IE 001

Engineering
Management
Controlling
WHERE WHERE
ARE WE WE WANT
NOW TO GO
(VISION)

- PLANNING
- ORGANIZING
- LEADING
- CONTROLLING
CONTROLLING
INTENDED LEARNING OUTCOMES:
1. Explain the nature and importance of control.
2. Describe the three (3) steps in the control
process.
3. Explain how organizational performance is
measured.
4. Describe the tools use to measure organizational
performance.
5. Discuss contemporary issues in control.
CONTROLLING
What is Controlling?
- the process of monitoring, comparing, and
correcting work performance.

The Purpose of Control:

- To ensure that activities are completed in ways
that lead to the accomplishment of organizational
goals.
CONTROLLING
Why is Control Important?
1. Planning
● Controls let managers know whether their
goals and plans are on target and what
future actions to take.
2. Empowering Employees
● Control systems provide managers with
information and feedback on employee
performance.
3. Protecting the Workplace
● Controls enhance physical security and help
minimize workplace disruptions.
CONTROLLING
Planning – Controlling Link:
CONTROL PROCESS
What is the Control Process?
- is a three-step process of measuring actual
performance, comparing actual performance
against a standard, and taking managerial action
to correct deviations or inadequate standards.
CONTROL PROCESS
The Control Process:
CONTROL PROCESS
Measuring: HOW and WHAT We
Measure:
CONTROL PROCESS
Sources of Information for Measuring
Performance:
CONTROL PROCESS
Comparing Actual Performance Against
the Standard:
- Determining the degree of variation between
actual performance and the standard
- Range of variation is the acceptable
parameters of variance between actual
performance and the standard.
CONTROL PROCESS
Acceptable Range of Variation:
CONTROL PROCESS
Example: Comparing Actual Performance
Against Standard
CONTROL PROCESS
Taking Managerial Actions:
- Managers can take three (3) possible courses of
action namely:
a) Do nothing
b) Correct actual performance
🡪 Immediate corrective action - corrective
action that corrects problems at once in order 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.
CONTROL PROCESS
Taking Managerial Actions (con’t):
c) Revise the standard
🡪 Variance between the performance and
standard could be a result of unrealistic standard,
either too high or too low.
● Performance exceeds standards always,
standards might be too low or easy
● Performance always fall short of standards
always, standards might be too high
🡪 Caution should always be observed when
revising a standard downward.
CONTROL PROCESS
Managerial Decisions in the Control Process:
ROOT CAUSE ANALYSIS
1. FISHBONE DIAGRAM
2. TREE DIAGRAM
3. WHY ANALYSIS
ORGANIZATIONAL PERFORMANCE

What is Organizational Performance?

● Performance - the end result of an activity.
● Organizational performance - the accumulated
results of all the organization’s work activities.
ORGANIZATIONAL PERFORMANCE

Measures of Organizational
Performance:
1. Productivity - the amount of goods or services
produced divided by the inputs needed to
generate that output.
Productivity = Output / Input
2. Organizational effectiveness - a measure of how
appropriate organizational goals are and how
well those goals are being met.
ORGANIZATIONAL PERFORMANCE
Popular Industry & Company Rankings:
TYPES OF CONTROL
Types of Control:
1. Feedforward control - control that takes place
before a work activity is done, to prevent the
problem.
2. Concurrent control - control that takes place
while a work activity is in progress. The best
known concurrent control is “direct supervision”.
Management by walking around, another type of

concurrent control, is a term used to describe

when a manager is out in the work area
interacting directly with employees.
TYPES OF CONTROL
3. Feedback control - control that takes place after
a work activity is done. This is the most popular
type of control.
CONTROL TOOLS

I. Financial Control:
1. Liquidity ratios - measure an organization’s
ability to meet its current debt obligations.
2. Leverage ratios - examine the organization’s use
of debt to finance its assets and whether it’s able
to meet the interest payments on the debt.
3. Activity ratios - assess how efficiently a company
is using its assets.
4. Profitability ratios - measure how efficiently and
effectively the company is using its assets to
generate profits.
CONTROL TOOLS
Popular Financial Ratios:
CONTROL TOOLS
Popular Financial Ratios (con’t):
CONTROL TOOLS

II. The Balanced Scorecard

- a performance measurement tool that
examines more than just the financial
perspective.
- measures a company’s performance in four
areas:
Financial
Customer
Internal processes
People/innovation/growth assets
CONTROL TOOLS

III. Information Controls

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

IV. Benchmarking
- the search for the best practices among
competitors or non-competitors that lead to their
superior performance.
Benchmark - the standard of excellence to
measure and compare against.
CONTROL TOOLS
Suggestions for Internal Benchmarking:
CONTEMPORARY ISSUES IN CONTROL

