MGMT Ch. 16

Customer satisfaction is the goal of all customer service representatives, but it can be very difficult to link customer satisfaction to a particular representative. For that reason, representatives are often measured on their behaviors, such as the number of times their phones ring before calls are picked up and whether the representative listens carefully to the customer's problem before offering a solution.

Behavior Control Behavior control regulates the behaviors and actions people perform on the job. It is used when it is easier to measure what people do than the output they produce, when cause-and-effect relationships are clear, and when good measures of worker behavior can be created.

Lifeguards may seem to have an easy life, but the work is really very difficult. All lifeguards have to receive specialized training and be prepared to jump into action at a moment's notice if an emergency arises. Professional lifeguards use a paramilitary structure (chief, captain, lieutenant, sergeant, and two levels of lifeguards) so that there is only one person giving orders in the event of an emergency.

Bureaucratic Control Bureaucratic control involves using rules and hierarchical authority relationships to influence behavior. It can be fairly rigid, so it is most effective when you want to make sure everyone is working in the same way (standardize practices) or if you need to constrain or place limits on people's behavior.

At Eagle Video, each production crew manages itself without much interference from senior management. Crews can make their own decisions about how to do their work. Each crew is dedicated to the job at hand, and different jobs seem to bring different crew values to the forefront. For one client, the crew will be totally focused on getting exactly the right lighting and set, but for another client, the crew might do everything in its power to get the job done as quickly as possible.

Concertive Control Concertive control involves following the norms of a work group rather than the culture or values of an organization. It is most often seen with autonomous work groups that take ownership of their behavior and work products. It is especially effective when managers want workers to feel that the workers are controlling themselves instead of being controlled by managers.

Pfizer works with the World Health Organization to monitor the number of cases of blinding trachoma in 19 countries.

Measure performance When Pfizer measures the number of cases of blinding trachoma, it is measuring performance. As the number of cases decreases, Pfizer's performance increases.

The employees of Tu Nidito, a nonprofit organization in Arizona, share one common goal: to provide comfort, hope, and support to children and families whose lives have been impacted by a serious medical condition or death. Employees are a close-knit group who share the belief that no child should grieve alone. All of their actions are driven by that belief, from fundraising to running a summer camp. New volunteers learn from more experienced employees by listening to the stories they tell about helping children and their families.

Normative Control Normative control comes from a shared set of values. In order to make this kind of control work, it helps to have a cohesive organization with a strong culture and deeply ingrained values and beliefs. Managers often rely on normative control when it is difficult to measure worker behaviors and outputs.

Abigail is a LEGO genius. Her bosses don't quite know how she does it, but she creates one or two fabulous LEGO creations every day, which are photographed for the pictures on the LEGO boxes. Abigail receives $300 for every project she completes. Sometimes she takes a little more time, and sometimes a little less time, but all her bosses care about are the finished products.

Output Control Output control measures the products of work. It is most effective when it is relatively easy to count those products, when it is possible to set clear goals and standards for production, and when it is difficult to determine what behavior caused the productivity.

Cash flow analysis

Predicts how changes in a business will affect its ability to take in more cash than it pays out.

Balance sheet

Provides a snapshot of a company's financial position with respect to assets and liabilities at a specific point in time.

Emily paints for a living and loves it. She decides how many paintings she will create in any given time period and what kinds of paintings they will be. Fortunately, Emily has the discipline to paint even when she doesn't feel like it, and she has produced many pieces of art that have sold for good prices on the open market.

Self-Control Self-control occurs when each individual takes responsibility for his or her own behavior. It is most effective in situations where workers are intrinsically motivated by their work and when they have or are taught self-control and leadership skills.

EVA Steps

Step 1. Calculate net operating profit after taxes (NOPAT). Step 2. Identify how much capital the company has invested (spent). Step 3. Determine the cost (rate) paid for capital. Step 4. Multiply capital used by the cost of capital. Step 5. Subtract the total dollar cost of capital from net profit after taxes.

Income statement

Summarizes a firm's financial performance for a given time interval, usually one year.

Pfizer increases production of Zithromax® after finding that the number of cases of blinding trachoma is increasing in parts of Africa.

Take corrective action Increasing the production of Zithromax® is a corrective action based on comparing the standard (eliminating blinding trachoma) with performance (increased number of cases of blinding trachoma). Note that Pfizer had two options in this situation: to adjust performance by changing behaviors or to adjust the company's standards. Changing behaviors indicates a commitment to existing goals.

Budget

Used to project costs and revenues, prioritize and control spending, and ensure that expenses don't exceed available funds and revenues.

Financial ratios

Used to track a company's liquidity, efficiency, and profitability over time compared to other businesses in its industry.

Keeping track of the number of cases of blinding trachoma can be difficult because people may be unwilling to report their illnesses, and this should be considered when Pfizer evaluates the ________ feasibility of eliminating the disease.

cybernetic feasibility Pfizer's ability to track the number of cases of blinding trachoma is directly related to the cybernetic feasibility of its control processes. If cases of blinding trachoma aren't reported because people are afraid of authorities, Pfizer will not be able to tell if its control process is working. Note that this has nothing to do with the costs of regulation, either intended or unintended. Fear will get in the way regardless of how much money the company spends on the control process.

The balanced scorecard:

encourages managers to focus on key performance metrics across several areas of the company. forces managers at each level of the company to set specific goals and measure performance in each of the four areas. Explanation: The balanced scorecard encourages managers to focus on key performance metrics across several areas of the company. One advantage is that it forces managers at each level of the company to set specific goals and measure performance in each of the four areas. The second advantage to the balanced scorecard is that it places equal importance on the financial, customer, internal, and learning perspectives which minimizes the changes of suboptimization, or improving performance in one area at the expense of decreased performance in another part.

The EVA is a financial analysis that tells you:

if a company's profits are greater than the cost of its capital. The EVA, or economic value added, analysis shows you whether a company's profits exceed the cost of capital in a given year. It is especially important because it acknowledges that capital comes at a cost, and it acknowledges that revenues must be large enough to cover that cost if the company is to be sustainable.