NATIONAL UNIVERSITY OF SCIENCE AND TECHNOLOGY

Department of Electronic Engineering

Engineering Management [TEE 3255]

5: Management Functions:
Controlling
 Lesson Outline
• Introduction
• Setting Performance Standards
• Benchmarking
• Measuring, Evaluating & Correcting Performance
• Means of Control
• Control of Management Time
• Control of Personnel
• Control of Business Relationships
• Control of Projects
• Control of Quality & Knowledge
• Conclusion
Introduction
Introduction

PLANNING
ORGANISING
(& DECISION MAKING)

CONTROLLING
Monitoring and
correcting ongoing LEADING
activities to facilitate goal
attainment
 Introduction

• Controlling refers to activities carried out by an

engineering manager to assess and regulate work
in progress, evaluate results for the purpose of
securing and maintaining maximum productivity,
and reduce and prevent unacceptable
performance.
 Introduction

• Engineering managers exercise control by

carrying out the specific tasks of:
• setting standards
• measuring performance
• evaluating performance (comparing)
• controlling performance (Corrective action)
• In addition, the manager also controls:
• time, personnel, business relationships, projects, and
company knowledge.
Setting Performance Standards
 Setting Performance Standards

• To set standards is to specify criteria by which

work and results are to be measured and
evaluated.
• Standards represent a yardstick for measuring
the performance of employees and units
 Setting Performance Standards

• Standards are typically established in the form of

how many (number of units), how good (quality,
acceptance), how well (user acceptance), and how
soon (timing), as imposed by the company
management, the customers or the marketplace.
 Setting Performance Standards

• Technical standards specify metrics related to

quality, quantity, mean time between failures
(MTBF), maintenance requirements etc.
• Historical standards are based primarily on past
records.
• Market standards are those related to sales,
competition, return on investment (ROI), earning
expectation by securities analysts, and other
factors.
 Setting Performance Standards

• Planning standards mostly relate to the strategic

and operational needs of the company. They
address topics such as objectives, programs,
schedules, budgets, and policies.
• Safety standards refer to the metrics related to
the safe operation of the company’s facilities.
Benchmarking
 Benchmarking

• Benchmarking is a method of defining

performance standards in relation to a set of
references (internal and external)

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 Benchmarking

1. Internal benchmarking - uses references within

the company to set performance standards
• However, it may create a false sense of corporate
well-being, as the resulting performance
standards, in the absence of an external
reference, may be deficient in the long run.
 Benchmarking

2. External benchmarking - uses references

external to the company to set performance
standards.
• Financial ratios
• Performance metrics
• Best practices
• Critical success factors
• Target (selling) pricing
• Balanced scorecard
 Benchmarking

• Benchmarking is useful, but it has certain

limitations.
• For example, some reference data may not be
available. This may cause the value of such
benchmarks to be less robust.
• Benchmarking metrics are mostly based on past
performance, and they can hardly predict the
future.
 Benchmarking

• Sample performance metrics:

• Financial: ROI (return on investment); Debt-to-equity ratio;
Number of units / employee; Number of units / hour; Sales /
employees; Profit / unit of production; Break-even volume.
• Nonfinancial: Average number of defects detected; Hours
lost due to unscheduled maintenance; Average energy
consumption / unit of production; Rate of absenteeism
• Product related: Number of material types used; Material
use in each component; Failure-mode effect analysis; Long-
term durability of product; Fraction of sales to repeat
customers; Company responsiveness to service requests
Measuring Performance
 Measuring Performance

• Performance measurement refers to the

recording and reporting of work done and the
outcome attained.
 Measuring Performance

• Managers take the following steps to measure

performance:
• Collect, store, analyze and record work being done
and results attained systematically (progress
reports, project reports, technical documents,
presentations, staff meeting minutes, personal
meeting notes, etc.)
• Compare performance against established standards
• Document results of measurement
 Measuring Performance

• Performance measurement may be carried out by

time study, work sampling, and performance
rating, among others for routine work, such as
that on factory floors.
Evaluating Performance
 Evaluating Performance

• To evaluate performance is to:

