Organizational Control Techniques

Control techniques provide managers with the type and amount of information they need to measure and monitor performance. The information from various controls must be tailored to a specific management level, department, unit, or operation.
To ensure complete and consistent information, organizations often use standardized documents such as financial, status, and project reports. Each area within an organization, however, uses its own specific control techniques, described in the following sections. Financial controls

After the organization has strategies in place to reach its goals, funds are set aside for the necessary resources and labor. As money is spent, statements are updated to reflect how much was spent, how it was spent, and what it obtained. Managers use these financial statements, such as an income statement or balance sheet, to monitor the progress of programs and plans. Financial statements provide management with information to monitor financial resources and activities. The income statement shows the results of the organization's operations over a period of time, such as revenues, expenses, and profit or loss. The balance sheet shows what the organization is worth (assets) at a single point in time, and the extent to which those assets were financed through debt (liabilities) or owner's investment (equity).

Financial audits, or formal investigations, are regularly conducted to ensure that financial management practices follow generally accepted procedures, policies, laws, and ethical guidelines. Audits may be conducted internally or externally. Financial ratio analysis examines the relationship between specific figures on the financial statements and helps explain the significance of those figures:

Liquidity ratios measure an organization's ability to generate cash.

Profitability ratios measure an organization's ability to generate profits.

Debt ratios measure an organization's ability to pay its debts.

Activity ratios measure an organization's efficiency in operations and use of assets.

In addition, financial responsibility centers require managers to account for a unit's progress toward financial goals within the scope of their influences. A manager's goals and responsibilities may focus on unit profits, costs, revenues, or investments.

Budget controls

A budget depicts how much an organization expects to spend (expenses) and earn (revenues) over a time period. Amounts are categorized according to the type of business activity or account, such as telephone costs or sales of catalogs. Budgets not only help managers plan their finances, but also help them keep track of their overall spending.

A budget, in reality, is both a planning tool and a control mechanism. Budget development processes vary among organizations according to who does the budgeting and how the financial resources are allocated. Some budget development methods are as follows:

Top-down budgeting. Managers prepare the budget and send it to subordinates.

Bottom-up budgeting. Figures come from the lower levels and are adjusted and coordinated as they move up the hierarchy.

Zero-based budgeting. Managers develop each new budget by justifying the projected allocation against its contribution to departmental or organizational goals.

Flexible budgeting. Any budget exercise can incorporate flexible budgets, which set meet or beat standards that can be compared to expenditures.

Marketing controls

Marketing controls help monitor progress toward goals for customer satisfaction with products and services, prices, and delivery. The following are examples of controls used to evaluate an organization's marketing functions:

Market research gathers data to assess customer needsinformation critical to an organization's success. Ongoing market research reflects how well an organization is meeting customers' expectations and helps anticipate customer needs. It also helps identify competitors.

Test marketing is small-scale product marketing to assess customer acceptance. Using surveys and focus groups, test marketing goes beyond identifying general requirements and looks at what (or who) actually influences buying decisions.

Marketing statistics measure performance by compiling data and analyzing results. In most cases, competency with a computer spreadsheet program is all a manager needs. Managers look at marketing ratios, which measure profitability, activity, and market shares, as well as sales quotas, which measure progress toward sales goals and assist with inventory controls.

Unfortunately, scheduling a regular evaluation of an organization's marketing program is easier to recommend than to execute. Usually, only a crisis, such as increased competition or a sales drop, forces a company to take a closer look at its marketing program. However, more regular evaluations help minimize the number of marketing problems. Human resource controls Human resource controls help managers regulate the quality of newly hired personnel, as well as monitor current employees' developments and daily performances. On a daily basis, managers can go a long way in helping to control workers' behaviors in organizations. They can help direct workers' performances toward goals by making sure that goals are clearly set and understood. Managers can also institute policies and procedures to help guide workers' actions. Finally, they can consider past experiences when developing future strategies, objectives, policies, and procedures. Common control types include performance appraisals, disciplinary programs, observations, and training and development assessments. Because the quality of a firm's personnel, to a large degree, determines the firm's overall effectiveness, controlling this area is very crucial. Computers and information controls

Almost all organizations have confidential and sensitive information that they don't want to become general knowledge. Controlling access to computer databases is the key to this area.

