chapter 13

• Forward Looking

it is used to identify deviations from standards and take prompt corrective action rather than blame for mistakes o Controlling

• Production Control

o Consist of a number of activities that are designed to keep overall operations on schedule o Involves routing operations, scheduling, and when necessary, expediting work flow • Gantt charts • Program evaluation review technique (PERT)

• Nature of Controlling

o Ensures that actual performance is in line with intended performance and taking corrective action when necessary o Part of supervisor's job to keep activities in line and when necessary, to get those activities back on track o One of the 5 primary managerial functions o Closely related to planning

• Three Types of Time Factor Control Mechanisms

o Feedback Control (After-the-Process) • Action taken after the activity, product, or service has been completed • Most widely used o Concurrent Control (In-Process) • Corrective action taken during the production o Feedforward Control (Preventative) • Anticipatory action taken to ensure that problems do not occur

• Closeness of Supervisor in Controlling

o How strict or closely supervisors control an employee is based on the employee's experience, initiative, dependability, and resourcefulness o Working without close supervision is both a challenge and a test of the supervisor's skill to delegate

• Inventory Control

o Keeping watch over raw materials, supplies, work-in-progress, finished goods, and the like o Maintaining sufficient, though not excessive inventory; keeping status records of all inventory ordering economic lot sizes; and many other tasks

• Quality control

o Maintaining the quality standards a firm sets for its products or services by monitoring and continual improvement to ensure that quality is maintained

• Employee's responses to Controlling

o Often viewed negatively because the amount of control may determine how much freedom employees have to do their job o If well implemented and designed it can positively influence employee's motivation and behavior

• Steps in Control Process (A cycle)

o Set Standards • Standards - Units of measure or criteria against which results are evaluated • Time Study - A quantitative technique for analyzing a job to determine time standards for performing the job • Select employees for observations • Observe the times needed to accomplish part of the job • Apply corrective factors and make allowances for fatigue, personal needs, and unavoidable delays • Employee Participation • Workers tend to accept standards as reasonable and fair when they help formulate those standards • Receive buy-in from workers • Workers resent imposed standards that appear designed solely to increase worker output • Strategic Control Points • Supervisors should choose criteria for assessment that are key indicators of overall performance • Examples o Number of voluntary resignations and request to transfer o Levels of absenteeism, tardiness, and turnover o Accident frequency o Number and types of employee grievances and complaints o Amount of scrap and unexplained losses of materials and inventory

• Consistent with Strategy

o Should establish feedback controls and monitoring progress which enables an organization to know IF, HOW, and WHEN it has achieved its strategic goals and objectives

• Planning

supervisors set objectives and these objectives become standards against which performance is appraised. If there is discrepancy, controlling function needs to be carried out by taking corrective actions

o Operating Budget

the assignment of dollar allocations to the costs and expenses needed to run the business, based on expected revenues

o Budgetary Control

the use of budgets by supervisors, accountants, and higher-level managers to control operations so that they comply with organizational standards for making budgets

o Take corrective action

• Only needed when deviated from standards, if not deviation step is not needed • Prior to corrective action, supervisor should • Determine causes of the deviation • Decide which remedial actions will obtain better results • Reasons for deviation from standards • Standards based on faulty forecasts or assumptions • Unforeseen problems arose and distorted results • Failure occurred in some preceding job • Employee who performed the job was unqualified • Employee was negligent or failed to follow directions or procedures

o Appraise performance against standards

• Personal Observation • Most common and valuable method for monitoring employee performance • Help supervisor identify causes of poor performance that can be traced to individual employee and causes beyond the employees control (eg., inadequate training, faulty raw materials, etc.,) • Oral and Written Reports • More useful when: o Department is large o Spread over more than one location o Operates on more than one shift • Most effective when reports are clear, complete, concise, correct, substantiated with data, and presented in both oral and written forms • Exception Principle • Concept that supervisors should concentrate their investigations on activities that deviate substantially from standards • Spot Checks • May be used if employee work routine does not lend itself to reports • Sampling Techniques • Evaluates some number of items from a larger group to determine whether the group meets acceptable quality standards o SQC (Statistical quality control) - method to determine not only which items or services to inspect but also how many to inspect

o Supervising within the Budget

• Supervisors must manage their departments within budget limits and refer to their budgets to monitor their expenditures during operating period • If expenditures exceed budgeted amount, the supervisor must find out why • Budget should not be so detailed and rigid that it becomes a burden

Budget

- a financial plan that projects expected revenues and expenditures during a set period

• Incremental budgeting

- a technique for projecting revenues and expense based on history

• Zero-based budgeting

- process of assessing, on a benefit-and-cost basis, to justify their existence

• Disadvantages

a lot of paper work and time consuming

• Five Characteristics of Effective Controls

o Understandable • Understandable by all who use them o Timely • Indicates deviations from standards without delay o Suitable and Economical • Appropriate magnitude for what is controlling o Indicational • Indicates where deviations occur and who is responsible o Flexible • Flexible enough to permit changes related to unanticipated problems

• Advantages -

reassess the needs and avoid waste from previous years