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Foundations of Control Chapter 13 Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13 PART V: Controlling
Learning Outcomes After reading this chapter, I will be able to: <ul><li>Define control. </li></ul><ul><li>Describe three ...
Learning Outcomes (cont’d) After reading this chapter, I will be able to: <ul><li>Explain how controls can become dysfunct...
What Is Control? <ul><li>Control </li></ul><ul><ul><li>The process of monitoring activities to ensure that they are being ...
Characteristics of Three Approaches  to Control Systems <ul><li>Market </li></ul><ul><ul><li>Uses external market mechanis...
The Control  Process Copyright © 2005 Prentice Hall, Inc. All rights reserved.  13– Exhibit 13.2
Steps in the Control Process <ul><li>Measuring actual performance </li></ul><ul><ul><li>Personal observation, statistical ...
Steps in the Control Process (cont’d) <ul><li>Comparing actual performance against a standard </li></ul><ul><ul><li>Compar...
Defining an Acceptable Range of Variation Copyright © 2005 Prentice Hall, Inc. All rights reserved.  13– Exhibit 13.3
Steps in the Control Process (cont’d) <ul><li>Taking managerial action to correct deviations or inadequate standards </li>...
Types Of Control <ul><li>Feedforward control </li></ul><ul><ul><li>Control that prevents anticipated problems </li></ul></...
Types of Control Copyright © 2005 Prentice Hall, Inc. All rights reserved.  13– Exhibit 13.5
The Qualities Of An Effective Control System <ul><li>Accuracy </li></ul><ul><li>Timeliness </li></ul><ul><li>Economy </li>...
What Contingency Factors Affect the Design of A Control System? <ul><li>Size of the organization </li></ul><ul><li>The job...
Contingency  Factors in  the Design  of Control  Systems Copyright © 2005 Prentice Hall, Inc. All rights reserved.  13– Ex...
Controls And Cultural Differences <ul><li>Methods of controlling employee behavior and operations can be quite different i...
The Dysfunctional Side Of Control <ul><li>Problems with unfocused controls </li></ul><ul><ul><li>Failure to achieve desire...
Contemporary Issues In Control <ul><li>The right to personal privacy in the workplace versus: </li></ul><ul><ul><li>Employ...
Perspective on Employee Theft <ul><li>Industrial security </li></ul><ul><ul><li>The opportunity to steal presents itself t...
Control Measures for Deterring or Reducing Employee Theft or Fraud Copyright © 2005 Prentice Hall, Inc. All rights reserve...
Suggestions for Achieving a Supportive  Growth-Oriented Culture Copyright © 2005 Prentice Hall, Inc. All rights reserved. ...
Suggestions for Achieving a Supportive  Growth-Oriented Culture (cont’d) Copyright © 2005 Prentice Hall, Inc. All rights r...
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  1. 1. Foundations of Control Chapter 13 Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13 PART V: Controlling
  2. 2. Learning Outcomes After reading this chapter, I will be able to: <ul><li>Define control. </li></ul><ul><li>Describe three approaches to control. </li></ul><ul><li>Explain why control is important. </li></ul><ul><li>Describe the control process. </li></ul><ul><li>Distinguish among the three types of control. </li></ul><ul><li>Describe the qualities of an effective control system. </li></ul><ul><li>Identify the contingency factors in the control process. </li></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  3. 3. Learning Outcomes (cont’d) After reading this chapter, I will be able to: <ul><li>Explain how controls can become dysfunctional. </li></ul><ul><li>Describe how national differences influence the control process. </li></ul><ul><li>Identify the ethical dilemmas in employee monitoring. </li></ul><ul><li>Describe how an entrepreneur controls for growth. </li></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  4. 4. What Is Control? <ul><li>Control </li></ul><ul><ul><li>The process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations </li></ul></ul><ul><ul><li>An effective control system ensures that activities are completed in ways that lead to the attainment of the organization’s goals. </li></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  5. 5. Characteristics of Three Approaches to Control Systems <ul><li>Market </li></ul><ul><ul><li>Uses external market mechanisms, such as price competition and relative market share, to establish standards used in system to gain competitive advantage. </li></ul></ul><ul><li>Bureaucratic </li></ul><ul><ul><li>Emphasizes organizational authority of administrative and hierarchical mechanisms to ensure appropriate employee behaviors and to meet performance standards. </li></ul></ul><ul><li>Clan </li></ul><ul><ul><li>Regulates employee behavior by the shared values, norms, traditions, rituals, beliefs, and other aspects of the organization’s culture. </li></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13– Exhibit 13.1
  6. 6. The Control Process Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13– Exhibit 13.2
  7. 7. Steps in the Control Process <ul><li>Measuring actual performance </li></ul><ul><ul><li>Personal observation, statistical reports, oral reports, and written reports </li></ul></ul><ul><ul><li>Management by walking around (MBWA) </li></ul></ul><ul><ul><ul><li>A phrase used to describe when a manager is out in the work area interacting with employees </li></ul></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  8. 8. Steps in the Control Process (cont’d) <ul><li>Comparing actual performance against a standard </li></ul><ul><ul><li>Comparison to objective measures: budgets, standards, goals </li></ul></ul><ul><ul><li>Range of variation </li></ul></ul><ul><ul><ul><li>The acceptable parameters of variance between actual performance and the standard </li></ul></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  9. 9. Defining an Acceptable Range of Variation Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13– Exhibit 13.3
