Organizational Management Ch. 6

-Step 4: Control takes corrective actions as needed. (3)

-Action is taken to address gaps between desired and actual performance. -Management by exception: giving attention to high-priority situations that show the greatest need for action. -Can save time, energy, etc. by keeping efforts from being aimed at non important things.

Breakeven analysis shows where revenues will equal costs. (3)

-Breakeven point: where revenues equal costs. Where losses end and profit begins. -Computed using the following formula: Breakeven Point=Fixed Costs/(Price-Variable Costs) -Breakeven analysis: used to perform what if calculations under different projected cost and revenue conditions.

-Step 3: Control compares results with objectives and standards. (4)

-Control equation: Need for action=Desired performance-Actual performance. -Engineering comparisons. -Historical comparisons: use past experience as a basis for evaluating current performance. -Relative comparisons: benchmark performance against that being achieved by other people or organizations.

6.1 How and Why Do Managers Use the Control Process? (5)

-Controlling is one of the four functions of management. -Step 1: Control begins with objectives and standards. -Step 2: Control measures actual performance. -Step 3: Control compares results with objectives and standards. -Step 4: Control takes corrective action as needed.

Controlling is one of the four functions of management. (4)

-Controlling: a process of measuring performance and taking action to ensure desired results. Make sure that plans are achieved. -Sees that the right things happen, in the right way, at the right time. -After-action review: structured review of lessons learned and results accomplished through a completed project. Questions are asked. "What was the intent?", "What actually happened?", "What did we learn?" -Benefits of learning are only realized when learning is translated into corrective actions.

Managers use feedforward, concurrent, and feedbackward controls. (3)

-Feedforward (preliminary) controls: take place before work begins; goal is to prevent problems before they happen. Inputs. -Concurrent (steering) controls: focus on what happens during the working process; they take place while people are doing their jobs. Throughput. -Feedback (post-action) controls: take place after a job is completed. Focus on the quality of finished products.

Balanced scorecards help top managers exercise strategic control. (3)

-If "what's measured happens" then managers should take advantage of "scorecards" to record and track performance results. -"To do well and win, you have to keep score." Managers use balanced scorecards. -The following questions are asked and answered to develop balanced scorecard goals and performance measures: 1. Financial performance: how well do our actions contribute to financial performance? 2. Customer satisfaction: how well do we serve our customers and clients? 3. Internal process improvement: how well do our activities and processes directly increase value provided to our customers and clients? 4. Innovation and learning: how well are we learning, changing, and improving things over time?

Inventory controls help save costs. (3)

-Inventory control: makes sure that any inventory is only big enough to meet ones immediate performance needs. -Economic order quantity: form of inventory control that automatically orders a fixed number of items every time inventory level falls to a predetermined point. -Just-in-time scheduling: reduces costs and improves workflow by scheduling material to arrive at a workstation or facility just in time for use. Nearly eliminates the carrying costs of inventories. Popularized by Japanese.

Financial ratios measure key areas of financial performance. (4)

-Liquidity: measures ability to meet short-term obligations. Higher is better. -Leverage: measures use of debt. Lower is better. -Asset management: measures asset and inventory efficiency. Higher is better. -Profitability: measures profit generation. Higher is better.

Managers use both internal and external controls. (5)

-Managers can take advantage of human capacity by setting up conditions that support internal or self-control. When people have a clear sense of organizational mission, know their goals, and have resources necessary to do their jobs well. -External control: structure situations so that things happen as planned. -Bureaucratic control: authority, policies, procedures, job descriptions, etc., make sure people behave in ways consistent with the organizational interests. -Clan control: influences behavior through social norms and peer expectations. Collective identity; persons who share values and identify strongly with each other tend to behave in ways that are consistent with one another's expectations. -Market control: the influence of market competition on the behavior of organizations and its members. Organizations adjust products, pricing, etc. in response to customer feedback and competitor moves. "Keeping up with the competition."

6.2 What Types of Controls Are Used by Managers? (3)

-Managers use feedforward, concurrent, and feedbackward controls. -Managers use both internal and external controls. -Managing by objectives is way to integrate planning and controlling.

Managing by objectives is a way to integrate planning and controlling. (4)

-Managing by objectives: structured process of regular communication in which a supervisor and subordinate jointly set performance objectives and review accomplished results. -Improvement objectives: intentions for improving performance in a specific way. ex. "reduce quality rejects by 10%" -Personal objectives: focus on expanding job knowledge or skills. "learn the latest version of a computer spreadsheet." -Keeps workers focused on best ways to meet objectives.

-Step 1: Control begins with objectives and standards. (2)

-Output standards: measure actual outcomes or work results. -Input standards: measure work efforts. Ex. a professor having an organized syllabus, returning exams quick, etc.

Gantt charts and CPM/PERT improve project management and control. (4)

-Project management: responsibility for the overall planning, supervision, and control of projects. Make sure project gets done on time, within budget, and consistent with objectives. -Gantt chart: graphically displays the scheduling of tasks that go into completing a project. Shows what needs to be done and when, and allows for progress checks at different time intervals. Early things get done in order for later work to build on them. -CPM/PERT: combination of the critical path method and the program evaluation and review technique. Breaks a project into sub-activities with clear beginning and end points. Shows interrelationships of tasks. -Critical pathway: quickest time an entire project can be finished. The pathway from start to conclusion that involves the longest completion times in a CPM/PERT method.

6.3 What Are Some Useful Control Tools and Techniques? (6)

-Quality control is a foundation of modern management. -Gantt chars and CPM/PERT improve project management and control. -Inventory controls help save costs. -Breakeven analysis shows where revenues will equal costs. -Financial ratios measure key areas of financial performance. -Balanced scorecards help top managers exercise strategic control.

Quality control is a foundation of modern management. (4)

-Total quality management: focuses on continuous improvement. -Have to have measurement for quality control. -Control chart: graphical ways of displaying trends so exceptions to quality standards can be identified. -Six Sigma: perfection rate of 99.9997%. (3.4 defects per million units.)

-Step 2: Control measures actual performance. (2)

-Unless we are willing to measure, very little control is possible. -What gets measured tends to happen.

4 steps of controlling:

1. Control begins with objectives and standards. 2. Control measures actual performance. 3. Control compares results with objectives and standards. 4. Control takes corrective action as needed.