












Chapter Introduction
5.1The Implementing Function
o 5-1a The Challenge of Implementing
o 5-1b Implementing Activities
5.2Motivation and Change Management
o 5-2a Motivation Theories
o 5-2b Managing Change
5.3The Controlling Function
o 5-3a Understanding Controlling
o 5-3b Setting Standards
5.4Gathering and Using Performance Information
o 5-4a Taking Corrective Action
Chapter 5Assessment
o Chapter Concepts
o Review Business Management Terms
o Review Business Management Concepts
o Apply What You Know
o Make Academic Connections
o Case in Point
Chapter Introduction
Reality Check
Losing Control
© Shutterstock/Yuri Arcurs
An office supply company developed a strategy to sell office supplies to the local business
market through Internet and telephone sales. Jasmine Marsh was hired as the manager of a
new telemarketing department that included computerized telephone and order-processing
systems. She was given a large budget to retrain current employees and to hire and train new
employees for telephone sales. A sales brochure highlighting the company's online catalog was
personally delivered to all businesses in the city by company managers to introduce the new
business and explain the ordering process. Follow-up telephone calls were made, promoting
the company's delivery guarantee. The promise was that any order placed by 10 p.m. would be
delivered by 10 a.m. the next day.
There was a real excitement among the employees when they made the sales calls to the new
business customers. They were able to reinforce the company's service guarantee. Soon,
orders began to come in. However, the rapidly expanding sales volume was putting pressure
on Jasmine's department. The workload was increasing rapidly as the telephone sales
associates took orders, answered questions about products and existing orders, and attempted
to solve customer problems. Technical difficulties resulted in unanswered calls and slow
computers. Although individual problems were solved as quickly as possible, customers and


sales associates were frustrated. After the first month of operations, it was clear that a growing
number of problems were leading to employee dissatisfaction and a high turnover rate.
Experienced employees, especially those who had worked for the company before the change,
were quitting or asking for transfers because of the pressure they were facing on the job.
Jasmine knew that her department was essential to the success of the company. If the
department was not able to maintain and increase the level of sales and process orders
efficiently, the new business strategy would fail.
What's Your Reaction? What are the primary reasons for problems in the new department?
What might Jasmine do to help employees?
5.1 The Implementing Function
Goals


Recognize problems that can occur when plans are implemented.
Identify important implementing activities performed by managers.

motivationmotivationThe set of factors that cause a person to act in a certain
way.
work teamwork teamA team in which members together are responsible for the
work assigned to the team.
operationsoperationsThe major ongoing activities of a business.
operations managementoperations managementEffectively directing the major
activities of a business to achieve its goals.
process improvementprocess improvementEfforts to increase the effectiveness
and efficiency of specific business operations.
Terms




Chapter Contents
5-1a The Challenge of Implementing
The implementing function of management involves carrying out the organization's plans and helping
employees to work effectively. The controlling function involves evaluating results to determine if the
company's objectives have been accomplished as planned. The majority of managers, especially supervisors and
middle-level managers, spend a great deal of their time on implementing and controlling activities.
Implementing involves guiding employee work toward achieving the company's goals. For example, a manager
may communicate important goals to an employee team, provide leadership to help them determine how to
complete the necessary work, and make sure that rewards and recognition are provided to everyone involved
when their work achieves the goals.
You will remember from the scenario at the beginning of the chapter that Jasmine had many activities for
which she was responsible in the new department. She was spending a great deal of time implementing the
company's plans. Jasmine discovered what many experienced managers have learned. Plans are not effective
unless they are implemented well. Changing conditions in a business create problems in the way work is
accomplished. Here is what Jasmine learned about the implementing function as she continued to study the
problems she was facing as a manager.
At the beginning, employees seemed to enjoy using the new computer equipment and making calls to
customers. Jasmine had an excellent training budget and three months to prepare employees for their new
work. The preparation time and training made them comfortable with their new work. The careful planning to
personally deliver the brochures to customers and make follow-up calls resulted in immediate orders.
Employees were pleased with their initial success. Customers liked the rapid delivery guarantee and the serviceoriented approach of the local business. But as Jasmine looked back, that was where the problems started.
The first problem occurred when Jasmine established sales quotas for each employee. With sales growing
rapidly, she didn't think it would be difficult for most employees to make their quotas. Jasmine believed the
quotas would encourage everyone to emphasize selling rather than just waiting for customers to call in orders.
However, some people easily exceeded their sales quotas whereas others seldom reached theirs. Several
employees complained that the quotas emphasized selling too much and didn't allow them adequate time to
answer customers’ questions and solve their problems.
Supervisors must implement the plans that have been developed. What types of information are available in
business plans to help supervisors direct the work of employees?
© Shutterstock/Yuri Arcurs
The department began to experience some computer difficulties. When a high volume of calls came in, the
computers would slow down. Employees would have to wait to get information on their screens, and
occasionally all of the information entered would be lost before the order could be processed. Also, Jasmine was
learning that when sales volume was high, the company sometimes was not able to meet its goal of overnight
delivery. Although sales volume was higher than anticipated, Jasmine's department and the delivery
department were still operating with the same number of employees as when the new wholesale business
started. As a result, the telemarketing employees were starting to receive customer complaints that they were
not prepared to handle.
While Jasmine was struggling with the computer problems and the sales quota issue, she was also facing the
growing employee turnover problem. Even though she was hiring and training new employees, it seemed there
were never enough employees to replace those who left and to handle the growing amount of business. To get
new employees on the job faster, training time was reduced. That seemed to result in more errors in the orders
processed. Veteran employees were being asked to work overtime to meet the demand and to help
inexperienced telemarketers. That created even more employee dissatisfaction. Jasmine couldn't believe that a
plan that seemed so good and had initially been successful could result in so many problems.
Checkpoint
Identify several types of changes that can occur in an organization that can create problems in accomplishing
plans.
Add Bookmark to this Page
Main content
Chapter Contents
5-1b Implementing Activities
21st Century Skills
Collaboration
Work teams require collaboration by all members. It is not enough to just do your job; you need to understand the
goals of the team and how your role affects the work of other team members. Learning how to collaborate with others
is helpful in every work environment, but it is especially important when you are a member of any sort of team.
To implement successfully, managers must complete a number of activities designed to channel employee efforts in
the right direction to achieve the goals. These activities include effective communications, motivating employees,
developing effective work teams, and operations management.
Effective Communications
Communication is an essential part of implementing work in a business. Managers must be able to communicate
plans and directions, gather feedback from employees, and identify and resolve communication problems. Both
personal and organizational communications are important. Because so many forms of communications media exist
in organizations today, managing communications technology is an important responsibility.
Communication is much more than telling employees what to do. In fact, if employees believe managers are being too
directive, they will likely be dissatisfied and not work as hard or effectively as they could. An important
communication skill for managers is to listen to employees and involve them in deciding how work should be done. A
manager should use both formal and informal communications. Encouraging employees to contribute their ideas and
involving them in deciding the best way to do the work will help gain their commitment to achieving the goals.
Manager's Perspective on Success
Managers can motivate employees with their actions even when they can't provide monetary rewards. Provide lots of
encouragement, don't harshly criticize one-time errors, add fun and variety to routine work, offer leadership
opportunities, allow employee input and choice when possible, and provide opportunities for social interaction as part
of the job.
Employee Motivation
MotivationMotivationThe set of factors that cause a person to act in a certain way.
is a set of factors that influence an individual's actions toward accomplishing a goal. Employees may be motivated to
achieve company goals, or they may be motivated to pursue other goals that do not benefit the company. Managers
don't actually “motivate” employees, but they can use rewards and punishments to encourage employees to motivate
themselves toward pursuing company objectives. A key to motivation is to know what employees value and give them
those things for achieving company goals. A reward is not motivating unless it is something the employee values. The
reward does not always have to be monetary. People also value things such as praise, respect, an interesting job
assignment, or extended breaks after hard work.
Motivation comes from influences both inside and outside the individual. Internal motivation stems from a person's
beliefs, feelings, and attitudes that influence the person's actions. For example, many workers are motivated to do a
good job because they get a feeling of satisfaction from a job well done. External motivation comes from rewards and
punishments supplied by other people. For example, performing well on a difficult task may result in a bonus in the
employee's paycheck, praise from the boss, or promotion to a team leadership position.
For many people, internal factors have the most influence on behavior. If employees consider work boring, they will
not be motivated to do a good job. For others, external factors have the strongest influence on performance. An
employee who values recognition will likely be motivated by the challenge of a competition to obtain the highest
customer service rating. Keeping work areas clean, clutter free, and repaired can motivate employees who value a
pleasant work environment.
All people have their own needs, and whenever possible will choose to do things that satisfy their needs and avoid
doing things that don't. Managers can influence employee performance by understanding individual needs and
providing rewards that satisfy those needs when employees accomplish work goals.
Work Teams
Seldom do people complete all of their work alone. Most people are part of a work group and rely on cooperation from
others to perform their work. Well organized groups can accomplish more than the same number of people working
independently. Managers need to be able to develop effective work teams. A work teamwork teamA team in
which members together are responsible for the work assigned to the team.
is a group of individuals who cooperate to achieve a common goal.
Effective work teams have several characteristics. First, the members of the group understand and support its
purpose. They clearly understand the activities to be completed, know which activities they must perform, and have
the knowledge and skills necessary to complete them. Group members are committed to meeting the expectations of
others in the group and helping the group succeed. Finally, group members communicate well with each other and
work to resolve problems within the group.
Team members must be able to work well together. How can an individual employee contribute to team effectiveness?
© iStockphoto/Daniel Laflo
Just because several people work together, however, does not guarantee that they will be an effective work team. In
fact, there are many reasons why they may not be an effective team. They may not know each other well or trust each
other. They may have biases or stereotypes about other group members. They may not be prepared to cooperate in
completing a task or know how to make effective team decisions.
Managers can play an important role in developing team effectiveness. To develop effective teams, they must
understand the characteristics that make groups effective, help to organize the team and develop needed team skills,
create a work environment that supports teamwork, and help the group resolve problems when they occur.
Operations Management
OperationsOperationsThe major ongoing activities of a business.
are the major ongoing activities of a business. Operations managementOperations managementEffectively
directing the major activities of a business to achieve its goals.
involves effectively directing the major activities of a business to achieve its goals. Several activities are part of
operations management. Facilities, equipment, materials, and supplies must be available and in good operating
condition so employees can perform their work. Employees must have the knowledge and skills to do their work.
Managers must make sure that employees complete their tasks on schedule, and work to resolve problems that could
interfere with the successful completion of the job.
Effective planning and organizing are important parts of operations management. Planning helps employees know
what to do. In the same way, well-organized work space and procedures for completing work tasks help operations
run smoothly. If problems occur in the operations of a business, managers should examine the planning and
organizing of the work.
Managers must be prepared to implement the activities assigned to their area of responsibility. Some activities are
common to most management areas. For example, managers must hire new employees, monitor work schedules, and
communicate policies and procedures. In addition, most departments are organized to perform specialized
operations. The manager of the marketing department may be responsible for advertising and sales. The information
systems manager must ensure that computer systems are operational, the company's Internet sites are up-to-date,
and software is problem-free. Managers need to understand the unique work of their departments in order to help
employees complete that work.
In the past several years, organizations have paid a great deal of attention to improving the way work is done. Due to
increasing competition, companies must operate efficiently to keep costs low so that they can compete successfully.
Customers are demanding improved quality, so the company must produce products free of defects. The efforts to
increase the effectiveness and efficiency of specific business operations are known as process
improvementprocess improvementEfforts to increase the effectiveness and efficiency of specific
business operations.
.
Checkpoint
What are the primary activities managers must perform as part of the implementing function?
Assessment 5.1
Understand Management Concepts
Determine the best answer for each of the following questions.
1.
An example of an internal motivation factor is
1. praise from your supervisor
2.
2. a pay increase
3. personal satisfaction
4. the admiration of co-workers
The efforts to increase the effectiveness and efficiency of specific business operations are known as
1. organizational change
2. team effectiveness
3. the implementing function of management
4. process improvement
Think Critically
Answer the following questions as completely as possible.
3.
4.
What are some reasons that managers with well-developed plans may still have problems when
implementing those plans?
Why do some employees work well in teams and others do not?
5.2 Motivation and Change Management
Goals


Describe the main points of three theories of motivation.
Identify the steps managers should follow when implementing change.

physiological needsphysiological needsIn Maslow's hierarchy of needs, things
required to sustain life, such as food and shelter.
security needssecurity needsIn Maslow's hierarchy of needs, things required to
make sure you and those you care about are safe and free from harm.
social needssocial needsIn Maslow's hierarchy of needs, the need to belong, to
interact with others, to have friends, and to love and be loved.
need for esteemneed for esteemIn Maslow's hierarchy of needs, the need for
recognition and respect from others.
self-actualizationself-actualizationIn Maslow's hierarchy of needs, the need to
grow emotionally and intellectually, to be creative, and to achieve your full
potential.
achievement needachievement needIn McClelland's theory, the need to take
personal responsibility for work, set personal goals, and have immediate
feedback on work.
affiliation needaffiliation needIn McClelland's theory, motivation related to
relationships with others and fitting in with a group.
power needpower needIn McClelland's theory, desire to influence and control
others and to be responsible for a group's activities.
hygiene factorshygiene factorsJob factors that dissatisfy when absent but do not
contribute to satisfaction when they are present.
motivatorsmotivatorsJob factors that increase job satisfaction.
Terms










