control ing

8/14/2019 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

112

2

3

4

56

7

8

9

10

11

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

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