ControllingControlling… is the process of measuring performance and taking action to ensure desired results.

Make sure the right things happen,

…at the right time.

Steps in the Control Steps in the Control ProcessProcess

Steps in the Control Steps in the Control ProcessProcess

Set performance objectives and standards. Describe standards as the conditions that must exist before

the performance can be rated satisfactory.  Establish objectives that are broader in scope and go beyond

day-to-day standards.

Measure actual performance. Measurement must be accurate enough to catch differences

between the planned and actual performance.

Compare actual performance against established standards.

Decide how much variance from the standard is acceptable. Determine if action is needed.

Take corrective actions as necessary. When standards are not met, it is important to find out why. When standards are met and exceeded, this is a good time to

offer employees positive reinforcement.

Types of ControlsTypes of Controls

 For example, a local automobile dealer can focus on activities before, during, or after sales of new cars. Careful inspection of new cars and cautious selection of sales employees are ways to ensure high quality or profitable sales even before those sales take place. Monitoring how sales people act with customers is a control during the sales task. Counting the number of new cars sold during the month and telephoning buyers about their satisfaction with sales transactions are controls after sales have occurred.

Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information.

Management by objectives works if you first think through your objectives. Ninety percent of the time you haven't.

Objectives are not fate; they are direction. They are not commands; they are commitments. They do not determine the future; they are means to mobilize the resources and energies of the business for the making of the future.

Peter Drucker

Management by Management by Objectives (MBO)Objectives (MBO)

…is a process of joint objective setting between a supervisor and subordinate

3 Types of Objectives3 Types of ObjectivesImprovement

◦Improve performance in a specific way◦“to reduce quality rejects by 10 percent”

Personal◦Personal growth activities◦“to learn the latest version of a

computer spreadsheet package”Maintenance

◦Maintain performance at a specific level

SMART – Specific, Measurable, Attainable, Referred to regularly, Time defined

Internal controlInternal controlAllows motivated individuals and

groups to exercise self-discipline in fulfilling job expectations.◦Self-control

understand and believe in the organization’s mission,

know their own objectives,

have the resources to do their job well

high level of trust and respect. 

What management style does this sound like?

External controlExternal control

Occurs through personal supervision or formal administrative systems.

Performance AppraisalCompensation Systems (pg. 375-378)

◦Pay for Performance (or merit Pay);◦bonus pay;◦Employee Stock Ownership (ESOP);◦gain-sharing;◦profit-sharing;◦skills-based pay (or pay for knowledge).

Employee Discipline Employee Discipline SystemsSystemsProgressive Discipline

◦ Unacceptable work (e.g., absenteeism, lateness, lying, or sexual harassment)

◦ Some types of misbehaviour are more severe than others.

◦ The disciplinary action administered to an employee should vary according to: how significant how often the behaviour occurs.

The “ultimate” penalty of being fired, should only be used in the case of the most severe infractions or for repeated occurrences of minor infractions.

Lumberjack versus Gardener

““Hot Stove Rules” of Employee Hot Stove Rules” of Employee DisciplineDiscipline

Immediacy: A reprimand should be immediate; ◦ a hot stove burns the first time you touch it.

Impartiality: A reprimand should be directed toward someone’s actions, not the individual’s personality; ◦ a hot stove doesn’t hold grudges, doesn’t try to humiliate people, and

doesn’t accept excuses. Consistency: A reprimand should be consistently applied;

◦ a hot stove burns anyone who touches it, and it does so every time. Informative: A reprimand should be informative;

◦ a hot stove lets a person know what to do to avoid getting burned in the future—”don’t touch.”

Supportive: A reprimand should occur in a supportive setting; ◦ a hot stove conveys warmth but with an inflexible rule—”don’t touch.”

Forewarning: A reprimand should support realistic rules; ◦ the don’t-touch-a-hot-stove rule isn’t a power play, a whim, or an

emotion of the moment; it is a necessary rule of reason.

Possible problems with “hot Possible problems with “hot stove” rules and Progressive stove” rules and Progressive DisciplineDisciplineThe focus is on past behaviour.There is a risk that employees

are disciplined in a punitive way.They do not build commitment

into their jobs.Employees are not likely to feel

better about the job or the company.