Griffin Mgmt12e IM Ch19

Management 12e by Ricky W.
Griffin
CHAPTER 19
Basic Elements of Control
Part Six introduces and discusses the fourth basic managerial function, control.
Part Six consists of two chapters. Chapter nineteen discusses the basics elements of control and the final
chapter covers the management of operations, quality, and productivity.
CHAPTER SUMMARY
The first section of this chapter explains the purpose of control. The text then looks at types of control
and the steps in the control process. The chapter then examines the four levels of control that most
organizations employ to remain effective: operations, financial, structural, and strategic control. The
chapter concludes by discussing the characteristics of effective control, noting why some people resist
control and describing what organizations can do to overcome this resistance.
LEARNING OBJECTIVES
After covering this chapter, students should be able to:
1. Explain the purpose of control, identify different types of control, and describe the steps in the
control process.
2. Identify and explain the three forms of operations control.
3. Describe budgets and other tools for financial control.
4. Identify and distinguish between two opposing forms of structural control.
5. Discuss the relationship between strategy and control, including international strategic control.
6. Identify characteristics of effective control, why people resist control, and how managers can
overcome this resistance.
MANAGEMENT IN ACTION
Metric Tons and Nonfinancial Metrics
The opening case discusses Jones Lang LaSalle (JLL), a Fortune 500 company out of Chicago,
specifically their Sustainability Report. The case shows how JLL has made sustainability a key
performance indicator even though they have little control over their 200+ office facilities. JLL manages
commercial property for clients, making sustainability a full client service. In one year’s time, JLL saves
clients $39 million in energy costs and saving 377 million kilowatt-hours of energy.
Discussion Starter: Do students feel JLL is greenwashing? Is JLL doing all it can to
reduce its own energy use? Would it make a difference if they did more?
LECTURE OUTLINE
I. THE NATURE OF CONTROL
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Chapter 19: Basic Elements of Control
Control is the regulation of organizational activities in such a way as to facilitate goal attainment.
Teaching Tip: A good analogy to use to describe control is that of a space flight to Mars.
After a rocket is launched, NASA scientists continually monitor its progress toward its
target or goal. During the flight, they may have to make periodic corrections to nudge it
back on course. Some corrections may be large, others small; some will be in one
direction, others in a different direction; and there will be some periods when no
corrections are needed. This process of monitoring progress toward the goal and then
making required corrections is control.
Teaching Tip: To some people, the very idea of control conjures up images of Big
Brother and a loss of personal freedom. The manager’s job is to maintain adequate
control without infringing on individual rights.
A. The Purpose of Control
Control provides an organization with ways to adapt to environmental change, to limit the
accumulation of error, to cope with organizational complexity, and to minimize costs.
Teaching Tip: Note Figure 19.1 and its depiction of the four basic purposes of control.
1. A properly designed control system can help managers anticipate, monitor, and respond
to changing circumstances.
Cross-Reference: We described environmental change in detail in Chapter 3.
Extra Example: The common room thermostat is also a control device. When the
temperature reaches a certain level, a climate control system is activated. When the
temperature changes to the targeted level, the system shuts down.
Discussion Starter: Ask students to discuss whether a control system can completely
deal with environmental change, or if—at best—it can only provide partial assistance.
2. Over time, small mistakes may accumulate and become serious. An adequate control
system will help prevent this from happening.
Extra Example: An example of error accumulation would be a manufacturer with a
small error in its production system that gets carried through hundreds or thousands of
products before it is discovered.
Extra Example: Some time ago, a series of small flaws in Microsoft’s XP operating
system allowed hackers to take control of other people’s PCs and use them for unethical
or illegal activities. The firm had to issue over a dozen small corrections in an attempt to
stop the hackers, but the problem was not completely resolved.
3. As organizations expand and create a variety of products, organizational complexity
increases. Control cannot be maintained without a well-planned and well-developed
control system.
Teaching Tip: Though control is important to any organization, it is especially important
in large, complex organizations. Problems and weaknesses can go undetected and
become ever more serious if control systems do not identify them on a timely basis.
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 12e by Ricky W. Griffin
Global Connection: To carry the preceding idea further, international firms have even
more complex control requirements. This point is covered later in the chapter.
4. Effective control can help to minimize costs and boost output. Effective control systems
can eliminate waste, lower labor costs, and improve output per unit of input.
B. Types of Control
Organizations practice control in a number of different areas and at different levels, and the
responsibility for managing control is widespread.
1. Control can focus on any area of the organization. Most organizations define areas of
control in terms of the four basic types of resources they use: physical, human,
