Management

Fourteenth Edition

Chapter 18
Monitoring and Controlling

Copyright©
Copyright ©2018,
2018,2016,
2016,2014
2014Pearson
PearsonEducation,
Education,Inc.
Inc.All
AllRights
RightsReserved
Reserved
What Is Controlling?
• Controlling: management function that involves
monitoring, comparing, and correcting work
performance.

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Why Is Controlling So Important?
• Planning
• Empowering employees
• Protecting the workplace

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Exhibit 18-1
Planning-Controlling Link

Exhibit 18-1 shows shows how controlling provides a critical link back to planning.
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
The Control Process
• Control process: a three-step process of
measuring actual performance, comparing actual
performance against a standard, and taking
managerial action to correct deviations or
inadequate standards

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Exhibit 18-2
The Control Process

Exhibit 18-2 illustrates the three-step control process.

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Step 1: Measuring Actual Performance
• How we measure: Four approaches used by
managers to measure and report actual
performance are personal observations, statistical
reports, oral reports, and written reports.
• What we measure: What measures are most
important and then retraining the staff on
achieving those measures. For instance, all
managers deal with people, so criteria such as
employee satisfaction or turnover and
absenteeism rates can be measured. Keeping
costs within budget is also a fairly common control
measure.
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Exhibit 18-3
Sources of Information for Measuring
Performance

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Step 2: Comparing Actual Performance
Against the Standard
• The comparing step determines the variation
between actual performance and the standard.
Although some variation in performance can be
expected in all ­activities, it’s critical to determine
an acceptable range of variation.
• Range of variation: the acceptable parameters of
variance between actual performance and the
standard.

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Exhibit 18-4
Acceptable Range of Variation

Exhibit 18-4 illustrates the acceptable range of variation.

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Step 3: Taking Managerial Action
• Managers can choose among three possible
courses of action: do nothing, correct the actual
performance, or revise the standards

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Correct actual performance
– Immediate corrective action: corrective
action that corrects problems at once to get
performance back on track
– Basic corrective action: corrective action that
looks at how and why performance deviated
before correcting the source of deviation

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Revise the Standard
• If performance consistently exceeds the goal, then
a manager should look at whether the goal is too
easy and needs to be raised.
• Managers must be cautious about revising a
standard downward.

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Managerial Decisions in Controlling
• The standards are goals developed during the
planning process. These goals provide the basis
for the control process, which involves measuring
actual performance and comparing it against the
standard. Depending on the results, a manager’s
decision is to do nothing, correct the performance,
or revise the standard.

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Exhibit 18-6
Managerial Decisions in the Control Process

Exhibit 18-6 summarizes the decisions a manager makes in controlling

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Controlling for Organizational
and Employee Performance
Cost efficiency. The length of time customers are
kept on hold. Customer satisfaction with service
provided. These are just a few of the important
performance indicators that executives in the
intensely competitive call-center service industry
measure. To make good decisions, managers in this
industry want and need this type of information so
they can manage organizational and employee
performance.

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
What is Organizational Performance?
• Performance: the end result of an activity
• Organizational performance: the accumulated
results of all the organization’s work activities

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Measures of Organizational Performance
• Productivity: the amount of goods or services
produced divided by the inputs needed to
generate that output
• Organizational effectiveness: a measure of how
appropriate organizational goals are and how well
those goals are being met

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Controlling for Employee Performance
• Disciplinary action: actions taken by a manager
to enforce the organization’s work standards and
regulations
• Progressive disciplinary action: an approach to
ensure that the minimum penalty appropriate to
the offense is imposed

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Exhibit 18-8
Types of Discipline Problems and Examples
of Each

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Tools for Measuring Organizational
Performance
• All managers need appropriate tools for
monitoring and measuring organizational
performance. Before describing some specific
types of control tools, let’s look at the concept of
feed forward, concurrent, and feedback control

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Exhibit 18-9
Types of Control

Exhibit 18-9 shows the three kinds of control

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Feedforward/Concurrent/Feedback
Controls
• Feedforward control: control that takes place
before a work activity is done.
• Concurrent control: control that takes place
while a work activity is in progress.
• Management by walking around: a term used
to describe when a manager is out in the work
area interacting directly with employees.
• Feedback control: control that takes place after a
work activity is done.
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Financial Controls
• Traditional controls
– Ratio analysis:
 Liquidity
 Leverage
 Activity
 Profitability
– Budget analysis:
 Quantitative standards
 Deviations
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Information Controls
• Management information system (MIS): a
system used to provide management with needed
information on a regular basis
• Data versus information

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Balanced Scorecard and Benchmarking
• Balanced scorecard: a performance
measurement tool that looks at more than just the
financial perspective
• Benchmark: the standard of excellence against
which to measure and compare
• Benchmarking: a performance measurement tool
that looks at more than just the financial
perspective

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Contemporary Issues in Control
• Control is an important managerial function. We’re
going to look at four control issues that managers
face today: cross-cultural differences,
workplace concerns, customer interactions,
and corporate governance.

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Adjusting Controls for Cross-Cultural
Differences and Global Turmoil
• Distance creates formalized controls, e.g. formal
reports
• Impact of technology
• Constraints due to local laws
• Comparability issues in data collection
• Be prepared for global turmoil and disasters

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Workplace Privacy/Concerns
• Employers can read your e-mail, tap your
telephone, monitor your work by computer, store
and review computer files.
• Reasons companies monitor:
– Productivity/Internet traffic
– Concerns about offensive/inappropriate
material
– Protecting company secrets

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Employee Theft
• Employee theft: any unauthorized taking of
company property by employees for their personal
use

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Controlling Customer Interactions
• Service profit chain: the service sequence from
employees to customers to profit

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Corporate Governance
• Corporate governance: the system used to
govern a corporation so that the interests of
corporate owners are protected.

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Copyright

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved