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Chapter 8 – Control, Planning, Organizing, Communication and Decision Making

Learning Objectives:
At the end of the chapter, you are expected to:
1. Recognize the importance of management functions in a hospitality industry.

CONTROL

Why is control so important? Control is important because it’s the final link in the
management functions. It’s the only way managers know whether organizational goals are
being met and, if not, why not. The figure below shows the relationship between controlling
and the other management functions.
Controlling is involved with planning, organizing, and leading. Goals give specific
direction to managers. Effective hospitality managers need to follow up constantly to ensure
that what others are supposed to do is being done and that goals are being met. Managers
need to develop an effective control system—one that can provide information and feedback
on employee performance. An effective control system is important because managers need
to delegate duties and empower employees to make decisions. But managers are
responsible for performance results, so they also need a feedback mechanism — which
control provides.
Given that management involves leading, planning, organizing, communicating,
motivating, and controlling, you might easily get the impression that maintaining control is
just something managers do after they are finished planning, organizing, and leading.
 For example, controlling always requires that some desirable outcomes, such as
targets, standards, or goals, be set. Similarly, much of what managers do when they have
their leadership hats on involves making sure that employees are doing and will do the
things they are supposed to do. However, the sort of self-motivation that derives from
empowering teams and putting them in charge is often the better alternative.
THE CONTROL PROCESS
The control process is a five-step process of determining goals, setting standards,
measuring actual performance, comparing actual performance against those standards, and
taking managerial action to correct deviations or inadequate performances. These
standards are the specific goals created during the planning process against which
performance progress can be measured.
SETTING STANDARDS
In the hospitality industry, setting standards generally means establishing the
levels of service, the quality of food and beverages offered, employee performance
levels, and return on investment. Standards are normally set in terms of quantity,
quality, finances, or time. A caterer has to determine the quantity or number of guests
to serve at a function. If the caterer purchases food for too many guests, then food
will be left over, but if he or she prepares for too few guests, then there will not be
enough food. When a chef purchases food items, they are controlled on arrival to
ensure that the right quality is being delivered. Budgets are used to control financial
expenditures, and time is used, for example, to control labor costs—a cook should
take only a certain number of minutes to prepare a batch of pasta and vegetables.
A word of caution: When developing a method of measurement, one must be
absolutely sure that the goals are indeed measurable. Suppose after careful
planning, with input from staff, all agree that labor costs are too high at 28 percent.
So the decision is made to reduce labor costs, and that becomes a stated goal—one
to which it is hard to object. At the end of the month, the kitchen still has a labor cost
of 28 percent, so it has not achieved the goal. During your discussion with the
personnel responsible, they claim that their plan to reduce labor costs will not be
effective until two months hence. You remind them that the goal was to reduce labor
costs, they agree that it was, and you point out that last month’s labor cost and this
month’s are the same. Who is correct here? The answer: neither. The goal of
reducing labor costs is inadequate and it is not measurable or attainable on your part.
The kitchen staff has put a plan into effect that they feel will reduce labor costs by the
end of the following month; they feel they are doing all that you asked. The dilemma
is that the goal lacks specificity. Had the goal been to decrease labor costs to 24
percent by the end of February, it would be measurable and attainable. Then we
could say to the kitchen staff that they hadn’t met the stated goal, but because we
didn’t quantify the goal, they are correct.
MEASURING
Managers must first know what they are measuring and how they are
measuring it before they can measure expected performance. Personal observation -
by monitoring subordinates to make sure things are done right—is the simplest and
most common way of comparing actual performance to standards. So, for example,
the chef can see whether the cook is cutting, slicing, and dicing correctly and whether
the right amount is being prepared according to the standardized recipe.
 Control information can be acquired through oral reports, conferences,
meetings, one-on-one conversations, or telephone calls. The advantage of oral
control reports is that they can be quick and allow instant feedback in the form of a
two-way conversation. A manager can inquire about the status of a function and get
immediate feedback from the banquet captain. In the often fast-paced hospitality
industry, oral control communication is often more effective than other forms of
communication.
Written reports are also used to measure performance. Like statistical reports,
these are slower yet more formal than personal observation or oral reports. Written
reports generally have more information than oral ones and are usually easy to file
and retrieve. General managers usually expect to see the “daily report,” which gives
details of the performance results from the day before, on their desks as they walk
into their offices. However, they also want a verbal report from any department they
may visit on the way to the office
COMPARING RESULTS
Comparing results with expectations shows the amount of variation between
actual performance and the standard or expected results. Some variation is generally
seen between the expected and the actual results—but how big is the variation? The
range of variation is the acceptable difference between the actual and expected
results.
Managers are concerned with the size and direction of the variance. Let’s
look at an example: If guest surveys show that one department is not performing up
to expectations, then management would make decisions to have the problem fixed.
But what if that didn’t work? Then more drastic action would be necessary.
Meanwhile, the survey scores would continue to drop. Management would quickly
find out in which direction and how fast the barometer of guest satisfaction was
moving.
TAKING MANAGERIAL ACTION
The final step in the control process is taking managerial action. Correcting
actual performance is used by managers if the source of the performance variation is
unsatisfactory. For instance, corrective action may include changing the way the job
tasks are done, changing strategy (doing different tasks), changing structure
(changing supervisors’/managers’ compensation practices), changing training
programs, redesigning jobs, or firing employees.
A manager who decides to correct actual performance then has to make
another decision: Does he or she use immediate corrective action, which corrects
problems at once to get performance back on track, or basic corrective action, which
looks at how and why performance has deviated and then proceeds to correct the
source of deviation? Many managers say they don’t have time to take corrective
action, yet they are the ones perpetually “putting out fires.”
Effective managers analyze deviations and, when the benefits justify it, take
the time to pinpoint and correct the causes of variance. This kind of control begins
with effective associate selection and training. Hiring the right person for the job and
ensuring that associates are properly trained increase the chance that associates
can be trusted to do the right thing.
 It is important to note the motivating influences of raises and promotions and
how they act as a form of control. Granting raises and awarding promotions based
solely on operating results criteria and desired behavior send an important message
to all associates. Those actions say that performance and behavior are being
monitored and are the basis for personnel decisions. In this way employee actions
are controlled.
TYPES OF CONTROL
Managers can use controls in advance of an activity (feedforward control), during the
activity (concurrent control), and after the activity has been completed (feedback control)

