Chapter 18 Foundations Of Control

Chapter 18

FOUNDATIONS OF

CONTROL© 2003 Pearson Education Canada Inc. 18.118.1

© 2003 Pearson Education Canada Inc.

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

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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

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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

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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

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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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StructureHuman Resource Management

Organizing

THE PLANNING-CONTROLLING LINK (Exhibit 18.2)

StandardsMeasurementsComparisonsActions

Controlling

GoalsObjectivesStrategiesPlans

Planning

MotivationLeadershipCommunicationIndividual and Group Behaviour

Leading

© 2003 Pearson Education Canada Inc. 18.718.7


THE CONTROL PROCESS (Exhibit 18.3)

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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

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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

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• 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

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• 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

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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 VARIATION (Exhibit 18.4)

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)© 2003 Pearson Education Canada Inc. 18.1418.14

CANUCKBREW’S SALES PERFORMANCE FOR JULY (Exhibit 18.5)

BrandAlexander KeithBig Rock WarthogOkanagan SpringMooseheadOlands Export AleMcAuslan’sGranville IslandUnibroue’sNelson After DarkTotal 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

– Revise the Standard - variance results from an unrealistic standard

• standard, not performance, needs correction

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MANAGERIAL DECISIONS IN THE CONTROL PROCESS (Exhibit 18.6)

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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

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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

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TYPES OF CONTROL (Exhibit 18.7)

Input OutputProcesses

Anticipatesproblems

FeedforwardControl

Correctsproblems after

they occur

FeedbackControl

Correctsproblems asthey happen

ConcurrentControl


Flexibility

QUALITIES OF AN EFFECTIVE CONTROL SYSTEM (Exhibit 18.8)

StrategicPlacement

UnderstandabilityReasonable

Criteria

EFFECTIVECONTROLSYSTEM

TimelinessMultipleCriteria

CorrectiveAction Accuracy

EconomyEmphasis onExceptions



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

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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

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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

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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

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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%

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• 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

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

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• 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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Business

Chapter 18 Foundations Of Control