schermerhorn - chapter 71 chapter 7 controlling - to ensure results 4 planning ahead –how do...

Schermerhorn - Chapter 7 1

Chapter 7

Controlling - To Ensure Results

Planning Ahead– How do controls work in organizations?

• Plan metrics and measurements use feedback

– How do organizational systems assist in control? See model of control process

– How can operations management improve control? Economic Order Quantity

– How can planning and controlling be integrated? MBO


How Controls Work

Steps in the Control Process– Establish objectives and standards(metrics)

• Use your past performance metrics

• Use metrics from competitors

• Use benchmark companies to measure against

– Measure actual performance (measures)– Compare results with objectives and standards– Take corrective action as needed


How Controls Work

Step 1: Establishing Objectives and Standards– Types of Standards

• output– measure results in terms of performance criteria– Output is more important, for instance on tests doing well regardless of how much time you study

• input– measure effort in terms of amount of work (inputs versus – outputs is efficiency) You measure inputs to control

costs.


How Controls Work

Step2: Measuring Actual Performance– goal is accurate

measurement of output and/or input standards

– Are you giving your customers what they want, the quality of products and the service.


How Controls Work

Step 3: Comparing Results with Objectives and Standards

Need for action x desired performance - actual performance

• Historical Comparison (e. g. Your financial ratios against your past performance)• Relative Comparison (e.g. Your ratios against others in industry• Engineering Comparison

•IS0 9000 can tell you how much each piece of work should be from time and motion studies and past history of those processes.


How Controls Work

Step 4: Taking Corrective Action– Management by exception

• problem situation• opportunity situation

Note we areTrying to overcomeproblems or exploitopportunities


How Controls Work

Characteristics of Effective Controls– strategic and results oriented

– understandable (for those that use controls)

– encourage self-control

– timely (quick enough to avoid defective work)

– exception oriented

– positive in nature

– fair and objective

– Flexible ( for emergencies)


Types of Controls

Feedforward (Preliminary) Controls– ensure that

» objectives are clear» proper directions are established» right resources are available

– focus on conditions before a work activity begins (Process engineering) Many in quality management believe employees rarely do a poor job if you have engineered the job correctly


Types of Controls

Concurrent (Steering) Controls– monitor ongoing operations to make sure they

are being done according to plan– focus on quality of task activities during work

process– In Six Sigma quality control, we want to

monitor what is going on so well that a few times in a million a product/service is not correctly accomplished.


Types of Controls

Feedback (Post action) Controls– take place after work is completed– focus on quality of end results– recently we also focus on speed

– Quick Response is a strategy for some companies.


Types of Controls

Internal Versus External Control– Internal

• allows motivated individuals to exercise self-discipline in fulfilling job expectations. You get the feedback before management has to correct your work. Most people rather control themselves and are not called out by management

– External• personal supervision

• formal administrative systems (HRM discipline)

• progressively sanctions increase


Organizational Control Systems

Employee Discipline Systems– progressive discipline

• achieve compliance with organizational expectations

• use least extreme amount of reprimand possible

• Negative control systems are real iffy



Management Process Controls to Measure – strategy and objectives– policies and procedures– selection and training– performance appraisal– job design and work structures– performance modeling– performance norms– organizational culture

• Don’t over control



Information and Financial Controls ( are Comprehensive Controls)– liquidity– leverage– asset management– profitability


Operations Management and Control Purchasing Control

– leverage buying power– looking for quantity discounts

– small number of suppliers– looking for control over products and services of suppliers

– supplier-purchaser partnerships – we are likely to have cross-functional teams with our suppliers to control processes up and down the value chain across businesses


Operations Management and Control Inventory Control

– Economic Order Quantity (EOQ)• minimize two costs

– ordering

– carrying

– just-in-time scheduling• JIT Inventory reduces total carrying costs, losses

due to lack of products, goods getting old


Operations Management and Control Quality Control

– Involves checking processes, materials, products, and services to ensure that they meet high standards.

– Statistical quality control involves:

– Taking samples of work• Measuring quality in the samples

• Determining the acceptability of results

• Our processes engineering, training ect should be so good

• we almost never have a reject.


Management by Objectives (MBO) MBO

– structured process of regular communication– supervisor and worker jointly set performance

objectives– jointly review results


Management by Objectives (MBO) Formal agreement

– worker’s performance objectives for a specific time period

– plans through which they will be accomplished– standards for measuring results– procedures for reviewing results


Management by Objectives (MBO) Advantages

– clearly focuses employee work efforts– clearly focuses manager’s work efforts on areas

of support– relationship building between manager and

employee– employee participates in decisions that affect

work


Management by Objectives (MBO) Performance objectives

– improvement– personal development– maintenance


Management by Objectives (MBO) Performance objective criteria

– specific– time defined– challenging– measurable


Management by Objectives (MBO) How to make MBO work

– hire best people– work with them to set challenging performance

objectives– give best possible support– hold employee accountable


Management by Objectives (MBO) Pitfalls to avoid

– tying MBO to pay– focusing too much attention on easily

quantifiable objectives– requiring excessive paperwork– have managers tell workers objectives– Employee learns how to work system and sets

goals low so they can easily make them.

schermerhorn - chapter 71 chapter 7 controlling - to ensure results 4 planning ahead –how do...

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