Feedforward Control

 Anticipates problems

Concurrent Control INPUT

 Corrects problems as
PROCESS
they occur
OUTPUT

Feedback Control
 Corrects problems
after they happen

The figure above shows the 3 types of control. Feedforward control focuses on
preventing anticipated problems because it takes place in advance of the work activity. For
example, by carefully explaining the policy on billing for catering functions, a catering
manager uses feedforward control to explain to the client that an accurate number of people
attending the function must be given in order for the correct space to be allocated for the
function. A follow-up number is to be given three months, one month, and two weeks before
the event, and final guaranteed numbers are required forty-eight hours before a function.
This is the number for which food is purchased, prepared, and charged accordingly. By
working closely with the client, the catering manager ensures that there are no surprises. In
the kitchen, recipes are an example of feedforward control; they prescribe the quantity of
each ingredient necessary to make a particular dish. Recipes also help with consistency by
making each dish look and taste the same. (That could be good or bad!) Without recipes, we
know the result is going to be a disaster. Feedforward controls are helpful in that they
encourage managers to prevent problems rather than react to them. The challenge is that
feedforward controls take more time to organize than the other types of control; however,
they save time in the long run.
Concurrent control is a type of control that takes place while a work activity is in
progress. When control is enacted while the work is being performed, management can
correct problems before they become too costly. The best form of concurrent control is direct
supervision, when a manager can concurrently monitor the actions of associates and correct
problems as they occur. Although some delay results between the activity and the
manager’s corrective response, the delay is minimal. For instance, you may have
experienced concurrent control when using word-processing software that alerts you to
misspelled words or incorrect grammar. In addition, many organizational quality programs
rely on concurrent controls to inform workers if their work output is of sufficient quality to
meet standards. Chefs use concurrent control when checking how a recipe is being
prepared; the cook can be guided on the correct consistency of a product.
Feedback control, the most popular type of control, takes place after the activity is
done. For example, financial statements are examples of feedback control. If, for instance,
the income statement shows that sales revenues are declining, the decline has already
occurred. The manager’s only option is try to determine why sales decreased and to correct
the situation. Feedback control is helpful in hospitality industry situations in which a number
of activities repeat themselves: Guests make reservations, are welcomed, checked in,
roomed, wined and dined, and so on, so resorts and hotels have developed several controls
that help measure and report on these activities. These controls include guest surveys,
comment cards, and outside checkers who stay at a property and give a detailed report to
management on their findings. Feedback control has two advantages over feedforward and
concurrent control. First, feedback provides managers with meaningful information on how
effective their planning efforts were. Feedback that indicates little variance between standard
and actual performance is evidence that the planning was generally on target. If the
deviation is significant, a manager can use the information when formulating new plans to
make them more effective. Second, feedback control can enhance employee motivation.
Associates generally want information on how well they have performed.
STRATEGIC PLANNING AND STRATEGIC MANAGEMENT
The two main categories of plans are strategic (long-term) plans and operational
(short-term) plans. Associated with strategic plans are business plans and feasibility studies,
which deal with the structure of the plan and provide the details necessary for obtaining
finance or other approvals for the operation.
Strategic planning creates the long-range plans that steer an organization toward
its goals in the accomplishment of its mission and vision. The strategic planning process
involves top management, who, in simple terms, identify where the organization is and
where it wants to go. There is a strong link between strategic planning and strategic
management. The planners figure out what to do, and management implements the plan.
Strategic management develops the mission, goals, and strategies of the
organization by identifying the business of the corporation today and the business it wants
for the future, and then by identifying the course of action it will pursue, given its strengths,
weaknesses, opportunities, and threats (internal and external environments). Strategic
management is a critical part of planning and the management process. There are three
main strategic management tasks: (1) developing a vision and mission statement, (2)
translating the mission into strategic goals, and (3) crafting a strategy (course of action) to
move the organization from where it is today to where it wants to be.
A strategy is the “how to” action necessary to accomplish goals and missions. In the
hospitality industry, for instance, there are six steps to strategic planning:
1. Create a vision
2. Find out what your guests want.
3. Do an environmental scan.
4. Identify critical issues
5. Formulate strategies for the future
6. Create your action plan and act on it
7. Monitor results
STRATEGIC PLANNING/MANAGEMENT PROCESS
Most of the strategic planning that takes place at the top management level is called
corporate-level strategy. The process starts with identifying the organization’s mission,
goals, and objectives. Then involves analyzing the organization’s environment and
resources and identifying its strengths, weaknesses, opportunities, and threats. The strategic
management process then entails the organization formulating strategies, implementing
them, and evaluating the results.
THE DECISION-MAKING PROCESS
All individuals in organizations, small or large, are faced with the task of decision
making. This can involve decisions as simple as where to have lunch or as complex as the
best place to locate a new franchise. A comprehensive, detailed decision-making process is
used to make a complex decision. However, the same model can also be used for simple
decisions.
The decision-making process consists of eight major steps
1. Identification and definition of problem
2. Identification of decision criteria
3. Allocation of weights to criteria.
4. Development of alternatives
5. Analysis of alternatives
6. Selection of alternative
7. Implementation of alternative
8. Evaluation of decision effectiveness

