Managerial Function: Controlling - · PDF filePurpose To get the job ... Crisis Management:...
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1 Session 7 Controlling
Transcript of Managerial Function: Controlling - · PDF filePurpose To get the job ... Crisis Management:...
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Session 7
Controlling
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Basics of Organizational Control
Definition The process of taking the necessary preventive
or corrective actions to ensure that the organization’s mission and objectives are accomplished as effectively and efficiently as possible
Purpose To get the job done despite environmental,
organizational, and behavioral obstacles and uncertainties.
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Steps in the Control Process
SetStandards
Measure Actual
Performance
ComparePerformance to
Standard
Take Corrective Action if
Necessary
DoNothing
Solve theProblem
ReviseStandard
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Types of Organizational Control
Feedforward control The active anticipation and prevention of problems,
rather than passive reaction
Concurrent control Involves monitoring and adjusting ongoing activities
and processes to ensure compliance with standards
Feedback control Gathering information about a completed activity,
evaluating that information, and taking steps to improve similar activities in the future
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Three Types of Control
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Components of Organizational
Control Systems Objectives
Measurable reference points (targets) for corrective action.
What do we need to accomplish?
Standards Guideposts on the way to achieving obejctives.
What guidelines and standards do we need to follow?
An evaluation-reward system Measure and reward individual team contributions to
attaining organizational objectives.
How will our results be measured and how will we be rewarded?
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Symptoms of Inadequate Control
An unexplained decline in revenues or profits
A degradation of service
Employee dissatisfaction
Cash shortages
Idle facilities or personnel
Disorganized operations
Excessive costs
Evidence of waste and inefficiency
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Crisis Management: The Basics
Definition
Systematic anticipation of and preparation for internal and
external problems that seriously threaten an organization’s
reputation, profitability, or survival
Two Biggest Mistakes Regarding Organizational
Crises
1. Ignoring early warning signs of an impending disaster.
2. Denying the existence of a problem when disaster actually
strikes.
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Key Elements a Crisis
Management Program
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The Quality Challenge
Defining Quality
“Conformance to requirements” (Crosby).
A subjective response by customers to the
adequacy of product or service quality in meeting
their expectations/needs/requirements.
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Effective Control Product Quality
Five types of product quality
Transcendent quality
Product-based quality
User-based quality
Manufacturing-based quality
Value-based quality
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Service Quality
Unique characteristics of service industry: Intangibility: creative advertising, no patient protection,
importance of reputation
Perishability: cannot inventory, opportunity loss of idle
capacity, need to match supply with demand
Heterogeneity: customer participation in delivery process
results in variability
Simultaneity: opportunities for personal selling, interaction
creates customer perceptions of quality
Customer Participation in the Service Process: attention to
facility design but opportunities for co-production
Bottom line: consumer judgment is the key…
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The Service Package
Supporting Facility: The physical resources that must be in place before a service can be sold. Examples are golf course, ski lift, hospital, airplane.
Facilitating Goods: The material consumed by the buyer or items provided by the consumer. Examples are food items, legal documents, golf clubs, medical history.
Information: Operations data or information that is provided by the customer to enable efficient and customized service. Examples are patient medical records, seats available on a flight, customer preferences, location of customer to dispatch a taxi.
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The Service Package (cont’d)
Explicit Services: Benefits readily observable by the
senses. The essential or intrinsic features. Examples
are quality of meal, attitude of the waiter, on-time
departure.
Implicit Services: Psychological benefits or extrinsic
features which the consumer may sense only vaguely.
Examples are privacy of loan office, security of a well
lighted parking lot.
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The Gaps Model of Service Quality
Customer Gap
Provider Gaps
Factors Leading to the Gaps
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The Customer Gap
Expected Service
Perceived Service
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Customer Gap Components
customer expectations
are the standards of or reference points for
performance against which service experiences
are compared
are what a customer believes should or will
happen
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Sources of customer expectations
Marketer-controlled factors
• Pricing
• Advertising
• Sales promises
Factors that the marketer has limited ability to affect
• Innate personal needs
• Word-of-mouth
• Communications
• Competitive offerings
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Customer Perceptions How customers perceive services, how they assess
whether they have experienced quality service and whether they are satisfied.
Keep in mind that perceptions are always considered relative to expectations. Because expectations are dynamic, evaluations may also shift over time-from person to person and from culture to culture.
Also keep in mind that the entire discussion of quality and satisfaction is based on customers’ perceptions of the service -not some predetermined objective criteria of what service is or should be.
