MGMT5

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Control16

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1. describe the basic control process2. discuss the various methods that

managers can use to maintain control3. describe the behaviors, processes, and

outcomes that today’s managers are choosing to control in their organizations

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Basics of Control

1. describe the basic control process

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The Control Process

• Establishment of clear standards of performance

• Comparing performance to those standards,

• Corrective action to repair performance deficiencies

• Dynamic, cybernetic process• Three basic methods: feedback control,

concurrent control, and feedforward control.

• Control isn’t always worthwhile or possible.

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Standards

• Must enable goal achievement

• Listen to customer’s comments, complaints, and suggestions

• Benchmarking – determining other companies’ standards

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Comparison to Standards

The quality of the comparison depends largely on the measurement and

information systems a company uses to keep track of performance.

The better the system, the easier it is for a company to track performance and identify

problems that need to be fixed.

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Corrective Action

• Identify performance deviations

• Analyze deviations

• Development and implement corrective programs

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Cybernetic Control Process

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Control Methods

• Feedback control

• Concurrent control

• Feedforward control

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Control Isn’t Always Worthwhile or Possible

• Control loss

• Regulation costs

• Cybernetic feasibility

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How and What to Control

2. discuss the various methods that managers can use to maintain control

3. describe the behaviors, processes, and outcomes that today’s managers are choosing to control in their organizations

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Bureaucratic Control

Top-down control; managers try to influence employee behavior by rewarding or punishing employees for compliance or

non-compliance.

•Managers emphasize following rules above all else.

•Companies are highly resistant to change and slow to respond to customers and competitors.

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Objective Control

The use of observable measures of employee behavior or output to assess performance and influence behavior.

•Behavior control•Output control

– measures must be reliable, fair, and accurate– employees and managers must believe that

they can produce the desired results– rewards must be dependent on achieving

established standards of performance

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Normative Controls

A company’s widely shared values and beliefs guide workers’ behavior and

decisions.

Created by…•Who companies hire•Observing experienced employees and listening to their stories

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Concertive Controls

Based on beliefs that are shaped and negotiated by work groups.

Develop in two phases:• Group members learn to work with each

other, supervise each other’s work, and develop guiding values and beliefs

• The emergence and formalization of objective rules to guide and control behavior

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Self-Control (Self-Management)

A control system in which managers and workers control their own behavior.

• Leaders and managers provide workers with clear boundaries within which they may guide and control their own goals and behaviors.

• Leaders and managers teach others the skills they need to maximize and monitor their own goals and theories.

• Individuals establish self-control by setting their own goals, monitoring their own progress, rewarding and punishing themselves, and constructing positive thought patterns.

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The Balanced Scorecard

Encourages managers to look at four different perspectives on company

performance.

•Customer perspective•Internal perspective•Innovation and learning perspective•Financial perspective

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Southwest Airlines’ Balanced Scorecard

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Controlling Financial Performance

Traditional approaches• Cash flow analysis• Balance sheets• Income statements• Financial ratios• Budgets

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Economic Value Added

• Not the same thing as profits…• The amount by which profits exceed the cost

of capital in a given year. • EVA is positive when company profits exceed

the cost of capital in a given year.

• Includes the cost of capital• Can be easily determine for subsets of a

company

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Calculating Economic Value Added (EVA)

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Top Ten U.S. Companies by Market Value Added and Economic Value Added

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Controlling Customer Defections

• Companies can do a better job of answering “How do customers see us?” by identifying which customers are leaving the company and measuring the rate at which they are leaving.

• Customers who have left are much more likely than current customers to tell you what you were doing wrong.

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Controlling Quality

Quality is measured in three ways:• Excellence• Value• Conformance to specifications

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Conformance to Specifications Checklist for Buying Fresh Fish

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Advantages and Disadvantages of Different Measures of Quality

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Controlling Waste and Pollution

• Waste prevention and reduction – good housekeeping– material/product substitution– process modification

• Recycle and reuse• Waste treatment• Waste disposal

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Four Levels of Waste Minimization

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REELTOREAL

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Friday Night Lights

1. The control process begins when managers set goals and create standards. In this scene, what does Coach Gaines state that he expects from the members of his team?

2. Based on the topics discussed in this chapter, what similarities could you draw between what a coach and the manager of a company must do to ensure success for their team?

3. Which method of control do you think most football coaches exert over their teams: bureaucratic, objective, normative, or concertive? Why?

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REELTOREAL

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Barcelona Restaurant Group

1. How do managers at Barcelona control the company’s financial performance?

2. What is the “balanced scorecard” approach to measuring corporate performance, and in what ways does Barcelona utilize this approach?

3. Describe the feedback control model and describe an instance where Barcelona followed this process to improve its performance.