information, and financial.
Control of physical resources includes inventory management, quality control, and
equipment control.
Control of human resources includes selection and placement, training and development,
performance appraisal, and compensation. Organizations attempt to control behavior
toward higher performance and away from unethical behaviors.
Control of information includes sales and marketing forecasting, environmental analysis,
public relations, production scheduling and economic forecasting.
Financial control involves managing the organization’s debt, ensuring the firm has
enough cash on hand, and that receivables are collected and bills are paid on time. The
control of financial resources is the most important area, because it relates to the control
of all the other resources.
Extra Example: Effective control is credited with Wal-Mart’s success. While its primary
competitor, Kmart, was concentrating on marketing and advertising, Wal-Mart managers
were focusing on cutting costs, improving efficiency, enhancing operations, and so forth.
2. Control can also be broken down by level within the organizational system.
a) Operations control focuses on the processes the organization uses to transform
resources into products or services. Quality control is one type of operations
control.
b) Financial control is concerned with the organization’s financial resources.
c) Structural control is concerned with how the elements of the organization’s
structure are serving their intended purpose.
d) Strategic control focuses on how effectively the organization’s strategies are
succeeding in helping the organization meet its goals.
3. Responsibility for control resides with all managers. Most large organizations have one
or more specialized managerial positions called controllers. A controller is a position in
organizations that helps line managers with their control activities. More and more often,
control resides with employees as well.
Cross-Reference: As discussed in Chapter 18 and other spots in this book, many
organizations today are relying on work teams. To make work teams most effective, the
organization must empower them to make decisions and do their own work. In addition,
it must allow them to handle much of their own control functions as well.
C. Steps in the Control Process
Regardless of the type or levels of control systems, there are four fundamental steps in any
control process.
1. Establishing standards.
A control standard is a target against which subsequent performance is compared.
Standards should be derived from the organization’s goals, expressed in measurable
terms, and focused on important and relevant performance indicators.
Teaching Tip: Note the performance standards that you have set for this class regarding
attendance, participation, and exam expectations.
2. Measuring performance.
Performance measurement is a constant, ongoing activity for most organizations. For
control to be effective, performance must be valid.
Teaching Tip: Note that grades you give papers/tests are a measure of performance.
3. Compare performance against standards.
Comparing performance against standards will result in one of three outcomes:
performance that is higher, lower, or even with the standards. The timetable for
comparing performance to standards depends on a variety of factors, including the
importance and complexity of what is controlled.
Teaching Tip: Stress that comparing performance against a control standard is not
always a cut-and-dried process.
4. Consider corrective action.
Once the comparison between performance and standards has been made, one of three
actions is appropriate: (1) maintain the status quo (do nothing), (2) correct the deviation,
or (3) change the standard.
Teaching Tip: As you look over final grades, you may go with a strict 90-80-70-60
percent cutoff for grades (maintaining the status quo). Alternatively, you may apply a
curve if grades are too far out of line (changing the standard).
II. OPERATIONS CONTROL
Operations control focuses on the processes used by the organization to transform inputs into
finished products or services.
The three forms of operations control are preliminary, screening, and postaction and occur at
different points in relation to the transformation process.
A. Preliminary Control
Preliminary control attempts to monitor the quality or quantity of financial, physical, human,
and information resources before they actually become part of the system.
Extra Example: Ford Motor Company is increasing its emphasis on preliminary control.
It has raised the product quality standards that must be met by its suppliers, for example,
and is pressuring them to lower their costs so that Ford itself can lower its own costs.
B. Screening Control
Screening control relies heavily on feedback processes during the transformation process. As
the outputs are produced, they are screened at checkpoints to make sure they meet the
standards. Screening controls tend to be used more often than other forms of control.
C. Postaction Control
Postaction control monitors the outputs or results of the organization after the transformation
process is complete. Effective if the manufacturing process is only a few simple steps. Useful
as an alert to a bigger problem or a sign that a reward is in order.
Most organizations employ a wide variety of techniques to facilitate operations control.
Extra Example: Levi Strauss relies heavily on postaction control. The firm requires that
every pair of jeans it makes be inspected before leaving the factory.
Teaching Tip: Stress the fact that most firms use more than one form of operations
control. For example, even though Ford forces its suppliers to improve the quality of parts
they ship to the automaker, Ford still pays attention to screening and postaction control.
III. FINANCIAL CONTROL
Financial control is concerned with the organization’s financial resources.

