Controlling: Purpose and Process

1. Controlling: Purpose and Process 2002 South-Western

2. Six Sigma • A process quality goal. • Highly disciplined process. • Helps companies focus on developing and delivering near-perfect products and services. • Statistical goal: 3.4 defects per million transactions. 2002 South-Western

3. Controlling • The function in which managers set and communicate performance standards for people, processes, and devices. • Is about managing risks. • A standard is any guideline or benchmark established as the basis for the measurement of capacity, quantity, content, value, cost, quality, or performance. 2002 South-Western

4. Risk Managers Monitor people and processes Help transform functional managers into advisers and consultants Teach others how to deal with the risks that haunt their areas of expertise 2002 South-Western

5. Bittel (1989) “Controlling is the function that brings the management cycle full circle. It is the steering mechanism that links all the preceding functions of organizing, staffing, and [leading] to the goals of planning.” 2002 South-Western

6. Control Process 2002 South-Western

7. Establishing Performance Standards Use a quantitative or qualitative measuring device. Point 1 Point 2 Designed to monitor people, money, capital goods, or processes. 2002 South-Western

8. Who designs, works with, and receives the output from controls. What is being monitored. What is to be achieved through monitoring. Where monitoring efforts will take place (location and functional area). When controls will be used. What resources are available to expend on the controls. The Nature of a StandardDepends On 2002 South-Western

9. Productivity The amount of output achieved from the use of a given amount of inputs. Can be measured quantitatively. Can be measured qualitatively. 2002 South-Western

10. Quality • Is customer satisfaction. • Begins with the standards and methods used to recruit, hire, train, evaluate, and reward employees. • Must exist within every person and process. • Must be a core value within an organization’s culture. 2002 South-Western

11. To Control Quality • Companies create standards and quality assurance (QA) systems. • A QA system focuses on constant incremental quality improvement [kaizen] measurements and results. 2002 South-Western

12. Measuring Performance • Measure actual performance to determine variation from standard. • Mechanisms for this purpose can be extremely sensitive. • Computers are increasingly important as tools for measuring performance. 2002 South-Western

13. Comparing Measured Performanceto Established Standards 1. Compare actual performance to the standards set for that purpose. 2. If deviations exist, the evaluator must decide if they are significant. 5. May require examining the standards being applied and the accuracy of the measurement and comparison processes. 4. The source of a deviation may lie beyond the employee who first discovers it. 3. The evaluator must determine what is causing the variance. 2002 South-Western

14. Productivity and Quality-CenteredEnvironment of Today • Workers and managers are often empowered to evaluate their own work for: • Quality • Productivity • Cost improvements • Individuals and groups are being given the responsibility to control their behavior and operations. 2002 South-Western

15. Types of Controlsfor Restaurant Operations 2002 South-Western

16. Feedforward Controls • Focus on operations before they begin. • Sometimes called preliminary, screening, or prevention controls. • Intended to prevent defects and deviations from standards. 2002 South-Western

17. Concurrent Controls • Apply to processes as they are happening. • The most important concurrent control in any undertaking is often the skilled and experienced operator. 2002 South-Western

18. Feedback Controls • Focus on the results of operations. • After-the-fact, or postperformance, controls. • Information is fed back into the process or to the controller. 2002 South-Western

19. Control Systems Feedforward, concurrent , and feedback controls should be viewed as part of an overall control system. Managers integrate suitable control combinations to enforce standards. Make sure elements function smoothly with one another. Ensure that resources are used effectively and efficiently. 2002 South-Western

20. Controls Focus on Inputs Outputs Processes 2002 South-Western

21. Critical Control Points • All the operations that directly affect the survival of an organization. • Should focus on: • Those points at which failures cannot be tolerated. • Where time and money costs are greatest. • The objective is to apply controls to the essential aspects of a business, not the peripheral ones. 2002 South-Western

22. Six Characteristics Of Effective Controls • Integration • Economic Feasibility • Acceptability • Accuracy • Timelines • Comprehensibility 2002 South-Western

23. Controls are Effective as Long as They Do what they are intended to do. Do not generate opposition. Do not result in costs greater than the benefits they provide. 2002 South-Western

24. Controls are Designed to Deal With 1. Specific people 2. Processes Circumstances 3. 2002 South-Western

25. Changes that RequireReexamination of Controls • Changes to Mission • Structural Changes • Changes in Decision Making • Changes in Human Relations • Technological Changes 2002 South-Western