• Appraise work in progress or completed and provide
feedback by (1) Establishing limits of tolerance, (2)
Note variations - deviation within the tolerance
limits, and exceptions - deviation outside the
tolerance limits, (3) Provide recognition to good
performance (give credit timely)
• Focus on deviation tends to encourage self-
appraisal/control and foster initiative
 Evaluating Performance

• To exert some control over this potentially chaotic

situation, a few industrial companies are known to
have advised department managers to steer the
overall evaluation results toward a Gaussian-type
distribution, which places the majority of
employees in the “average” group and only about
5% and 15%, respectively, in the excellent and
above-average groups.
 Evaluating Performance

• Should the performance of an employee be rated

as poor or failure, his or her manager must
initiate action to correct such performance in a
timely manner.
Correcting Performance
 Correcting Performance

• Don’t Know - Lack

definition of performance
standards, lack of
feedback
• Can’t Do - Lack skills
and/or aptitude
• Don’t Care - Lack the
proper work attitude
 Correcting Performance

• To rectify and improve work being done and

results being obtained:
a) Employers should take short-term action (1) Correct
mistakes and focus on future development (2) Take
operation actions - get help from outside consultants,
hire temporary workers
b) Employers may consider long-term-oriented actions to
overcome deficiencies (3) Take management action –
improve training, improve work procedures and
policies, transfer employees and recommend dismissal
 Correcting Performance

• However, people also resent control, and

extensive control may lead to loss of motivation.
• Feedback must be focused on results and
outcome—not the person—and directed toward
the future, without upsetting employees or
harbouring punitive motives.
Means of Control
 Means of Control

• There are a number of tools available for

managers to exercise control, such as performing
personal inspections, reviewing current progress,
and defining any deviation from plans
Control of Management Time
 Control of Management Time

• Typical Time Wasters:

a) Absence of clear roles and responsibilities -
overlapping responsibilities
b) Poor self-discipline - No planning, lack of personal
drive to accomplish, confused priority,
procrastination
c) Lack of effective delegation - trying to do all by self
d) Poor communications - unprepared meetings,
policies, politics
Control of Personnel
 Control of Personnel

• Managerial control is exercised primarily for the

purposes of maximizing company productivity and
minimizing potential damages arising from an
ineffective use of company resources, as well as
problems related to ethics, laws, safety, and
health issues.
 Control of Personnel

• To manage creative people, or those who are able

to produce new and useful results, managers
need to set targets, monitor the employees
periodically, apply a low level of supervision, and
maintain a collaborative and creativity-inducing
work environment
 Control of Personnel
Low
Skills
Productivity

High
Skills

Amount of Supervision
Control of Business Relationships
 Control of Business Relationships

• As industrial markets become increasingly global,

business relationships (defined by whom the
company knows and how well) represent an
increasingly important competitive force in the
marketplace
 Control of Business Relationships

• They should take note of others’ professional

specialty areas and follow up with periodical
exchanges to nurture the relationships.
• Over time, such a network of professional
contacts may become a very powerful business
asset to managers and their employers
Control of Projects
 Control of Projects

• Project control focuses on several key issues;

Cost control, Schedule control, Critical path
activities, Collaboration, Technical and financial
feasibility, Conflict resolution
Control of Quality
 Control of Quality

• To achieve success in the marketplace, companies

must focus on the quality of products/ services
they offer. Thus, the planning and implementation
of quality control programs represents a major
corporate undertaking for all progressive
companies
 Control of Quality

• Many years ago, Deming (2000) promoted the

concept of product quality in the United States but
attracted few followers.
• He went to Japan and was enthusiastically
welcomed there. Since then, a number of quality
control practices have been created by the
Japanese, such as quality circles, Kaizen, Kanban,
just in time (JIT), Lean production, Taguchi,
Ishikawa, and the 5S campaign.
 Control of Quality

• Kanban means looking up to the board in order to

adjust to a constantly varying production
schedule.
• The 5S campaign includes (1) seiri— arrangement,
(2) seiton—tidying up, (3) seisou—cleaning, (4)
seiketsu—cleanliness, and (5) shukan—
customizing
 Control of Quality

