acceptability Timeliness

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Monitoring Organizational Impacts 6 6 Controlled experiments Surveys of employees affected by controls Surveys of employees affected by controls Before-and-after comparisons Techniques for Monitoring the Impact of Controls Techniques for Monitoring the Impact of Controls

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter Updating Controls 6 6 Changes in Decision Making Changes to Mission Structural Changes Changes in Human Relations Technological Changes