This means control of financial resources as they flow into the organization (revenues, shareholder
investments), are held by the organization (working capital, retained earnings), and flow out of the
organization (pay, expenses).
Teaching Tip: Interestingly, even though most managers probably consider human
resources to be the most critical resource for organizations, financial resources are
probably a more important resource to be controlled.
A. Budgetary Control
A budget is a plan expressed in numerical terms.
Budgets serve four primary purposes.
They help managers coordinate resources and projects.
They help define the established standards for control.
They provide guidelines about the organization’s resources and expectations.
Budgets allow the organization to evaluate manager performance and organizational units.
Discussion Starter: Ask students if they use budgets. If they do, discuss with them how
they use budgets, what kinds of budgets they use, how formal they are, and so forth.
1. Most organizations use three types of budgets—financial, operating, and nonmonetary
budgets.
A financial budget indicates where the organization expects to get its cash for the coming
time period and how it plans to use it.
An operating budget is concerned with planned operations within the organization.
A nonmonetary budget is a budget expressed in nonfinancial terms, such as units of
output, hours of direct labor, machine hours, or square-foot allocations.
Extra Example: Some students use nonmonetary budgets based on time to plan their
studying—a certain number of hours on this day to study for one course, a different
number of hours on that day for another course, and so forth.
2. Budges were traditionally developed through a top-down process. Many organizations
allow more participation by all managers in the budget development process.
The heads of each operating unit submit budget requests to the heads of their division.
The division head integrates and consolidates the budget requests into one overall
division budget request.
Division budget requests are forwarded to the budget committee, usually composed of
top managers.
The budget committee, the controller, and the CEO review and agree on the overall
budget for the organizations, as well as specific budgets for each operating unit.
Teaching Tip: As noted in the text, many organizations today are allowing more people
at lower levels of the organization to participate in the budgeting process. This process is
consistent with the topics of participation, empowerment, decentralization, and work
teams discussed in various other chapters.
3. Strengths of budgeting:
Budgets facilitate effective control.
Budgets facilitate coordination and communication between departments.
Budgets help maintain records of organizational performance and complement planning.
Organizations can use budgets to link plans and control.
4. Weaknesses of budgeting:
Managers may fail to adjust budgets for changing circumstances.
Developing budgets can be very time consuming.
Budgets may limit innovation and change.
Discussion Starter: If your students use budgets for their personal affairs, ask them to
discuss positive and negative experiences with budgets. You can then relate these
experiences to the strengths and weaknesses of budgets as noted here in the text.
Extra Example: Tenneco and Texas Instruments are firms that have cut back on the
budgets they use. However, managers at both firms stress that budgets cannot be
eliminated and the budgets they retained play a vital role in their respective organizations.
B. Other Tools of Financial Control
1. A financial statement is a profile of some aspect of an organization’s financial
circumstances. The two most basic, used by virtually all organizations, are a balance
sheet and an income statement.
The balance sheet is a list of assets and liabilities of an organization at a specific point in
time.
The income statement is a summary of financial performance over a period of time,
usually one year.
Information from the balance sheet and income statement is used in computing important
financial ratios.
Teaching Tip: Obtain copies of an income statement and a balance sheet from corporate
annual reports. Use them to illustrate their “look” and the basic information they contain.
2. Ratio analysis is the calculation of one or more financial ratios to assess some aspect of
the organization’s financial health. There are a variety of different ratios.
Liquidity ratios indicate how liquid an organization’s assets are.
Debt ratios reflect ability to meet long-term financial obligations.
Return ratios show managers and investors how much return the organization is
generating relative to its assets.
Coverage ratios help estimate the organization’s ability to cover interest expenses on
borrowed capital.
Operating ratios indicate the effectiveness of specific functional areas rather than of the
total organization.
Group Exercise: If you obtain financial statements from annual reports, give a copy to
small groups of students and have them calculate some of the basic financial ratios listed
here. Compare and contrast different ratios, especially across different organizations.
Point out that an acceptable ratio in one industry may be high or low in another industry.
3. An audit is an independent appraisal of an organization’s accounting, financial, and
operational systems.
External audits are financial appraisals conducted by experts who are not employees of
the organization. Publicly held companies are required by law to have external audits
regularly, as assurance to investors that the financial reports are reliable.
An internal audit is handled by employees of the organization. Its objective is the same
as an external audit, to verify the accuracy of financial and accounting procedures.
Teaching Tip: Note that auditing is a specialization within the accounting profession.
Discuss whether your school offers this specialization.
Extra Example: Whether or not they have an internal auditing staff, publicly traded
corporations must have their financial statements audited by an external firm. If you
obtained corporate annual reports in response to the Teaching Tip provided earlier in this
manual, note that the report includes a statement from the firm’s auditors.
IV. STRUCTURAL CONTROL
Two major forms of structural control, bureaucratic control and decentralized control, represent
opposite ends of a continuum. A few organizations fall precisely at one extreme or the other, most
tend toward one end but may have specific characteristics of either.
A. Bureaucratic Control
Bureaucratic control is an approach to organization design characterized by formal and
mechanistic structural arrangements. It follows the bureaucratic model with the goal of
employee compliance.
These organizations rely on strict rules and a rigid hierarchy, insist that employees meet
minimally acceptable levels of performance, and often have a tall structure. They focus their
rewards on individual performance and allow only limited and formal employee participation.
Extra Example: General Motors is an example of a firm that relies on bureaucratic
control. Myriad rules, regulations, and standard operating procedures dictate what people
and operating units can and cannot do.
Extra Example: Most colleges and universities also rely heavily on bureaucratic control.
B. Decentralized Control
Decentralized control is an approach to organizational control based on informal and organic
structural arrangements.
Its goal is employee commitment to the organization. It relies heavily on group norms and a
strong corporate culture, and gives employees the responsibility for controlling themselves.
Employees are encouraged to perform beyond minimally acceptable levels. Organizations