5-2a Motivation Theories

Think of the days when you are excited to get up and go to school or work. You enjoy the day and work
hard. Time seems to move faster than usual. Compare that to the days when it is impossible to get up
and you dread going to work or school. The day seems to go on forever, and you don't seem to be able
to get anything done.
In the same way, you probably can identify teachers, coaches, or businesspeople for whom you enjoy
working and who seem to be able to encourage your best efforts. You also know others whom you
would prefer to avoid and for whom it is a struggle to perform well. What causes the differences?
You learned earlier that internal and external factors motivate people to act in certain ways.
Psychologists have developed theories about what factors motivate people to behave as they do.
Managers can influence employees to behave in ways that help achieve company goals by
understanding and applying theories of motivation.









Maslow's Hierarchy of Needs
Abraham Maslow described motivation in terms of a hierarchy of needs. The first level is physiological
needs, followed by security, social, esteem, and self-actualization needs. Physiological
needsPhysiological needsIn Maslow's hierarchy of needs, things required to sustain life,
such as food and shelter.
are things required to sustain life, such as food and shelter. Security needsSecurity
needsIn Maslow's hierarchy of needs, things required to make sure you and
those you care about are safe and free from harm.
involve making sure you and those you care about are safe and free from harm. Social
needsSocial needsIn Maslow's hierarchy of needs, the need to belong, to interact
with others, to have friends, and to love and be loved.
include the need to belong, to interact with others, to have friends, and to love and be loved.
The need for esteemneed for esteemIn Maslow's hierarchy of needs, the need for
recognition and respect from others.
includes the need for recognition and respect from others. Finally, self-actualizationselfactualizationIn Maslow's hierarchy of needs, the need to grow emotionally and
intellectually, to be creative, and to achieve your full potential.
is the need to grow emotionally and intellectually, to be creative, and to achieve your full
potential.

According to the theory, people seek to satisfy these needs in order, from lowest to highest. If a lower
level of need is not satisfied, a person will have little motivation related to higher levels. For example,
starving people will be more motivated to find food than to be concerned about friendships. But once
people have reasonably satisfied their physiological and security needs, the need for social interaction
will have more influence on their behavior. Applying Maslow's theory, managers can influence
employee behavior by recognizing the levels of the hierarchy that are currently most important to an
employee and then try to use things such as job assignments, praise and support, and financial rewards
that best meet those needs.


McClelland's Achievement Motivation


Whereas Maslow's theory is based on a set of needs common to all people, David McClelland believed
that people are influenced most strongly by one of three specific needs: the need for achievement, the
need for affiliation, and the need for power.
McClelland suggested that people with a high achievement needachievement needIn
McClelland's theory, the need to take personal responsibility for work, set personal
goals, and have immediate feedback on work.
take personal responsibility for their own work, set personal goals, and want immediate
feedback on their work. People with a strong affiliation needaffiliation needIn
McClelland's theory, motivation related to relationships with others and fitting
in with a group.


are concerned about their relationships with others and work to get along well and fit in with
a group. Finally, those with a strong power needpower needIn McClelland's theory,
desire to influence and control others and to be responsible for a group's
activities.
want to influence and control others and to be responsible for a group's activities. You can
probably think of people who fit into each of these three need classifications.

Managers who believe in McClelland's theory recognize that various jobs provide greater or fewer
opportunities for achievement, affiliation, or power. Managers working with individuals with a high
achievement need should provide opportunities for them to make decisions and control their own
work. When managers see a high affiliation need in their employees, they should assign them to group
projects and teams. These employees will respond well if socializing opportunities are provided.
Finally, people with a high need for power will work best when given the opportunity to be project
leaders or to be involved in planning and decision making. McClelland's theory suggests that the
strength of the three needs can be changed over time with careful development.

Herzberg's Two-Factor Theory

Facts & Figures


Employee Retention





Managers are challenged to find ways to retain their best employees. From surveys of over 100,000
employees, the Gallup organization reported the key reasons employees choose to leave their jobs are
lack of respect for management, stress or job burnout, lack of challenge, poor work environment,
insensitivity to personal needs, poor quality of work life, and feeling out of the loop on information.
A third important motivation theory was developed by Frederick Herzberg. He conducted studies of
employees to identify what satisfied and dissatisfied them in their work. His research resulted in the
identification of two distinct groups of factors related to motivation. Therefore his theory is known as
the two-factor theory.
Herzberg called one group hygiene factors. Hygiene factorsHygiene factorsJob factors that
dissatisfy when absent but do not contribute to satisfaction when they are present.
are job factors that dissatisfy when absent but do not contribute to satisfaction when they are
present. Examples of hygiene factors are the amount of pay and fringe benefits, working
conditions, rules, and the amount and type of supervision. For example, a good companysponsored health care plan will not motivate employees to do a better job. But the lack of a
good health plan could cause employees to be dissatisfied with their jobs.
Herzberg called the second group motivators. MotivatorsMotivatorsJob factors that increase
job satisfaction.
are factors that increase job satisfaction. The people whom Herzberg studied were motivated
by factors such as challenging work, recognition, achievement, accomplishment, increased
responsibility, and personal development.



The interesting part of Herzberg's theory is that the two types of factors and their results are separate
from each other. In other words, hygiene factors can create dissatisfaction but cannot improve
satisfaction. For example, people can be dissatisfied with the level of their pay and fringe benefits, but
pay increases will not increase satisfaction very much or for any length of time. So, providing hygiene
factors, such as pay increases and better working conditions, will only prevent employees from being
dissatisfied. It will not motivate employees to perform at a higher level for more than a short time.
On the other hand, motivators increase satisfaction. To stimulate workers to higher achievement,
managers should provide motivators such as opportunities for interesting work, greater individual
control and responsibility, and recognition for good work.
Managers are often surprised by Herzberg's studies. It is easy to believe that a pay increase will
motivate employees to perform better. However, people are often dissatisfied when they compare their
pay to that of others, or they believe they are worth more than they are currently being paid. Factors
such as fair pay, flexible work hours, and good fringe benefits can keep people from being dissatisfied
but seldom are the major reason people are motivated to perform well.

