Ch08 5549KB Sep 11 2008 09:45:12 AM

PowerPoint Presentation
to Accompany Chapter 8 of
Management Fundamentals
Canadian Edition
Schermerhorn  Wright
Prepared by: Michael K. McCuddy
Adapted by: Lynda Anstett & Lorie Guest
Published by: John Wiley & Sons Canada, Ltd.
Planning Ahead — Chapter 8 Study Questions
 How do managers plan?
 What types of plans do managers use?
 What are the useful planning tools and
techniques?
 What is the control process?
 What are the common organizational
controls?
Management Fundamentals - Chapter 8
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Study Question 1: How do managers plan?
 Planning
– The process of setting objectives and determining how
to best accomplish them.
 Objectives
– Identify the specific results or desired outcomes that
one intends to achieve.
 Plan
– A statement of action steps to be taken in order to
accomplish the objectives.
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Study Question 1: How do managers plan?
 Steps in the planning process:
– Define your objectives.
– Determine where you stand vis-à-vis objectives.
– Develop premises regarding future conditions.
– Analyze and choose among action alternatives.
– Implement the plan and evaluate results.
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Figure 8.1 The roles of planning and
controlling in the management process.
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Study Question 1: How do managers plan?
 Benefits of planning:
– Improves focus and flexibility.
– Improves action orientation.
– Improves coordination.
– Improves time management.
– Improves control.
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Figure 8.2 A sample means-ends chain for
total quality management.
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Study Question 2: What types of plans do
managers use?
 Short-range and long-range plans
– Short-range plans = 1 year or less
– Intermediate-range plans = 1 to 2 years
– Long-range plans = 3 or more years
 People vary in their capability to deal
effectively with different time horizons.
 Higher management levels focus on longer
time horizons.
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Study Question 2: What types of plans do
managers use?
 Strategic and operational plans
– Strategic plans — set broad, comprehensive, and
longer-term action directions for the entire
organization.
– Operational plans — define what needs to be done in
specific areas to implement strategic plans.
•
•
•
•
•
Production plans
Financial plans
Facilities plans
Marketing plans
Human resource plans
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Study Question 2: What types of plans do
managers use?
 Policies and procedures
– Standing plans
• Policies and procedures that are designed for
repeated use.
– Policy
• Broad guidelines for making decisions and taking
action in specific circumstances.
– Rules or procedures
• Plans that describe exactly what actions are to be
taken in specific situations.
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Study Question 2: What types of plans do
managers use?
 Budgets and project schedules
– Single-use plans
• Only used once to meet the needs and objectives of a well-
defined situation in a timely manner.
– Budgets
• Single-use plans that commit resources to activities, projects,
or programs.
• Fixed, flexible, and zero-based budgets.
– Projects
• One-time activities that have clear beginning and end points.
• Project management and project schedules.
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Study Question 3: What are the useful
planning tools and techniques?
 Forecasting
– Making assumptions about what will happen in the
future.
– Qualitative forecasting uses expert opinions.
– Quantitative forecasting uses mathematical and
statistical analysis.
– All forecasts rely on human judgment.
– Planning involves deciding on how to deal with the
implications of a forecast.
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Study Question 3: What are the useful
planning tools and techniques?
 Contingency planning
– Identifying alternative courses of action that
can be implemented to meet the needs of
changing circumstances.
– Contingency plans anticipate changing
conditions.
– Contingency plans contain trigger points.
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Study Question 3: What are the useful
planning tools and techniques?
 Scenario planning
– A long-term version of contingency planning.
– Identifying alternative future scenarios.
– Plans made for each future scenario.
– Increases organization’s flexibility and
preparation for future shocks.
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Study Question 3: What are the useful
planning tools and techniques?
 Benchmarking
– Use of external comparisons to better evaluate
current performance and identify possible
actions for the future.
– Adopting best practices of other organizations
that achieve superior performance.
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Study Question 3: What are the useful
planning tools and techniques?
 Use of staff planners
– Coordinating the planning function for the total
organization or one of its major components.
– Possible communication gaps between staff
planners and line management.
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Study Question 3: What are the useful
planning tools and techniques?
 Participation and involvement
– Participatory planning requires that the planning
process include people who will be affected by the
plans and/or will help implement them.
– Benefits of participation and involvement:
• Promotes creativity in planning.
• Increases available information.
• Fosters understanding, acceptance, and commitment to the
final plan.
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Figure 8.3 How participation and
involvement help build commitments to plans.
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Study Question 4: What is the
control process?
 Controlling
– The process of measuring performance and taking
action to ensure desired results.
– Has a positive and necessary role in the management
process.
– Ensures that the right things happen, in the right way, at
the right time.
– Organizational learning and after-action review.
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Study Question 4: What is the
control process?
 Steps in the control process:
– Step 1 — establish objectives and standards.
– Step 2 — measure actual performance.
– Step 3 — compare results with objectives and
standards.
– Step 4 — take corrective action as needed.
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Figure 8.4 Four steps in the control
process.
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Study Question 4: What is the
control process?
 Step 1 — establishing objectives and
standards
– Output standards
• Measure performance results in terms of quantity,
quality, cost, or time.
– Input standards
• Measure effort in terms of amount of work
expended in task performance.
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Study Question 4: What is the
control process?
 Step 2 — measuring actual performance
– Goal is accurate measurement of actual
performance results and/or performance efforts.
