Slide 19.1 Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Chapter 19 CONTROL AND PERFORMANCE MEASUREMENT

Slide 19.2 Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 What is control and how to achieve it? Control strategies and tactics – mechanistic or organic? Types of performance measurement How to measure performance – the balanced scorecard Human considerations in control Cases and examples –NHS, Enron, Apple

Slide 19.3 Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 What is control and how to achieve it? The control process is intended to support the achievement of objectives at any level, by using suitable control systems. This involves: Setting targets – what and when to measure Measuring with control tools Comparing actual with target Correcting deviations or altering target.

Slide 19.4 Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 The cycle of contol Figure 19.1 The control process

Slide 19.5 Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Setting targets Performance targets provide direction and a standard of performance to aim for. The standard of performance is the defined level of performance to be achieved against which actual performance is compared.

Slide 19.6 Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Measuring Table 19.1 Common sources of information for measuring performance

Slide 19.7 Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Comparing Figure 19.2 Defining the acceptable range of variation

Slide 19.8 Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Strategies for control Table 19.2 Examples of mechanistic and organic controls

Slide 19.9 Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 When is each strategy suitable? Table 19.3 Contingencies and choice of control strategies

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Tactics for control Direct supervision Organisation structure Rules and procedures Management by objectives Control through machinery Human resource management control Values and beliefs.

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Types of performance measure An input measure is an element of resource that is measured as it is put into the transformation process. A process measure is a measurement taken during an operational process that provides data on how the process is performing. An output measure is a measurement taken after an operational process is complete.

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Efficiency and effectiveness Efficiency is a measure of the inputs required for each unit of output. Effectiveness is a measure of how well an activity contributes to achieving organisational goals.

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Frameworks for measuring performance Generic performance objectives are: Quality Speed Dependability Flexibility Cost.

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Aggregating measures Table 19.4 Aggregating performance measures Source: Adapted from Operations Management, 6th ed., Pearson Education Ltd. (Slack, N., Chambers, S. and Johnston, R. 2010) p. 608, Table 20.1, Copyright © Nigel Slack, Stuart Chambers, Robert Johnston 2001, 2004, 2007, 2010.

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 The balanced scorecard A performance measurement tool that views performance in four areas simultaneously: –Financial – how do we look to shareholders? –Customer – how do customers see us? –Internal – what must we excel at? –Innovation and learning – can we continue to improve and create value?

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 The balanced scorecard (Continued) Figure 19.4 The balanced scorecard

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Human considerations in control People have personal objectives and interests, which affect how they react to control. Lawler (1976) found: Rigid bureaucratic behaviour –For example, concentrating on features that are assessed, even if not important. Inaccurate data –For example, distorting information to make performance look better. Demotivating effects –For example, if they perceive the control is obstructing needs.

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Controls and human needs Table 19.5 Possible effects of control systems on human needs

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Competing values and control Table 19.6 Performance standards based on the competing values framework Sources: Based on Quinn et al. (2003) and Harrison (2005).

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Integrating themes Entrepreneurship The control systems used by small businesses reflect their governance arrangements (such as family ownership). Sustainability A commitment to measure managers’ environmental performance is likely to help increase sustainability. Internationalisation International companies face a dilemma between central and local control, taking account of national cultures. Governance Serious failures of performance can usually be traced to inadequate governance.

Slide Boddy, Management: An Introduction PowerPoints on the Web, 6 th edition © Pearson Education Limited 2014 Summary Organisations must maintain control over performance to meet stakeholder expectations. The control process includes setting targets, measuring, comparing and correcting. The balanced scorecard is one of the most common methods for measuring performance. Type of control – mechanistic or organic – will depend on the type of organisation, its strategy and its environment.