FS10321: Business Management

1. FS10321: Business Management Week #9: The Apprentice: AIPh Finale! Chapter 13: Foundations of Control

2. What Is Control? • Monitoring organization’s activities • Ensure they are accomplished as planned • Correct any significant deviations • An effective control system • Ensures activities are completed to lead to attainment of the organization’s goals.

3. Three Approaches to Control Systems • Market • Bureaucratic • Clan

4. Steps: Measuring Actual Performance • Personal observation • MBWA: Management by walking around • Direct experience – pick up what others miss • Subject to biases • Takes time • Interferes • Statistical reports • May miss more subjective information

5. Steps: Measuring Actual Performance • Oral reports • E.g. Regular meetings • Similar to personal observation • Written reports • More formal • More comprehensive

6. What Is Measured • More important than how it’s measured • People focus on measurements • Make sure it’s what you want them to do! • Dependent on goals of organization • Most things can be measured in some way

7. Steps: Comparing Actual vs. Standard • Measured/actual values are collected • Compared to objective measures • Budgets • Standards • Goals • Range of variation • Variation should be expected • Acceptable Range of Variation must be defined • Address performance outside range

8. Defining an Acceptable Range of Variation

9. Sales Performance for July(hundreds of cases)

10. Sales Performance for July(hundreds of cases)

11. Immediate corrective action Get performance back on track ASAP Basic corrective action Determining source of deviation Correct the problem Possible corrections: Strategy Structure Compensation practices Training programs Redesign jobs Replace personnel Etc. Taking Action: Correct Performance

12. Taking Action: Revising the standard • Standard may have been set inappropriately • Performance may have been acceptable • Adjust the standard • Reflect current & predicted capabilities • Adjusting up is seen as a good thing • Be careful about adjusting down! • Easy to blame poor performance on standards • If you believe standard, hold your ground!

13. Qualities of an Effective Control System • Accuracy • Reliable, produces valid data • Timeliness • Info arrives soon enough to fix problem • Economy • Must be worth the cost • Flexibility • Adjust to problems • Take advantage of new opportunities

14. Qualities of an Effective Control System • Understandability • Will be ignored otherwise • Might sacrifice sophistication for simplicity • Reasonable criteria • Get people to stretch without breaking • Strategic placement • Place where most good is done • Highest costs for failure • Most likely to fail

15. Qualities of an Effective Control System • Emphasis on the exception • Only report on issues that require attention • Multiple criteria • Widens focus • Discourage efforts to only excel on measured factors • Corrective action • Suggests solution as well as reports problem

16. The Dysfunctional Side Of Control • Inflexible controls/unreasonable standards • Controls & goals ignored • Controls & goals manipulated • Incomplete control measures • Focus only on looking good on control measures • Unfocused controls • Fail to achieve desired/intended results

17. Contemporary Issues In Control • Right to personal privacy at work versus: • Monitoring of employee activities • Liability for creation of a hostile environment • Need to protect intellectual property Remember: The computer on your desk belongs to the company

18. Achieving a Supportive Growth-Oriented Culture • Keep the lines of communication open • Inform employees about major issues • Establish trust • Be honest, open, & forthright about challenges & rewards • Be a good listener • Find out what employees are thinking and facing • Be willing to delegate duties • Be flexible • Be willing to change your plans if necessary

19. Achieving a Supportive Growth-Oriented Culture • Provide consistent and regular feedback • Let employees know outcomes — good and bad • Reinforce the contributions of each person • Recognize employees’ efforts • Continually train employees • Enhance their capabilities and skills • Maintain focus on the mission • Even as it grows • Establish and reinforce a “we” spirit • A successful growing venture takes the coordinated efforts of all the employees.