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
Prentice Hall, 2002 18-2
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
Prentice Hall, 2002 18-3
What Is Control? 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
Prentice Hall, 2002 18-4
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
Prentice Hall, 2002 18-5
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
Prentice Hall, 2002 18-6
Structure
Human Resource
Management
Organizing
The Planning-Controlling Link
Standards
Measurements
Comparisons
Actions
Controlling
Goals
Objectives
Strategies
Plans
Planning
Motivation
Leadership
Communication
Individual and
Group Behavior
Leading
Prentice Hall, 2002 18-7
The Control Process
Prentice Hall, 2002 18-8
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
Prentice Hall, 2002 18-9
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
Prentice Hall, 2002 18-10
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
Prentice Hall, 2002 18-11
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
The Control Process (cont.)
Prentice Hall, 2002 18-12
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
Prentice Hall, 2002 18-13
Defining The Acceptable Range
Of Variation
Acceptable
Upper Limit
Standard
Acceptable
Lower Limit
M
e
a
s
u
r
e
m
e
n
t

o
f

P
e
r
f
o
r
m
a
n
c
e

Acceptable
Range of
Variation
t t+1 t+2 t+3 t+4 t+5
Time Period (t)
Prentice Hall, 2002 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
Prentice Hall, 2002 18-15
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
Prentice Hall, 2002 18-16
Managerial Decisions in the
Control Process
Prentice Hall, 2002 18-17
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
Prentice Hall, 2002 18-18
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
Types of Control (cont.)
Prentice Hall, 2002 18-19
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 Output Processes
Anticipates
problems
Feedforward
Control
Corrects
problems after
they occur
Feedback
Control
Corrects
problems as
they happen
Concurrent
Control
Prentice Hall, 2002 18-23
Flexibility
Qualities Of An Effective Control
System
Strategic
Placement
Understandability
Reasonable
Criteria
EFFECTIVE
CONTROL
SYSTEM

Timeliness
Multiple
Criteria
Corrective
Action
Accuracy
Economy
Emphasis on
Exceptions

Prentice Hall, 2002 18-24
Contingency Factors in the Design
of Control Systems
Prentice Hall, 2002 18-25
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
Implications For Managers
Prentice Hall, 2002 18-26
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
Contemporary Issues In Control
Prentice Hall, 2002 18-27
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
Prentice Hall, 2002 18-28
Workplace Monitoring
Track telephone calls (numbers and time spent) 39%
Store and review employee e-mail messages 27%
Store and review computer files 21%
Log computer time and keystrokes entered 15%
Record and review telephone conversations 11%
Store and review voice-mail messages 6%
Prentice Hall, 2002 18-29
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
Prentice Hall, 2002 18-30
Control Measure for Deterring or Reducing
Employee Theft or Fraud
Prentice Hall, 2002 18-31
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
Prentice Hall, 2002 18-32
Contemporary Issues In Control
(cont.)
Workplace Violence (cont.)
contributing factors (cont.)
faulty or unsafe equipment
hazardous work environment
culture of violence
Prentice Hall, 2002 18-33
Workplace Violence
Witnessed yelling and other verbal abuse 42%
Yelled at coworkers themselves 29%
Cried over work-related issues 23%
Seen someone purposely damage machines
or furniture 14%
Seen physical violence in the workplace 10%
Struck a coworker 2%
Prentice Hall, 2002 18-34