chapter 18 foundations of control - …site.iugaza.edu.ps/melfarra/files/2010/02/control183.pdf ·...

Chapter 18

FOUNDATIONS

OF

CONTROL

© Prentice Hall, 2002 18-1

Learning Objectives

You should learn to:

1. Define control

2. Describe the three approaches to control

3. Explain why control is important

4. Describe the control process

5. Distinguish among the three types of control

6. Describe the qualities of an effective control

system


Learning Objectives (cont.)

You should learn to:

7-Discuss the contingency factors that influence

the design of an organization’s control system

8-Identify how controls need to be adjusted for

cultural differencescultural differences

9-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. facilitate goal achievement.

• There are three different approaches to designing

organizational control systems. (See Exhibit 18.1 on

p. 496.):


What Is Control?

• There are three different approaches to designing

organizational control systems. (See Exhibit 18.1 on p.

496.):

1. market control - emphasizes the use of external market

mechanisms to establish standards of performance. E.g.,

use of price competition, relevant market share to

establish standards. establish standards.

When this approach is used?

• 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

2. bureaucratic control - emphasizes organizational

authority.

• relies on administrative rules, procedures, and

policies.

• depends on standardization of activities, well-• depends on standardization of activities, well-

defined job descriptions, and other administrative

mechanisms such as budgets.


What Is Control? (cont.)

Control

3. 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. expected behaviors and performance measures.

• found where teams are common and technology

changes often.

• For example in IUG individuals are well aware of

expectations regarding appropriate work behavior

and performance standards. © Prentice Hall, 2002 18-7

Control system

Most organizations don’t rely totally on just one of

these approaches to designing an effective control

system.


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 – fear that employees will do something wrong for which

the manager will be held responsible

– provides information and feedback on employee

performance


Organizing

The Planning-Controlling Link

Standards

Controlling

Goals

Objectives

Strategies

Plans

Planning

Structure

Human Resource

Management

Standards

Measurements

Comparisons

Actions

Motivation

Leadership

Communication

Individual and

Group Behavior

Leading


The Control Process


The Control ProcessBackground

– controlling is a three-step process

– assumes that performance standards already exist

• specific goals are created in the planning process

Measuring:

How we measure is done through four common sources of

information that managers use. Each of these sources has information that managers use. Each of these sources has

its own advantages and drawbacks.

1. personal observation - permits intensive coverage.

– Management By Walking Around (MBWA)

– drawbacks - subject to personal biases

» consumes a great deal of time

» suffers from obtrusiveness: mistrust© Prentice Hall, 2002 18-12

The Control Process (cont.)Measuring (cont.)

How We Measure (cont.)

2. statistical reports - numerical data are easy to visualize and

effective for showing relationships. Use of graphs, bar charts..

• drawbacks - not all operations can be measured.

• important subjective factors may be ignored.• important subjective factors may be ignored.

3. 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 18-13

The Control Process (cont.)

How We Measure (cont.)

4. written reports - often more comprehensive

and concise than oral reports

• usually easy to file and retrieve

– comprehensive control efforts should use all four – 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:

1. employee satisfaction, absenteeism, and turnover.

2. keeping costs within budgets.

• control system needs to recognize the diversity of activities


• 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\qualitative measures



Comparing

Comparing is the next step in the control process.

1. It determines the degree of variation between actual performance and the standard.

2. It’s critical to determine the range of variation, which are the acceptable parameters of variance which are the acceptable parameters of variance between actual performance and the standard. (See Exhibit 18.4 on p. 501.)

3. An example of comparing actual performance to standards is shown in Exhibit 18.5 on p. 502.


Defining The Acceptable Range Of Variation

Acceptable

Upper Limit

Standard

Mea

sure

men

t of

Per

form

ance

Acceptable

Range of

Variation

Acceptable

Lower Limit

Mea

sure

men

t of

Per

form

ance

Variation

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

Time Period (t)


Sales Performance Figures For July, Eastern

States Distributors

BrandHeineken

Molson

Irish Amber

Victoria Bitter

Labatt’s

Standard*1,075

630

800

620

540

Actual*913

634

912

622

672

Over (under)*(162)

4

112

2

132Labatt’s

Corona

Amstel Light

Dos Equis

Tecate

Total cases

540

160

225

80

170

4,300

672

140

220

65

286

4,464

132

(20)

(5)

(15)

116

164

* hundreds of cases


The Control Process (cont.)Taking Managerial Action.

• Correct Actual Performance - action taken when the

performance variation is unsatisfactory. Example of

corrective actions: changing strategy, structure, training,

redesigning jobs.

• immediate corrective action - corrects problems at once to

get performance back on track.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 18-19

Managerial Decisions in the Control Process


Types Of Control

Feedforward\preventive Control

– prevents anticipated problems

– most desirable type of control

– requires timely and accurate information that

often is difficult to get

Concurrent\parallel 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

Types of Control (cont.)

• 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

Input OutputProcesses

Feedforward FeedbackConcurrent

Anticipates

problems

Feedforward

Control

Corrects

problems after

they occur

Feedback

Control

Corrects

problems as

they happen

Concurrent

Control


Qualities Of An Effective Control System

EFFECTIVE

TimelinessMultiple

Criteria

Corrective

ActionAccuracy

FlexibilityStrategic

Placement

UnderstandabilityReasonable

Criteria

CONTROL

SYSTEMEconomy

Emphasis on

Exceptions


Contingency Factors in the Design of Control Systems


• methods of controlling people and work can be quite different in other countries. E.g., global companies.

• 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

Adjusting Controls for Cultural Differences

direct

• laws in different countries provide different constraints on corrective action: eg, laying off employees, taking momey out of the country.

• data used for controlling may not be comparable in different countries though for the same company but different branches.


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:

1. Recreational\fun on-the-job Web surfing

Contemporary Issues In Control

1. Recreational\fun on-the-job Web surfing

2. creation of hostile work environments with e-mail

3. security leaks of critical information

• Electronic Communications Privacy Act - 1986

• prohibits unauthorized interception\catching of electronic

communication

• workplace electronic monitoring is still legal


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 • inform employees that computers may be

monitored.

• provide clear guidelines on acceptable use of

company e-mail system and the Web.


Workplace Monitoring by employers in US

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%Record and review telephone conversations 11%

Store and review voice-mail messages 6%


Contemporary Issues In Control (cont.)Employee Theft

unauthorized taking of company property by employees for their

personal use. Up to 85 percent of all organizational theft and

fraud is committed by employees.

• is an escalating problem in all types of organizations

• different proposals to explain employee theft. They will

depend on who you ask:depend on who you ask:

1. industrial security - opportunity presents itself due to lack of

controls and favorable circumstances

2. criminology - people have financial-based pressures or vice-

based pressures (such as gambling debts).

3. clinical psychology - people are able to rationalize any type

of behavior. E.g., every one does it.© Prentice Hall, 2002 18-٣٠

Control Measure for Deterring or Reducing Employee Theft or Fraud



Workplace Violence

many factors contribute to workplace violence including:

1. employee work driven by time, numbers, and crises.

2. rapid and unpredictable change

3. destructive communication style of manager

4. authoritarian leadership4. authoritarian leadership

5. defensive attitude

6. double standards

7. unresolved grievances\complains

8. emotionally troubled employees

9. repetitive, boring work



Workplace Violence (cont.)

– contributing factors (cont.)

• faulty or unsafe equipment

• hazardous work environment

• culture of violence


Workplace Violence

Witnessed yelling\scream 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%Struck a coworker 2%


chapter 18 foundations of control - …site.iugaza.edu.ps/melfarra/files/2010/02/control183.pdf ·...

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