Chapter 10: Monitoring

Question 1

Define what monitoring is.

Answer 1

Monitoring is the process that determines what is being accomplished, evaluating results, taking steps to perpetuate positive results, and to correct undesirable deviations from standards.

Question 2

What characterizes an effective management system? (4)

Answer 2

1. Simplicity
2. Accessibility
3. Merge capability
4. Adaptability

Question 3

What types of standards & benchmarks are used as the basis for performance measurement? (2)

Answer 3

1. Historical standards - internal & external sources.
2. Engineered standards - based on objective quantitative analysis of work situations, measuring potential output of employees.

Question 4

What are the (2) types of results that are important when it comes to monitoring?

Answer 4

1. Financial data/financial standards
2. Sales data/sales standards

Question 5

What are the (2) types of results that are important when it comes to monitoring?

Answer 5

1. Financial data/financial standards
2. Sales data/sales standards

Question 6

When monitoring sales standards, what elements are important to pay attention to? (5)

Answer 6

1. Sales volume - current sales levels are compared to levels from a corresponding prior period.
2. Product mix - blends of different business lines (eg. commercial-lines and personal-lines).
3. Commission income - reflects actual income earned by the brokerage and is more important than premium volume.
4. Net profit - the bottom line standard for any brokerage, the overriding standard of any profitable business.
5. Individual performance - standards for both quantitative and qualitative aspects of employees’ performance, how well they do their work.

Question 7

What is the overall purpose of corrective action?

Answer 7

The primary purpose is to keep the firm’s actual performance as close to its strategic plan as possible when deviations have been identified.