1. Chapter 9 Fundamentals of Control
John R. Schermerhorn, Jr.
Daniel G. Bachrach
Introduction to Management
13th edition
Chapter 9 Fundamentals of Control

2. Planning Ahead — Key Takeaways
Identify the types of controls used by managers
and the reasons for them.
List and describe the steps in the control process.
Explain the use of common control tools and
techniques.
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3. Chapter 9 Outline Managerial Control The Control Process
Importance of controlling
Types of controls
Internal and external control
The Control Process
Establish objectives and standards
Measure actual performance
Compare results with objectives
Take corrective action
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4. Chapter 9 Outline Control Tools and Techniques
Project management and control
Inventory control
Breakeven analysis
Financial controls
Balanced scorecards
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5. Why and How Managers Control
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
Benefit: Organizational learning (Example: After-action review)
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6. Figure 9.1 The role of controlling in the management process
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7. Why and How Managers Control
Feedforward controls
Employed before a work activity begins
Ensures that:
Objectives are clear
Proper directions are established
Right resources are available
Goal is to solve problems before they occur
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8. Why and How Managers Control
Concurrent controls
Focus on what happens during work process
Monitor ongoing operations to make sure they are being done according to plan
Goal is to solve problems as they occur
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9. Why and How Managers Control
Feedback controls
Take place after work is completed
Focus on quality of end results
Goal is to solve problems after they occur and prevent future ones
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10. Figure 9.2 Feedforward, concurrent, and feedback controls
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11. Why and How Managers Control
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
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12. Why and How Managers Control
Self-control
Internal control that occurs through self-discipline in fulfilling work and personal goals and responsibilities
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13. Why and How Managers Control
Bureaucratic control
Influences behavior through authority, policies, procedures, job descriptions, budgets, and day-to-day supervision
Clan control
Influences behavior through norms and expectations set by the organizational culture
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14. Why and How Managers Control
Market Control
Influence of market competition on the behavior of organizations and their members
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15. Figure 9.3 Four steps in the control process
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16. 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
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17. The Control Process Step 2 — measuring actual performance
Goal is accurate measurement of actual performance results and/or performance efforts
Must identify significant differences between actual results and original plan
Effective control requires measurement
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18. The Control Process
Step 3 — comparing results with objectives and standards
Need for action = Desired Performance –
Actual Performance
Comparison methods:
Historical comparison
Relative comparison
Engineering comparison
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19. The Control Process Step 4 — taking corrective action
Taking action when a discrepancy exists between desired and actual performance
Management by exception
Giving attention to situations showing the greatest need for action
Types of exceptions
Problem situation
Opportunity situation
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20. Control Tools and Techniques
Project Management
Overall planning, supervision, and control of projects
Projects – unique one-time events that occur within a defined time period
Gantt chart – graphic display of scheduled tasks required to complete a project
CPM/PERT – combination of the critical path method and program evaluation and review technique
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21. Gantt Chart
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22. CPM/PERT CHART
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23. Control Tools and Techniques
Inventory control
Ensures that inventory is only big enough to meet immediate needs
Economic order quantity
Places new orders when inventory levels fall to predetermined points
Just-in-time scheduling
Routes materials to workstations just in time for use
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24. Control Tools and Techniques
Breakeven analysis
Breakeven point
Occurs where revenues just equal costs
Performs what-if calculations under different revenue and cost conditions
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25. Figure 9.4 Use of breakeven analysis to make informed “what-if” decisions
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26. Figure 9.5 Basic foundations of a balance sheet and income statement
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27. Control Tools and Techniques
Basic Financial Ratios
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
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28. Control Tools and Techniques
Balanced Scorecard
Factors used to develop scorecard goals and measures:
Financial performance
Customer Satisfaction
Internal process improvement
Innovation and learning
Copyright ©2015 John Wiley & Sons, Inc.