Increasingly, computers are being used to collect and store information for control purposes. Many organizations privately monitor each employee's computer usage to measure employee performance, among other things. Some people question the appropriateness of computer monitoring. Managers must carefully weigh the benefits against the costsboth human and financialbefore investing in and implementing computerized control techniques. Although computers and information systems provide enormous benefits, such as improved productivity and information management, organizations should remember the following limitations of the use of information technology: Performance limitations. Although management information systems have the potential to increase overall performance, replacing long-time organizational employees with information systems technology may result in the loss of expert knowledge that these individuals hold. Additionally, computerized information systems are expensive and difficult to develop. After the system has been purchased, coordinating itpossibly with existing equipmentmay be more difficult than expected. Consequently, a company may cut corners or install the system carelessly to the detriment of the system's performance and utility. And like other sophisticated electronic equipment, information systems do not work all the time, resulting in costly downtime. Behavioral limitations. Information technology allows managers to access more information than ever before. But too much information can overwhelm employees, cause stress, and even slow decision making. Thus, managing the quality and amount of information available to avoid information overload is important. Health risks. Potentially serious health-related issues associated with the use of computers and other information technology have been raised in recent years. An example is carpal tunnel syndrome, a painful disorder in the hands and wrists caused by repetitive movements (such as those made on a keyboard). Regardless of the control processes used, an effective system determines whether employees and various parts of an organization are on target in achieving organizational objectives.

What "Leader" Really Means

Leadership is the process by which a person influences others to accomplish a mission, task, or objective. Although some individuals have the good fortune of possessing an apparently innate ability for leadership, the rest of us must develop our leadership potential through self-study,

dedication, education, experience, and hard work. Indeed, effective leadership is so scarce that literally thousands of books, articles, and workshops have been developed on the subject. Nevertheless, a precise definition of what it means to be a leader remains as elusive as ever. Perhaps a good starting point is to note that the mere fact of wielding power or possessing authority does not make someone a leader. Many individuals have inspired, influenced, and motivated others without having a title or any formal authority whatsoever. A distinction should also be made between leaders and managers. Leaders are able to inspire others to act freely and willfully in pursuit of common objectives; by contrast, managers or bosses primarily instruct others on how to do a task in an effective manner. As a matter of fact, it is very possibleand quite likelythat great managers make poor leaders and vice versa. Given the current leadership crisis in corporate America, the time is ripe for a treatise on the principal traits that characterize effective leaders. Each of the letters that comprise the word leader represents an important quality shared by those who significantly influence the attitude and behavior of others. Although these six traits are not to be considered exclusive, they do reflect the principal characteristics of those who exercise legitimate influence over individuals.

Lead
It might be a truism, but it certainly cannot be denied that true leaders lead; that is, they are at the forefront of their group or organization instead of following behind it. Leaders choose the destination and select the path that others follow. To draw upon a Biblical parallel, recall how Moses lead the Israelites through the desert toward the Promised Land. As a leader, Moses selected the destination (i.e., the Promised Land) and the path (i.e., through the desert). In fact, this principle is particularly true of those who confidently grasp the mantle of leadership. As Bill Parcells reminds us, Make it clear from day one that youre in charge. Dont wait to earn your leadership.

Enable
Leaders enable others to achieve greatness by serving as facilitators, moderators, and advocates. They remove obstacles that hinder others from obtaining their goals. As enablers, leaders often smooth the path so that followers can reach their objectives, whether personal or organizational. Regardless of whether they supply material or moral resources, true leaders achieve their goals by enabling others to achieve theirs. In fact, Ian Cook advises leaders to take the following approach toward those whom they lead: Decide whom not what you serve in your leadership capacity. Help them succeed in contributing to the organization, help them learn and grow, and see them as your customer.