using this approach are usually relatively flat. They direct rewards at group performance and
favor widespread employee participation.
Extra Example: Microsoft uses decentralized control. Members generally support the
organization and work well together. Consequently, they need fewer rules and regulations.
V. STRATEGIC CONTROL
When an organization integrates its strategy and control systems it can assess how effectively that
strategy is helping the organization meet its goals.
A. Integrating Strategy and Control
Strategic control is aimed at ensuring that the organization is maintaining an effective
alignment with its environment and moving toward achieving its strategic goals.
To ensure strategic control, an organization must focus on how well its structure, leadership,
technology, human resources, and information and operational control systems are working to
enact the strategic path selected.
Cross-Reference: The basic elements of strategic control parallel the concepts of
strategy implementation as discussed in Chapter 7.
B. International Strategic Control
Because of both their relatively large size and the increased complexity associated with
international business, global organizations must take an especially pronounced strategic view
of their control systems.
One very basic question is whether to manage control from a centralized or decentralized
perspective. Under a centralized system, each organizational unit around the world is
responsible for frequently reporting the results of its performance to headquarters.
Organizations that use a decentralized control system require foreign branches to report less
frequently and in less detail.
Global Connection: Some German firms struggle because of inadequate strategic
control. They focus so much attention on quality without balancing that quality against
cost that their sales are slipping. Their products are known to be of high quality, but they
cost so much more than competing products that people have more trouble buying them.
Extra Example: Daimler-Benz, the manufacturer of Mercedes, is an example of a firm