Checkpoint

Why should managers understand motivation theories?
5-2b Managing Change
The only thing that seems certain in business is change. Global competition, downsizing, mergers, and many other
organizational changes affect workers and their jobs.
People are not always comfortable with change. Consider changes you have experienced. Examples could include
moving, changing schools, relationships with family or friends, or an important decision you may be facing. How did
you react to that change? When it appears that things will be different, those affected by the change are likely to be
very concerned.
When people's jobs are threatened, when they are uncertain about how a change will affect them, or when they do not
trust those responsible for planning the change, they will probably resist the change. They are likely to resist most
when change occurs suddenly, when they are not prepared, or when they don't understand the reasons for the change.
To implement organizational change, managers must work to reduce that resistance and to make change as
comfortable as possible for the employees affected. Careful planning that involves the people affected will make the
transition smoother, and employees will be more likely to support the change. The steps in an effective change appear
in Figure 5-1.
Figure 5-1
Managers should follow these steps when making changes that affect employees.
Implementing Change
1.
Step 1
PLANNING
Carefully plan for the change.
2.
Step 2
COMMUNICATING
Communicate with people, so that change does not surprise them.
3.
Step 3
INVOLVING
Involve people, so they feel a part of the change.
4.
Step 4
EDUCATING
Educate people, so they understand the change.
5.
Step 5
SUPPORTING
Support people in their efforts to change.
© Cengage Learning 2013.
Change occurs regularly in business today. What are some examples of recent changes that have occurred in
businesses in your community?
© Getty Images/Altrendo
Planning
Whenever possible, managers should not move too rapidly to make changes. They must be certain that change is
needed and that the organization will be better off as a result of the change. Then they should follow a careful
procedure to gather information, identify and study alternatives, and determine the consequences of change. A wellconsidered plan will help to assure the best results and will give confidence to those most affected by the change.
Taking a bit more time to plan will save time and reduce problems later.
Communicating
Sometimes managers believe it is best not to say anything to employees about possible changes until they are ready to
take action. They believe that early information will raise unnecessary concerns and misunderstanding. People who
study the change process recognize that it is almost impossible to conceal information about pending changes. Based
on informal communication and limited information, rumors and misinformation will spread. If people are surprised
by a change or believe they have been misled, the result is usually more damaging to the organization than the result
of early, direct communications.
Managers who have previously established open communications with employees are in the best position to
communicate with them about possible changes. Because change occurs frequently in business, employees who are
used to regular communications with their managers will not be surprised by information about potential changes,
even if the changes may appear to be negative. Regular, open, two-way communications between managers and
employees are part of an effective change process.
Net Bookmark
One of the most highly respected awards in business is the Malcolm Baldrige Quality Award. Established by the
federal government in 1987, it recognizes the achievements of companies that improve the quality of their goods and
services and provide an example of high quality and productivity.
Access the website for this textbook and choose the link for Chapter 5 Net Bookmark. Watch the video highlighting
the reasons organizations participate in this award program and the results they have achieved. How do employees
benefit when their company works to identify and achieve quality goals?
www.cengage.com/school/bizmgmt
Involving
People are more likely to support changes when they have been involved in planning. Managers must recognize that
employees can be a good source of ideas for effective solutions and how to make changes. Most effective change
processes involve the people who will be affected in gathering information, considering alternatives, and testing
solutions. It is usually not possible to involve everyone in all parts of the change process or to use a majority vote to
decide on a change. However, employees will be more supportive when they know their voices will be heard and that
they have input into plans that result in change.
Managers need to respect and seek the input of employees. Sometimes managers say they want employees’ ideas but
then ignore their input. That will frustrate employees and make them reluctant to participate in the future. Managers
must make it clear that not every idea contributed by an employee can be implemented but will be carefully
considered in the planning process.
Educating
Change in business does not just happen. New products, new technology, or redesigned jobs require people to
prepare. Usually, that means information and training. As plans for change develop, managers must determine who
will be affected and what new knowledge and skills those employees will need. Then managers should implement
information meetings and training programs to prepare employees for the required changes.
Many companies have had to reduce the number of employees through downsizing. That type of change is very
difficult for managers to implement and employees to accept. Some companies try to help the people who will no
longer have jobs by offering training for other positions available in the company or to develop skills that will help
them get jobs with another company.
Supporting
How willing are you to make a change if you are uncertain of the result? When people believe they will receive support
from their organization, they are more willing to accept changes. All changes involve some amount of risk, and
organizations cannot guarantee success. However, managers need to assure employees that there is support available
to help them adjust to the change.
The support can take many forms, such as allowing employees time to adjust to change. Managers may provide more
feedback on employee performance and be less critical of mistakes early in the new process. Counseling, training,
additional information and advice from employees who have already experienced the change are other methods of
support.
Sometimes changes have negative effects on employees that cannot be avoided. Jobs may be eliminated or
restructured. Employees may have to deal with major job changes that can require reduction in pay, different working
conditions, additional training, or a move to another location. Support is especially needed under these
circumstances. Employees who lose their jobs need time to adjust. Companies may provide full or partial salary for
several weeks or months while the people affected look for new jobs. The companies may identify open positions in
the organization and help employees retrain or relocate. They can give preference to those employees when new
positions open. Many companies now provide personal and career counseling, help with job-seeking skills, and even
pay for employment services for employees who are terminated due to change.
Checkpoint
What steps should managers follow to help employees understand and adjust to a major change?
Assessment 5.2
Understand Management Concepts
Determine the best answer for each of the following questions.
1.
2.
The motivation theory that people are influenced most strongly by one of three specific needs—
achievement, affiliation, or power—was developed by
1. Maslow
2. McClelland
3. Pavlov
4. Herzberg
Which of the following is not an effective way for a manager to implement change?
1. Do not move too rapidly to implement change.
2. Don't communicate with employees about the change until a final decision has been
made.
3. Ask employees for ideas on effective solutions and procedures.
4. Be less critical of mistakes made by employees while changes are being made.
Think Critically
Answer the following questions as completely as possible.
3.
4.
Do you agree or disagree that increases in pay and other financial benefits are not good long-term
motivators for most employees? Explain your answer.
How do you believe a manager should involve employees in planning for a change that will result in
some of them losing their jobs?
5.3 The Controlling Function
Goals


List the three basic steps in the controlling function.
Identify and describe four types of standards.

