Control

1. Introduction to Hospitality, 6e and Introduction to Hospitality Management, 4e Control John R. Walker Chapter 18

2. What is Control? • Control provides a way to check actual results against expected results. • Action can then be taken to correct the situation if the results are too far from the expected outcome • It is also about providing guidelines and mechanisms to keep things on track

3. What is Control • Control is the management function that provides information on the degree to which goals and objectives are being accomplished. • Management engages in controlling by monitoring activities and taking corrective actions whenever the goals are not being met. • An effective control system ensures that activities that lead to the attainment of the organization’s goals are completed.

4. Why is Control Important? • Control is important because it’s the final link in the management functions. • It’s the only way managers know whether organizational goals are being met and, if not, why not. • Controlling is involved with planning, organizing, and leading

5. The Control Process • The control process is a five-step process of determining goals, setting standards, measuring actual performance, comparing actual performance against those standards, and taking managerial action to correct deviations or inadequate performances

6. Setting Standards • Standards are normally set in terms of quantity, quality, finances, or time. • When developing a method of measurement, one must be absolutely sure that the goals are indeed measurable

7. Measuring • Personal observation—by monitoring subordinates to make sure things are done right—is the simplest and most common way of comparing actual performance to standards • Management by walking around (MBWA) is the best way to make personal observations

8. How We Measure • Four common sources of information to measure actual performance are personal observation, statistical reports, oral, and written reports • Statistical reports provide information in the form of data that measures results and can be used for comparative purposes • The advantage of oral control reports is that they can be quick and allow instant feedback • Written reports often have more information than oral, and are usually easy to file and retrieve

9. What We Measure • We measure results to see how they compare with expectations. What we measure is more critical than how we measure. • The results we measure include guest satisfaction, labor costs, food and beverage costs, employee satisfaction, rooms and room rates, bed sheets, energy costs, insurance, and labor turnover • We measure labor costs because they are the highest of the variable costs

10. What We Measure • Most managers have budgets set in dollar costs for their areas of responsibility. • Keeping costs within budget is, therefore, a fairly common control measure • Results-accountability control system must be able to detect deviations from desired results quickly enough to allow for timely corrective management action

11. Comparing Results • Comparing results with expectations shows the amount of variation between actual performance and the standard or expected results. • Some variation is generally seen between the expected and the actual results. • The range of variation is the acceptable difference between the actual and expected results • Managers are concerned with the size and direction of the variance

12. Taking Managerial Action • The final step in the control process is taking managerial action. Correcting actual performance is used by managers if the source of the performance variationis unsatisfactory • Immediate corrective action, corrects problems at once to get performance back on track, or • Basic corrective action, looks at how and why performance has deviated and then proceeds to correct the source of deviation

13. Types of Controls • Feedforward control focuses on preventing anticipated problems because it takes place in advance of the work activity • Concurrent control is a type of control that takes place while a work activity is in progress • Feedback control, the most popular type of control, takes place after the activity is done. For example, financial statements are examples of feedback control

14. Other Types of Control • Corporate Control - Planning and scheduling work more effectively may save thousands of dollars for departments such as Food and Beverage and Banquets • Food and Beverage Control - Most operations take inventory and calculate the food and beverage costs expressed as a percentage of sales at least once, sometimes twice, a month

15. Operational Financial Control • At the operational level in the hospitality industry, the financial controls mainly consist of budgets and income statements • zero-based budgeting has managers begin with a budget of zero dollars and justify all the cost of goods sold, controllable costs, and capital expenditures • Income statements show the actual sales and expenditures for a month or year

16. Operational Financial Controls • Good managers first control the “big ticket” items that will be most costly if not controlled • Labor costs in a hospitality operation are the largest of the controllable costs. Labor costs, like any other, need to be controlled in line with sales • Food and beverage costs are the next largest to be controlled after labor costs

17. Qualities of an Effective Control System • All effective control systems exhibit the following ten characteristics: Accuracy, timeliness, economy, flexibility, understandability, reasonable criteria, strategic placement, emphasis on exceptions, multiple criteria, and corrective action

18. Contingency Plans and Controls • The most important contingency plan factor that affects the design of an organization’s control system is the size of the organization. The control system will vary according to its size • As organizations increase in size, direct supervision is likely to be supplemented by an expanding formal control system of reports, regulations, and rules • Very large organizations typically have highly formalized and impersonal feedforward and feedback controls

19. Adjusting Controls for Cultural Differences • In a global hospitality corporation, managers of foreign operations tend to be controlled less directly by the home office • Because distance creates a tendency to formalize controls, the home office of a global company relies on formal reports for control. • Global companies rely on the power of information technology to provide speedy control reports of results

20. Workplace Privacy • Personal on-the-job Web surfing costs millions of dollars a year in wasted computer resources and billions of dollars in lost work productivity • Concern about sexual harassment is one of the reasons why companies may want to monitor or keep backup copies of all e-mail

21. Workplace Theft • A high percentage of all organizational theft and fraud is committed by employees, not outsiders • People steal because they can rationalize whatever they’re doing as being correct and appropriate behavior. • Hospitality associates also steal because they often feel underpaid

22. Workplace Violence • Factors contributing to workplace violence include employee stress caused by long working hours, information overload, daily interruptions, unrealistic deadlines, and uncaring managers

23. Controlling Sustainability • Hotels and restaurants as well as other businesses and organizations must constantly monitor and manage the different aspects of sustainable practices, such as energy, waste, lighting, water, heating and cooling, temperature and other sources that consume energy • There are a variety of solutions to lighting controls, including occupancy sensors, time switches, energy efficient bulbs

24. Trends in Control • Current trends include: Increasing use of technology for control helps make the job of control not only easier but also much quicker. Quicker results mean decisions to make necessary changes are made sooner, thus avoiding further losses. • Handheld devices that take inventory are an example of how technology can assist management with inventory taking

25. The End