experiencing the kinds of troubles noted above. Indeed, these costs were a major factor in
the decision to construct an assembly plant in the U.S. and to merge with Chrysler.
VI. MANAGING CONTROL IN ORGANIZATIONS
To use the control process, managers must recognize the characteristics of effective control and
understand how to identify and overcome occasional resistance to control.
A. Characteristics of Effective Control
Control systems tend to be most effective when they are integrated with planning and when
they are flexible, accurate, timely, and objective.
1. The more explicit and precise the linkages between planning and control are, the more
effective the control system will be. To achieve this, one must account for the control
system as the plans are developed.
Teaching Tip: In some ways, planning and control are the two most integrated
management functions. Planning helps determine what the organization wants to do, and
control keeps it on track toward doing it.
2. The control system itself must be flexible enough to accommodate changes.
3. Control systems must be accurate to be effective. Inaccurate information leads to
inappropriate managerial action.
4. Timeliness does not necessarily mean quickness. Rather, it describes a control system
that provides information as often as is necessary. In general, the more uncertain and
unstable the circumstances, the more frequently the measurement is needed.
5. The information provided by the control system must be as objective as possible.
Extra Example: Waterford Crystal suffered some performance problems because of
flaws in its control system. One source of difficulty for the firm was that its accounting
system was inadvertently camouflaging higher-than-projected production costs.
Extra Example: Another control problem at Waterford resulted from poorly trained
employees subjectively interpreting important information before managers saw it.
B. Resistance to Control
Many employees resist control, especially if they feel overcontrolled, if they think control is
inappropriately focused or rewards inefficiency, or if they are uncomfortable with
accountability.
1. Overcontrol occurs when an organization attempts to control too many things. This
becomes problematic when the control directly affects employee behavior. Troubles
arise when employees perceive attempts to limit their behavior as being unreasonable.
2. The control system may be too narrow, or it may focus too much on quantifiable
variables and leave no room for analysis or interpretation.
3. When departments that end the fiscal year in the red get a budget increase, this is an
example of rewarding inefficiency.
4. The fact that accountability for one’s work is increased when control systems are in place
may promote resistance.
Global Connection: Many managers in India are especially prone to resist control. They
view the presence of control measures and systems as indicators that their organization
lacks confidence in their managerial abilities.
C. Overcoming Resistance to Control
The best way to overcome resistance to control is to create effective control to begin with. If
control systems are properly integrated with planning and if controls are flexible, accurate,
timely, and objective, the organization will be less likely to overcontrol, to focus on
inappropriate standards, or to reward inefficiency.
Two other ways to overcome resistance are encouraging employee participation and
developing verification procedures.
1. If employees participate in developing the control systems, there is generally less
resistance to them.
2. Use checks and balances to ensure that the control systems are providing the data needed
to compare performance against standards, and use multiple systems to crosscheck the
accuracy and usefulness of the control system reports.
Teaching Tip: One of the biggest challenges facing managers is finding the appropriate
balance of control. They need to have sufficient control to avoid problems, but they also
need to avoid overcontrol.
Teaching Tip: The reliance on work teams and empowered employees needs an increase
in self-control if employees are to feel they really have a voice in their own work.
END OF CHAPTER QUESTIONS
Questions for Review

1. What is the purpose of organizational control? Why is it important?
The purpose of control is to let the organization know how well it is doing by comparing where
performance is relative to a standard of where it should be. Control helps the organization fulfill its
goals by adapting to change, reducing the compounding of errors, coping with complexity, and
minimizing costs.
2. What are the different levels of control? What are the relationships between the different
levels?
At the lowest level, operational and financial controls address issues about transformation processes
and use of financial resources. At the mid-level, structural control helps monitor each element of the
organization’s structure. At the highest level, strategic control ensures that the organization
effectively meets its strategic goals. Effective strategic control enables effective structural control,
which enables effective operational and financial control.
3. Describe how a budget is created in most organizations. How does a budget help a manager
with financial control?
Typically, operating units submit budget requests to divisional managers, who in turn submit
requests to a high-level budget committee. The committee, which consists of the CEO, controller,
and other high-level finance managers, approves requests and formulates an organization-wide
budget. For operational and divisional managers, budgets serve as an indicator of the organization’s
strategic intent. These managers also use budgets to monitor and correct deviations in their use of
resources. Top-level managers use budgets to control performance of each division and unit in the
firm.
4. Describe the differences between bureaucratic and decentralized control. What are the
advantages and disadvantages of each?
Bureaucratic control works to ensure employee compliance with directives through rules and
hierarchy, top-down decision making, and limited participation from lower level employees.
Bureaucratic control is directed at maintaining a minimum level of acceptable performance by
individual workers. Decentralized control, on the other hand, is based on informal and organic
structural arrangements such as group norms and organizational culture to obtain self-controlled
behavior of employees.
Bureaucratic control is quicker and simpler to develop and gives clear-cut guidance to managers, but
it can be rigid, it doesn’t reward excellence, and employees may be frustrated by too many rules and
lack of participation. Decentralized control gives opportunities for participation, rewards excellence
and creativity, and encourages teamwork. However, decentralized control can be ambiguous,
expensive, and take a great deal of time to develop.
Questions for Analysis