Identification and Definition of Problem: Let’s say that we are experiencing a

discrepancy between current and desired results. In this case, the decision-making
process begins with identifying and defining the problem(s). It is not always easy to
identify the problem because other issues may muddy the waters. In a hotel setting,
problem situations can be identified with respect to, say, guest check-in. In some of
the larger city-center, convention-oriented hotels, long lines of guests are frequently
waiting to check into the hotel. Defining this problem is best done by writing a
problem statement: “The problem is that it takes too long for guests to register.” Once
the problem has been accurately stated, it becomes easier to move to the next step
in the decision-making process.

Identification of Decision Criteria: Once the problem has been identified and
defined, we need to determine the criteria relevant to the decision. Suppose the
problem is that we are hungry; the decision criteria might then be the following:
1. What type of food would we prefer?
2. How much time do we have to eat?
3. How much do we want to spend?
4. How convenient is parking?
5. What is the restaurant’s reputation?
6. How is the food quality?
7. How is the service?
8. How is the atmosphere?

Allocation of Weights to Criteria: To decision makers, decision criteria all have

different levels of importance. For instance, is the expected cost of the meal more
important than the atmosphere? If so, a higher weight should be attached to that
criterion. One method used to weigh the criteria is to give the most important criterion
a weight of 10 and then score the others according to their relative importance. In the
meal example, the cost of the meal may receive a weight of 10, whereas the
atmosphere may be awarded a weight of 6.

Development of Alternatives: In developing alternatives, decision makers list the

viable alternatives that could resolve the problem. No attempt is made to evaluate
these alternatives—only to list them.

Analysis of Alternatives: The alternatives are analyzed using the criteria and
weights established in Steps 2 and 3.

Selection of Alternative: The sixth step is to select the best alternative. Once the
weighted scores for each alternative have been totaled, it will become obvious which
is the best alternative.

Implementation of Alternative: We next need to ensure that the alternative is

implemented so that the decision is put into action. Sometimes good decisions fail
because they are not put into action.

Evaluation of Decision Effectiveness: The final step in the decision loop is to

evaluate the effectiveness of the decision. As a result of the decision, did we achieve
the goals we set? If the decision was not effective, then we must find out why the
desired results were not attained. This would mean going back to Step 1. If the
decision was effective, then no action, other than recording the outcome, needs to be
taken.
 ACTIVITY 8

Answer the following questions:

1. Why is control important?

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2. What are the elements of the control process?

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