Management function: Controlling

Chapter 16: Controlling

Gary Loveman
- Currently CEO of Ceasar's (Harrah's) Entertainment
- Pace: PhD Econ MIT + 7 years
Associate Professor Harvard + 9 years
COO to CEO of Harrah's Entertainment + 5 years
- Normally, to get from BS/BA to CEO, it takes +20-30 years

Definitions:
Controlling - standards for performance of people & processes are set, communicated, and applied
Six Sigma - highly disciplined control process, helps companies improve productivity & quality of products & services
Control Process - 4-step process                 1. Establish performance standard
2. Measure performance
3. Compare 1 & 2
4. Corrective Action
(Feed-forward, Concurrent, Feedback) Controls - (before, during, after) process. All are parts of an effective control system

Concepts:
Controls - established to monitor progress (and resources used) toward goals
Loose vs Tight Control
- loose may reduced incentives for managers to meet their goals
- tight requires additional reporting (more cost & inconvenience)
- tight restricts lower-level managers from taking initiatives due to heavy monitoring
- middle ground: managers must value honesty and integrity

How to make controls more effective?
- They must be timely, economically feasible, accurate, comprehensible, acceptable, and seamlessly integrable. To break some parts down, by acceptable we mean the controls enhance all parties involved, and by integrable we mean they must align w/ corporate values.
- They focus on critical control points, where failures cannot be tolerated, where time & money costs are greater, that directly affect the survival of the corporation.
- Monitor them to ensure they remain effective
1. before and after organizational environmental assessment
2. survey employees affected by controls
3. run controlled experiments
- Controls themselves need to be controlled
ex. subsystem controls (finance, marketing, HR, etc.)