5. How can a manager determine whether his or her firm needs improvement in control? If
improvement is needed, how can the manager tell what type of control needs improvement
(operations, financial, structural, or strategic)? Describe some steps a manager can take to
improve each of these types of control.
Symptoms of poor control may include excessive costs or waste of other resources, too many errors
or defects, an inability to adapt in response to changes, and lack of managerial capability in the face
of organizational complexity.
Operational control would help in improving the transformation process such as more training for
workers to reduce product defects or a new system for obtaining customer satisfaction feedback.
Financial control is best for control of resources. This would include budgets, financial statements,
and audits. Structural control is needed when the various elements of the firm cannot work together
effectively. The performance appraisal system, the goal-setting system, and data sharing on the
information system are all examples of structural control. Strategic control is required for issues
related to long-term goals and includes top leadership capability and growth and profitability
targets.
6. One company uses strict performance standards. Another has standards that are more
flexible. What are the advantages and disadvantages of each system?
A strict system is simple to develop and implement, gives clear-cut output, and has an appearance of
fairness, yet it can be overly rigid and easily becomes outdated or irrelevant when changes occur. A
more flexible system is easily adapted to changing circumstances and can accommodate complex
situations more readily. However, a flexible system requires constant updating, may appear to be
less fair, and can be confusing and difficult to implement.
7. Are the differences in bureaucratic control and decentralized control related to differences in
organization structure? If so, how? If not, why not? (The terms do sound similar to those used
to discuss the organizing process.)
Bureaucratic control suggests strict rules, formal controls, and a rigid hierarchy, which is consistent
with the mechanistic form of organizational structure. In tall organizations, bureaucratic control is a
top-down process with limited participation by subordinates. Bureaucratic control does not seem to
necessitate the technical competence dimension of the bureaucratic form of organization. So, while
similar, they are not the same. Decentralized control is more like the organic organization with
group norms used for formalization, a flat structure with shared information, and a participative
informal environment.
Questions for Application

8. Many organizations today are involving lower-level employees in control. Give at least two
examples of specific actions that a lower-level worker could do to help his or her organization
better adapt to environmental change. Then do the same for limiting the accumulation of
error, coping with organizational complexity, and minimizing costs.
Clearly, students’ answers will vary, but they may note lower-level workers can monitor
environmental change by seeking customers’ opinions or speaking to workers in similar jobs at
competing firms. Lower-level workers can be critically important in limiting the accumulation of
error because many of the errors may originate at the lowest level and lower-level workers may be
more aware of the impact of errors on customers. Lower-level employees can help the firm cope
with complexity by aiding managers in the development and implementation of sophisticated
control systems. Cost minimization is crucial at the lower levels of the firm as employees can work
to reduce waste, defects, wasted time, and other items that contribute to high expenses.
9. Describe ways that the top management team, midlevel managers, and operating employees
can participate in each step of the control process. Do all participate equally in each step, or
are some steps better suited for personnel at one level? Explain your answer.
The top management team will probably be most involved in issues of strategic control because the
team sets the organization’s long-term goals and then must monitor goal achievement. Middle
managers would typically have the highest involvement in structural control as they are responsible
for ensuring that all elements of the organization work together effectively. Lower-level employees
are probably most active in operational control due to their expertise in the organization’s
transformation processes. All managers have responsibility for financial control at their level in the
firm.
10. Interview a worker to determine which areas and levels of control exist for him or her on the
job. Does the worker resist efforts at control? Why or why not?
Students’ responses will vary, but they should be able to identify the types of control present in a
worker’s job. Some workers do in fact resist control efforts, particularly if the firm employs a
bureaucratic control system that allows little employee input. However, students may be surprised to
find that many workers prefer a powerful control system because they enjoy knowing exactly what
is expected of them, how it will be measured, and the consequences of differing levels of
performance.
END OF CHAPTER EXERCISES
Building Effective Time Management Skills

