Chapter 18:

Controlling

Learning Objectives

• Definition of control

• Planning-controlling link

• Three approaches to controlling

• The control process

• What we measure

• How we measure

• SPC charting

• Taking action

• Types of control (input, process, output)

• Qualities of an effective control system

• Dysfunctional side of control

What is Control?

• Monitoring activities to:–Make sure they are done correctly– Correct any significant deviations if

necessary

Control and You

• What is something you control or at least measure regularly, either in your life or at work?

• What is the target, or standard?

• What is acceptable deviation?

• What action is taken when the deviation is too large?

The Planning-Controlling The Planning-Controlling LinkLink

GoalsObjectivesStrategiesPlans

Planning

StructureHuman resources management

Organizing

MotivationLeadershipCommunicationIndividual and group behavior

Leading

StandardsMeasurementsComparisonsAction

Controlling

Three ApproachesThree Approachesto Control Systemsto Control SystemsThree ApproachesThree Approachesto Control Systemsto Control Systems

MarketMarketControlControlMarketMarketControlControl

ClanClanControlControl

ClanClanControlControl

BureaucraticBureaucraticControlControl

BureaucraticBureaucraticControlControl

The Control Process

Goals and Objectives- Organizational- Divisional- Departmental- Individual

Comparing ActualPerformance AgainstStandard

Measuring Actual Performance

Taking ManagerialAction

What We Measure

• Employee satisfaction

• Turnover

• Absenteeism

• Cost

• Productivity

• Quality

• Revenue

• ROI

• Profit

• Market share

• Reject rate

• Work In Progress

• Responiveness

• Customer satisfaction

How We Measure

• Direct observation

• Statistical reports

• Oral reports

• Written reports

Sales Performance Figures for July, Eastern States Distributors

BRAND

HeinekenMolsonBeck’sMooseheadLabatt’sCoronaAmset LightDos EquisTecate

Total Cases

STANDARD ACTUAL OVER (UNDER)

(HUNDREDS OF CASES)

1,07563080062054016022580

170

4,300

91363491262267214022065

286

4,464

(162)4

1122

132(20)(5)

(15)116

164

Defining the Acceptable Range of Variation

Standard

Acceptableupper limit

Acceptablelower limit

Me

as

ure

men

t o

f P

erfo

rma

nc

e

t t+1 t+2 t+3 t+4 t+5

Acceptablerange ofvariation

Taking Action(Fixing the problem)

• Do Nothing

• Take Immediate Corrective Action

• Take Basic Corrective Action

• Revise the Standard

Managerial Decisions in the Control ProcessManagerial Decisions in the Control Process

IdentifyCauses IdentifyCauses

VarianceAcceptable?

VarianceAcceptable?

StandardAttained?StandardAttained?

StandardAcceptable?

StandardAcceptable?

YesYes

YesYes

YesYes

NoNo

NoNo

NoNo

MeasurePerformance

MeasurePerformance

ObjectivesObjectives

StandardStandard

Do NothingDo Nothing

Do NothingDo Nothing

CorrectPerformance

CorrectPerformance

ComparePerformanceto Standard

ComparePerformanceto Standard

ReviseStandardRevise

Standard

Types of ControlTypes of ControlTypes of ControlTypes of Control

FeedforwardFeedforwardControlControlAnticipatesAnticipates

ProblemsProblems

Before They OccurBefore They Occur

OutputOutputOutputOutput

FeedbackFeedbackControlControl

CorrectsCorrects

ProblemsProblems

After They OccurAfter They Occur

FeedbackFeedbackControlControl

CorrectsCorrects

ProblemsProblems

After They OccurAfter They Occur

ConcurrentConcurrentControlControl

CorrectsCorrects

ProblemsProblems

As They OccurAs They Occur

ConcurrentConcurrentControlControl

CorrectsCorrects

ProblemsProblems

As They OccurAs They Occur

InputInputInputInput ProcessProcessProcessProcess

Silocaf

1. What’s being controlled?

2. What approach to control is being used (market, bureaucracy or clan)?

3. What’s the standard?

4. How measure? (direct observation, statistics, oral reports, written reports?)

5. What type of control is being used (feedforward, concurrent, feedback)?

Qualities of an Effective Qualities of an Effective Control SystemControl System

EffectiveControlSystem

Correctiveaction

Accuracy

Timeliness

Economy

Understandability

Strategicplacement

Emphasis onexceptions

Flexibility

Multiple criteria

Reasonablecriteria

InflexibleInflexible

The DysfunctionalThe DysfunctionalSide of ControlsSide of Controls

UnreasonableUnreasonable

AmbiguousAmbiguousIncompleteIncomplete