Articulate
Leaders articulate a dynamic and inspiring vision that motivates others to follow them. Those who cannot articulate a guiding principle are not likely to lead others very far. In the words of Gregory Smith, who likens leaders to gladiators of the ancient world, Call it a purpose, an

obsession, a calling: whatever the terminology, good leaders have a defining mission in their life. This mission, above all other traits, separates managers from leaders. It is only by enunciating and formulating a credible, realistic, and achievable mission that leaders are able to convince others to follow them through thick and thin.

Decide
Being a leader requires one to examine options and then decide. Although they often discuss issues and delegate responsibilities, true leaders cannot abrogate their ultimate responsibility to make tough decisions, even if unpopular. As the lyrics from a popular song so aptly attest, Even if you choose not to decide, you still have made a choice. Great leaders not only make decisions with confidence, but they take calculated risks and are innovative. They realize that adopting a timid, head-in-the-sand posture is fruitless. In fact, decisiveness and the ability to distill complex problems into their core essence are two of the hallmarks of a truly effective leader.

Encourage
According to Ed Konczal, Leaders encourage people to learn and grow. They point them in the right direction and then get out of the way. He also argues that leaders create and sustain a high performance environment and empower people by providing learning opportunities. Encouragement can take a variety of forms, from a simple word of praise, to a pat on the back, to public acclamation. True leaders encourage others to:

Step out of their customary boundaries and look at issues from a new perspective Unleash their creativity and accept new challenges Dissent and critique the status quo and customary ways of doing things Set high standards and meet them Embrace change and uncover competing commitments (Kegan and Lahey)

Reward
True leaders reward, value, and extol the achievements of others. Paul Thornton reminds us that effective managers and leaders reward and recognize people who demonstrate the ability to work independently, make decisions and get the job done. As part of their overall reward system, effective leaders provide feedback so that others can adjust their behavior to achieve desired outcomes. Indeed, it makes little sense to reward someone who meets a goal by simple happenchance. Once again, Thornton is on the mark: Real confidence is based on achieving results, one success after another. When leaders provide rewards and recognition, its a validation of peoples talents and determination.

As we have seen, the word leader stands for someone who leads, enables, articulates, decides, encourages, and rewards. Although these are not the only traits exhibited by successful leaders, they do epitomize those characteristics shared by nearly all those who successfully influence others. Besides applying the general guidelines noted above, those seeking to become effective leaders should ask themselves critical questions as part of an on-going effort to improve their leadership skills. Those who exercise responsibility for leadership must never fail to critically examine their leadership skills and remedy their deficiencies. One useful tool for accomplishing this goal is the following leadership survey based on the work of T.M. Georges:

Lead
1. Do others view me as a leader? Why or why not? 2. What are my strengths as a leader? My weaknesses? 3. Do I give others the correct amount of autonomy and responsibility? 4. How would others describe my leadership style?

Enable
1. Do I help others to do their work more effectively? 2. Do I provide the necessary physical and material resources to do the job? 3. Do others view me as a moderator, facilitator, guide, and enabler? 4. Do others look to me for assistance and advice to accomplish their tasks?

Articulate
1. Have I articulated a coherent, realizable vision that inspires others? 2. Have I set challenging goals for myself and others? 3. Have I done a good job of communicating my vision or mission to others? 4. Is my vision compatible with the corporate culture?

Decide
1. Do I consult others before reaching a decision?

2. Do I make decisions in a forthright and timely manner? 3. Do others respect my decision-making ability? 4. Do I delegate decision-making responsibility, or do I try to make all decisions myself?

Encourage
1. Do I encourage freedom, innovation, and creativity? 2. Do I encourage activities and behaviors that lead to accomplishing stated goals? 3. How do I encourage others? Is my way of encouraging effective? 4. Am I known as someone that encourages thinking and acting outside the box?