I. Purpose
This exercise provides students practice in using time-management skills to prioritize tasks related
to control.
II. Format
This time-management skills exercise is best performed on an individual basis. It should take 20–30
minutes to complete.
III. Follow-Up
A. Prioritize the work that needs to be done by sorting the information into three categories: very
timely, moderately timely, and less timely. Then address the following questions.
Very timely tasks include the disgruntled employee and the big customer with a complaint.
Moderately timely tasks include meeting with your boss, seeing the shop steward, the change
in delivery schedule, and the chamber of commerce meeting. Less timely tasks include the
upcoming OSHA inspection, and interviewing for a new supervisor.
B. Are importance and timeliness the same thing?
No. Some tasks need to be done immediately but are not very critical (important), while
others are very critical but can be delayed for some time. Timely but not important tasks
include a meeting scheduled for today about a routine problem. Important but not timely tasks
include setting aside time for long-range strategic planning.
C. What additional information do you need before you can begin to prioritize all these demands
on your time?
It’s not clear how urgent some of the problems are. For example, is the disgruntled employee
acting irrationally, making threats, or carrying a weapon? Any of these would increase that
task’s importance. Is the change in delivery schedule a routine matter, or is it a change that
might disrupt the entire firm’s supply chain? What is the subject of the meeting with your
boss?
D. How would your approach differ if your assistant were in the office?
The assistant could handle some of the routine tasks such as responding to the chamber of
commerce’s request. The assistant also could be used to gather additional information such as
asking your boss about the subject of the meeting.
Building Effective Technical Skills