  10. 10. Steps in the Control Process (cont’d) <ul><li>Taking managerial action to correct deviations or inadequate standards </li></ul><ul><ul><li>Immediate corrective action </li></ul></ul><ul><ul><ul><li>Correcting a problem at once to get performance back on track </li></ul></ul></ul><ul><ul><li>Basic corrective action </li></ul></ul><ul><ul><ul><li>Determining how and why performance has deviated and then correcting the source of deviation </li></ul></ul></ul><ul><ul><li>Revising the standard </li></ul></ul><ul><ul><ul><li>Adjusting the performance standard to reflect current and predicted future performance capabilities </li></ul></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  11. 11. Types Of Control <ul><li>Feedforward control </li></ul><ul><ul><li>Control that prevents anticipated problems </li></ul></ul><ul><li>Concurrent control </li></ul><ul><ul><li>Control that takes place while an activity is in progress </li></ul></ul><ul><li>Feedback control </li></ul><ul><ul><li>Control that takes place after an action </li></ul></ul><ul><ul><ul><li>Provides evidence of planning effectiveness </li></ul></ul></ul><ul><ul><ul><li>Provides motivational information to employees </li></ul></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  12. 12. Types of Control Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13– Exhibit 13.5
  13. 13. The Qualities Of An Effective Control System <ul><li>Accuracy </li></ul><ul><li>Timeliness </li></ul><ul><li>Economy </li></ul><ul><li>Flexibility </li></ul><ul><li>Understandability </li></ul><ul><li>Reasonable criteria </li></ul><ul><li>Strategic placement </li></ul><ul><li>Emphasis on the exception </li></ul><ul><li>Multiple criteria </li></ul><ul><li>Corrective action </li></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  14. 14. What Contingency Factors Affect the Design of A Control System? <ul><li>Size of the organization </li></ul><ul><li>The job/function’s position in the organization’s hierarchy </li></ul><ul><li>Degree of organizational decentralization </li></ul><ul><li>Type of organizational culture </li></ul><ul><li>Importance of the activity to the organization’s success </li></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  15. 15. Contingency Factors in the Design of Control Systems Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13– Exhibit 13.6 Contingency Variable Control Recommendations
  16. 16. Controls And Cultural Differences <ul><li>Methods of controlling employee behavior and operations can be quite different in different countries. </li></ul><ul><li>Distance creates a tendency for formalized controls in the form of extensive, formal reports. </li></ul><ul><li>In less technologically advanced countries, direct supervision and highly centralized decision making are the basic means of control. </li></ul><ul><li>Local laws constraint the corrective actions that managers can take foreign countries. </li></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  17. 17. The Dysfunctional Side Of Control <ul><li>Problems with unfocused controls </li></ul><ul><ul><li>Failure to achieve desired or intended results occur when control measures lack specificity </li></ul></ul><ul><li>Problems with incomplete control measures </li></ul><ul><ul><li>Individuals or organizational units attempt to look good exclusively on control measures. </li></ul></ul><ul><li>Problems with inflexible or unreasonable control standards </li></ul><ul><ul><li>Controls and organizational goals will be ignored or manipulated. </li></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  18. 18. Contemporary Issues In Control <ul><li>The right to personal privacy in the workplace versus: </li></ul><ul><ul><li>Employer’s monitoring of employee activities in the workplace </li></ul></ul><ul><ul><li>Employer’s liability for employees creating a hostile environment </li></ul></ul><ul><ul><li>Employer’s need to protect intellectual property </li></ul></ul><ul><li>Remember: The computer on your desk belongs to the company. </li></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  19. 19. Perspective on Employee Theft <ul><li>Industrial security </li></ul><ul><ul><li>The opportunity to steal presents itself through lax controls and favorable circumstances. </li></ul></ul><ul><li>Criminologists </li></ul><ul><ul><li>Employees steal to relieve themselves of financial-based or vice-based pressures. </li></ul></ul><ul><li>Clinical psychologists </li></ul><ul><ul><li>Employees steal because they can rationalize whatever they are doing as being correct and appropriate behavior. </li></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13–
  20. 20. Control Measures for Deterring or Reducing Employee Theft or Fraud Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13– Exhibit 13.7 Sources: Based on A. H. Bell and D. M. Smith. “Protecting the Company Against Theft and Fraud,” Workforce Online (www.workforce.com), December 3, 2000; J. D. Hansen, “To Catch a Thief,” Journal of Accountancy , March 2000, pp. 43–46; and J. Greenberg. “The Cognitive Geometry of Employee Theft,” in Dysfunctional Behavior in Organizations: Nonviolent and Deviant Behavior (Stamford, CT: JAI Press, 1998), pp. 147–93.
  21. 21. Suggestions for Achieving a Supportive Growth-Oriented Culture Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13– Keep the lines of communication open—inform employees about major issues. Establish trust by being honest, open, and forthright about the challenges and rewards of being a growing organization. Be a good listener—find out what employees are thinking and facing. Be willing to delegate duties. Be flexible—be willing to change your plans if necessary. Exhibit 13.8
  22. 22. Suggestions for Achieving a Supportive Growth-Oriented Culture (cont’d) Copyright © 2005 Prentice Hall, Inc. All rights reserved. 13– Provide consistent and regular feedback by letting employees know the outcomes—good and bad. Reinforce the contributions of each person by recognizing employees’ efforts. Continually train employees to enhance their capabilities and skills. Maintain the focus on the venture’s mission even as it grows. Establish and reinforce a “we” spirit since a successful growing venture takes the coordinated efforts of all the employees. Exhibit 13.8

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