I. Adjusting controls for cross-cultural

differences
- The concept of control for companies may
vary as affected by:
🡪 distance
🡪 technology
🡪 the country’s laws and regulations
🡪 comparability
CONTEMPORARY ISSUES IN CONTROL
II. Workplace concerns
- Today’s workplaces present considerable
control challenges for managers.
a) Workplace Privacy
🡪 26% of companies have fired an employee for
e-mail misuse
🡪 26% have fired workers for Internet misuse
🡪 6% have fired employees for inappropriate cell
phone use
🡪 4% have fired employees for instant messaging
misuse
🡪 3% have fired someone for inappropriate text
messaging
CONTEMPORARY ISSUES IN CONTROL
b) Employee theft
- is defined as any unauthorized taking of
company property by employees for their personal
use.
- 85% of all organizational theft and fraud is
committed by employees.
- employees steal because:
🡪 the opportunity presents itself through lax controls
and favorable circumstances
🡪 people have financial-based pressures or vice pressures
🡪 they can rationalize whatever they’re doing as being
correct and appropriate behavior
CONTEMPORARY ISSUES IN CONTROL
Controlling Employee Theft:
CONTEMPORARY ISSUES IN CONTROL
III. Workplace violence
🡪 2 million American workers are victims of
some form of workplace violence each year
🡪 each week, 1 employee is killed and 25 are
seriously injured in violent assault by
current or previous coworkers
🡪 58% of firms in the US reported to the
Department of Labor that their managers
received verbal threats from workers
CONTEMPORARY ISSUES IN CONTROL
Primary Contributors to Workplace Violence:
1. Employee work driven by TNC (time, numbers and crises).
2. Rapid and unpredictable change where instability and
uncertainty plague employees.
3. Destructive communication style where managers
communicate in an excessively aggressive, condescending,
explosive, or passive-aggressive styles; excessive
workplace teasing or scapegoating.
4. Authoritarian leadership with a rigid, militaristic mind-set
of managers versus employees; employees aren’t allowed
to challenge ideas, participate in decision making, or
engage in team-building efforts.
5. Defensive attitude where little or no performance feedback
is given; only numbers count; and yelling, intimidation, or
avoidance is the preferred way of handling conflict.
CONTEMPORARY ISSUES IN CONTROL
Primary Contributors to Workplace Violence (con’t):
6. Double standards in terms of policies, procedures, and
training opportunities for managers and employees.
7. Unresolved grievances because the organization provides
no mechanisms or only adversarial ones for resolving
them; dysfunctional individuals may be protected or
ignored because of long-standing rules, union contract
provisions, or reluctance to take care of problems.
8. Emotionally troubled employees and no attempt by
managers to get help for these people.
9. Repetitive, boring work with no chance for doing
something else or for new people coming in.
10. Faulty or unsafe equipment or deficient training, which
keeps employees from being able to work efficiently or
effectively.
CONTEMPORARY ISSUES IN CONTROL
Primary Contributors to Workplace Violence (con’t):
11. Hazardous work environment in terms of temperature, air
quality, repetitive motions, overcrowded spaces, noise
levels, excessive overtime, and so forth.
12. Culture of violence that has a history of individual violence
or abuse; violent or explosive role models; or tolerance of
on-the-job alcohol or drug abuse.
CONTEMPORARY ISSUES IN CONTROL
Controlling Workplace Violence:
CONTEMPORARY ISSUES IN CONTROL
IV. Controlling customer interactions:
1. Service profit chain is the service sequence from
employees to customers to profit.
- the company’s strategy and service delivery system
influence how employees deal with customers
(service productivity & quality); influences customer
perceptions of service value which leads to customer
satisfaction and loyalty.
- work environment should enable employees to
deliver high levels of quality service and make them
feel they’re capable of delivering top-quality
service.
CONTEMPORARY ISSUES IN CONTROL
2. Corporate governance - the system used to
govern a corporation so that the interests of
corporate owners are protected.
- The Board of Directors of a company is a
group independent from management,
looking out for the interests of shareholders, who
were not involved in the day-to-day management
of the organization.
- Sarbanes-Oxley Act called for more disclosure
and transparency of corporate financial
information. Senior managers in the US are now
required to certify their companies’ financial
results.
Assignment:
This will be used for your groupwork next meeting:
a) Watch the movie “Deepwater Horizon” released
in 2016 or
b) Research in the internet the case of British
Petroleum Deepwater Horizon Oil Spill.