ENGINEERING MANAGEMENT

EMGT101
Lecture 8
Controlling

Dr. J. Berlin P. Juanzon CE, MBA,MSCM

Advanced Organizer
Managing Engineering and Technology
Management Functions
Planning
Decision Making
Organizing
Leading
Controlling

Managing Technology

Personal Technology

Research

Time Management

Design

Ethics

Production

Career

Quality
Marketing
Project Management

Three Types of Control

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Types of Control
Feedforward Controls
Used to anticipate problems before they arise so
that problems do not occur later during the
conversion process
Giving stringent product specifications to
suppliers in advance
IT can be used to keep in contact with suppliers
and to monitor their progress

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Types of Control
Concurrent Controls
Give managers immediate feedback on how efficiently inputs are
being transformed into outputs
Allows managers to correct problems as they arise

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Types of Control
Feedback Controls
Used to provide information at the output stage
about customers reactions to goods and services
so that corrective action can be taken if
necessary

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Control Process Steps

Figure 11.2

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The Control Process

1. Establish standards of performance, goals,
or targets against which performance is to
be evaluated.
Managers at each organizational level need to
set their own standards.

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The Control Process

2. Measure actual performance
Managers can measure outputs resulting from
worker behavior or they can measure the
behavior themselves.

The more non-routine the task, the harder it is to

measure behavior or outputs

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The Control Process

3. Compare actual performance against chosen
standards of performance
Managers evaluate whether and to what extent
performance deviates from the standards of
performance
chosen in step 1

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The Control Process

4. Evaluate result and initiate corrective action if the
standard is not being achieved
If managers decide that the level of performance is
unacceptable, they must try to change the way work activities
are performed to solve the problem

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Three Organizational Control Systems

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Financial Controls
Traditional Controls
Ratio analysis
Liquidity
Leverage
Activity
Profitability
Budget Analysis
Quantitative standards
Deviations
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Financial Ratios
Objective

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Ratio

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Calculation

Meaning

Financial Ratios
Objective

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Ratio

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Calculation

Meaning

Financial Controls
Managing Earnings
Timing income and expenses to enhance current
financial results, which gives an unrealistic picture of the
organizations financial performance.
New laws and regulations require companies to clarify
their financial information.

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Balanced Scorecard
Is a measurement tool that uses goals set by managers in
four areas to measure a companys performance:
Financial
Customer
Internal processes
People/innovation/growth assets

Is intended to emphasize that all of these areas are

important to an organizations success and that there
should be a balance among them.
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Output Control
Organizational Goals
Each division within the firm is given specific
goals that must be met in order to attain overall
organizational goals.
Goals should be set appropriately so that managers
are motivated to accomplish them

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Organization-Wide Goal Setting

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Output Control
Operating Budgets
Blueprint that states how managers intend to use
organizational resources to achieve organizational
goals efficiently.

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Effective Output Control

1. Objective financial measures
2. Challenging goals and performance standards
3. Appropriate operating budgets

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Problems with Output Control

Managers must create output standards that
motivate at all levels
Should not cause managers to behave in
inappropriate ways to achieve organizational
goals

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Behavior Control
Direct supervision
managers who actively monitor and observe the
behavior of their subordinates
Teach subordinates appropriate behaviors
Intervene to take corrective action
Most immediate and potent form of behavioral
control
Can be an effective way of motivating employees

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Problems with Direct Supervision

Very expensive because a manager can personally manage
only a relatively small number of subordinates effectively
Can demotivate subordinates if they feel that they are under
such close scrutiny that they are not free to make their own
decisions

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Bureaucratic Control
Bureaucratic Control
Control through a system of rules and standard
operating procedures (SOPs) that shapes and
regulates the behavior of divisions, functions,
and individuals.

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Bureaucratic Control
Problems with Bureaucratic Control
Rules easier to make than than discarding them,
leading to bureaucratic red tape and slowing
organizational reaction times to problems.
Firms become too standardized and lose
flexibility to learn, to create new ideas, and solve
to new problems.

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Clan Control
Clan Control
The control exerted on individuals and groups in
an organization by shared values, norms,
standards of behavior, and expectations.

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Organization Change
Movement of an organization away from its
present state and toward some desired future
state to increase its efficiency and
effectiveness

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Organizational Change

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Lewins Force-Field Theory of Change

Lewins Force-Field Theory of Change

There are a wide variety of forces arising from the way an
organization operates, from its structure, culture, and
control systems that make organizations resistant to change

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Lewins Force-Field Theory of Change

To get an organization to change, managers must find a way
to increase the forces for change, reduce resistance to
change, or do both simultaneously

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Evolutionary and Revolutionary Change

Evolutionary change
gradual, incremental, and narrowly focused
constant attempt to improve, adapt, and adjust strategy and
structure incrementally to accommodate changes in the
environment

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Evolutionary and Revolutionary Change

Revolutionary change
Rapid, dramatic, and broadly focused
Involves a bold attempt to quickly find ways to be effective
Likely to result in a radical shift in ways of doing things, new
goals, and a new structure for the organization

Steps in the Organizational Change Process

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Implementing the Change

Top Down Change
A fast, revolutionary approach to change in which top managers
identify what needs to be changed and then move quickly to
implement the changes throughout the organization.

Implementing the Change

Bottom-up change
A gradual or evolutionary approach to change in which managers
at all levels work together to develop a detailed plan for change.

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Evaluating the Change

Benchmarking
The process of comparing one companys performance on
specific dimensions with the performance of other, highperforming organizations.

Information Controls
Purposes of Information Controls
As a tool to help managers control other organizational
activities.
Managers need the right information at the right time and in the right amount.

As an organizational area that managers need to control.

Managers must have comprehensive and secure controls in place to protect the
organizations important information.

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Information Controls
Management Information Systems (MIS)
A system used to provide management with needed information on a
regular basis.
Data: an unorganized collection of raw, unanalyzed facts (e.g., unsorted
list of customer names).
Information: data that has been analyzed and organized such that it has
value and relevance to managers.

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Workplace Concerns
Workplace privacy versus workplace monitoring
E-mail, telephone, computer, and Internet usage
Productivity, harassment, security, confidentiality, intellectual
property protection

Employee theft
The unauthorized taking of company property by employees for
their personal use.

Workplace violence
Anger, rage, and violence in the workplace is affecting employee
productivity.
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Controlling Employee Theft

Workplace Violence
Witnessed yelling or other verbal abuse

42%

Yelled at co-workers themselves

29%

Cried over work-related issues

23%

Seen someone purposely damage

machines or furniture

14%

Seen physical violence in the workplace

10%

Struck a co-worker
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2%

Controlling Workplace Violence

Customer Interactions
Service profit chain
Is the service sequence from employees to customers to profit.
Service capability affects service value which impacts on customer
satisfaction that, in turn, leads to customer loyalty in the form of repeat
business (profit).

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Corporate Governance
The system used to govern a corporation so that the
interests of the corporate owners are protected.
Changes in the role of boards of directors
Increased scrutiny of financial reporting (SarbanesOxley Act of 2002)
More disclosure and transparency of corporate
financial information
Certification of financial results by senior
management

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