Power Point Presentation to Accompany Chapter 8 of

Power. Point Presentation to Accompany Chapter 8 of Management, 8/e John R. Schermerhorn, Jr. Prepared by: Michael K. Mc. Cuddy Valparaiso University Published by: John Wiley & Sons, Inc. Management 8/e - Chapter 8

Planning Ahead — Chapter 8 Study Questions Ø How do managers plan? Ø What types of plans do managers use? Ø What are the useful planning tools and techniques? Ø What is the control process? Ø What are the common organizational controls? Management 8/e - Chapter 8 2

Study Question 1: How do managers plan? Ø Planning – The process of setting objectives and determining how to best accomplish them. Ø Objectives – Identify the specific results or desired outcomes that one intends to achieve. Ø Plan – A statement of action steps to be taken in order to accomplish the objectives. Management 8/e - Chapter 8 3

Study Question 1: How do managers plan? Ø 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. Management 8/e - Chapter 8 4

Study Question 1: How do managers plan? Ø Benefits of planning: – Improves focus and flexibility. – Improves action orientation. – Improves coordination. – Improves time management. – Improves control. Management 8/e - Chapter 8 5

Study Question 2: What types of plans do managers use? Ø 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 Ø People vary in their capability to deal effectively with different time horizons. Ø Higher management levels focus on longer time horizons. Management 8/e - Chapter 8 6

Study Question 2: What types of plans do managers use? Ø 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 Management 8/e - Chapter 8 7

Study Question 2: What types of plans do managers use? Ø 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. Management 8/e - Chapter 8 8

Study Question 2: What types of plans do managers use? Ø 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. Management 8/e - Chapter 8 9

Study Question 3: What are the useful planning tools and techniques? Ø 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. Management 8/e - Chapter 8 10

Study Question 3: What are the useful planning tools and techniques? Ø 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. Management 8/e - Chapter 8 11

Study Question 3: What are the useful planning tools and techniques? Ø 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. Management 8/e - Chapter 8 12

Study Question 3: What are the useful planning tools and techniques? Ø 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. Management 8/e - Chapter 8 13

Study Question 3: What are the useful planning tools and techniques? Ø 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. Management 8/e - Chapter 8 14

Study Question 3: What are the useful planning tools and techniques? Ø 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. Management 8/e - Chapter 8 15

Study Question 4: What is the control process? Ø 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. Management 8/e - Chapter 8 16

Study Question 4: What is the control process? Ø 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. Management 8/e - Chapter 8 17

Study Question 4: What is the control process? Ø 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. Management 8/e - Chapter 8 18

Study Question 4: What is the control process? Ø 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. Management 8/e - Chapter 8 19

Study Question 4: What is the control process? Ø 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 Management 8/e - Chapter 8 20

Study Question 4: What is the control process? Ø 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 Management 8/e - Chapter 8 21

Study Question 4: What is the control process? Ø 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. Management 8/e - Chapter 8 22

Study Question 4: What is the control process? Ø 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. Management 8/e - Chapter 8 23

Study Question 4: What is the control process? Ø Feedback controls … – Take place after work is completed. – Focus on quality of end results. – Provide useful information for improving future operations. Management 8/e - Chapter 8 24

Study Question 4: What is the control process? Ø 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. Management 8/e - Chapter 8 25

Study Question 5: What are the common organizational controls? Ø 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. Management 8/e - Chapter 8 26

Study Question 5: What are the common organizational controls? Ø 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. Management 8/e - Chapter 8 27

Study Question 5: What are the common organizational controls? Ø 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. Management 8/e - Chapter 8 28

Study Question 5: What are the common organizational controls? Ø Types of MBO performance objectives – Improvement – Personal development – Maintenance Ø Criteria for effective performance objectives – Specific – Time defined – Challenging – Measurable Management 8/e - Chapter 8 29

Study Question 5: What are the common organizational controls? Ø 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. Management 8/e - Chapter 8 30

Study Question 5: What are the common organizational controls? Ø 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. Management 8/e - Chapter 8 31

Study Question 5: What are the common organizational controls? Ø Employee discipline systems – Discipline is the act of influencing behavior through reprimand. – Discipline that is applied fairly, consistently, and systematically provides useful control. Management 8/e - Chapter 8 32

Study Question 5: What are the common organizational controls? Ø 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. Management 8/e - Chapter 8 33

Study Question 5: What are the common organizational controls? Ø 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. Management 8/e - Chapter 8 34

Study Question 5: What are the common organizational controls? Ø 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. Management 8/e - Chapter 8 35

Study Question 5: What are the common organizational controls? Ø 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 Management 8/e - Chapter 8 36

Study Question 5: What are the common organizational controls? Ø 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 Management 8/e - Chapter 8 37

Study Question 5: What are the common organizational controls? Ø 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 Management 8/e - Chapter 8 38

Study Question 5: What are the common organizational controls? Ø 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. Management 8/e - Chapter 8 39

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