• Kaizen begins and ends with people. An involved

leadership guides workers to strive for lower
cost, higher quality, and faster delivery of goods
and services to customers
 Control of Quality

• Foreign automakers manufacturing in the United

States make superior product quality than
indigenous companies.
• The better quality can only be attributed to
superior management practices, as there is no
difference in culture, language, or value systems
between American workers employed by General
Motors or Ford and those working in U.S. factories
for Toyota, Nissan etc.
 Control of Quality

• Another case in point is the implementation of the

quality program. Ford Motors Company is credited
for having spearheaded the well-known failure
mode and effect analysis (FMEA) method in the
U.S. automotive industry around 1977
 Control of Quality

• Applying FMEA systematically should lead to a

continuous reduction of the effects of failure
modes in product design, product manufacturing,
service, and other engineering or business
applications.
 Control of Quality

• This drives home the point that having knowledge

about quality is useful, but implementing quality
control steps represents the key step in achieving
quality performance.
• Successful implementation requires management
commitment and worker dedication.
 Control of Quality

• Like Kaizen and FMEA, TQM is also a very

powerful program addressing the issues related
to product quality and organizational productivity.
• TQM covers the concepts of customer satisfaction,
empowerment of employees in problem solving,
continuous improvement, and management
excellence.
• To achieve TQM success, worker dedication and
management commitment are also required.
Control of Knowledge
 Control of Knowledge

• Knowledge refers to the sum total of corporate

intellectual property, which is composed of
patents, proprietary know-how, technical
expertise, design procedures, empirical problem-
solving heuristics, process operational insights
etc.
 Control of Knowledge

• Managers are generally responsible for

developing, preserving, safeguarding, and
applying corporate engineering and technology
knowledge.
• They also need to develop policies to facilitate the
control of such knowledge.
 Control of Knowledge

• Knowledge management strategies:

1. Experimentation - Put systems and processes in place to
facilitate the search for and testing of new knowledge.
2. Benchmarking - Learn from one’s own experience, and best
practices of others in industry, by reflection and analysis.
3. Preserve knowledge - Set policies concerning the
preparation of reports, design procedures, and data books.
4. Dissemination of knowledge - Rotate experts to different
locations or jobs so that knowledge may be shared with and
learned by others. Make knowledge or data available
electronically companywide.
 Control of Knowledge

• Difficulties in knowledge management:

• Many knowledge chunks are dispersed throughout
various documents within the company.
• Most domain experts do not like to share their
knowledge with others, rendering the use of
knowledge acquisition tools somewhat ineffective.
Conclusion
 Conclusion

• Control focuses mostly on the administrative and

operational aspects of the work.
• Exercising the right level of control is of critical
importance, dependent on the people, the nature
of the project, its urgency and impact, and the
risks entailed.
 Conclusion

• Set standards using external benchmarking to

avoid losing competitiveness.
• Delegation without proper control will likely
result in a waste of company resources e.g. time,
manpower, know-how, and management
attention.
 Activity / Class Discussion

• You have just been employed as the manager of a

local manufacturing firm. You are reviewing the
management tasks ahead and aware that they
belong to one of the four major management
functions.
• Identify the management functions performed in
the activities listed in the next slide.
 Activity / Class Discussion
ACTIVITY PLANNING ORGANISING LEADING CONTROLLING
Decide whether to open a branch.
Assign job duties
Check register slips to ensure proper prices
are being charged to customer
Consider the use of technology to save costs
Decide what new products to offer
Monitor that shop opens and closes as
scheduled
Set target time to complete customer’s order
Check whether the budgeted profit is
achieved for the year
Explain the work plan with staff and the
expectations on them
 Activity / Class Discussion
ACTIVITY PLANNING ORGANISING LEADING CONTROLLING
Decide whether to open a branch. 
Assign job duties 
Check register slips to ensure proper prices 
are being charged to customer
Consider the use of technology to save costs 
Decide what new products to offer 
Monitor that shop opens and closes as 
scheduled
Set target time to complete customer’s order 
Check whether the budgeted profit is 
achieved for the year
Explain the work plan with staff and the 
expectations on them
End of Management Functions:
Controlling