Control Ing
Transcript of Control Ing
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Chapter 5 - Controlling
Dr. C. M. Chang
Only to be used by instructors who adopt the text:C. M. Chang, Engineering Management: Challenges
in the New Millennium, Pearson Prentice Hall (2005)
Copyright 2005 by Dr. Carl Chang
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Controlling
Work done by managers to
assess and regulate work in
progress and to evaluate
results obtained, for purpose of
(1) Securing and
maintain maximum
productivity, & (2) Reducing
and preventing unacceptableperformance
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Nature of Controlling Function
Primarily administrative and operational in
nature
Critical to implementation of any plan (task,project, program) - no implementation, no results
regardless of plans merits
Important to delegation - no effective control, nodelegation
Important to company renewal (pruning)
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Nature of Controlling Function
Balance between operational efficiency and
staff creativity and innovation - Four
Levers of Control Types of control - Output-based and Process-
based
Resistance to control - falsifying data,inventing excuses, sabotaging, playing
games, and pitching one against the other
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Characteristics of Good Control
Accuracy
Timeliness
Flexibility
Cost-effectiveness
Understandability Realistic
Acceptable to those
who will enforce
decisions Control at all levels
Balance between
objectivity andsubjectivity
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Pareto Principle
Principle of Critical Few: 20% of factors
affecting 80% of Results - Control the few
Number of Customers
Sales Revenue $(MM)
5 10 15 20 25
10
5
030
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Controlling Function
Measuring Performance
Setting Standards
Evaluating Performance
Controling Performance
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Setting Standards
Standards are criteria by which work and results
are measured and evaluated at grades: (1) Average
-- generally expected performance level for agiven job, (2) Other grades -- outstanding, better
than average, average, below average and
unacceptable
To distinguish performance grades and to defineexpected impact of results
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Grades of Performance
BelowAverage
Gaussian
Distribution
Average
Above
Average
Performance
Percentage
OutstandingUnacceptable
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Value of Setting Standards
Provide specific guidelines for exercising
authority and making decisions (rewards and
punishments) Define yardstick to measure performance
(individuals, group/unit, project)
Facilitate self evaluation, improvement andself-control
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Types of Standards
Technical Standards (product first pass success
rate, product unit cost, mean time between failure
(MTBF) for equipment, hurtle rate, sales peremployee, ROE, etc.)
Historical Standards (own metrics in the past -
internal benchmarking)
Planning Standards (cost leadership target, salesrevenue, profitability)
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Types of Standards (contd)
Market Standards (market share, time to
market, EPS expected by Wall Street, order
processing cost, customer inquiry responsetime - external benchmarking)
Other Standards (OSHA, environmental
quality, EEO, ISO certification, self-imposedperformance metrics)
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Good Standards
Based on approved plans
Measurable
Considerate of human factors
Comparable and reasonable
Indicative of expected work performance
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Question # 5.2
The company has decided for an average annual salary
raise of 8%, although the current inflation rate runs at
10%. Each engineering manager may decide on the best
way to distribute the salary increase to his/her staff. If
everyone gets an increase of 8%, then there will be no
differentiation between good and poor performers.
What should you do as the engineering manager?
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Barriers to Setting
Good Standards Subjectivity -Technically strong managers
tend to set unrealistically high standards -
(1) Too high standards - demoralizing, (2)Too low standards - not challenging enough
Fearful ofnot meeting standards
Lack of Consideration - Human factors andother considerations
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Benchmarking
Internal Bench marking
How do I compare with
m yself over the years
External Benchmarking
How do I compare with my
peers in industry
Benchmarking is a method of defining
performance standards in relation to a set
of references
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Internal Benchmarking
Compare current year performance metrics
with those in past years to indicate
performance improvement (annual reports) Short-term goal setting based on internal
benchmarking may create a false sense of
corporate wellbeing - absent externalbenchmarking
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External Benchmarking
Compare companys performance with those of
peers in the same industry
(1) Financial ratios, (2) Performance metrics -Time to market, order processing efficiency,
quality control, unit product cost, etc., (3) Best
practices - tried-and-true methods of achieving
useful results, (4) Critical success factors -
conditions for achieving success in specific areas
based on accumulated learning,
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External Benchmarking (contd)
(5) Target pricing - surveying marketplace to
define going prices for competitive products,
subtracting desirable margin and setting productcost target for product development - Innovation
under duress model generally applicable to
many business/engineering activities
(6) Balanced Scorecard forward looking and
non-financial versus past orientation of financial
metrics only
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Benchmarking Metrics
Financial
Non-
Financial
Product-
Related
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Examples of Benchmarking
Metrics (contd) Financial Ratios: ROI, ROA, ROS, Debt
to Equity Ratio, Inventory turns, Number of
units produced per employee, number ofunits produced per hour, sales per
employees, profit per unit, breakeven
volume
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Measuring Performance
Collect, store, analyze and record work being
done and results attained systematically
(progress reports, project reports, technicaldocuments, presentations, staff meeting
minutes, personal meeting notes, etc.)
