BUSA 3720

BUSINESS FUNDAMENTALS
WEEK 10
OPERATIONS - CONTROL
‘
Control
Process & Methods
 What is
control?
A regulatory process of establishing
standards to
achieve organizational goals

The control
process:
• Establish clear standards of
performance
• Compare actual performance to
standards
• Take corrective action where
necessary
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What are
standards?
A basis of comparison for measuring the extent to
which various kinds of organizational performance is
satisfactory or unsatisfactory.

Establishing
standards:
• Good standards enable goal achievement
• Can be determined by customer
comments/feedback
• Are sometimes set by govt & regulatory
bodies

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Comparing Performance to Standards
Measures vary between industries
& roles

Standard Performance measurement

• Retail: Certain greetings, phrases, • ‘Mystery shopper’ may uncover these are
tone to be used in customer service not being followed or misused

• Contact Centre: Over 20 calls per • Phone system stats determine if

day with answer time < 15 numbers are achieved
seconds
• Business analysts can check statistics and
• Airline: Flight delays of over 30 determine causes for Corrective Action
minutes: < 10% of total

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 Taking
Corrective
Action
Identify performance deviations from standard;
analyze these and develop programs to correct

Proactive:
• Beta software (eg. Use and monitor for bugs)
• Pre-production testing (eg. Ensure product can
withstand extreme temperature/weather)

Reactive:
• Retraining of staff
• Changing of business process

Control Processes are Cybernetic – they are

continuously required to be used and kept up
to date to keep standards on track

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Cybernetic Control Process

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The Three Basic Control Methods

Feedforward • Before
Controls

Concurrent • During
Controls

Feedback • After
Controls

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 Control Isn’t Always Worthwhile
or Possible
Control Regulati Cybernet
loss: on costs: ic
The situation in feasibilit
which behaviour
and work
The costs y:
associated with
procedures do not implementing or The extent to which
conform to maintaining it is possible to
standards. control. implement in each
of the three steps in
the control process.

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Control Methods

Bureaucratic Objective

Normative Concertive

Self-Control

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Control Methods
Top-down control; managers give rewards & punishment to employees for
Bureaucrati complying/not complying with organizational policies, rules and procedures.
c

Using of observable measures of employee behaviour or output to assess performance.

Objective Behaviour controls: Location tracking of employees; measurement of ‘break time’ logged on
call center phones. Output controls: Number of sales made; deliveries completed; calls
taken.
Company-wide values shared amongst employees, eg. Nordstrom: “Respond to Unreasonable
Normative Customer Requests!”
● Relies on employee judgement as values may be open to interpretation; hiring may
focus on attitudes and values over skills and abilities.

Work group control; groups that exercise control autonomously without managers.
Concertive ● Requires time for group to properly form, work with each other and then
formalize objective rules for newcomers to follow.

Employees control their own behaviour. Managers set clear boundaries, but employees
Self-Control self-observe and self-reward as they move toward goals.

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 What to Control?

Balanced
Scorecard
Internal
processes
Financial
Quality
Performance
Innovation
and
Customer Learning
Defections Value

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The Financial Perspective: Controlling Budgets,
Cash Flows, and Economic Value Added

Cash flow analysis: Predicts how changes in a business will affect

its ability to take in more cash than it pays out.

Balance Sheet (statement of financial position) : accounting

statements that provide a snapshot of a company's financial
position at a particular point in time.
Income Statement ( statements of comprehensive income):
accounting statements that show what has happened to an
organization's income, expenses, and net profit over a period of time
(also historically called profit and loss statements).
Budget: quantitative plans through which managers decide how
to allocate available money to best accomplish company goals
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 Calculating Economic Value
Added
EVA: the amount (EVA)
by which company profits ( revenues, minus
expenses, minus taxes) exceed the cost of capital in a given year)

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Customer Perspective: Controlling
Customer Defection
● Customer Defection: a performance assessment in
which companies identify which customers are leaving
and measure the rate at which they are leaving.
● How do customers see us?
● Not only with satisfaction surveys companies
achieve the information.
● Companies should be farther ahead, monitoring
customer
defections. When are they leaving and the rate
● According to experts, the cost of a new customer is
higher than keep an older one.
● It’s important to reach former customers and talk with
them in
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The Internal
Perspective:
Controlling Quality
Quality is typically defined and
measured in three ways:

Conformance
Excellence Value to
specifications

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Value: customer perception that the product quality is excellent for
the price offered.

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Organisational Capacity
Focusing on an organization's capacity
to improve and develop can help
companies identify areas to innovate
and encourage employees to work
toward a company's goals. Here are a
few examples of objectives in this
perspective:

• Implementing a program for

employee development

• Changing a company's culture to

promote greater employee
satisfaction

• Implementing new technology that

improves a company's information
security

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