quantity standardquantity standardA specific measure that establishes the
expected amount of work to be completed.
quality standardquality standardA specific measure that describes expected
consistency in production or performance.
time standardtime standardA specific measure that establishes the amount of
time needed to complete an activity.
profitprofitThe amount remaining after subtracting the cost of goods sold from
revenue.
cost standardcost standardThe predetermined cost of performing an operation
or producing a good or service.
variancevarianceThe difference between current performance and the standard.
Terms





Add Bookmark to this Page
Main content
Chapter Contents
5-3a Understanding Controlling
“Employee absences have increased by 3 percent this year.”
“Maintenance costs are down an average of $150 per vehicle.”
“Salespeople in the southern district have increased new customer orders by 12.3 percent in a three-year
period.”
“An average of 16 additional employees per month are enrolling in the company's wellness program.”
“The adjustments to the welding robot's computer program have reduced the variations in the seam to 0.0004
mm.”
These statements provide very valuable information to managers. With the proper information, managers can
tell how well activities are being performed. Reviewing performance is one part of the fourth management
function—controlling. Managers must be able to determine if performance meets expectations. When
expectations are being met, the manager can recognize employees for their success and even reward them when
possible. If performance problems are occurring, managers need problem-solving skills to develop good
solutions.
Management as a Continuous Process
All managers perform four management functions. Planning involves setting goals and directions for the
business. Organizing deals with obtaining and arranging resources so the goals can be met. Implementing is the
responsibility for carrying out the work of the organization. Controlling is determining whether goals are being
met and what actions to take if performance falls short of the goals.
Although each of the functions has a unique purpose and includes a specific set of activities, they are all related.
Planning improves if there is an effective organization to provide information to managers. Without effective
planning, it is difficult to decide how to organize a business and what resources are needed. Implementation is
impossible without plans and difficult with a poorly designed organization. Controlling cannot be completed
unless the company has specific goals and plans. Figure 5-2 shows that management is a continuous process
and that each function supports the others. Controlling is the final function and provides the information
needed to improve the management process and business operations.
Figure 5-2
The four functions of management are directly related. The way in which one is completed affects each of the
others.
© Cengage Learning 2013.
The Steps in Controlling
Controlling involves three basic steps: (1) establishing standards for each of the company's goals, (2) measuring
and comparing performance against the established standards to see if performance met the goals, and (3)
taking corrective action when performance falls short of the standards.
Consider the following example. A business has a goal to manufacture and deliver to a customer 1,000 made-toorder blankets by a specific date. The standard is to produce 25 blankets each day for 40 consecutive days.
During the first 10 days, only 200 blankets are produced, or an average of 20 blankets a day. Because
production is 50 blankets below the standard—250 blankets in 10 days—the managers must take action to
increase production during the remaining 30 days. The corrective action may include scheduling overtime work
or assigning more workers to the task. Even as they take action, the managers should carefully study the
manufacturing process to see why the standard that was originally set could not be met.
As another example, the manager of a shoe store wants to make sure that new styles of shoes sell rapidly. The
standard is to sell 30 percent of all shoes in a new style within one month. If the store sells only 20 percent, the
manager must take corrective action. The manager may choose to increase the advertising for the shoes, give
salespeople a higher commission for selling that style, or mark down the price to sell more. The manager will
also want to use this information when planning purchases in the future.
In each example, the managers set a standard based on the work to be accomplished. Then they compared
performance against the standard to see if the company's goals could be met. Finally, if performance was not
meeting the standard, the managers had to determine how to correct the problem. Note that in both examples
the managers did not wait very long to begin measuring performance. Controlling activities should be
completed before the problem is too big or too expensive to correct.
Checkpoint
What are the three basic steps in controlling?
5-3b Setting Standards
Managers establish standards in the planning stage. They need to set high but achievable standards. Managers
can determine reasonable standards by studying the task, using their past experience, gathering industry
information, and asking for input from experienced workers. The standards become the means for judging
success and for applying controls.
Types of Standards
The standards used to control business operations depend on the type of business, its size, and the activities
being controlled. The major types of standards are quantity, quality, time, and cost standards.
Quantity Standards
A quantity standardquantity standardA specific measure that establishes the expected amount
of work to be completed.
establishes the expected amount of work to be completed. Quantity standards take different forms, depending
on the tasks. Production managers may specify the minimum number of units to be produced each hour, day,
or month by individual workers or groups of workers. Sales managers may establish the number of prospective
customers that sales representatives must contact daily or weekly. A manager of administrative services may
establish a minimum number of forms to be completed or number of lines of information to be keyed in an
hour by information-processing personnel. The quotas Jasmine established for her employees in the
telemarketing department described at the beginning of the chapter are examples of quantity standards.
Quality Standards
Quantity standards alone are often not enough to judge an employee, a product, or a service. A fast worker, for
example, can be very careless, or a slow worker can be extremely careful. Thus, the quality of the work
performed is often just as important as the quantity produced. A quality standard A specific measure
that describes expected consistency in production or performance.
Perfection—having no errors—may be the only acceptable standard for some products and services. An
automobile battery that does not work cannot be sold. An invoice with pricing errors cannot be sent to a
customer. An accountant cannot calculate a client's taxes incorrectly. Perfection is the standard, but it may not
always be practical or cost-effective to develop procedures to check every finished product. On an assembly line
where thousands of products are produced every hour, sampling a few products each hour may be enough to
identify when quality problems occur so corrective action can be taken.
Time Standards
Time standards are closely related to quantity and quality standards. Most business activities can be measured
by time. A time standardtime standardA specific measure that establishes the amount of time
needed to complete an activity.
is the established amount of time needed to complete an activity. The amount of time it takes to complete an
activity has an effect on costs, the quantity of work completed, and often on the quality of the work. Time
standards are more important to some businesses than to others. Building contractors and bakeries are
examples of businesses that normally have strict time schedules. If they do not meet the schedules, they suffer
an immediate financial loss. If an office tower is not completed on time, the builder usually must pay a financial
penalty. A baker who does not have doughnuts and bagels ready for the breakfast rush will lose a major portion
of the day's sales. Other businesses may not see the immediate financial loss, but failure to maintain time
standards will result in fewer products being produced, poor coordination of activities between departments, or
other problems.
Cost Standards
An important measure of the success or failure of a firm is financial profit or loss. ProfitProfitThe amount
remaining after subtracting the cost of goods sold from revenue.
equals income minus costs. Therefore, managers can increase profits by either (1) increasing sales revenue or
(2) decreasing costs. Not all managers or employees are directly connected with work that increases sales.
However, most employees and managers do influence costs. Wasting material or taking more time than
necessary to perform a task adds to the cost of doing business. Increased costs, without a proportionate
increase in sales dollars, decrease profit. Businesses must be cost-conscious at all times. Cost standardsCost
standardsThe predetermined cost of performing an operation or producing a good or service.
, or the predetermined cost of performing an operation or producing a good or service, are an effective way of
helping businesses maintain profitability.
Management Matters
There's an app for that, too
On a large scale, computer applications can instantaneously track everything in a business from the hourly
production of oil wells to the sales of specific colors of sweaters in each store of a worldwide retail business. At
any time, managers can access that information to make production decisions and update sales forecasts.
In the same way, cell phone users can track minutes used, text messages sent, or amount of data downloaded by
their phone. Some plans require users to pay for each service while others set limits and charge customers when
they exceed their plan. Some plans allow users to check their usage online or directly on their phones. The
information can be used in controlling expenses. Knowing the current status of your account can help you make
better decisions on whether to send a text message to all your friends or download a new song.
What Do You Think? Does access to information help you make better decisions? What types of information
can help you stick to a budget, better schedule your time, or improve your physical health?
Generally, businesses pay more attention to cost controls than to any other type of control. The control devices
used, as a result, are numerous. One of the main purposes of the accounting department is to provide detailed
cost information. This is why the head of an accounting department is often called a controller. Most managers,
however, act as cost controllers in some way. Increasingly, employee work teams and individual employees are
assigned responsibility for cost controls.
The most widely used tool for controlling costs is the budget. Like schedules and standards, budgets are also
planning devices. When a budget is prepared, it is a planning device; after that, it is a controlling device. Actual
cost information is collected and compared with budgeted amounts. These comparisons permit judgments
about the success of planning efforts and provide clues for making changes that will help the company reach its
financial goals. Managers need to monitor costs regularly. When budget problems are identified early,
managers have time to take corrective action.
Measuring and Comparing Performance
Once standards have been established, they are used to determine effective performance. Managers gather
information on all parts of business operations for which they are responsible. They compare that information
against the standards to determine if performance is meeting the standards. A variancevarianceThe
difference between current performance and the standard.
is a difference between current performance and the standard. A variance can be positive (performance exceeds
the standard) or negative (performance falls short of the standard). Whenever a variance exists, managers must
identify the reasons for the difference.
Actual performance exceeding the standard may seem to be an ideal situation that requires no corrective action.
However, it is important to understand why the higher-than-expected performance occurred so that it can be
repeated. Or, perhaps the positive performance in one area of the business is having a negative effect on
another area. In addition, managers should review the process for developing standards to see why they set the
standard lower than the performance that could actually be achieved.
The greatest concern occurs when performance is lower than the standard. That means that the company is not
performing at the expected level. It also says that there are problems between planning and implementing
activities. Managers not only need to take corrective action as soon as possible to improve performance but
must review procedures carefully to avoid the same problem in the future. Managers must be careful in the way
they communicate the problem to employees and how they take corrective action. If employees believe the
manager is blaming them for their role in the substandard performance, they may not be motivated to help
solve the problem. On the other hand, if employees do not recognize the seriousness of the problem, they will
not make the changes needed for improvement to occur.
Monitoring all activities for which managers are responsible can take a great deal of time. Managers can use
information systems to reduce the amount of time spent on controlling. Computers can monitor performance
and compare it to the standard. When the computer identifies a variance, it generates a variance report for the
manager. Through the use of computer monitoring and variance reports, managers can identify problems
quickly and begin to take immediate corrective action.
Checkpoint
Provide an example of each of the four types of standards.
Assessment 5.3
Understand Management Concepts
Determine the best answer for each of the following questions.
1.
2.
The final step managers take in the controlling process is
1. establishing performance standards for company goals
2. measuring performance using established standards
3. establishing new goals
4. taking corrective action when standards are not met
Consistency in products and performance is measured with a
1. quantity standard
2. quality standard
3. time standard
4. cost standard
Think Critically
Answer the following questions as completely as possible.
3.
4.
Do you believe managers should perform each of the management functions in order? Why or
why not?
Which type of standard do you believe is most important to improving the overall
effectiveness of a business? Justify your choice.
Teamwork
Changing the Face of Manufacturing
You can't make a mistake when building airplane engines. The jet engines produced by the General Electric
Aircraft Engines plant in Durham, North Carolina, have more than 10,000 parts. When completely assembled,
they weigh more than eight tons. Yet a bolt not tightened, a tool left inside the engine, or a safety procedure not
followed can cost hundreds of lives.
Approximately 200 people assemble the huge engines. But there is only one boss, the plant manager, and one
instruction to guide the work of the plant—the date each engine needs to be finished. Beyond that instruction,
employees make every decision about how the work will be completed. They hold a record for delivering every
engine ordered on schedule for over three years. During that time, they were able to reduce the cost of
producing the engine by nearly one-third.
How was this GE plant able to achieve its amazing record with only one manager? Here are some unique
characteristics of the organization:







