Chap18

Chapter 18

FOUNDATIONSOF

CONTROL

© Prentice Hall, 2002 18-1

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


Learning Objectives (cont.)

You should learn 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


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


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


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


StructureHuman Resource Management

Organizing

The Planning-Controlling Link

StandardsMeasurementsComparisonsActions

Controlling

GoalsObjectivesStrategiesPlans

Planning

MotivationLeadershipCommunicationIndividual and Group Behavior

Leading


The Control Process


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


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



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


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




Comparing–determines the degree of variation between

actual performance and standard– acceptable range of variation - deviations

that exceed this range become significant


AcceptableUpper Limit

Standard

AcceptableLower Limit

Mea

sure

men

t of

Per

form

ance

AcceptableRange ofVariation

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

Time Period (t)


Sales Performance Figures For July, Eastern States Distributors

BrandHeinekenMolsonIrish AmberVictoria BitterLabatt’sCoronaAmstel LightDos EquisTecateTotal 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



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


Managerial Decisions in the Control Process


Types Of ControlFeedforward Control–prevents anticipated problems–most desirable type of control – requires timely and accurate information that

often is difficult to getConcurrent Control– takes place while activity is in progress– corrects problem before it becomes too costly–best-known form is direct supervision


Feedback Control– takes place after the activity is done–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.)


Types Of ControlInput OutputProcesses

Anticipatesproblems

FeedforwardControl

Correctsproblems after

they occur

FeedbackControl

Correctsproblems asthey happen

ConcurrentControl


Flexibility

Qualities Of An Effective Control System

StrategicPlacement

UnderstandabilityReasonable

Criteria

EFFECTIVECONTROLSYSTEM

TimelinessMultipleCriteria

CorrectiveAction

Accuracy

EconomyEmphasis onExceptions


Contingency Factors in the Design of Control Systems


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


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


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


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%



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


Control Measure for Deterring or Reducing Employee Theft or Fraud



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



Workplace Violence (cont.)– contributing factors (cont.)• faulty or unsafe equipment• hazardous work environment• culture of violence


Workplace Violence

Witnessed yelling and other verbal abuse 42%Yelled at coworkers themselves 29%Cried over work-related issues 23%Seen someone purposely damage machinesor furniture 14%Seen physical violence in the workplace 10%Struck a coworker 2%


Chap18

Technology

control bureaucratic

control process prentice

types of control

obtrusiveness prentice

management process

step process

performance standards

organizational goals