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Gaps Model of Service Quality Customer Gap:
difference between customer expectations and
perceptions
Provider Gap 1:
not knowing what customers expect
Provider Gap 2:
not having the right service designs and standards
Provider Gap 3:
not delivering to service standards
Provider Gap 4:
not matching performance to promises
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COMPANY
Perceived
Service
Expected
ServiceCUSTOMER
Customer
Gap
GAP 2
Customer-Driven Service Designs and
Standards
GAP 4
External Communications
to CustomersGAP 1
Company Perceptions of Consumer Expectations
GAP 3
Service
Delivery
Gaps Model of Service Quality
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Company Perceptions of
Consumer Expectations
Expected Service
CUSTOMER
COMPANY
GAP 1
Provider Gap 1
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CUSTOMER
COMPANY
GAP 2
Customer-DrivenService Designs and
Standards
Company Perceptions of
Consumer Expectations
Provider Gap 2
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CUSTOMER
COMPANY Service Delivery
GAP 3
Customer-DrivenService Designs and
Standards
Provider Gap 3
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Provider Gap 4
CUSTOMER
COMPANYExternal
Communications to CustomersGAP 4
Service Delivery
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The Gaps Model
The key to closing the Customer Gap is to
close Provider Gaps 1-4
Gaps Model used as the organizing
framework throughout the course
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Provider Gap 1: Not knowing what customers expect
Provider Gap 2: Not selecting the right service designs and standards
Provider Gap 3: Not delivering to service standards
Provider Gap 4: Not matching performance to promises
Customer
Expectations
Customer Perceptions
Key Factors Leading to the Customer Gap
Customer
Gap
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Customer Expectations
Company Perceptions of Customer Expectations
Inadequate marketing research orientation Insufficient marketing research Research not focused on service quality Inadequate use of market research
Lack of upward communication Lack of interaction between management and customers Insufficient communication between contact employees and managers Too many layers between contact personnel and top management
Insufficient relationship focus Lack of market segmentation Focus on transactions rather than relationships Focus on new customers rather than relationship customers
Inadequate service recovery Lack of encouragement to listen to customer complaints Failure to make amends when things go wrong No appropriate recovery mechanisms in place for service failures
Key Factors Leading to Provider Gap 1
Gap
1
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Customer-Driven Service
Designs and Standards
Management Perceptions of Customer Expectations
Poor service design Unsystematic new service development process Vague, undefined service designs
Failure to connect service design to service positioning Absence of customer-driven standards
Lack of customer-driven service standards Absence of process management to focus on customer
requirements Absence of formal process for setting service quality goals
Inappropriate physical evidence and servicescape
Failure to develop tangibles in line with customer expectations Servicescape design that does not meet customer and
employee needs Inadequate maintenance and updating of the servicescape
Key Factors Leading to Provider Gap 2
Gap
2
30Service Delivery
Customer-Driven Service
Designs and Standards
Deficiencies in human resource policies Ineffective recruitment Role ambiguity and role conflict Poor employee-technology job fit Inappropriate evaluation and compensation systems Lack of empowerment, perceived control, and teamwork
Customers who do not fulfill roles Customers who lack knowledge of their roles and responsibilities Customers who negatively impact each other
Problems with service intermediaries Channel conflict over objectives and performance Difficulty controlling quality and consistency Tension between empowerment and control
Failure to match supply and demand Failure to smooth peaks and valleys of demand Inappropriate customer mix Overreliance on price to smooth demand
Key Factors Leading to Provider Gap 3
Gap
3
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Service Delivery
Lack of integrated services marketing communications Tendency to view each external communication as independent Not including interactive marketing in communications plan Absence of strong internal marketing program
Ineffective management of customer expectations Absence of customer expectation management through all forms of
communication Lack of adequate education for customers
Overpromising Overpromising in advertising Overpromising in personal selling Overpromising through physical evidence cues
Inadequate horizontal communications Insufficient communication between sales and operations Insufficient communication between advertising and operations Differences in policies and procedures across branches or units
External Communications to
Customers
Key Factors Leading to Provider Gap 4
Gap
4
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Moments of Truth
Each customer contact is called a
moment of truth.
You have the ability to either satisfy or
dissatisfy them when you contact them.
A service recovery is satisfying a
previously dissatisfied customer and
making them a loyal customer.
