Controlling: Purpose and Process

MultiMedia by Stephen M. Peters © 2002 South-Western

Controlling: Purpose and Process

MultiMedia by Stephen M. Peters © 2002 South-Western

Six Sigma

• A process quality goal.• Highly disciplined process.• Helps companies focus on developing and

delivering near-perfect products and services.• Statistical goal: 3.4 defects per million transactions.

MultiMedia by Stephen M. Peters © 2002 South-Western

Controlling

The function in which managers set and communicate performance standards for people, processes, and devices.

Is about managing risks. A standard is any guideline or benchmark established

as the basis for the measurement of capacity, quantity, content, value, cost, quality, or performance.

MultiMedia by Stephen M. Peters © 2002 South-Western

Risk Managers

Monitor people and processes

Help transform functional managers into advisers and consultants

Teach others how to deal with the risks that haunt their areas of expertise

MultiMedia by Stephen M. Peters © 2002 South-Western

Bittel (1989)

“Controlling is the function that brings the management cycle full circle. It is the steering mechanism that links all the

preceding functions of organizing, staffing, and [leading] to the goals of planning.”

MultiMedia by Stephen M. Peters © 2002 South-Western

Control Process

MultiMedia by Stephen M. Peters © 2002 South-Western

Establishing Performance Standards

Use a quantitative or qualitative measuring device.

Designed to monitor people, money, capital goods, or processes.

Point 1

Point 2

MultiMedia by Stephen M. Peters © 2002 South-Western

The Nature of a StandardDepends On

• Who designs, works with, and receives the output from controls.

• What is being monitored.

• What is to be achieved through monitoring.

• Where monitoring efforts will take place (location and functional area).

• When controls will be used.

• What resources are available to expend on the controls.

MultiMedia by Stephen M. Peters © 2002 South-Western

Productivity

The amount of output achieved from the use of a given amount of inputs.

Can be measured qualitatively.

Can be measured quantitatively.

MultiMedia by Stephen M. Peters © 2002 South-Western

Quality

Is customer satisfaction.Begins with the standards and methods used to recruit, hire, train, evaluate, and reward employees.Must exist within every person and process.Must be a core value within an organization’s culture.

MultiMedia by Stephen M. Peters © 2002 South-Western

To Control Quality

Companies create standards and quality assurance (QA) systems.

A QA system focuses on constant incremental quality improvement [kaizen] measurements and results.

MultiMedia by Stephen M. Peters © 2002 South-Western

Measuring Performance

• Measure actual performance to determine variation from standard.

• Mechanisms for this purpose can be extremely sensitive.

• Computers are increasingly important as tools for measuring performance.

MultiMedia by Stephen M. Peters © 2002 South-Western

Comparing Measured Performanceto Established Standards

1. Compare actual performance to the

standards set for that purpose.

2. If deviations exist, the evaluator must decide if they are

significant.

4. The source of a deviation may lie

beyond the employee who first discovers it.

5. May require examining the

standards being applied and the accuracy of the

measurement and comparison processes.

3. The evaluator must determine what is

causing the variance.

MultiMedia by Stephen M. Peters © 2002 South-Western

Productivity and Quality-CenteredEnvironment of Today

• Workers and managers are often empowered to evaluate their own work for:– Quality

– Productivity

– Cost improvements

• Individuals and groups are being given the responsibility to control their behavior and operations.

MultiMedia by Stephen M. Peters © 2002 South-Western

Types of Controlsfor Restaurant Operations

MultiMedia by Stephen M. Peters © 2002 South-Western

Feedforward Controls

Focus on operations before they begin.

Sometimes called preliminary, screening, or prevention controls.

Intended to prevent defects and deviations from standards.

MultiMedia by Stephen M. Peters © 2002 South-Western

Concurrent Controls

Apply to processes as they are happening.

The most important concurrent control in any undertaking is often the skilled and experienced operator.

MultiMedia by Stephen M. Peters © 2002 South-Western

Feedback Controls

Focus on the results of operations.

After-the-fact, or postperformance, controls.

Information is fed back into the process or to the controller.

MultiMedia by Stephen M. Peters © 2002 South-Western

Control SystemsFeedforward, concurrent , and feedback controls should

be viewed as part of an overall control system.

Managers integrate suitable control combinations to enforce standards.

Ensure that resources are used effectively and efficiently.

Make sure elements function smoothly with one another.

MultiMedia by Stephen M. Peters © 2002 South-Western

Controls Focus on

Inputs Outputs

Processes

MultiMedia by Stephen M. Peters © 2002 South-Western

Critical Control Points• All the operations that directly affect the survival of

an organization.

• Should focus on:– Those points at which failures cannot be tolerated.

– Where time and money costs are greatest.

• The objective is to apply controls to the essential aspects of a business, not the peripheral ones.

MultiMedia by Stephen M. Peters © 2002 South-Western

Six Characteristics Of Effective Controls

Acceptability

Timelines Comprehensibility

Accuracy

Economic Feasibility

Integration

MultiMedia by Stephen M. Peters © 2002 South-Western

Controls are Effective as Long as They

Do what they are intended to do.

Do not generate opposition.

Do not result in costs greater than the

benefits they provide.

MultiMedia by Stephen M. Peters © 2002 South-Western

Controls are Designed to Deal With

Specific people

Processes

Circumstances

1.

2.

3.

MultiMedia by Stephen M. Peters © 2002 South-Western

Changes that RequireReexamination of Controls

Changes to Mission Structural Changes Changes in Decision Making Changes in Human Relations Technological Changes