1. CHAPTER 6 CONTROLLING

2. Copyright © 2005 Prentice Hall, Inc. All rights reserved. 18–2 What Is Control? Control – The process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations. The Purpose of Control – To ensure that activities are completed in ways that lead to accomplishment of organizational goals.

3. Copyright © 2005 Prentice Hall, Inc. All rights reserved. 18–3 Tools for Controlling Organizational Performance Feedforward Control – A control that prevents anticipated problems before actual occurrences of the problem. Building in quality through design. Requiring suppliers conform to ISO 9002. Concurrent Control – Control that monitors ongoing employee activities to ensure they are consistent with performance standards. Direct supervision: management by walking around.

4. Copyright © 2005 Prentice Hall, Inc. All rights reserved. 18–4 Tools for Controlling Organizational Performance (cont’d) Feedback Control – A control that takes place after an activity is done. Corrective action is after-the-fact, when the problem has already occurred. – Advantages of feedback controls Feedback provides managers with information on the effectiveness of their planning efforts. Feedback enhances employee motivation by providing them with information on how well they are doing.

5. Organizational Control Focus Feedforward Control Anticipates Problems Examples Pre-employment drug testing Inspect raw materials Hire only college graduates Focus is on Inputs Concurrent Control Solve Problems as They Happen Examples Adaptive culture Total quality management Employee self-control Focus is on Ongoing Processes Feedback Control Solves Problems After They Occur Examples Analyze sales per employee Final quality inspection Survey customers Focus is on Outputs Developed by Cool Pictures & MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved.

6. Scope of Control in the Organization Strategic Control  Strategy refers to the direction for the organization as a whole.  It is linked to the mission of the organization and to the basic plans for achieving that mission.  focused on how the organization as a whole fits its external environment and meets its long-range objectives and goals.

7. Approaches to Strategic Control Strategic control system valuable, but should not be tightly administered Strategic control system problematic Strategic control system valuable Strategic control more for tracking progress than motivation HIGH LOW ENVIRONMENTAL TURBULENCE EASYDIFFICULT ABILITY TO SPECIFY AND MEASURE PRECISE STRATEGIC OBJECTIVES

8. Tactical Control  Focuses on the implementation of strategy.  Tactical control forms the heart @ the soul of an organization’s total sets of controls.  4 types of tactical control systems are: I.Financial controls II.Budgets III.The supervisory structure IV.Human resources policies and procedure.

9. Tactical Control Financial Controls – Include several quantitative ratios involving key financial statistics. Budget Controls – Typically cover a relatively limited time frame (usually 12 months or 13 months periods) – Focus exclusively on one type of objective (financial) – Usually cannot be used to compare a total organization’s progress relative to its competitors. Supervisory Structure – In organizations of any size, there is always someone or some group to which an employee or manager reports.

10. Human Resource Controls – Selection procedures can specify the range of abilities that will be brought into the organization. – Training can enhance the consistency with which skills will elevate performance to meet standards. – Appraisal and evaluation methods reinforce desired behavior and discourage undesirable levels of performance. – Compensation can motivate efforts in particular directions as opposed to other directions.

11. Characteristic of Strategic and Tactical Control TACTICAL CONTROLS STRATEGIC CONTROLS LimitedLong, unspecified Controls relate to specific, functional areas Controls relate to organization as a whole Comparisons made within organization Comparisons made to other organizations Implementation of strategy Determination of overall organizational strategy

12. Feedback Control Model If Inadequate If Adequate Adjust StandardsAdjust Performance Feedback Establish Strategic Goals 1. Establish standards of performance. 2. Measure actual performance. 3. Compare performance to standards. 4. Take corrective action. 4. Do nothing or provide reinforcement. Feedback Use of feedback to determine if performance meets established standards. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved.

13. Total Quality Management an approach that seeks to improve quality and performance which will meet or exceed organization expectations. A philosophy of management that is driven by customer needs & expectations & focuses on continual improvement in work processes.

14. TQM Techniques 1)Quality Circles a group of 6 to 12 volunteer employees meet at a set time during the workweek identify problems Try to find solutions 2) Benchmarking Benchmarking may be considered as a way to reference a good organization. 3)Six Sigma Six Sigma is a business management strategy originally developed by Motorola, USA in 1981. Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.

15. 4) Reduced Cycle Time Focusing on improved responsiveness acceleration of activities into shorter time. Reduction in cycle time improves overall company performance as well as quality. 5) Continuous Improvement (Kaizen) The basic philosophy is that improving things a little but at a time, has the highest probability of success. TQM Techniques

16. 6) TQM Success Factors POSITIVE FACTORSNEGATIVE FACTORS Tasks make high skill demand on employees Management expectations are unrealistically high TQM serves to enrich jobs and motivate employees Middle managers are dissatisfied about loss of author Problem solving skills are improved for all employees Workers are dissatisfied with other aspects of organizational life Participation and teamwork are used to tackle significant problems Union leaders are left out of QC discussions Continuous improvement is a way of life Managers wait for big, dramatic innovations

17. International Quality Standards ISO 9000 Quality management standards established by the International Organization for Standardization adhered to by companies around the world. ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained by ISO, the International Organization for Standardization and is administered by accreditation and certification bodies.