CHAPTER 17 FOUNDATIONS OF CONTROL 1. INTRODUCTION. Regardless of the thoroughness of the planning, an idea still may be poorly or properly implemented without a satisfactory control system. 2. WHAT IS CONTROL? Control is the process of monitoring activities to ensure they are being accomplished as planned and of correcting any significant deviations. There are three different approaches to designing organizational control systems. A. Market control is an approach that emphasizes the use of external market mechanisms to establish the standards used in the control system. B. Bureaucratic control is an approach that emphasizes organizational authority and relies on administrative rules, regulations, procedures, policies, standardization of activities, and other administrative mechanisms to ensure that employees exhibit appropriate behaviors and meet performance standards. C. Clan control is an approach to designing control systems in which employee behaviors are regulated by the shared values, norms, traditions, rituals, beliefs, and other aspects of the organization's culture. 3. THE IMPORTANCE OF CONTROL. Control is important since it serves as the final link in the functional chain of management. 4. THE CONTROL PROCESS. The control process is the process of measuring actual performance, comparing it against a standard, and taking managerial action to correct deviations or inadequate standards. A. Measuring is the first step in the control process. 1. How we measure can be shown by four common sources of information that managers use. a. Personal observation b. Statistical reports c. Oral reports d. Written reports 2. What we measure is probably more critical than the how. Both objective and subjective measures are used. B. Comparing is the next step in the control process, and it determines the degree of variation between actual performance and the standard. It is critical to determine the range of variation, which is the acceptable parameters of variance between actual performance and the standard. C. Taking managerial action is the final step in the control process. Although the manager might decide to "do nothing," two other alternatives are possible. 1. Correct actual performance. Once the manager has decided to correct actual performance, he or she has another decision to make. a. Take immediate corrective action, which is correcting an activity at once in order to get performance back on track. b. Take basic corrective action, which is determining how and why performance has deviated and correcting the source of deviations. c. The action taken will depend upon the cost/benefit of doing so. 2. Revise the standard. If the standard was set too high or too low, a manager may decide to revise it. D. Summary. The control process is a continuous flow between measuring, comparing, and managerial action. 5. TYPES OF CONTROL. There are three basic types of control. A. Feedforward control is control that prevents anticipated problems. B. Concurrent control is control that occurs while an activity is in progress. C. Feedback control is control imposed after an action has occurred. 6. QUALITIES OF AN EFFECTIVE CONTROL SYSTEM. Effective control systems tend to have certain qualities in common. A. Characteristics of effective control systems include the following. 1. Accuracy 2. Timeliness 3. Economy 4. Flexibility 5. Understandability 6. Reasonable criteria 7. Strategic placement 8. Emphasis on the exception 9. Multiple criteria 10. Corrective action 7. THE DYSFUNCTIONAL SIDE OF CONTROLS. Controls also can have a dysfunctional side. When controls are inflexible or control standards are unreasonable, people lose sight of the organization's overall goals. Also, people can engage in behaviors designed to influence the information system that is gathering data during a given control period. Keep in mind that controls have both positive aspects and negative aspects. 8. ADJUSTING CONTROLS FOR NATIONAL DIFFERENCES. Methods of controlling people and operations can be quite different in foreign countries. The differences are seen primarily in the measurement and correction action steps of the control process. Also, technology's impact on control can be seen when comparing technologically advanced nations with those that are not as technologically advanced. 9. ETHICAL ISSUES IN CONTROL. Ethical issues arise as managers design efficient and effective control systems. We'll look at three specific ethical issues in employee control. A. Employee workplace privacy is one area in which ethical questions can arise. One area of hot debate is e-mail communications. Organizations need to have policies in place regarding e-mail usage and communicate these to all system users. B. Closely related to the issue of workplace privacy is the practice of computer monitoring of employee work performance and behavior on the job. Computer monitoring systems can be used to collect, process, and provide feedback information on employee's work. Again, it's important that organizations have a well-designed computer monitoring system that informs employees they will be monitored and is used only in instances where a legitimate business purpose is at stake. C. The last area in ethical issues of control concerns employees' off-the-job behavior. Because of skyrocketing health care costs, many companies are forbidding certain off-the-job behaviors. ANSWERS TO REVIEW QUESTIONS 1. What is the role of control in management? The role of control in management is to monitor the activities to ensure they are being accomplished as planned, and to correct any significant deviations. 2. How are planning and control linked? Is control also linked to the other management functions? Explain. The control process assumes that standards exist already. These existing standards are established in the planning function. But control is also linked to the other management functions because the types of controls used will influence the organizing and leading functions of managers. 3. Describe the three basic approaches to control systems. Give an example of an organization that you feel represents each approach, and explain your rationale behind your choice. Market control is an approach that emphasizes the use of external market mechanisms to establish the standards used in the control system. An example of a company that uses this would be PepsiCo. Each of its divisions (Taco Bell, KFC, Frito Lay, Pizza Hut, and Pepsi Cola) has standards or goals established that reflect market share percentages and contributions to corporate profits. Bureaucratic control emphasizes organizational authority and relies on administrative rules, regulations, procedures, policies, standardization of activities, and other administrative mechanisms to control employe behavior. An example of an organization that uses bureaucratic control would be any governmental agency. Clan control is an approach that regulates employee behavior by the shared values, rituals, traditions, beliefs, and other aspects of the organization's culture. An example of a company that uses clan control would be 3M and its culture that supports risk-taking and innovation. 4. Why is what is measured probably more crucial to the control process than how it is measured? The criteria that are measured become the focus of attention. Whatever criteria are chosen, people will emphasize and attempt to look good on that criteria. 5. Name four methods managers can use to acquire information about actual performance. The four methods are personal observation, statistical reports, oral reports, and written reports. 6. Which step in the control process do you think is likely to be the most difficult? Why? Although each step in the control process (measuring, comparing, and taking action) can be difficult, probably the most difficult would be the first step measuring, particularly in the area of determining what is measured. The selection of the wrong criteria can result in serious dysfunctional consequences. 7. Contrast immediate and basic corrective action. Immediate corrective action deals with the problem on its surface. It addresses the outcome and not the cause. Basic corrective action looks for the cause of the problem and corrects it. The latter is more difficult to do than the former. 8. What are the advantages and disadvantages of feedback control? Feedback controls provide managers with meaningful information about how effective the planning effort was. Feedback can also enhance employee motivation. However, it is after the fact. It tends to be more costly because it fails to anticipate problems. 9. What can management do to reduce the dysfunctionality of controls? Since controls have both a positive side and a negative side, managers need to design flexibility into the control system in order to reduce the dysfunctionality of controls. By being flexible, managers can hopefully avoid some of the problems associated with strict controls. 10. What ethical issues can you see in the controlling process? What factors do you think have contributed to these? What can organizations do to ensure that their control systems are ethical as well as effective and efficient? Most of the ethical issues in the controlling process revolve around employee workplace privacy, computer monitoring practices, and the right of employers to control employees' off-the-job behavior. Some factors that might have contributed to this include the more competitive global marketplace that forces organizations to be extremely cost-efficient, the skyrocketing health care costs associated with risky behavior, and the availability of technology that enables closer monitoring of employee behavior.