Expressing Dissatisfaction
Action
No Action
Public Action
Private Action
Seek redress directly from
the firm
Take legal action
Complaint to business, private,
or governmental agencies
Stop buying the product or
boycott the seller
Warn friends about the product
and /or seller
Dissatisfaction
occurs
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Approaches to Service Recovery
Case-by-case addresses each customer‟s
complaint individually but could lead to
perception of unfairness.
Systematic response uses a protocol to handle
complaints but needs prior identification of
critical failure points and continuous updating.
Early intervention attempts to fix problem before
the customer is affected.
Substitute service allows rival firm to provide
service but could lead to loss of customer.
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Effective Control Service Quality –
Group ExerciseDescribe an experience during which you
experienced excellent service.
Describe an experience during which you experienced substandard service.
First, think about both of those on your own, then share with your team members. Can you come up with a list of common characteristics for all your experiences of each type?
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TQM: The Basics
Definition Creating an organizational culture committed to
the continuous improvement of skills, teamwork, processes, product and service quality, and customer satisfaction
Four Principles of TQM: Do it right the first time
Be customer-centered
Make continuous improvement a way of life
Build teamwork and empowerment
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Deming Management
The application of W. Edwards Deming„s ideas to
revitalize productive systems to make them more
responsive to the customer, more democratic, and
less wasteful organizations.
Key Points of Deming Management Quality improvement drives the entire economy
The customer always comes first
Don’t blame the person, fix the system
Plan-do-check-act (PDCA Cycle)
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Everyone Benefits from Improved Quality
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Deming’s PDCA Cycle
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Deming’s 14 Points
Constant purpose
New philosophy
Give up on quality by inspection
Avoid constant search for lower-cost suppliers
Seek continuous improvement
Train everyone
Provide real leadership
Drive fear out of the workplace
Promote teamwork
Avoid slogans & targets
Get rid of numerical quotas
Remove barriers that stifle
pride in workmanship
Education and self-
improvement are key
“The transformation is
everyone’s job”
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Characterizing Change…
Anticipatory changes planned changes based on expected situations
Reactive changes changes made in response to unexpected situations
Incremental changes subsystem adjustments required to keep the organization
on course
Strategic changes alerting the overall shape or direction of the organization
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Types of Organizational Change
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Resulting Types of Change
Tuning: active anticipation and avoidance of problems
rather than waiting for sth. to go wrong; most common,
least intense, and least risky type of change.
Adaptation: dealing with incremental changes, but
changes are in reaction to problems, pressures, or
events.
Re-orientation: “frame bending” because
organization is significantly redirected (what to do
about past?)
Re-creation: “frame breaking” – most intense and
risky type of organizational change
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Individual Reactions to Change
Changes
they like
Changes
they
don’t like
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Reasons for Resistance to Change
Surprise Unannounced significant changes threaten
employees‟ sense of balance in the workplace.
Inertia Employees have a desire to maintain a safe,
secure, and predictable status quo.
Misunderstanding and lack of skills Without introductory or remedial training, change
may be perceived negatively.
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Reasons for Resistance to Change
(cont’d) Emotional Side Effects
Forced acceptance of change can create a sense of powerlessness, anger, and passive resistance to change.
Lack of Trust Promises of improvement mean nothing if
employees do not trust management.
Fear of Failure Employees are intimidated by change and doubt
their abilities to meet new challenges.
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Reasons for Resistance to Change
(cont’d) Personality Conflicts
Managers who are disliked by their subordinates are poor conduits for change.
Poor Timing Other events can conspire to create resentment
about a particular change.
Lack of Tact No showing sensitivity to feelings can create
resistance to change.
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Reasons for Resistance to Change
(cont’d) Threat to Job Status/Security
Employees worry that any change may threaten their job or security.
Breakup of Work Group Changes can tear apart established on-the-job
social relationships.
Competing Commitments Change can disrupt employees in their pursuit of
other goals.
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Strategies for Overcoming Resistance
to Change Education & communication
Participation & involvement
Facilitation & support
Negotiation & agreement
Manipulation
Explicit & implicit coercion
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Characteristics of Effective Controls
1. Employees must accept controls.
2. Measures must be appropriate.
3. Provides diagnostic information.
4. Allows for self-feedback and self-
control.
5. Must provide timely information.
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Characteristics of Effective Controls,
(cont’d)
6. More effective when employees have control over results measured.
7. Must not contradict each others (such as quality and quantity).
8. Should allow for random variation from standard.
9. Cost effective (provide good return on investment)
