foundations ofcontrol

8/12/2019 FOUNDATIONS OF CONTROL

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FOUNDATIONS OF

CONTROL

Chapter 18


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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 controlsystem

Prentice Hall, 2002 18-2


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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


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What Is Control? Control

the process of monitoring activities to ensure thatthey are being accomplished as planned and of

correcting significant deviations

control systems are judged in terms of how well

they facilitate goal achievement market contro l

- 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


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What Is Control? (cont.)

Control bureaucrat ic contro l- emphasizes organizational authority

relies on administrative rules, procedures, and policies

depends on standardization of activities, well-defined job

descriptions, and other administrative mechanisms

clan contro l- 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



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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



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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



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The Control Process



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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 observat ion- permits intensive

coverage Management B y Walking Aroun d(MBWA)

drawbacks - subject to personal biases

consumes a great deal of time

suffers from obtrusiveness Prentice Hall, 2002 18-9


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The Control Process (cont.)

Measuring (cont.)

How We Measure(cont.)

stat ist ical repo rts- 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 repo rts- 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



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How We Measure (cont.)

wri t ten reports- often more

comprehensive and concise than oral

reports

usually easy to file and retrieve

comprehensive control efforts should

use all four approaches



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What We Measure

what we measure more critical than how wemeasure

control criteria applicable to any managementsituation:

employee satisfaction, absenteeism, and turnover

keeping costs within budgets

control system needs to recognize the diversity ofactivities

some activities difficult to measure in quantifiableterms most activities can be grouped into some objective

segments that can be measured

when objective measures are not available, should relyon subjective measures




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Comparing

determines the degree of variation

between actual performance and

standard

acceptable range of variation -

deviations that exceed this range

become significant



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Defining The Acceptable Range

Of VariationAcceptable

Upper Limit

Standard

Acceptable

Lower LimitMeasurementofPerformance

Acceptable

Range of

Variation

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

Time Period (t)



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a es er ormance gures orJuly, Eastern States Distributors

BrandHeineken

Molson

Irish Amber

Victoria BitterLabatts

Corona

Amstel Light

Dos Equis

TecateTotal cases

Standard*1,075

630

800

620540

160

225

80

1704,300

Actual*913

634

912

622672

140

220

65

2864,464

Over (under)*(162)

4

112

2132

(20)

(5)

(15)

116164

* hundreds of cases



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The Control Process (cont.) Taking Managerial Action

Correct Actual Perform ance- action takenwhen the performance variation is

unsatisfactory

immediate cor rect ive action- corrects problems

at once to get performance back on track

basic co rrect ive action- identifies reason for

performance variation

corrects the source of variation

Revise the Standard- variance results froman unrealistic standard

standard, not performance, needs correction

troublesome to revise the standard downward Prentice Hall, 2002 18-16


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Managerial Decisions in the

Control Process



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Types Of Control

Feedforward Control prevents anticipated problems

most desirable type of control

requires timely and accurate information thatoften 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



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Feedback Control

problems may already have caused damageor waste

the most popular type of control

feedback may be only viable form of controlavailable

feedback has two advantages

provides meaningful information on theeffectiveness of planning

can enhance employee motivation

Types of Control (cont.)



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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


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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


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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 whichto measure and compete


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Types Of Control

Input OutputProcesses

Anticipates

problems

Feedforward

Control

Corrects

problems after

they occur

Feedback

Control

Corrects

problems as

they happen

Concurrent

Control



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Flexibility

Qualities Of An Effective Control

System

StrategicPlacement

UnderstandabilityReasonable

Criteria

EFFECTIVECONTROL

SYSTEM

TimelinessMultiple

Criteria

Corrective

ActionAccuracy

EconomyEmphasis on

Exceptions



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Contingency Factors in the Design

of Control Systems


mp ca ons or anagers


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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 areindirect

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

mp ca ons or anagers



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Workplace Privacy employers have the right to monitor employee

communications, examine employee computersand 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

Electron ic Communicat ions Pr ivacy Act- 1986 prohibits unauthorized interception of electronic

communication

workplace electronic monitoring is still legal

Contemporary Issues In Control



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(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



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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%



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(cont.) Employee Theft

unauthorized taking of company property by

employees for their personal use

is an escalating problem in all types oforganizations

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


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Control Measure for Deterring or Reducing

Employee Theft or Fraud



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(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



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(cont.) Workplace Violence (cont.)

contributing factors (cont.)

faulty or unsafe equipment

hazardous work environment

culture of violence



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Workplace ViolenceWitnessed 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

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