Compare performance against establishedstandards
Document results of measurement
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Evaluating Performance
Appraise work in progress or completed and
provide feedback by (1) Establishing limits of
tolerance, (2) Note variations - deviation within thetolerance limits, and exceptions - deviation outside
the tolerance limits, (3) Provide recognition to good
performance (give credit timely)
Focus on deviation tends to encourage self-appraisal/control and foster initiative
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Correcting Performance
Rectify and improve work being done and results
obtained - Taking steps:
(1) Correct mistakes and focus on futuredevelopment, (2) Take operation actions - get
help from outside consultants, add temp people,
(3) Take management action - add training,
improve procedures and policies to avoidrepeating deficiencies, transfer and recommend
dismissal
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Reasons for Performance
Deficiencies Dont Know - Lack
definition of
performance standards,lack of feedback
Cant Do - Lack skills
and/or aptitude
Dont Care - Lack the
proper work attitude
Don't Now
Performance
Deficiency
Don't CareCan't Do
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Constructive Criticisms
Negative feedback must be offered carefully to
avoid attacking peoples esteem
Focus on results/outcome, not on person Avoid upsetting people by using labels
Have no punitive motive and avoid causing pain
Show helpful and sincere attitude Provide no threat
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Some Rules of Thumb
Not good to make mistakes in
engineering fundamentals
Okay to fail once in a while in
new risky development work, but
failure in every other projects will
hurt own reputation
Making the same mistakes again
and again (human relations,
aggressiveness, poor teamwork
attitude) is perceived negatively
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Means of Performance Control
Personal Review - Focusing on variance
-management by exception for decision making
Resources - Allocation of capital, people, staffsupport, technology, equipment/ facilities
Project Approval - Initiate, modify or terminate
specific project activities
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Guidelines for Effective Control
Focus on location where actions take place
Induce self-imposed control (Most effective)
Avoid extensive control, which tends to de-motivate people and induce strong reactions
Manage exceptions, both bad and good
Strive for flexible and coordinated control(supply information with control mechanism in
place)
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Specific Controlling Targets
Personnel KnowledgeTimeBusiness
RelationsProject
(1) Managerial time
(2) Personnel
(3) Business Relationship
(4) Project(5) Knowledge
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Control of Management Time
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Important tasks often arrive
at unpredictable times
Trivial tasks often take up a
disproportionately large
amount of time
Interruptions to managers
schedule are common
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Typical Time Wasters
Absence of clear roles and responsibilities -overlapping
responsibilities
Poor self-discipline - No planning, lack of personal drive to
accomplish, confused priority, procrastination
Lack of effective delegation - trying to do all by self
Poor communications - unprepared meetings, policies,
politics
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Tips to Manage Time
Set goals (for the day, week, month, year)
Prioritize tasks (classify into A, B and C categories)
according to value addition
Plan tasks properly
Minimize interruptions for blocks of time to do A-tasks -
planning, strategy development)
Make use of waiting time Keep reports concise and readable
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1. Set Goals Write specific, measurable outcomes you want to achieve in the nextweek, month, year and
five years. Consider your work, relationships, play, and well being. Gofrom goals to plan to work.
2. Use a Master "to-do"List
Categorize all of your to do ideas according to which goal each serves.Estimate all others.
3. Get the Big Picture Plan your priorities so you work foremost on whatever gives you thebiggest payoff and potential
4. Cluster CommonTasks
Do similar tasks in the same time block (e.g., a bunch of letters, a bunchof phone calls, etc.)
5. Create Systems Keep tools, forms, checklists, and information handy and organized forrepetitive tasks.
6. Establish PlaceHabit
Keep everything in its pre-determined place.
Time Saving Tips for Engineering Managers
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7. Delineate TimeBlocks
Schedule blocks of un-interruptible time (2-4 hours) to work onprojects requiring concentration.
Assure colleagues of availability otherwise.
8. Design YourEnvironment
Make your setting conducive to concentration (e.g., sit with your backto traffic passing your
office, and screen calls).
9. Cut Meeting Time Use proven meeting time-savers (e.g., go to others offices formeetings, do stand-up meetings,
set agenda and follow through rigorously).
10. Reduce Panic Handle what worries you the most. Ask yourself, Will this matterseem urgent 1o years from
now?
11. Take the One-Minute Test
Periodically take a minute to ask yourself, Am I doing this in the bestway to meet my goals,
serve others, and take care of myself?
Condensed and Adopted from Cottringer (2003), Casavant (2003) and Anonymous (2003B).
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Control of Personnel
For high skills personnel, less control is
more desirable, excess control could induce
adverse reactions - Supervision Curve
Low Skills
High Skills
Amount of Supervision
Productivity
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Skills for Managing Projects
Organizational and planning skills
People management
Problem solving Communications (team members, sponsors, customers)
Drive and energy
Goal orientation and customer focus
Broad multidisciplinary technical knowledge
Manage changes
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Summary
Controlling - administrative function, with
strategic implication (assure implementation,
support delegation, foster corporate renewal) Set standards using external benchmarking to
avoid losing competitiveness
Correcting poor performance may be unpleasant Apply Four Levers of Control - Assure
operational efficiency and enhance creativity