What is controlling?Controlling is the process by which a person – a group – an organization consciouslymonitoring (measuring) the actual performance of employees, comparing it withstandards (goals) and take corrective actions.The Purpose of ControlTo ensure that activities are completed in ways that lead to accomplishment oforganizational goals.Why Is Control Important?As the final link in management functions:Planning:-Controls let managers know whether their goals and plans are on target and whatfuture actions to take.Empowering employees:-Control systems provide managers with information and feedback on employeeperformance.Protecting the workplace:-Controls enhance physical security and help minimize workplace disruptions. The Planning–Controlling LinkThe Control ProcessControl process as the three-step process of measuring actual performance, comparingit against a standard, and taking managerial action to correct deviations or inadequatestandards.
1. Measuring actual performanceHow we measure is done through four common sources of information that managersuse.Personal observationsStatistical reportsOral reportsWritten reportsWhat we measure is probably more critical than the how. Both objective and subjectivemeasures are used.Employees Satisfaction Turnover AbsenteeismBudgets Costs Output SalesFor example, if sales growth is a target, the organization should have a means ofgathering and reporting sales data.Common Sources of Information for Measuring Performance
2. Compare performance with the standardsThis step determines the degree of variation between actual performance and thestandard.It’s critical to determine the range of variation, which are the acceptable parameters ofvariance between actual performance and the standard.When managers read computer reports or walk through their plants, they identifywhether actual performance meets, exceeds, or falls short of standards. 3. Take corrective actionsWhen performance deviates from standards, managers must determine what changes, ifany, are necessary and how to apply them.Managers can choose among three possible courses of action:“Doing nothing” Only if deviation is judged to be insignificantCorrecting actual (current) performanceTwo types of actions managers take Immediate corrective action to correct the problem at once Basic corrective action to locate and to correct the source of the deviation Corrective Actions Change strategy, structure, compensation scheme, or training programs; redesign jobs; or fire employeesRevising the standardExamining the standard to ascertain whether or not the standard is realistic, fair, andachievable Upholding the validity of the standard Resetting goals that were initially set too low or too high
Managerial Decisions in the Control ProcessControlling for Organizational PerformanceWhat Is Performance?The end result of an activityWhat Is Organizational Performance?The accumulated end results of all of the organization’s work processes and activities Designing strategies, work processes, and work activities. Coordinating the work of employeesTools for Controlling Organizational Performance (Types of Control)Activity-Base Control SystemSystem-Base Control SystemActivity-Base Control SystemFeed-forward ControlA control that prevents anticipated problems before actual occurrences of the problem. Building in quality through design. Requiring suppliers conform to ISO 9002.Concurrent ControlA control that takes place while the monitored activity is in progress The best known form of concurrent control is Direct supervision (management by walking around), which describes a manger.Feedback ControlA control that takes place after an activity is done. Corrective action is after-the-fact, when the problem has already occurred.Advantages of feedback controls Feedback provides managers meaningful information about how effective their planning efforts have been. Feedback enhances employee motivation by providing them with information on how well they are doing.
System-Base Control System (Designing Control Systems) (Methods of Control)There are three different approaches to designing organizational control systems.Market (Auto-Curacy) ControlEmphasizes the use of external market mechanisms to establish the standards used inthe control system. External measures: price competition and relative market shareBureaucratic ControlEmphasizes organizational authority and relies on rules, regulations, procedures, andpolicies.Clan (Democratic) ControlRegulates behavior by shared values, norms, traditions, rituals, and beliefs of the firm’sculture.
Goal-Setting Theory says that specific goals increase performance, and difficult goals, whenaccepted, result in higher performance than easy goals. What do we know about goals asmotivators?1. Intention to work toward a goal is a major source of job motivation. Specific and challenginggoals are superior motivating forces. Specific hard goals produce a higher level of output than dogeneralized goals.2. Is there a contradiction between achievement motivation and goal setting? No, and here’swhy.a. Goal-setting theory deals with people in general; achievement theory is based only on peoplewho have a high need for achievement. Difficult goals are still recommended for the majority ofemployees.b. The conclusions of goal-setting theory apply to those who accept and are committed to thegoals.Difficult goals will lead to higher performance only if they are accepted.3. Will employees try harder if they participate in the setting of goals?a. We can’t say that participation is always desirable.b. However, participation is probably preferable to assigning goals when the manager expectsresistance.4. Will people do better when they get feedback on how well they’re progressing toward theirgoals?a. Feedback acts to guide behavior.b. Self-generated feedback has been shown to be a more powerful motivator than externallygenerated feedback.5. What contingencies exist in goal-setting theory? There are four contingencies we need toknow about.a. Feedback influences the goal-performance relationship.b. Goal commitment is another contingency. Commitment is most likely to occur when goals aremade public, when the individual has an internal locus of control, and when the goals are self-setrather than assigned.c. Self-efficacy is another contingency and refers to an individual’s belief that he or she iscapable of performing a task. The higher your self-efficacy, the more confidence you have inyour ability to succeed in a task.d. The last contingency that affects goal setting is national culture.6. Our conclusion about motivation from goal-setting theory is that intentions, as defined by hardand specific goals, are a powerful motivating force.a. In the proper conditions, they can lead to higher performance.b. However, there’s no evidence that such goals are associated with increased job satisfaction.---------------------------------------------------------------------------------------------------------------- • Need An internal state that makes certain outcomes appear attractive-----------------------------------------------------------------------------------------------------------------