Management: Fourteenth Edition

Management
Fourteenth Edition
Chapter 18
Monitoring and Controlling
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
What Is Controlling and Why Is It
Important?
• Controlling: management function that involves
monitoring, comparing, and correcting work
performance
Why Is Control So Important?
• Planning
• Empowering employees
• Protecting the workplace
Exhibit 18-1
Planning-Controlling Link
Exhibit 18-1 shows shows how controlling provides a critical link back to planning.
The Control Process
• Control process: a three-step process of
measuring actual performance, comparing actual
performance against a standard, and taking
managerial action to correct deviations or
inadequate standards
Exhibit 18-2
The Control Process
Exhibit 18-2 illustrates the three-step control process.

Step 1: Measuring Actual Performance
• How we measure
• What we measure
Step 2: Comparing Actual Performance
Against the Standard
• Range of variation: the acceptable parameters of
variance between actual performance and the
standard
Exhibit 18-4
Acceptable Range of Variation
Exhibit 18-4 illustrates the acceptable range of variation.

Step 3: Taking Managerial Action
• Correct actual performance
– Immediate corrective action: corrective
action that corrects problems at once to get
performance back on track
– Basic corrective action: corrective action that
looks at how and why performance deviated
before correcting the source of deviation
Revise the Standard
• If performance consistently exceeds the goal, then
a manager should look at whether the goal is too
easy and needs to be raised.
• Managers must be cautious about revising a
standard downward.
Managerial Decisions in Controlling
• Depending on the results, a manager’s decision is
to do nothing, correct the performance, or revise
the standard.
Exhibit 18-6
Managerial Decisions in the Control Process
Exhibit 18-6 summarizes the decisions a manager makes in controlling

What is Organizational Performance?
• Performance: the end result of an activity
• Organizational performance: the accumulated
results of all the organization’s work activities
Measures of Organizational Performance
• Productivity: the amount of goods or services
produced divided by the inputs needed to
generate that output
• Organizational effectiveness: a measure of how
appropriate organizational goals are and how well
those goals are being met
Controlling for Employee Performance
• Disciplinary action: actions taken by a manager
to enforce the organization’s work standards and
regulations
• Progressive disciplinary action: an approach to
ensure that the minimum penalty appropriate to
the offense is imposed
Feedforward/Concurrent/Feedback
Controls
• Feedforward control: control that takes place
before a work activity is done
• Concurrent control: control that takes place
while a work activity is in progress
• Management by walking around: a term used to
describe when a manager is out in the work area
interacting directly with employees
• Feedback control: control that takes place after a
work activity is done
Exhibit 18-9
Types of Control
Exhibit 18-9 shows the three kinds of control

Financial Controls
• Traditional controls
– Ratio analysis:
 Liquidity
 Leverage
 Activity
 Profitability
– Budget analysis:
 Quantitative standards
 Deviations
Information Controls
• Management information system (MIS): a
system used to provide management with needed
information on a regular basis
• Data versus information
Balanced Scorecard and Benchmarking
• Balanced scorecard: a performance
measurement tool that looks at more than just the
financial perspective
• Benchmark: the standard of excellence against
which to measure and compare
• Benchmarking: a performance measurement tool
that looks at more than just the financial
perspective
Adjusting Controls for Cross-Cultural
Differences and Global Turmoil
• Distance creates formalized controls, e.g. formal
reports
• Impact of technology
• Constraints due to local laws
• Comparability issues in data collection
• Be prepared for global turmoil and disasters
Workplace Privacy
• Employers can read your e-mail, tap your
telephone, monitor your work by computer, store
and review computer files.
• Reasons companies monitor:
– Productivity/Internet traffic
– Concerns about offensive/inappropriate
material
– Protecting company secrets
Employee Theft
• Employee theft: any unauthorized taking of
company property by employees for their personal
use
Controlling Customer Interactions
• Service profit chain: the service sequence from
employees to customers to profit
Corporate Governance
• Corporate governance: the system used to
govern a corporation so that the interests of
corporate owners are protected
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Management

Exhibit 18-2 illustrates the three-step control process.

Exhibit 18-4 illustrates the acceptable range of variation.

Exhibit 18-6 summarizes the decisions a manager makes in controlling

Exhibit 18-9 shows the three kinds of control

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