Download - 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
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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
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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
– 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
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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
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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
StandardsMeasurementsComparisonsActions
Controlling
GoalsObjectivesStrategiesPlans
Planning
MotivationLeadershipCommunicationIndividual 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 observation - permits intensive coverage– Management By Walking Around (MBWA)– drawbacks - subject to personal biases
» consumes a great deal of time» suffers from obtrusiveness
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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
© Prentice Hall, 2002 18-10
The Control Process (cont.)
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
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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
The Control Process (cont.)
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The Control Process (cont.)
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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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)
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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
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The Control Process (cont.)
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
© Prentice Hall, 2002 18-16
Managerial Decisions in the Control Process
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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
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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.)
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Types Of ControlInput OutputProcesses
Anticipatesproblems
FeedforwardControl
Correctsproblems after
they occur
FeedbackControl
Correctsproblems asthey happen
ConcurrentControl
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Flexibility
Qualities Of An Effective Control System
StrategicPlacement
UnderstandabilityReasonable
Criteria
EFFECTIVECONTROLSYSTEM
TimelinessMultipleCriteria
CorrectiveAction
Accuracy
EconomyEmphasis onExceptions
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Contingency Factors in the Design of Control Systems
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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 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
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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
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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
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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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Contemporary Issues In Control (cont.)
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
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Control Measure for Deterring or Reducing Employee Theft or Fraud
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Contemporary Issues In Control (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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Contemporary Issues In Control (cont.)
Workplace Violence (cont.)– contributing factors (cont.)• faulty or unsafe equipment• hazardous work environment• culture of violence
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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%
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