Employees are organized into fourteen work teams that make almost all decisions. Everyone
is on a team, and team meetings are scheduled when all employees are available.
There are three pay levels for employees, based on skill levels.
As employees increase their skills, they can advance into a higher pay level.
There is no time clock. If someone has a doctor's appointment or needs to go to their child's
school activities, they work with team members to be able to leave.
Everyone learns how to do many of the assembly tasks so they can help each other.
Teams are responsible for hiring new team members. They do the interviewing, and they have
to agree on the right person.
Teams solve problems and often come up with unique but simple solutions.
The team environment in Durham works. The plant has the lowest turnover rate and lowest production costs of
any of General Electric's engine assembly plants. Its unique organization demonstrates that when employees
are given the opportunity to work together to manage their work, they do it better than anyone could have
imagined.
Think Critically
1.
2.
How do you believe the pay plan affects employee motivation? What are the advantages and
disadvantages of that plan?
Discuss reasons why the team problem-solving process seems to result in unique but effective
solutions. Are there reasons a solution developed by employees is likely to be more successful
than if the same solution was developed by a manager without the input of employees?
© Shutterstock/Rick Becker-Leckrone
5-4 Gathering and Using Performance Information
Goals


Describe three corrective actions managers can take as part of controlling performance.
Discuss several important areas of cost control in businesses.

inventoryinventoryAll the materials and products a business has on hand for use
in production and available for sale.
just-in-time (JIT) inventory controljust-in-time (JIT) inventory controlA method
in which the company maintains very small inventories and obtains materials
just in time for use.
creditcreditCredit used when a customer makes an expensive purchase and
agrees to make payments over an extended but fixed period of time.
Terms