– Must identify significant differences between
actual results and original plan.
– Effective control requires measurement.
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Study Question 4: What is the
control process?
 Step 3 — comparing results with objectives
and standards
– Need for action reflects the difference between
desired performance and actual performance
– Comparison methods:
• Historical comparison
• Relative comparison
• Engineering comparison
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Study Question 4: What is the
control process?
 Step 4 — taking corrective action
– Taking action when a discrepancy exists
between desired and actual performance.
– Management by exception
• Giving attention to situations showing the greatest
need for action.
• Types of exceptions
– Problem situation
– Opportunity situation
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Study Question 4: What is the
control process?
 Feedforward controls …
– Employed before a work activity begins.
– Ensures that:
• Objectives are clear.
• Proper directions are established.
• Right resources are available.
– Focuses on quality of resources.
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Study Question 4: What is the
control process?
 Concurrent controls …
– Focus on what happens during work process.
– Monitor ongoing operations to make sure they
are being done according to plan.
– Can reduce waste in unacceptable finished
products or services.
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Study Question 4: What is the
control process?
 Feedback controls …
– Take place after work is completed.
– Focus on quality of end results.
– Provide useful information for improving future
operations.
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Figure 8.5 The role of feedforward,
concurrent, and feedback controls in
organizations.
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Study Question 4: What is the
control process?
 Internal and external control
– Internal control
• Allows motivated individuals and groups to exercise
self-discipline in fulfilling job expectations.
– External control
• Occurs through personal supervision and the use of
formal administrative systems.
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Study Question 5: What are the common
organizational controls?
 Management by Objectives (MBO)
– A structured process of regular communication.
– Supervisor/team leader and workers jointly set
performance objectives.
– Supervisor/team leader and workers jointly
review results.
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Figure 8.6 Management by objectives as
an integrated planning and control framework.
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Study Question 5: What are the common
organizational controls?
 MBO involves a formal agreement specifying …
– Workers’ performance objectives for a specific time
period.
– Plans through which performance objectives will be
accomplished.
– Standards for measuring accomplishment of
performance objectives .
– Procedures for reviewing performance results.
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Study Question 5: What are the common
organizational controls?
 The MBO process:
– Supervisor and workers jointly set objectives,
establish standards, and choose actions.
– Workers act individually to perform tasks;
supervisors act individually to provide
necessary support.
– Supervisor and workers jointly review results,
discuss implications, and renew the MBO
cycle.
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Study Question 5: What are the common
organizational controls?
 Types of MBO performance objectives
– Improvement
– Personal development
– Maintenance
 Criteria for effective performance objectives
– Specific
– Time defined
– Challenging
– Measurable
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Study Question 5: What are the common
organizational controls?
 Pitfalls to avoid in using MBO
– Tying MBO to pay.
– Focusing too much attention on easily
quantifiable objectives.
– Requiring excessive paperwork.
– Having managers tell workers their objectives.
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Study Question 5: What are the common
organizational controls?
 Advantages of MBO
– Focuses workers on most important tasks and
objectives.
– Focuses supervisor’s efforts on important areas
of support.
– Contributes to relationship building.
– Gives workers a structured opportunity to
participate in decision making.
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Study Question 5: What are the common
organizational controls?
 Employee discipline systems
– Discipline is the act of influencing behavior
through reprimand.
– Discipline that is applied fairly, consistently,
and systematically provides useful control.
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Study Question 5: What are the common
organizational controls?
 To be effective, reprimands should …
– Be immediate.
– Be directed toward actions, not personality.
– Be consistently applied.
– Be informative.
– Occur in a supportive setting.
– Support realistic rules.
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Study Question 5: What are the common
organizational controls?
 Employee discipline systems
– Progressive discipline ties reprimands to the
severity and frequency of the employee’s
infractions.
– Progressive discipline seeks to achieve
compliance with the least extreme reprimand
possible.
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Study Question 5: What are the common
organizational controls?
 Important financial aspects of organizational
performance …
– Liquidity
• The ability to generate cash to pay bills.
– Leverage
• The ability to earn more in returns than the cost of debt.
– Asset management
• The ability to use resources efficiently and operate at minimum
cost.
– Profitability
• The ability to earn revenues greater than costs.
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Study Question 5: What are the common
organizational controls?
 Break-even analysis …
– Determination of the point at which sales
revenues are sufficient to cover costs.
– Break-Even Point = Fixed Costs / (Price –
Variable Costs)
– Used in evaluating:
• New products
• New program initiatives
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Figure 8.7 Graphical approach to breakeven analysis.
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Study Question 5: What are the common
organizational controls?
 Purchasing control …
– A productivity tool
– Trends in purchasing control:
• Leveraging buying power
• Committing to a small number of suppliers
• Working together in supplier-purchaser partnerships
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Study Question 5: What are the common
organizational controls?
 Inventory control
– Goal is to ensure that inventory is just the right
size to meet performance needs, thus
minimizing the cost.
– Methods of inventory control:
• Economic order quantity
• Just-in-time scheduling
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Study Question 5: What are the common
organizational controls?
 Statistical quality control
– Quality control involves checking processes,
materials, products, and services to ensure that
they meet high standards.
– Statistical quality control involves:
• Taking samples of work.
• Measuring quality in the samples.
• Determining the acceptability of results.
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