Transcript Ch. 18

Introduction to Hospitality, 6e
and
Introduction to Hospitality Management, 4e
John R. Walker
Control
Chapter 18
What is Control?
• Control provides a way to check actual results
against expected results.
• Action can then be taken to correct the situation
if the results are too far from the expected
outcome
• It is also about providing guidelines and
mechanisms to keep things on track
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
What is Control
• Control is the management function that
provides information on the degree to which
goals and objectives are being accomplished.
• Management engages in controlling by
monitoring activities and taking corrective
actions whenever the goals are not being met.
• An effective control system ensures that
activities that lead to the attainment of the
organization’s goals are completed.
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Why is Control Important?
• Control is important because it’s the final link in
the management functions.
• It’s the only way managers know whether
organizational goals are being met and, if not,
why not.
• Controlling is involved with planning, organizing,
and leading
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
The Control Process
• The control process is a five-step process of
determining goals, setting standards, measuring
actual performance, comparing actual
performance against those standards, and
taking managerial action to correct deviations or
inadequate performances
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Setting Standards
• Standards are normally set in terms of quantity,
quality, finances, or time.
• When developing a method of measurement,
one must be absolutely sure that the goals are
indeed measurable
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Measuring
• Personal observation—by monitoring
subordinates to make sure things are done
right—is the simplest and most common way of
comparing actual performance to standards
• Management by walking around (MBWA) is
the best way to make personal observations
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
How We Measure
• Four common sources of information to measure
actual performance are personal observation,
statistical reports, oral, and written reports
• Statistical reports provide information in the form
of data that measures results and can be used
for comparative purposes
• The advantage of oral control reports is that they
can be quick and allow instant feedback
• Written reports often have more information than
oral, and are usually easy to file and retrieve
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
What We Measure
• We measure results to see how they compare
with expectations. What we measure is more
critical than how we measure.
• The results we measure include guest
satisfaction, labor costs, food and beverage
costs, employee satisfaction, rooms and room
rates, bed sheets, energy costs, insurance, and
labor turnover
• We measure labor costs because they are the
highest of the variable costs
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
What We Measure
• Most managers have budgets set in dollar costs
for their areas of responsibility.
• Keeping costs within budget is, therefore, a fairly
common control measure
• Results-accountability control system must be
able to detect deviations from desired results
quickly enough to allow for timely corrective
management action
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Comparing Results
• Comparing results with expectations shows the
amount of variation between actual performance
and the standard or expected results.
• Some variation is generally seen between the
expected and the actual results.
• The range of variation is the acceptable
difference between the actual and expected
results
• Managers are concerned with the size and
direction of the variance
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Taking Managerial Action
• The final step in the control process is taking
managerial action. Correcting actual
performance is used by managers if the source
of the performance variation is unsatisfactory
• Immediate corrective action, corrects
problems at once to get performance back on
track, or
• Basic corrective action, looks at how and why
performance has deviated and then proceeds to
correct the source of deviation
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Types of Controls
• Feedforward control focuses on preventing
anticipated problems because it takes place in
advance of the work activity
• Concurrent control is a type of control that
takes place while a work activity is in progress
• Feedback control, the most popular type of
control, takes place after the activity is done. For
example, financial statements are examples of
feedback control
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Other Types of Control
• Corporate Control - Planning and scheduling
work more effectively may save thousands of
dollars for departments such as Food and
Beverage and Banquets
• Food and Beverage Control - Most operations
take inventory and calculate the food and
beverage costs expressed as a percentage of
sales at least once, sometimes twice, a month
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Operational Financial Control
• At the operational level in the hospitality
industry, the financial controls mainly consist of
budgets and income statements
• zero-based budgeting has managers begin
with a budget of zero dollars and justify all the
cost of goods sold, controllable costs, and
capital expenditures
• Income statements show the actual sales and
expenditures for a month or year
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Operational Financial Controls
• Good managers first control the “big ticket” items
that will be most costly if not controlled
• Labor costs in a hospitality operation are the
largest of the controllable costs. Labor costs, like
any other, need to be controlled in line with
sales
• Food and beverage costs are the next largest to
be controlled after labor costs
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Qualities of an
Effective Control System
• All effective control systems exhibit the following
ten characteristics: Accuracy, timeliness,
economy, flexibility, understandability,
reasonable criteria, strategic placement,
emphasis on exceptions, multiple criteria, and
corrective action
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Contingency Plans and Controls
• The most important contingency plan factor that
affects the design of an organization’s control
system is the size of the organization. The control
system will vary according to its size
• As organizations increase in size, direct supervision
is likely to be supplemented by an expanding formal
control system of reports, regulations, and rules
• Very large organizations typically have highly
formalized and impersonal feedforward and
feedback controls
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Adjusting Controls for
Cultural Differences
• In a global hospitality corporation, managers of
foreign operations tend to be controlled less
directly by the home office
• Because distance creates a tendency to
formalize controls, the home office of a global
company relies on formal reports for control.
• Global companies rely on the power of
information technology to provide speedy control
reports of results
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Workplace Privacy
• Personal on-the-job Web surfing costs millions
of dollars a year in wasted computer resources
and billions of dollars in lost work productivity
• Concern about sexual harassment is one of the
reasons why companies may want to monitor or
keep backup copies of all e-mail
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Workplace Theft
• A high percentage of all organizational theft and
fraud is committed by employees, not outsiders
• People steal because they can rationalize
whatever they’re doing as being correct and
appropriate behavior.
• Hospitality associates also steal because they
often feel underpaid
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Workplace Violence
• Factors contributing to workplace violence
include employee stress caused by long working
hours, information overload, daily interruptions,
unrealistic deadlines, and uncaring managers
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Controlling Sustainability
• Hotels and restaurants as well as other
businesses and organizations must constantly
monitor and manage the different aspects of
sustainable practices, such as energy, waste,
lighting, water, heating and cooling, temperature
and other sources that consume energy
• There are a variety of solutions to lighting
controls, including occupancy sensors, time
switches, energy efficient bulbs
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Trends in Control
• Current trends include: Increasing use of
technology for control helps make the job of
control not only easier but also much quicker.
Quicker results mean decisions to make
necessary changes are made sooner, thus
avoiding further losses.
• Handheld devices that take inventory are an
example of how technology can assist
management with inventory taking
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
The End
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved