FOUNDATIONS OF

CONTROL
Chapter 18

Learning Objectives
You should learn to:
Define control
Describe the three approaches to control
Explain why control is important
Describe the control process
Distinguish among the three types of control
Describe the qualities of an effective control
system
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Learning Objectives (cont.)

You should learn to:
Discuss the contingency factors that
influence the design of an organizations
control system
Identify how controls need to be adjusted
for cultural differences
Explain how three contemporary issues workplace privacy, employee theft, and
workplace violence - affect control
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 Control

What Is Control?

the process of monitoring activities to ensure that they

are being accomplished as planned and of correcting
significant deviations
control systems are judged in terms of how well they
facilitate goal achievement
market control
- emphasizes the use of external market mechanisms to
establish standards of performance
useful where products and services are distinct
useful where marketplace competition is considerable
divisions turned into profit centers and judged by the
percentage of total corporate profits each contributes
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What Is Control? (cont.)

Control
bureaucratic control - emphasizes organizational authority
relies on administrative rules, procedures, and policies
depends on standardization of activities, well-defined job
descriptions, and other administrative mechanisms
clan control - behavior regulated by shared values, traditions,
and other aspects of organizational culture
dependent on individual and group to identify expected
behaviors and performance measures
found where teams are common and technology changes
often

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Why Is Control Important?

Control is the Final Link in the Management
Process
provides the critical link back to planning
only way managers know whether organizational
goals are being met

Permits Delegation of Authority

fear that employees will do something wrong for
which the manager will be held responsible
provides information and feedback on employee
performance
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The Planning-Controlling Link

Planning
Goals
Objectives
Strategies
Plans

Controlling
Standards
Measurements
Comparisons
Actions

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Organizing
Structure
Human Resource
Management

Leading
Motivation
Leadership
Communication
Individual and
Group Behavior

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The Control Process

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The Control Process

Background
controlling is a three-step process
assumes that performance standards already
exist
specific goals are created in the planning process

Measuring
How We Measure
personal observation - permits intensive coverage
Management By Walking Around (MBWA)
drawbacks - subject to personal biases
consumes a great deal of time
suffers from obtrusiveness
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The Control Process (cont.)

Measuring (cont.)
How We Measure (cont.)
statistical reports - numerical data are easy to
visualize and effective for showing relationships
drawbacks - not all operations can be measured
important subjective factors may be ignored

oral reports - includes meetings, telephone calls

may be best way to control work in a virtual environment
technology permits creation of written record from oral
report
drawbacks - filtering of information
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The Control Process (cont.)

How We Measure (cont.)
written reports - often more
comprehensive and concise than oral
reports
usually easy to file and retrieve

comprehensive control efforts should

use all four approaches

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The Control Process (cont.)

What We Measure

what we measure more critical than how we measure

control criteria applicable to any management
situation:
employee satisfaction, absenteeism, and turnover
keeping costs within budgets

control system needs to recognize the diversity of

activities
some activities difficult to measure in quantifiable
terms
most activities can be grouped into some objective
segments that can be measured
when objective measures are not available, should rely on
subjective measures
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The Control Process (cont.)

Comparing
determines the degree of variation
between actual performance and
standard
acceptable range of variation deviations that exceed this range
become significant

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Measurement of Performance

Defining The Acceptable Range

Of Variation
Acceptable
Upper Limit
Acceptable
Range of
Variation

Standard

Acceptable
Lower Limit

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t+1

t+2
t+3
t+4
Time Period (t)

t+5

18-14

Sales Performance Figures For

July, Eastern States Distributors
Brand
Heineken
Molson
Irish Amber
Victoria Bitter
Labatts
Corona
Amstel Light
Dos Equis
Tecate
Total cases

Standard*
1,075
630
800
620
540
160
225
80
170
4,300

Actual*
913
634
912
622
672
140
220
65
286
4,464

Over (under)*
(162)
4
112
2
132
(20)
(5)
(15)
116
164

* hundreds of cases
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The Control Process (cont.)