5-4a Taking Corrective Action
When managers discover that performance is not meeting standards, they can take three possible actions:
1.
2.
3.
Take steps to improve performance.
Change policies and procedures.
Revise the standard.
If managers have planned carefully, they should be reluctant to change standards. In the blanketmanufacturing business discussed earlier, managers should know from past experience whether producing 25
blankets a day is reasonable. Only under unusual circumstances (major equipment breakdown, problems with
suppliers, employee strikes, etc.) would the blanket managers reduce the standard. However, failure to meet the
goal of 1,000 blankets by the specified date will not please the customer and may result in a loss of sales.
Most often, managers need to improve performance of activities when standards are not being met. This usually
means making sure that the work is well organized, that supplies and materials are available when needed, that
equipment is in good working order, and that employees are well trained and motivated.
Occasionally, standards are not met because activities cannot be accomplished as planned, or policies and
procedures are not appropriate. This is likely to happen when a business begins a new procedure, starts to use
new equipment, or has other major changes. In this situation, managers may need to change the policies or
procedures that are not working in order to meet the standards. Process improvement discussed earlier usually
results in policy or procedure changes.
Finally, when the managers have explored all possibilities to improve performance and it still does not meet the
standards, they need to evaluate the standards themselves. Planning is usually not exact. Conditions can change
between the time plans and standards are developed and the time activities are performed. Managers cannot
expect that all standards will be appropriate. Managers like to raise standards when they believe workers can
achieve higher performance. It is difficult to make the decision to reduce standards, but that may be necessary
from time to time. If a group of new employees is doing the task, performance standards may need to be
reduced until the employees have had the necessary training and opportunity to perfect their skills.
When new planning procedures are used or new activities are implemented, planning is less likely to be
accurate. Standards developed in those situations should be studied more carefully than the standards for
ongoing activities or standards that have been developed in the same way for a long period of time.
Standards should be revised when it is clear they will not accurately reflect performance and attempts to
improve performance have been unsuccessful. When standards are changed, the new standards and the reasons
for the changes should be clearly communicated to the employees affected. Also, the procedures for setting
standards should be revised so that standards developed in the future are more accurate.
Checkpoint
Why should managers be reluctant to change standards even when performance does not meet those
standards?
Controlling Costs
All managers need to watch constantly for ways to reduce costs. Excessive costs reduce the company's profit.
There are several areas in a business where managers can anticipate cost problems and develop ways to reduce
costs. They are inventory, credit, theft, and employee health and safety.
Inventory
All the materials and products a business has on hand for use in production and available for sale is called
inventory----All the materials and products a business has on hand for use in production and
available for sale.
Manufacturers need to produce enough of each product to fill the orders they receive. They need
enough raw materials to produce those products. Wholesalers and retailers must maintain inventories to meet
their customers’ needs. In all types of businesses, if inventories are too low, sales will be lost. If inventories are
too high, costs of storage and handling will increase. There may be products remaining in inventory that are
never used or sold. In that situation, the company loses all of the money invested in those products.
Inventory control requires managers to walk a fine line. They must maintain sufficient inventory to meet their
production and sales needs yet not so much that it is too costly to handle and store. They must select products
to purchase that can be sold quickly at a profit. They must purchase products at the right time and in the correct
quantities to minimize the company's inventory cost.
Inventory control is a kind of balancing act. What factors need to be in place for just-in-time inventory controls
to be successful?
Shutterstock/Dmitry Kalinovsky
Facts & Figures
Consumer Credit
According to the U.S. Census Bureau, 181 million Americans hold a total of 1.5 billion credit cards. Credit cards
are used to complete more than $2.5 trillion in transactions each year. The National Foundation of Credit
Counseling reports that 26 percent of Americans admit to not paying their bills on time. At any time, about 4
percent of credit card payments are more than 30 days past due.
Many companies use just-in-time (JIT) inventory control----A method in which the company
maintains very small inventories and obtains materials just in time for use.
JIT is a method of inventory control in which the company maintains very small inventories
and obtains materials just in time for use. To set up a JIT system, managers carefully study production
time, sales activity, and purchasing requirements to determine the lowest possible inventory levels. They then
place orders for materials so that they arrive just as they are needed for production or to fill sales orders.
Production levels are set so the company has only enough products to fill orders as they are received. Effective
inventory control methods can be very complicated. JIT inventory management requires the close support and
cooperation of a company's suppliers as well as the companies providing transportation services to resupply
inventories. If an order is not delivered on time, production will be delayed and sales will be lost.
Credit
Most businesses must be able to extend credit to customers. Businesses also use credit when buying products
from suppliers. Credit---used when a customer makes an expensive purchase and agrees to make
payments over an extended but fixed period of time.
is the provision of goods or services to a customer with an agreement for future payment. If the company
extends credit to customers who do not pay their bills, the company loses money. Also, businesses that use
credit too often when making purchases may spend a great deal of money on interest payments. Those
payments add to the total cost of the product and reduce profits.
Businesses must develop credit policies to reduce the amount of losses from credit sales. They
must check each customer's credit history carefully before offering them credit. They must develop billing and
collection procedures that will collect most accounts on time. The age of an account is the number of days that
payment is past due. Managers need to watch the age of each credit account. The longer an account goes
unpaid, the greater the chance that the company will never collect the full payment.
Companies should buy on credit when they will lose money if they don't make the purchase. If a production
schedule cannot be maintained without the credit purchase and if the price that can be charged for the sale of
the product is high enough to cover the added cost, the credit purchase should be made. Companies may also
need credit to purchase expensive equipment or large orders of products and materials. But managers
responsible for purchasing must control the amount of money the company owes to other businesses. It is easy
to make too many purchases on credit. When this happens, the interest charges will often be high, and the
company may not have enough money to pay all of its debts on time.
Managers must be sure bills are paid on time to protect the credit reputation of the business. If the supplier
offers a discount for paying cash, managers should check to see if the company will benefit from taking
advantage of the discount. Before using credit, managers should study the credit terms to see what the final cost
will be. Credit can be a good business tool if used carefully but can harm the business if not controlled.
Theft
Businesses can lose a great deal of money if products are stolen. Thefts can occur in many parts of a business
and can be done by employees as well as by customers and others. Businesses can lose cash, merchandise,
supplies, and other resources due to theft. By establishing theft controls, businesses usually are able to reduce
losses.
The theft of merchandise from warehouses and stores is a major business concern. Retail stores
are the hardest hit by such losses. Retailers lose billions of dollars annually due to crime, much
of which is from theft of merchandise. Shoplifting by customers and employees equals 6
percent or more of total sales each year for the typical retailer. Much of the loss occurs during
the end-of-year holiday shopping season when stores are crowded and part-time workers are
employed, but it is an ongoing and serious problem throughout the year.
Businesses and individual computer users must apply security measures to protect data and personal
information. Have you ever experienced identity theft?
© Getty Images/Photodisc
Many stores, warehouses, and trucks are burglarized during the night or when merchandise is being
transported. Security guards and a variety of security equipment are frequently used to reduce the chances of
such thefts. Many companies carry insurance against losses, but with high loss rates the cost of insurance is
very expensive.
A rapidly growing area of concern to businesses and consumers alike is computer and Internet
fraud. Business data and personal information are held in large and small computer files.
Financial records and personal identity information are moved back and forth via the Internet.
Data are exchanged online as part of many business transactions. Businesses increasingly
contract with specialized companies to handle activities such as order processing, customer
billing, accounting, and human resource management. Businesses must carefully plan and
review all procedures for gathering, storing, and exchanging data to ensure the highest level of
security and to prevent data and identity theft.
Health and Safety
Even when employees are absent from work because of sickness or injury, the company must continue to
operate. Other employees must be available to fill in for the absent employee or the work will go undone. The
salary of both the absent employee and the replacement employee must be paid. A share of employee health
insurance costs and other benefits are often paid by the company as well. Studies estimate that the annual costs
to many businesses of employee absence and health care now exceed 20 percent of the salary paid to each
employee. An employee paid at the rate of $17.00 per hour requires an additional $3.40 each hour to pay those
costs. A person earning $45,000 will add $9,000 or more to the costs of the business just for
health expenses and employee absences.
The rising cost of health insurance is causing many businesses to increase the percentage of the insurance costs
employees must contribute and offer coverage only to full-time employees. Businesses are working with
insurance companies to find lower-cost insurance alternatives that may reduce benefits and add to the out-ofpocket costs for employees. Many companies offer no health insurance benefits at all. The cost of health
insurance is one of the major issues facing business managers and employees today.
Businesses can control or even reduce the costs associated with health and safety programs if managed
carefully. These companies provide safety training for all employees. Work areas and equipment are inspected
regularly to make sure they operate correctly and safely. Employees are provided information on ways to
improve their health. Investments in fitness centers and wellness programs have resulted in lower costs for the
business due to fewer medical claims and reduced employee absences.
Checkpoint
What are the main areas in a business where managers can anticipate cost problems and develop ways to
reduce costs?
Assessment 5.4
Understand Management Concepts
Determine the best answer for each of the following questions.
1.
2.
Which of the following is not one of the actions managers should take if they discover that
performance is not meeting standards?
1. Take steps to improve performance.
2. Change policies and procedures.
3. Revise the standard.
4. Assign the problem to a trusted employee.
The best credit policy for a company is to
1. never make purchases on credit
2. charge very high interest rates to customers to increase profits
3. only buy on credit when it will lose money if the purchase isn't made
4. pay for credit purchases well before payment is due
Think Critically
Answer the following questions as completely as possible.
3.
4.
Explain the meaning of the statement “planning is usually not exact” as it applies to
evaluating performance and standards.
What recommendations would you make to a business to increase computer and Internet
security for the business and its customers?
Assessment
Chapter Concepts


