1. Chapter 18
FOUNDATIONS
OF
CONTROL
© Prentice Hall, 2002
18-1

2. 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
© Prentice Hall, 2002
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3. 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
© Prentice Hall, 2002
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4. Control
What Is 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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5. 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
© Prentice Hall, 2002
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6. 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
© Prentice Hall, 2002
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7. The Planning-Controlling Link
Planning
Goals
Objectives
Strategies
Plans
Controlling
Standards
Measurements
Comparisons
Actions
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Organizing
Structure
Human Resource
Management
Leading
Motivation
Leadership
Communication
Individual and
Group Behavior
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8. The Control Process
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9. 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
© Prentice Hall, 2002
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10. 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

11. 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
© Prentice Hall, 2002
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12. The Control Process (cont.)
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
© Prentice Hall, 2002
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13. 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
© Prentice Hall, 2002
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14. Measurement of Performance
Acceptable
Upper Limit
Acceptable
Range of
Variation
Standard
Acceptable
Lower Limit
t
© Prentice Hall, 2002
t+1
t+2
t+3
t+4
Time Period (t)
t+5
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15. Sales Performance Figures For July, Eastern
States Distributors
Brand
Heineken
Molson
Irish Amber
Victoria Bitter
Labatt’s
Corona
Amstel Light
Dos Equis
Tecate
Total 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
© Prentice Hall, 2002
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16. 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
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17. Managerial Decisions in the Control Process
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18. 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
© Prentice Hall, 2002
18-18

19. Types of Control (cont.)
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
© Prentice Hall, 2002
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20. Types Of Control
Input
Processes
Output
Feedforward
Control
Concurrent
Control
Feedback
Control
Anticipates
problems
Corrects
problems as
they happen
Corrects
problems after
they occur
© Prentice Hall, 2002
18-20

21. Qualities Of An Effective Control System
Corrective
Action
Accuracy
Multiple
Criteria
Emphasis on
Exceptions
Timeliness
EFFECTIVE
CONTROL
SYSTEM
Strategic
Placement
Flexibility
Reasonable
Criteria
© Prentice Hall, 2002
Economy
Understandability
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22. Contingency Factors in the Design of Control Systems
© Prentice Hall, 2002
18-22

23. Implications For Managers
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
© Prentice Hall, 2002
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24. 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
– Electronic Communications Privacy Act - 1986
• prohibits unauthorized interception of electronic
communication
• workplace electronic monitoring is still legal
© Prentice Hall, 2002
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25. 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
© Prentice Hall, 2002
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26. Workplace Monitoring
Track telephone calls (numbers and time spent)
Store and review employee e-mail messages
Store and review computer files
Log computer time and keystrokes entered
Record and review telephone conversations
Store and review voice-mail messages
© Prentice Hall, 2002
39%
27%
21%
15%
11%
6%
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27. 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 vicebased pressures
• clinical psychology - people are able to rationalize any type
of behavior
© Prentice Hall, 2002
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28. Control Measure for Deterring or Reducing Employee Theft or
Fraud
© Prentice Hall, 2002
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29. 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
© Prentice Hall, 2002
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30. Contemporary Issues In Control (cont.)
Workplace Violence (cont.)
– contributing factors (cont.)
• faulty or unsafe equipment
• hazardous work environment
• culture of violence
© Prentice Hall, 2002
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31. Workplace Violence
Witnessed yelling and other verbal abuse
Yelled at coworkers themselves
Cried over work-related issues
Seen someone purposely damage machines
or furniture
14%
Seen physical violence in the workplace
Struck a coworker
© Prentice Hall, 2002
42%
29%
23%
10%
2%
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