since the mid twentieth century.

These include the mternational Organization for Standards 0

9000 and ISO 14000), Six Sigma, and Total Quality Management (TQM).

Financial controls deal with the organization's bottom line. These include cash flow analysis
the balance sheet, budgets, income statements, and the financial rations that make these
instruments possible.

Technological controls range from low-tech time cards to elaborate internet-based monitoring
systems. Knowledge management is the system that allows an organization to capture,
manipulate, and utilize information in a timely fashion. This may include information about how
many widgets were sold or and where an employee has been, physically or online.

Social controls deal with people. Here we are squarely in the dominion of leadership. Sometime
managers attempt to control conduct with their presence. This is behavioral control. It is largely
ineffective. At other times, they control with regulations. This is bureaucratic control. It is
demotivating. Good leaders opt for cultural control where possible. If a leader has done his job
correctly, employees are there because they have bought into the vision. Moreover, if they ha e
been empowered to complete their tasks, they will exercise a great deal of self-control.

Bottom Line: The test of organizational control: If the leader was removed today, would your
organization succeed tomorrow?

Key Terms:

Control is monitoring progress toward a goal to ensure desired results. It is comparing actual
performance to the predetermined standard.

Standards are performance targets. They are points of reference that help you determine how
you are doing.

Benchmarking is comparing your organization's performance against others in the industry.

Feedback control provides feedback after the production process is complete.

Concurrent control provides feedback during operations. It provides immediate feedback to

correct problems quickly.

Feedforward control takes place before production. The goal is to anticipate and correct defects
before they can be produced.

Quality is degree to which a product meets or supersedes customer needs. It is determined by the
intrinsic characteristics of the product and how consistently it satisfies customers.

ISO 9000 is the name of international standards for quality control in management.

ISO 14000 is the name of international standards for environmental performance.

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Six Sigma is a quality control management process that employs statistical analysis to reduce
defects in the production process.

DMAIC (See Six Sigma DMAIC process).

Six Sigma DMAIC process is used to incrementally improve existing systems.

DMADV(See Six Sigma DMADV process).

Six Sigma DMAD V process is used to develop new processes for quality from its inception.

Total Quality Management (TQM) is a philosophy of management focused on improving

performance.

Quality circles are groups of workers who meet periodically to discuss quality improvements.
They generate solutions to problems. However, they usually have no direct authority to
implement the solutions.

Just-in-time (JIT) inventory system is an interdependent supply system where inventory arrives
as it is needed.

Kanban is a system that uses a signal to order more inventory.

Kaizen is a call for continuous improvement.

Financial controls consist of budgets and other financial measurements.

Cash flow analysis is a study of cash inflow and outflow to track the health of the organization.

Financial ratios are tools to check the financial position ofthe business. Financial ratios include:
Liquidity, efficiency, profitability and other measures.

Liquidity as a financial ratio (a quick ratio) is measured as current assets - inventory / current
liabilities.

Efficiency as a financial ratio (inventory turnover) measures the cost of goods sold/average value
of inventory.

Profitability as a financial ratio (gross profit margin) is measured by gross profit/total sales, and
ROI (return on equity) is measured as net income/owner's equity.

Budget is a formal financial plan covering a specific length of time (usually a year).

Balance sheet is a snapshot of the organization's financial worth at a given point of time.

Profit and Loss statement (P & L) (see income statement).

Income statement is an overview of the organization's financial health over a period oftime.

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Balanced scorecard provides management with a view of the whole organization including
customer service, learning and growth, internal business and financial measures.

Technological controls are any controls that use technology to monitor work processes.

Timecards keep track of when employees start and leave work.

Security cameras track people who enter and leave specific locations.

Intranet is an organization's internal internet

Management Information System (See knowledge management)

Knowledge management is the internal IT system (Management Information System) for

capturing, developing, and sharing information.

Internet as it relates to business, it is an incredible research tool, but it can also become a
liability.

Snoopervision is when the organization is overly ambitious in monitoring employee behavior.

Washington Post Test states that one should never do anything you would not be willing to see
reported on the front page of the newspaper.

Behavior control is controlling the organization by controlling conduct.

Bureaucratic control is control through standardization and procedures. Bureaucratic control

utilizes formal authority, rules, and regulations to maintain certain behaviors.

Cultural control (see clan control).

Clan Control (or cultural control) is control through cultural norms and values.

Normative control is control through the organization's commonly held values.

Concertive control is control through a smaller work group's agreed upon values.

Self-control (self-management) is control through self-imposed constraint. To the degree that

you control yourself, you need not be controlled by rules. You are effectively free from the rules.

Marshmallow test was an experiment where preschoolers were given a marshmallow and told
they could have two if they did not eat the first one. Those who exhibited self control at age four
had an average 210 point increase on the SAT in high school over peers who simply ate the
marshmallow.

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