Implementing involves communicating effectively, motivating employees to do their best
work, developing work teams, and managing company operations.
People choose to do things that will satisfy their needs and avoid things that don't. Managers
influence performance by providing rewards when employees accomplish work goals.
Theories of motivation developed by Maslow, McClelland, and Herzberg describe factors that
influence employee behavior.



Change is common in organizations and managers need to help employees accept change. The
steps in an effective change process are planning, communicating, involving, educating, and
supporting.
Controlling ensures that company operations meet expectations. Controlling steps are:
establishing standards for goals, measuring and comparing performance against standards,
and taking corrective action when performance falls short of standards. Common types of
standards are quantity, quality, time, and cost standards.
To help the company make a profit, managers must control costs. Areas commonly monitored
for cost control are inventory, credit, theft, and employee health and safety.
Assessment
Review Business Management Terms
Write the letter of the term that matches each definition. Some terms will not be used.

A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.
R.
S.
1.
2.
3.
4.
5.
A specific measure that describes expected consistency in production or performance.
The predetermined cost of performing an operation or producing a good or service.
A specific measure that establishes the expected amount of work to be completed.
Job factors that increase job satisfaction.
A specific measure that establishes the amount of time needed to complete an
activity.
6. Job factors that dissatisfy when absent but do not contribute to satisfaction when
they are present.
7. All the materials and products a business has on hand for use in production and
available for sale.
8. Effectively directing the major activities of a business to achieve its goals.
9. Efforts to increase the effectiveness and efficiency of specific business operations.
10. The difference between current performance and the standard.
achievement need
affiliation need
cost standard
hygiene factors
inventory
motivation
motivators
need for esteem
operations management
physiological needs
power need
process improvement
quality standard
quantity standard
security needs
self-actualization
social needs
time standard
variance
Assessment
Review Business Management Concepts
Determine the best answer.
11. Effective work teams have all of the following characteristics except
1. all members understand and support the group's purpose
2. the team does not need to have a group leader
3. members work to resolve problems in the group
4. The team's activities are clear.
12. The person who described motivation in terms of a hierarchy of needs was
1. Maslow
2. Herzberg
3. McClelland
4. Jacobs
13. Employees are more likely to support what they
1. find to be the easiest
2. are paid for
3. are involved in planning
4. have been told to support by their manager
14. The first step in the controlling process is
1. establishing standards for each of the company's goals
2. communicating with employees about the importance of controlling
3. taking corrective action when performance falls short of standards
4. organizing employees into work groups
15. Which of the following is not a way managers can increase profits?
1. Increase sales revenues.
2. Decrease costs.
3. Add more employees.
4. Reduce waste.
16. A production manager who specifies the minimum number of units to be produced each hour,
day, or month is establishing a
1. variance
2. time standard
3. quality standard
4. quantity standard
Assessment
Apply What You Know
Answer the following questions.
17. Based on the Reality Check scenario at the beginning of the chapter, do you believe most of the
problems were the result of poor planning or poor implementation? Justify your answer.
18. Why are businesses paying much more attention to developing effective work teams today than in the
past?
19. What differences in implementation and controlling activities, if any, would there be for a manager of a
small business and a manager in a large business?
20. What should a manager do if it is clear that many employees will view a planned change negatively?
21. What are some examples of business activities where perfection is the only acceptable standard for
performance?
22. Should managers delegate controlling activities to employees and employee teams? Why or why not?