CONTROL AND CONTROL
SYSTEMS
“What gets measured happens”
13–2
Questions from this Section
1. Define control. Describe three approaches to
control.
2. Explain why control is important.
3. Describe the control process.
4. Distinguish among the three types of control.
5. Describe the qualities of an effective control
system.
6. Identify the contingency factors in the control
process.
What Is Control?
• Control
– A process of monitoring performance and taking
action to ensure desired results.
– It sees to it that the right things happen, in the
right ways, and at the right time.
– An effective control system ensures that activities
are completed in ways that lead to the
attainment of the organization’s goals.
• Think about various controlling elements in
MIIM
Organizational Control
Managers must monitor and evaluate:
– Is the firm efficiently converting inputs into
outputs?
• Are units of inputs and outputs measured
accurately?
– Is product quality improving?
• Is the firm’s quality competitive with other firms?
– Are employees responsive to customers?
• Are customers satisfied with the services offered?
– Are our managers innovative in outlook?
• Does the control system encourage risk-taking?
What Do Managers Measure?
• Information
• Operations
• Finances
• People
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 what future actions to take.
– Empowering employees
• Control systems provide managers with information
and feedback on employee performance.
– Protecting the workplace
• Controls enhance physical security and help minimize
workplace disruptions.
The Planning–Controlling Link
Characteristics of Three Approaches to Control
Systems
Market
Uses external market mechanisms, such as price competition and
relative market share, to establish standards used in system to gain
competitive advantage.
Bureaucratic
Emphasizes organizational authority of administrative and hierarchical
mechanisms to ensure appropriate employee behaviors and to meet
performance standards.
Clan
Regulates employee behavior by the shared values, norms, traditions,
rituals, beliefs, and other aspects of the organization’s culture.
Control Systems
• Control Systems
Formal, target-setting, monitoring, evaluation and
feedback systems that provide managers with
information about whether the organization’s
strategy and structure are working efficiently
and effectively.
Four steps in the control process.
The Control Process
13–13
Step 1 — Establishing objectives and
standards
– Output standards
• Measure performance results in terms of quantity,
quality, cost, or time.
– Input standards
• Measure effort in terms of amount of work expended
in task performance.
Step 2 — Measuring actual
performance
– Goal is accurate measurement of actual
performance results and/or performance efforts.
– Must identify significant differences between
actual results and original plan.
– Effective control requires measurement.
How Do Managers Measure?
• Personal observations
– MBWA (management-by-walking around)
• Statistical reports
• Oral reports
• Written reports
Step 3-Comparing actual performance
against a standard
– Comparison to objective measures: budgets,
standards, goals
– Range of variation
• The acceptable parameters of variance between
actual performance and the standard
Step 4- Taking managerial action to
correct deviations or inadequate
standards
– Immediate corrective action
• Correcting a problem at once to get performance back
on track
– Basic corrective action
• Determining how and why performance has deviated
and then correcting the source of deviation
– Revising the standard
• Adjusting the performance standard to reflect current
and predicted future performance capabilities
Types of Control
Types Of Control
• Feedforward control
– Control that prevents anticipated problems
• Concurrent control
– Control that takes place while an activity is in
progress
• Feedback control
– Control that takes place after an action
• Provides evidence of planning effectiveness
• Provides motivational information to employees
Qualities Of An Effective Control
System
Corrective Accuracy
Action
Multiple Timeliness
Criteria
EFFECTIVE
Emphasis on CONTROL
Economy
Exceptions SYSTEM
Strategic
Placement Flexibility
Reasonable
Understandability
Criteria
What Contingency Factors Affect the
Design of A Control System?
• Size of the organization
• The job/function’s position in the
organization’s hierarchy
• Degree of organizational decentralization
• Type of organizational culture
• Importance of the activity to the
organization’s success
Contingency
Factors in the
Design of
Control
Systems
The Dysfunctional Side Of Control
• Problems with unfocused controls
– Failure to achieve desired or intended results occur
when control measures lack specificity
• Problems with incomplete control measures
– Individuals or organizational units attempt to look
good exclusively on control measures.
• Problems with inflexible or unreasonable control
standards
– Controls and organizational goals will be ignored or
manipulated.