Taking Managerial Action
Correct Actual Performance - action taken
when the performance variation is unsatisfactory
immediate corrective action - corrects problems at
once to get performance back on track
basic corrective action - identifies reason for
performance variation
corrects the source of variation

Revise the Standard - variance results from an

unrealistic standard
standard, not performance, needs correction
troublesome to revise the standard downward
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Managerial Decisions in the

Control Process

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Types Of Control
Feedforward Control
prevents anticipated problems
most desirable type of control
requires timely and accurate information that
often is difficult to get
Concurrent Control
takes place while activity is in progress
corrects problem before it becomes too costly
best-known form is direct supervision
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Types of Control (cont.)

Feedback Control

problems may already have caused damage

or waste
the most popular type of control
feedback may be only viable form of control
available

feedback has two advantages

provides meaningful information on the
effectiveness of planning
can enhance employee motivation
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Feedback Control
Financial Controls
Balance Scorecard:
A performance measurement tool that looks at
four areas that contribute to companys success
financial
Customer
Internal processes
People/ innovation/ growth
Managers should develop goals in each of the four
areas

Information Controls
Two ways to view
1.As a tool to help managers control
organizational activities (MIS)
2.As an organizational area that managers
need to control

Benchmarking of Best Practices

Bench marking
The search for the best practices among
competitors or non competitors that lead
to their superior performance
Benchmark
The standard of excellence against which
to measure and compete

Types Of Control
Input

Processes

Output

Feedforward
Control

Concurrent
Control

Feedback
Control

Anticipates
problems

Corrects
problems as
they happen

Corrects
problems after
they occur

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Qualities Of An Effective Control

System
Corrective
Accuracy
Action

Multiple
Criteria

Emphasis on
Exceptions

Timeliness

EFFECTIVE
CONTROL
SYSTEM

Strategic
Placement

Flexibility
Reasonable
Criteria

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Economy

Understandability
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Contingency Factors in the Design

of Control Systems

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Implications For Managers

Adjusting Controls for Cultural Differences
methods of controlling people and work can be quite
different in other countries
differences are most marked in the measurement and
corrective action steps

in technologically advanced nations, controls are

indirect
in less technologically advanced nations, controls are
more direct
laws in different countries provide different constraints
on corrective action
data used for controlling may not be comparable in
different countries
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Contemporary Issues In Control

Workplace Privacy
employers have the right to monitor employee
communications, examine employee computers
and files, and use surveillance cameras
reasons for monitoring include prevention of:
recreational on-the-job Web surfing
creation of hostile work environments with e-mail
security leaks of critical information

Electronic Communications Privacy Act - 1986

prohibits unauthorized interception of electronic
communication
workplace electronic monitoring is still legal
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Contemporary Issues In Control

(cont.)
Workplace Privacy (cont.)
companies are developing and
enforcing workplace monitoring policies
develop unambiguous computer usage
policy
inform employees that computers may be
monitored
provide clear guidelines on acceptable use
of company e-mail system and the Web
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Workplace Monitoring
Track telephone calls (numbers and time spent)
Store and review employee e-mail messages
Store and review computer files
Log computer time and keystrokes entered
Record and review telephone conversations
Store and review voice-mail messages

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39%
27%
21%
15%
11%
6%

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Contemporary Issues In Control

(cont.)

Employee Theft

unauthorized taking of company property by

employees for their personal use
is an escalating problem in all types of organizations
different proposals to explain employee theft
industrial security - opportunity presents itself due to lack
of controls and favorable circumstances
criminology - people have financial-based pressures or
vice-based pressures
clinical psychology - people are able to rationalize any
type of behavior
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Control Measure for Deterring or Reducing

Employee Theft or Fraud

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Contemporary Issues In Control

(cont.)
Workplace Violence
many factors contribute to workplace violence
including:

employee work driven by time, numbers, and crises

rapid and unpredictable change
destructive communication style of manager
authoritarian leadership
defensive attitude
double standards
unresolved grievances
emotionally troubled employees
repetitive, boring work

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Contemporary Issues In Control

(cont.)
Workplace Violence (cont.)
contributing factors (cont.)
faulty or unsafe equipment
hazardous work environment
culture of violence

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Workplace Violence
Witnessed yelling and other verbal abuse
Yelled at coworkers themselves
Cried over work-related issues
Seen someone purposely damage machines
or furniture
14%
Seen physical violence in the workplace
Struck a coworker

Prentice Hall, 2002

42%
29%
23%
10%
2%

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