Reward
1. How often do I reward others? 2. What types of rewards do I employ? 3. How do I know that my rewards are something others actually value? 4. Are there certain activities that I reward too often? Too little?

The Path-Goal Theory of Leadership was developed to describe the way that leaders encourage and support their followers in achieving the goals they have been set by making the path that they should take clear and easy. In particular, leaders:

Clarify the path so subordinates know which way to go. Remove roadblocks that are stopping them going there. Increasing the rewards along the route.

Leaders can take a strong or limited approach in these. In clarifying the path, they may be directive or give vague hints. In removing roadblocks, they may scour the path or help the follower move the bigger blocks. In increasing rewards, they may give occasional encouragement or pave the way with gold.

This variation in approach will depend on the situation, including the follower's capability and motivation, as well as the difficulty of the job and other contextual factors. House and Mitchell (1974) describe four styles of leadership:
Supportive leadership

Considering the needs of the follower, showing concern for their welfare and creating a friendly working environment. This includes increasing the follower's self-esteem and making the job more interesting. This approach is best when the work is stressful, boring or hazardous.
Directive leadership

Telling followers what needs to be done and giving appropriate guidance along the way. This includes giving them schedules of specific work to be done at specific times. Rewards may also be increased as needed and role ambiguity decreased (by telling them what they should be doing). This may be used when the task is unstructured and complex and the follower is inexperienced. This increases the follower's sense of security and control and hence is appropriate to the situation.
Participative leadership

Consulting with followers and taking their ideas into account when making decisions and taking particular actions. This approach is best when the followers are expert and their advice is both needed and they expect to be able to give it.
Achievement-oriented leadership

Setting challenging goals, both in work and in self-improvement (and often together). High standards are demonstrated and expected. The leader shows faith in the capabilities of the follower to succeed. This approach is best when the task is complex. There are three main things that make a good leader. The first is that a leader must practice what he preaches. The second is that he has to look after and protect those around him. The third is that he must be able to develop other good leaders. I will go into more detail about how to implement all three of these characteristics, so that you too can become a good leader.
A good leader is excellent at practicing what he preaches. I love the quote that states, "Your actions speak so loud that I can't hear what you are saying." The greatest leader of all time was Jesus Christ and he was the best at practicing what he preached. This goes back to the old proverb that says, "Live by the sword, die by the sword." This is the same with leadership and how much a leader abides by what he says. As a good leader, how can you expect people do what you say, when you don't even do what you say?

A good leader looks after those he wants to lead. He does this by always doing what he can to protect them from harm, criticism, or blame from other people. People want security, that's why they buy SUVs, put money in their 401k, and stay at the same dead end job for years. It's integrated into our nervous system that we want to feel secure. When you have a team of people that you are leading, it can be very powerful when they know that you are on their side, and that you will do whatever you can to make sure that you protect them from harm of other outside forces. A big part of being a good leader is knowing how to take the blame when things go wrong, and how to give away credit when things go well. A good leader knows that when things go bad or wrong, it's his responsibility to take the blame, even if it was not his fault. And when things go well, a good leader knows that it's his responsibility to make sure that he gives the credit to the deserving person who did the great work. Hence, making that person look very good. A good leader develops other good leaders. This can only be attained once a person has first become a good leader. How can you expect to develop other good leaders, if you are not one first? Most of this just boils down to taking the time to spend time with the leaders that you want to develop and cultivate. By being a good mentor, you can teach and coach them through their trials and tribulations as a young and developing leader. Sometimes just being there to help them get back up after they have fallen is all you have to do. One of the best ways that you can invest time, is by investing it in the relationships of others around you. The making of a good leader is extremely broad, so I hope that I've narrowed it down into three simple strategies for you. If you practice what you preach, look after the others around you, and invest time to develop other good leaders, I believe that you will be well on your way to making yourself a good leader.