Chapter 18

FOUNDATIONS
OF
CONTROL
© 2003 Pearson Education Canada Inc. 18.1
 LEARNING OBJECTIVES
• You should be able 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
© 2003 Pearson Education Canada Inc. 18.2
 LEARNING OBJECTIVES
(continued)
• You should be able to:
– Discuss the contingency factors that influence
the design of an organization’s 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

© 2003 Pearson Education Canada Inc. 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
• Three basic approaches to control
– Market control - emphasizes the use of external
market mechanisms to establish standards of
performance
© 2003 Pearson Education Canada Inc. 18.4
 WHAT IS CONTROL?
(continued)
• Three basic approaches to control
(continued)
– Bureaucratic control - emphasizes
organizational authority and relies on
administrative rules and procedures
– Clan control - behaviour regulated by shared
values, traditions, and other aspects of
organizational culture

© 2003 Pearson Education Canada Inc. 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

© 2003 Pearson Education Canada Inc. 18.6

 THE PLANNING-CONTROLLING
LINK (Exhibit 18.2)
Planning
Goals
Objectives
Strategies
Controlling Plans Organizing
Standards
Structure
Measurements
Human Resource
Comparisons
Management
Actions
Leading
Motivation
Leadership
Communication
Individual and
Group Behaviour
© 2003 Pearson Education Canada Inc. 18.7
 THE CONTROL PROCESS
(Exhibit 18.3)

© 2003 Pearson Education Canada Inc. 18.8

 THE CONTROL PROCESS
• 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

© 2003 Pearson Education Canada Inc. 18.9

 THE CONTROL PROCESS
(continued)
• Measuring (continued)
– How We Measure (continued)
• statistical reports - numerical data are easy to visualize and
effective for showing relationships
– drawbacks - not all operations can be measured
• 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

© 2003 Pearson Education Canada Inc. 18.10

 THE CONTROL PROCESS
(continued)
• Measuring (continued)
– How We Measure (continued)
– written reports - often more comprehensive
and concise than oral reports
• usually easy to file and retrieve
– comprehensive control efforts should use all
four approaches

© 2003 Pearson Education Canada Inc. 18.11

 THE CONTROL PROCESS
(continued)
• Measuring (continued)
– 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
© 2003 Pearson Education Canada Inc. 18.12
 THE CONTROL PROCESS
(continued)
• Comparing
– Determines the degree of variation between
actual performance and standard
– Acceptable range of variation - deviations that
exceed this range become significant

© 2003 Pearson Education Canada Inc. 18.13

 DEFINING THE ACCEPTABLE
RANGE OF VARIATION (Exhibit 18.4)
Measurement of Performance

Acceptable
Upper Limit
Acceptable
Range of
Standard Variation

Acceptable
Lower Limit

t t+1 t+2 t+3 t+4 t+5

Time Period (t)
© 2003 Pearson Education Canada Inc. 18.14
 CANUCKBREW’S SALES
PERFORMANCE FOR JULY (Exhibit 18.5)
Brand Standard* Actual* Over (under)*
Alexander Keith 1,075 913 (162)
Big Rock Warthog 630 634 4
Okanagan Spring 800 912 112
Moosehead 620 622 2
Olands Export Ale 540 672 132
McAuslan’s 160 140 (20)
Granville Island 225 220 (5)
Unibroue’s 80 65 (15)
Nelson After Dark 170 286 116
Total cases 4,300 4,464 164

* hundreds of cases
© 2003 Pearson Education Canada Inc. 18.15
 THE CONTROL PROCESS
(continued)
• 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
– Revise the Standard - variance results from an
unrealistic standard
• standard, not performance, needs correction

© 2003 Pearson Education Canada Inc. 18.16

 MANAGERIAL DECISIONS IN THE
CONTROL PROCESS (Exhibit 18.6)

© 2003 Pearson Education Canada Inc. 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
© 2003 Pearson Education Canada Inc. 18.18
 TYPES OF CONTROL
(continued)
• Feedback Control
– Takes place after the activity is done
– Problems may already have caused damage
or waste
– The most popular type of control
– Feedback has two advantages
• provides meaningful information on the
effectiveness of planning
• can enhance employee motivation
© 2003 Pearson Education Canada Inc. 18.19
TYPES OF CONTROL (Exhibit 18.7)
Input Processes Output

Feedforward Concurrent Feedback

Control Control Control

Anticipates Corrects Corrects

problems problems as problems after
they happen they occur

© 2003 Pearson Education Canada Inc. 18.20

 QUALITIES OF AN EFFECTIVE
CONTROL SYSTEM (Exhibit 18.8)
Corrective
Action Accuracy

Multiple Timeliness
Criteria

EFFECTIVE
Emphasis on CONTROL
Economy
Exceptions SYSTEM

Strategic
Placement Flexibility

Reasonable
Criteria Understandability

© 2003 Pearson Education Canada Inc. 18.21

 CONTINGENCY FACTORS IN THE DESIGN
OF CONTROL SYSTEMS (Exhibit 18.9)

© 2003 Pearson Education Canada Inc. 18.22

 IMPLICATIONS FOR
MANAGERS
• Adjusting Controls for Cultural Differences
– Methods of controlling people and work can be quite
different in other countries
– 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

© 2003 Pearson Education Canada Inc. 18.23

 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

© 2003 Pearson Education Canada Inc. 18.24

 CONTEMPORARY ISSUES IN
CONTROL (continued)
• Workplace Privacy (continued)
– 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

© 2003 Pearson Education Canada Inc. 18.25

 WORKPLACE MONITORING
(Exhibit 18.10)

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%

© 2003 Pearson Education Canada Inc. 18.26

 CONTEMPORARY ISSUES IN
CONTROL (continued)
• 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

© 2003 Pearson Education Canada Inc. 18.27

 CONTROL MEASURES FOR DETERRING OR
REDUCING EMPLOYEE THEFT (Exhibit 18.11)

© 2003 Pearson Education Canada Inc. 18.28

 CONTEMPORARY ISSUES IN
CONTROL (continued)
• 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
© 2003 Pearson Education Canada Inc. 18.29