Management students, attention please: this is the last chapter key notes Chapter 18 Introduction to Controlling A MANAGER’S DILEMMA How can today’s managers develop adequate control systems to safeguard their organizations? How can they effectively measure organizational performance and correct problems? Chapter 18 introduces and explores basic tools for measuring organizational performance. Throughout the chapter, students discover the importance of the control process throughout the production and delivery of goods and services in the business world. This chapter’s Manager’s Dilemma refers to a tragic event that marred the 2010 Winter Olympics in Vancouver – the death of a young luger on the new Olympic track. The international sanctioning committee on the sport, the FIL, placed the blame for the fatal crash on the young man and on “a complex series of interrelated events.” The International Olympic Committee’s president, said, “The IOC had a moral responsibility for the luge track where the death happened, but not a legal one . . . blame should be shared by the FIL and the Vancouver Organizing Committee, which built it.” Could better controls have helped prevent this accident? To address this question, students should find several places in the process for additional controls. It’s possible the FIL and Olympic officials needed to place more safety controls in how new tracks are designed – was the track designed to be too fast? The FIL should determine if there is too much emphasis on making a faster track to break Olympic records. In the testing of equipment the participants use, more safety controls may need to be put into place. Finally, athletes should be properly trained in the complexities of new tracks before events. These are all control issues that could have been addressed and may have prevented loss of life. INTRODUCTION Even when managers carefully and thoroughly plan, a program or decision may be poorly or improperly implemented if an effective control system has not been established. 18.1 WHAT IS CONTROLLING, AND WHY IS IT IMPORTANT? Control is the process of monitoring, comparing, and correcting work performance. Control is important for three main reasons: A. Control serves as the final link in the functional chain of management. Exhibit 18-1 show the planning-controlling link. B. Controlling is also important to delegation. The development of an effective control system may decrease resistance to delegation. C. Finally, control serves to protect the company and its assets. 18.2 THE CONTROL PROCESS The control process is a three-step process including measuring actual performance, comparing actual performance against a standard, and taking managerial action. (See Exhibit 18-2) A. Measuring is the first step in the control process. 1. Measurement is frequently achieved through four common sources of information: a. Personal observation b. Statistical reports c. Oral reports d. Written reports 2. What we measure is probably more critical than how we measure. What is measured often determines the area(s) in which employees will attempt to excel. B. Comparing is the next step in the control process. 1. Comparing determines the degree of variation between actual performance and the standard. 2. Of critical importance to the control process is determining the range of variation. The range of variation is the acceptable parameters of variance between actual performance and the standard. (See Exhibit 18-4) 3. An example of comparing actual performance to standards is presented in Exhibit 18-5. C. Taking managerial action is the final step in the control process. Although the manager might decide to “do nothing,” two additional alternatives may be taken. 1. Correct actual performance. Once the manager has decided to correct actual performance, he/she must make another decision: a. To take immediate corrective action, which is corrective action that corrects problems at once to get performance back on track, or b. To take basic corrective action, which is corrective action that looks at how and why performance deviated and then proceeds to correct the source of deviation. c. After analyzing deviations, effective managers identify and correct causes of variance when the benefits of doing so justify the cost involved. 2. Revise the standard. If the standard was set too high or too low, a manager may decide to revise the standard. D. Summary of Managerial Decisions The control process is a continuous flow among measuring, comparing, and managerial action. Exhibit 18-6 summarizes the manager’s decisions in the control process. 18.3 CONTROLLING FOR ORGANIZATIONAL PERFORMANCE A. What Is Organizational Performance? Performance is the end result of an activity. Managers are concerned with organizational performance—the accumulated end results of all the organization’s work activities. B. Measures of Organizational Performance Employees need to recognize the connection between what they do and the outcomes. The most frequently used organizational performance measures include organizational productivity, organizational effectiveness, and industry rankings. 1. Productivity is the overall output of goods or services produced divided by the inputs needed to generate that output. The management of an organization seeks to increase this ratio. 2. Organizational effectiveness is a measure of how appropriate organizational goals are and how well an organization is achieving those goals. 3. Industry and company rankings are often used as a measure to describe organizational effectiveness. Exhibit 18-8 and PowerPoint slide 18-24 list some of the more popular industry rankings used to measure organizational performance. 18.4 TOOLS FOR CONTROLLING ORGANIZATIONAL PERFORMANCE Three basic types of controls are used to control organizational performance: feedforward controls, concurrent controls, and feedback controls. (See Exhibit 18-8) A. Feedforward, Concurrent, and Feedback Control. Feedforward control is a type of control that takes place before a work activity is done. Concurrent control is a type of control that takes place while a work activity is in progress. Feedback control is a type of control that takes place after a work activity is done.
Posted on: Sat, 19 Apr 2014 05:54:27 +0000
Trending Topics
Recently Viewed Topics
© 2015