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Control Audrey Dodson Liberty University August 22, 2013
it is important in an individual’s personal life. A performance measure must be valid and the performance measurement must be continuous. and corrective action. the organization will take corrective action by correcting errors or potentially changing the standard.CONTROL Control The key topic is control. and operational control differ. in alignment with the organization’s goals. comparison of performance against standards. I selected this topic to see if the processes for management control. Hermanson. Key Concept Explanation The essential elements of the process of control are establishing standards. and corrective action. Comparison In comparing the elements of control in the textbook with the elements of control from the research literature. measuring performance. & Hermanson. and should be able to identify performance indicators. Comparing 2 performance against standards allows the organization to see and monitor variances or to see that the organization is on target. Control is not only important in business. The steps in the control process are establishing standards. A control standard is a target of which performance will be compared. Other . the elements of control are basically the same. If there is not a variance between performance and standard there is no corrective action needed (Veliyath. The standard should be measurable. After performance has been compared to standard. strategic control. The concept of control is very broad and encompasses an entire organization inclusive of day to day operations. The difference is in the performance being measured and the standards that the performance is being compared to. 1997). comparison of performance against standards. measuring performance.
and operating controls. accounts receivable. environmental analysis. & Kord. and equipment control. and financial control. operations control. public relations. (2) human resources. Strategic control refers to the process of evaluating an organization’s strategy.CONTROL differences are in the type of controls that have been established: strategic controls. Types of Control Controls are established in different areas. This type of control is normally done after the formation of the organization’s strategy and after the strategy has been implemented. structural controls. and operational control. Financial resource control includes managing organizational debt. financial controls. and accounts payable. Information resource control includes sales and marketing forecasting. Human resource control includes selection and placement. Salarzehi. The levels of control are strategic control. structural control. Areas of control are (1) physical resources. performance appraisal. and (4) financial resources. 2010). . and compensation. training and development. Controls are also established at various levels within the organization. and economic forecasting. quality control. production scheduling. Physical resource control includes inventory 3 management. Organizational Control There are three main types of organizational control: strategic control. 1996) . when combined these substrategies make up the overall strategy of the organization. (Flamholtz. Operational control is concerned with both individual and group performance compared with the standards required by the organization. cash flow. All managers of an organization are responsible for control (Armesh. Management control’s focus in on accomplishment of the various departmental strategies or substrategies. management control. (3) information resources. Managing control is an enormous responsibility.
” today’s firms face environmental. Because of internal. “Organizational Control Systems: Matching Controls with 4 Organizational Levels. and unknown risks organizations need controls to monitor processes and regulate activities Organizations need controls to help determine if their goals are being met and to take corrective action if necessary. Hermanson. & Hermanson. 1997). legal. The control process helps to align individual goals or objectives with those of the organization. A parable in the New Testament about a steward who is wasting money is an example for the motive of monitoring processes. measurement and comparison of outcomes against targets. Firms face losses from derivatives and lawsuits for employee harassment and discrimination. Biblical Integration The purpose of control is to let the organization know how well or not so well it is doing by comparing performance to standards. Managers and employees use manual and systematic controls to prevent or detect risks. external. implementation programs and policies. These controls are necessary and are implemented so that work proceeds as necessary for continuous operation. it is necessary for management to determine the type of controls needed and match them to the appropriate levels in the organization. The process of control involves four steps: setting goals or objectives. Controls are needed for regulation of organizational activities and help ensure that targeted elements of performance remain in acceptable limits. and financial risks coupled with uncertain risks. The owner in Luke 16:2 . For controls to be effective. and corrective action. There are different types of control within the organization but two common methods of control are preventive and detective (Veliyath.CONTROL Article Summary According to the article.
One rationale for internal control is that if given the opportunity to steal an employee will give in to temptation and steal. and corrective action. control activities encompass policies and procedures and the daily events that happen within the internal control system. Corrective action can be done through policies and procedures. Hermanson. 1997) . Essentially. and deal with complexity. liabilities. “What is this I heard about you? Draw me up an account of your stewardship.CONTROL 5 says. It is important for organizations to have a control system that reduces embezzlement. & Hermanson. Ecclesiastes 4:1-2 states.” This verse indicates that control is used to monitor performance. “Put not trust in a neighbor.” The implication of these verses is by monitoring and evaluating processes errors can be identified and corrected which eliminates internal and external conflict. adapt to change. Application Control measures help the organization achieve its goals. Controls also function as a system of checks and balances to detect and identify errors that could have a negative impact on internal and external stakeholders of the organization. reduce errors.” These verses can be considered the rationale for the need for internal control. Micah 7:5-6 states. minimize cost. risk elimination or reduction. and disciplinary action. . A control system should include both preventive and detective control processes for risk identification. and internal risks (Veliyath. Controls help to protect the organization from damages. implementing new technology to improve processes. have no confidence in a friend. “These are things you should not be ashamed of—keeping strict accounts with a traveling companion. employee training.
1111/j. Control is a mechanism for motivation. Salarzehi.1911-3846. doi:10. S.. Retrieved from http://search. liability.x This article explains the importance of preventive and detective controls within an organization.01106. H. Emett. M. and bank accounts. D. Contemporary Accounting Research. Christ. structure. integration. Interdisciplinary Journal of Contemporary Research in Business. 432-452. Emphasis of an organization's control system should be on core capabilities. & Kord. The intent of organizational control is to influence members of the organization. H. Summers. committing illegal acts.. performance measurement.. 29. . operational results. were highlighted and explained. (2012). 193-206. proper authorization for transactions. and defrauding the organization.. The design of preventive controls is to prevent workers at all levels from making errors.com/docview/815405395?accountid=12085 6 This article was helpful in explaining the nature and function of organizational control relative to employee behavior and motivation. The effects of preventive and detective controls on employee performance and motivation. (2010). and culture. and detective controls: performance reviews and reconciliations on expense. Management control system. & Wood.. and implementation of strategy. B.proquest.2011. Controls help the organization emphasize goals and motivate employees to focus on achieving the goals of the organization. Examples of preventative controls: segregation of duties. revenue. S. Detective controls are designed to detect errors or fraud after they have taken place. 2(6).CONTROL References Armesh.
The rationale for an organization to have controls is that today companies face a number of risks: internal and external. Retrieved from http://search.. 20-24.CONTROL Veliyath. D. . 18(2). 7 Matching controls with organizational levels. Review of Business. that can have a negative impact. Control process steps were highlighted and explained. H.com/docview/220964413?accountid=12085 This article is helpful in understanding organizational control. & Hermanson. (1997).. The article also explains why it is necessary to match the various controls in the organization to the appropriate organizational level. Hermanson. Explanations and descriptions of the various types of controls within organizations are also highlighted.proquest. which was helpful for comparison of control in the textbook. and why organization control is a fundamental asset for any organization. Organizational control systems. the components of organizational control. R.
CONTROL 8 .