Control BASICS OF CONTROL 1 The Control Process Learning objective: Describe the basic control process.

Control: a regulatory process of establishing standards to achieve organizationa l goals, comparing actual performance against the standards, and taking correcti ve action, when necessary. The control process: 1) begins with the establishment of clear standards of perf ormance; 2) involves a comparison of actual performance to desired performance; 3) takes corrective action, if needed, to repair performance deficiencies; 4) is a dynamic, cybernetic process; and 5) consists of three basic methods: feedback control, concurrent control, and feedforward control. 1.1 Standards The control process begins with the establishment of clear standards of perform ance. Standards: a basis of comparison when measuring the extent to which various kind s of organizational performance are satisfactory or unsatisfactory. Managers set standards by: Ensuring the standard will enable goal achievement; Listening to customers or observing competitors; Benchmarking other companies. Benchmarking is the process of determining how well other companies perform busi ness functions or tasks. The steps to benchmarking are: Determining what to benchmark; Identifying the companies against which to benchmark your standards; and Collecting data to determine other companies performance standards. 1.2 Comparison to Standards The next step in the control process is to compare actual performance to perfor mance standards. The quality of the comparison depends on the measurement and in formation systems a company uses to keep track of performance. Example: Retail stores spend $435 million a year to hire secret shoppers who visi t stores to determine whether their employees provide good customer service. 1.3 Corrective Action The next step in the control process is to identify performance deviations, ana lyze deviations, and develop and implement programs to correct them. Example: A first-class hotel in New York City was losing $250,000 per year beca use of an error that did not post mini bar and phone charges to guests bills. The hotel devised a four-step system to eliminate this expensive problem. 1.4 Dynamic, Cybernetic Process Control is not a one time result. It is an ongoing, continuous process that ma nagers must repeat over and over. Thus, control is both dynamic and cybernetic. Cybernetic: the process of steering or keeping on course. Example: In order to keep his company on course, newly appointed CEO of Commerc ial Credit in Baltimore, Sandy Weill, immediately set about cutting frivolous co rporate spending on items such as free newspaper subscriptions and premium-class company cars. 1.5 Feedback, Concurrent, & Feedforward Control There are three types of control: Feedback control: a mechanism for gathering information about performanc

e deficiencies after they occur. Example: Squirrels cause 90% of the electrical transformer malfunctions on neigh borhood utility poles, but utility companies are only ever aware of the problem until after one touches a live wire and causes the kind power surge that blows o ut computers, televisions, and other appliances. Concurrent control: a mechanism for gathering information about performa nce deficiencies as they occur, eliminating or shortening the delay between perf ormance and feedback. This type of control is an improvement over feedback control because it sees pro blems as they occur. Example: Aircraft manufacturers have equipped modern planes with hundreds of com puter sensors so airlines can monitor their aircrafts systems while in flight. If a flight problem occurs, then the airline is prepared to apply a remedy immedia tely after landing. Feedforward control: a mechanism for monitoring performance inputs rathe r than outputs to prevent or minimize performance deficiencies before they occur . This type of control is best because it solves problems before they occur. 1.6 Control Isnt Always Worthwhile or Possible Control loss: a situation in which behavior and work procedures do not conform to standards. Maintaining control is important because control loss prevents goal achievement . To determine if control is worthwhile, managers must assess if the costs of reg ulation exceed the benefits. Regulation costs: the costs associated with implementing or maintaining control . Example: Many U.S. pharmaceutical companies have stopped producing major vaccine s because the cost of controlling legal risks is too high. Sometimes unintended consequences accompany increased control. In other words, c ontrol systems sometimes introduce a new set of problems, and therefore further increase control costs. A second factor that helps managers determine whether control is possible is cy bernetic feasibility. Cybernetic feasibility: the extent to which it is possible to implement each st ep in the control process. Example: Many companies have begun using web-based corporate travel systems that actually force employees to follow company travel policies. tomalforex@gmail.com