MGMT CH 11

planning and organizing

•managers develop organizational strategy and create the structure to use resources most effectively to create value for customers and other stakeholders

controlling

managers monitor and evaluate whether strategy and structure are working as intended, how they could be improved, and how they might be changed if they are not working

steps in control process

1\.Establishing standards for performance



2\.Measuring performance



3\.Comparing actual performance with expected performance



4\.Correcting deviations if necessary

Establishing standards for performance

• criteria against which results are measured

• output standards: productivity, profitability, market share

• behavioural standards: customer responsiveness, absenteeism, punctuality

Measuring performance

• actual rate of productivity?

• determine ROI

• measure market share

• monitor customer complaints, rates of absenteeism, and punctuality

compare actual performance with expected performance

• is performance higher than expected?

• is performance as expected?

• is performance lower than expected?

• evaluate the reasons for variances between the standard and actual performance

correct deviations

• corrective actions can focus on root of the problem when there is significant gap between actual and expected outputs/behaviours

• managers must determine the cause

  • performance problems may occur because standard too high

  • need to change the way in which resources are being used

  • lack of training

  • org needs restructuring

types of standards

• output standards

• operating costs

• behavioural standards

output standards

refer to quantity of the service or product the employee is to produce

* may include operating costs, inventory levels, market share, ROI

operating costs

measure the efficiency of production by monitoring and evaluating the actual costs associated with producing goods and services

behavioural standards

refer to quality of employees actions

* hours worked, dress code

operations management

process of managing the use of materials and other resources to produce goods and services

production system

system used to acquire inputs, convert inputs into outputs, and dispose of the outputs

5 Ps of org operations

• people

• plants

• parts

• processes

• planning and control systems

control systems

formal target setting, monitoring, evaluation, feedback systems that provide managers with info about org

3 effective control systems characteristics

• flecible so managers can respond to unexpected events

• provide accurate info about org performance

• provide info in timely manner

improving responsiveness

• managers must correctly identify customers and promote org strat that respond to their needs

• managers try to design production systems that produce the outputs that have the attributes customers desire

• ex: shift to online shopping due to COVID

impact of increased quality on org performance

leads to:

• increased reliability

  • higher prices

• increased productivity

  • lower costs

= higher profits

increasing efficiency

• total factor productivity

• partial productivity

total factor productivity

* how well an org utilizes all of its resources
* labour, capital, materials, energy

partial productivity

* specifics measures of efficiency that measures the efficiency of an individual unit

total factor productivity

outputs / all inputs

labour productivitu

outputs / direct labour

facility layout

* influences efficiency by way managers decide to lay out or design an org physical work facilities
* important because
* way in which machines and workers grouped together affects the efficiency of the production system
* major determinant of efficiency is the cost associated with setting up the equipment needed to make a particular product

product layout

• machiens organized so each operation eeded to manufacture a product is performed at workstations arranged in fixed sequence

• ex: car assembly lines

process layout

• each workstation relatively self contained, and a product goes to whichever workstation is needed to perform the next operation to complete the product

• ex: custom made products

fixed position layout

• the product stays in fixed position

• component parts are produced in remote workstations and brought to the production area for final assembly

• ex: airplanes

inventory

* stock of raw materials, inputs, and component parts that an org has on hand at particular time

just in time inventory system

• parts or supplies arrive at the org when they are needed, not before

• leaves org without buffer stock of inventory needed if shortage

• inventory can be expensive to store

• sufficient inventory helps respond to increased customer demand

3 systems of control

• feedforward control

• concurrent control

• feedback control

feedforward control

* anticipate and deal with potential problems before they occur

concurrent control

* immediate feedback on how efficiently inputs are being transformed into outputs

feedback control

* info about customers reactions so corrective action can be taken if necessary

output control

* main mechanisms managers use to assess output or performance
* financial measures
* organizational goals
* operating budgets

financial measures of performance

* financial measures of performance are objective and allow comparison to other firms
* profit ratios
* liquidity ratios
* leverage ratios
* activity ratios

organizational goals

• once an org sets overall goals, they establish performance standards

  • specify divisional and functional managers the level at which their unit must perform for orgs to reach overall goals

  • managers evaluate how well performance matches up to goals set and determine if adjustments are needed

• provide framework for what is evaluated and assessed

operating budgets

* blueprint of how managers intend to use org resources to achieve org goals efficiently
* objective financial measures
* performance standards derived from goals
* appropriate operating budgets

pitfalls of output control

• extremely difficult goals may not motivate

• unachievable goals can lead to unethical behaviour

• inappropriate goals can lead to short term emphasis

• may not be responsive enough if conditions change

behavioural controls

* mechanisms that managers can use to keep employee behaviour on track and make org structures work as they are designed to work
* ex:
* corporate governance
* direct supervision
* management by objectives
* bureaucratic rules and standard operating procedures
* clan control

corporate governance and control

• processes companies use to be accountable to stakeholders, investors, employees, the environment, and communities

• include levels of executive pay, how they conduct audits, internal control systems, and shareholder rights

• transparent corp gov and sustainability strat

  • help create comp advantage

  • shareholders demand triple bottom line returns (economic, environmental, social impact)

direct supervision

• managers actively monitor and observe behaviours of their subordinates

• problems with direct supervision

  • very expensive

  • can be demotivating to subordinates

  • sometimes not feasible

management by objectives

• provide framework within which to evaluate subordinates for their ability to achieve specific goals

• allow managers to monitor progress toward achieving goals

• reviews are held periodically looking at progress toward goals

bureaucratic roles and SOPs

• system of rules and standard operating prosedures (SOPs) that standardize the behaviour of divisions, functions and individuals

• SOPs

  • written instructions describing the exact series of actions that should be followed in a specific situation

  • rules and policies that standardize behaviours

  • discipline: administering punishment when undesired behaviours are exhibited

progressive discipline

• verbal reprimand

  • ex: occasional tardiness/absenteeism

• written reprimand

  • ex: booking off sick every friday

• discharge

  • theft

  • embezzlement

problems with bureaucratic control

• establishing rules easier than discarding them

  • increases red tape

• firm can become too standardized and not flexible - people stop thinking for themselves

  • incompatible with innovation

• best used for routine activities and programmed decisions

clan control

* shared norms and values of org members
* relies on strong org culture
* employees internalize org values and norms and let these guide their decisions and actions
* important for 2 reasons
* provide control where output and behavioural controls do not work
* strong culture and clan control helps employees focus on what is best for org in the long run

clan control and diversity

• values and norms embedded in the org culture may hinder diversity, equity, and inclusion goals

• inclusive cultures create opportunities for team building that are welcoming and respectful of differences

• managers must question assumptions that underpin clan control to dismantle systemic or unintended racism

• cultural norms upon which clan control relies must be inclusive of diversity

importance of control

• adapt to change and uncertainty

• discover irregularities and errors

• reduce costs, increase productivity, or add value

• detect opportunities

• deal with complexity

• decentralize decision making and facilitate teamwork

control and comp advantage

• control system: includes the measures to asses how efficiently the org is producing goods and services

• if any changes in production, measures tell managers how successful they have been

• without a control system managers have no idea how well their org is performing and how its performance can be improved