I. Purpose
This exercise improves students’ technical skills by asking them to prepare a personal budget and
then analyze its effectiveness.
II. Format
This exercise should be done by individual students outside of class and will take at least 30 minutes
to complete, although motivated students may spend more time.
III. Follow-Up
A. Prepare lists of your estimated expenditures and income for one month. Remember: You’re
dealing with budgeted amounts, not the amounts that you actually spend and take in. You’re
also dealing with figures that represent a typical month or a reasonable minimum. If, for
example, you estimate that you spend $200 a month on groceries, you need to ask yourself
whether that’s a reasonable amount to spend on groceries for a month. If it’s not, perhaps a
more typical or reasonable figure is, say, $125.
First, estimate your necessary monthly expenses for tuition, rent, car payments, childcare,
food, utilities, and so on. Then, estimate your income from all sources, such as wages,
allowance, loans, and funds borrowed on credit cards. Calculate both totals.
B. Now write down all of your actual expenses and all your actual income over the last month. If
you don’t have exact figures, estimate as closely as you can. Calculate both totals.
C. Compare your estimates to your actual expenses and actual income. Are there any
discrepancies? If so, what caused them?
In completing this exercise, students become familiar with the steps in the budget process,
from estimation of future expenses to measurement of actual expenses to comparison of the two.
Most students will experience discrepancies and the reasons may include unexpected events or
poor initial estimates.
D. Did you expect to have a surplus or a deficit for the month? Did you actually have a surplus or
a deficit? What can you do to make up any deficit or manage any surplus?
Most often, an unexpected surplus or deficit occurs, although hopefully, the discrepancy is
relatively minor. For small deviations, no or little action may be necessary. Large surpluses
may be saved or “blown.” Point out to students that large deficits are the most problematic.
Their suggestions may either increase revenues, such as asking parents for more allowance or
taking out a loan, or they may reduce expenses, such as finding a roommate or dropping out of
school.
E. Do you regularly use a personal budget? If yes, how is it helpful? If no, how might it be
helpful?
Most people use a budget of some sort, but they vary considerably in terms of their detail and
specificity. Some people, for example, write detailed budgets that indicate how much they can
spend each week on groceries, transportation, and so forth. Others have a more general idea of
how much money they need for various expenses, but they do not commit it to writing.
Students’ opinion about the usefulness of budgets will vary, of course. Clearly, budgets are
most useful when they are accurate and when they are used consistently.
MANAGEMENT AT WORK
The Law of Cheating
The closing case discusses performance measures or key performance indicators (KPI) and the problems
that arise when high-stakes incentives are tied to narrow win-or-lose KPIs. The title of the case refers to
Campbell’s Law which concludes that if the stakes and the cost of failure are too high, people tend to
cheat. One expert distinguishes between “honest cheating” and “dishonest cheating”. Clarifying
“dishonest cheating is illegal and you can go to jail for it”.
1. Case Question 1: What about you? Put yourself in the position of the Atlanta educators whose
dilemma is described in the case. If there was a real possibility that you’d lose your job because
your students performed badly, how would you assess your situation and your options? What if
there were a real possibility that you’d lose a pay raise and promotion? How about the possibility
that you’d be reassigned to a much less desirable school? Be prepared to argue either side of your
case.
Students answers will vary of course. There should be some arguments of how the control measures
of students’ test scores do not have characterisces of effective control measures. Students could
mention how the measure is inflexible, or based on inaccurate information or does not show a
linkage between students’ test scores and teacher’s abilities. The other side of the case is to try to
honestly meet the standards by either ‘teaching to test’ or asserting themselves into the process of
attempting to change the standards.
2. Case Question 2: Think about a class that you’re taking now or have taken in the past. What key
performance indicator (KPI) played the most important role in the instructor’s evaluation of your
performance? What did it tell you about your instructor’s strategy for teaching the course? Do you
think that is was too narrowly focused or otherwise unreasonable? If so, how do you think your
instructor could have improved his performance-evaluation strategy?
Answers will vary greatly for this question. A student may offer an example of an introductory
writing class where the KPIs were grades on a series of small written assignments and the final
paper. The writing assignments were on a gradually weighted scale with the final paper responsible
for 70 percent of your grade. This could show an instructor strategy of students continually
improving throughout the class with the final paper being their best effort.
3. Case Question 3: Again, what about you? After having read this case, have you reconsidered your
attitude toward how much control or accountability you’d like to have in a job? If, for example,
you’re studying to be a teacher, how do you feel about a career goal such as moving up to principal
or even multischool administrator? How does your concept of an ideal work/life relationship affect
your thinking on the subject?
Due to the personal, reflective nature of these questions, students’ responses will vary.
4. Case Question 4: As we saw in Chapter 13, incentives “represent special compensation
opportunities that are usually tied to performance” – that is, to a certain form of workplace behavior.
They can also be tied to other forms of workplace behavior – such as complying with an employer’s
policies regarding legal and ethical conduct (its so-called compliance and ethics, or C&E, program).
Incentives can be either “soft” (consisting of nontangible encouragement or recognition) or “hard”
(typically consisting of tangible, often monetary rewards).* What “C&E incentives affect the way
you conduct yourself, whether at work or at school? How do they stack up against the incentives to
behave in accord with Campbell’s Law? Is there any tension between the two sets of incentives?
What do you do – or can you do – to resolve tension as you make decisions affecting your behavior?
Again, the personal nature of the questions will vary the answers.
*Jeffrey M. Kaplan, “The First Word on Compliance Incentives,” The FCPA Blog (January 19,
2011), www.fcpablog.com, on June 29, 2015.

Griffin Mgmt12e IM Ch19

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Management 12e by Ricky W.

II. OPERATIONS CONTROL

III. FINANCIAL CONTROL

Financial control is concerned with the organization’s financial resources.

IV. STRUCTURAL CONTROL

Employees are encouraged to perform beyond minimally acceptable levels. Organizations

Extra Example: Daimler-Benz, the manufacturer of Mercedes, is an example of a firm

VI. MANAGING CONTROL IN ORGANIZATIONS

END OF CHAPTER QUESTIONS

Questions for Review

Questions for Analysis

Questions for Application

END OF CHAPTER EXERCISES

Building Effective Time Management Skills

Building Effective Technical Skills

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