ADMIN 313 Unit FORMATED 6

Unit
Organizational Control
Centre for Distance Education, IAE, University of Ghana, Legon

ADMIN 313 Human Behaviour In Organisation Unit 6 Organizational Control
Organizational Control
Introduction
Welcome my valued friend and companion to Unit 6. This is the
beginning of the end of your journey. You need to “finish hard” so
that at the end success will crown our relentless effort. I have
taken you through three of the four functions of management; that
is planning, organizing and leadership. This last Unit of the course
is devoted to the fourth function which is controlling. The functions
of management begin with planning and end with controlling. The
Unit contains six sections:
Section 1 The Nature and Purpose of Control in

Organizations
Section 2 Steps in the Control Process
Section 3 Types of Control
Section 4 Total Quality Management
Section 5 Designing Control Systems
Section 6 Management of Organizational Control
Objectives
Upon the completion of this unit, you should be able to
 define organizational control and explain its importance in

organizations
 explain the steps involved in the controlling process
 describe the different types of controls in organizations
 discuss bureaucratic and decentralized approaches to quality

control
 discuss the concept of total quality management
 describe the elements of effective organizational control
208 Centre for Distance Education, IAE, University of Ghana, Legon

Section 1 The Nature and Purpose of Control

in Organizations
Introduction
Welcome my trusted friend to Section 1 of Unit 6. As modern
organizations become more and more complex, so does the
problem of controlling organizational activities become more
difficult. Managers, as well as prospective managers, therefore
need to understand the essentials of the controlling function. In
this section, I will explain to you the nature and purpose of control
in organizations.
Objectives
 define organizational control
 explain the importance of control as a key management

function
What is Organizational Control (Control in

Organizations)?
Certo and Certo (2006:480) provide a simple and very interesting
answer. They see control simply as “making something happen the
way it was planned to happen”. Extending this to organizational
control, we can say that organizational control involves making sure
that every activity in the organization happens according to plan.
Griffin (2004:602) defines organizational control as “the regulation
of organizational activities so that some targeted element of
performance remains within acceptable limits”. In the words of Daft
(1997:628), “organizational control is the systematic process
through which managers regulate organizational activities to make
them consistent with the expectations established in plans, targets,
and standards of performance”. Stoner, et al (1995:558) define
control as “the process of ensuring that actual activities conform to
planned activities”.
As you can see from these definitions, there is very close

relationship between planning and control. The two are virtually
inseparable management functions, to the extent that they have
been referred to as “the Siamese twins of management”. For every
plan there is a corresponding control. As you learned in Unit 3,
Section 1, planning sets goals and objectives and describes how to
achieve them. When a plan is implemented there must be a
Centre for Distance Education, IAE, University of Ghana, Legon 209

system put in place to monitor performance to determine if things

are moving according to the laid down plan, so that corrective
action can be taken if there is any deviation from the plan. If there
is any deviation from the plan, the set goals and objectives will
never be achieved. For example, the production department of a
manufacturing organization generally sets monthly production
levels. The production level for a month is broken down into
weekly production levels, which are in turn broken down into daily
production targets for the workers in the production department.
To ensure that the target for the month is achieved., the
performance of the workers must be monitored. Therefore, the
units produced by each worker is recorded, and at the end of the
week the target achieved for the week is determined. If the
individual daily productions fall far below the expected daily
production levels, it means there is a problem somewhere. The
production manager must detect and correct the problem to ensure
that the production level for the month is achieved.
Managers must always monitor how a plan is doing so that they

can take corrective action in the case of any deviation. The
production level set for the month is the control. If the production
levels are being achieved, it means the plan is doing well. You can
imagine what would happen if there were no production levels set
for the individual worker and the whole department. Therefore,
managers must always monitor performance in order to determine
if it is going according to plan and make corrective changes
whenever necessary. Do you know that the programme of
activities we follow at any function is a control tool? Yes it is,
because it sets the time for every activity, when it should start and
end. Without any programme to follow, there will be chaos. Even
the time table you draw for yourself to guide your studies is a
control tool because it directs your learning behaviour. This
explanation shows that simply formulating a plan is not enough.
There must be a system to accompany the plan to measure
performance. Therefore, to effectively achieve organizational
goals, managers (together with workers) must, in addition to
formulating plans, develop and implement a monitoring or
information system that will provide feedback on actual
performance.
The Purpose of Control in Organizations

 Activity 1.1
Now that I have explained to you what organizational control
means, give two reasons why you think control is necessary in an
organization.
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The definitions of control that we have examined and the meaning

of control that we have derived from these definitions show the
significance of control in organizations. In general, properly
designed control systems fulfill four basic purposes in an
organization. In other words, control performs four basic functions
in an organization. Control enables an organization to adapt to
changes in its environment, to determine and correct mistakes, to
cope with internal complexity of the organization, and to minimize
cost. Let us now discuss each of these functions.
Adapting to Environmental Change. As indicated in our

discussions (in Unit 5) on leadership, organizations of today are
operating in complex and turbulent environments. Sometimes the
environmental changes are gradual. At other times the changes
are sudden and discontinuous. In this complex and turbulent
environment, a properly designed control system can help
managers to anticipate changes, monitor and respond to them. On
the other hand, lack of control, or an improperly designed control
system can result in the collapse of the organization.
Detecting Mistakes and Correcting Mistakes: A properly

designed control system enables small mistakes and errors to be
detected in time for corrective measures to be taken to put plans
back on track. Without an effective control system small mistakes
and errors will go undetected and will eventually accumulate to
cause serious damage to organizational performance.
Coping with Organizational Complexity: As an organization

grows and develops, its structure becomes correspondingly
complex, and needs a sophisticated control system to maintain
adequate control of the organization. For example, if an
organization headquarter in Accra grows internally and establishes
divisions in each of the ten regions of Ghana, top management
must design an appropriate system to control, to some extent, the
regional divisions. The control system in use before the expansion
into the regions will no longer be effective.
Minimizing costs: An effective control system enables an

organization to use its resources efficiently thereby reducing waste.
Such a system will help determine the amount of resources to be
allocated to the various functional areas of the organization.
Control of physical resources includes keeping the correct amount
of materials at any time (i.e. inventory management, quality control

(maintaining appropriate levels of quality of output), and equipment

control (supplying the necessary facilities and machinery).
Financial controls enable the management to ensure that the
organization always has enough cash to meet its financial
obligations. Human resource controls ensure that the organization
always has the right number of employees with the right skills doing
the right jobs, and paid the right remunerations. Thus, effective
control systems can help an organization to eliminate waste, lower
labour costs, and improve productivity.
Summary
In this section, I explained to you the meaning of organizational
control, and why an organization, particularly organizations of
today, need well designed control systems to survive.

Section 2 The Steps in the Control Process
Introduction
A hearty welcome to Section 2. In Section 1 we looked at the
meaning and significance of control in organizations. In this
section, will take you through the steps involved in the traditional
control process.
Objective
Upon the completion of this section, you should be able to
 describe the key steps in the control process
Any well-designed control system consists of favour key steps:

establishing standards of performance, measuring actual
performance, comparing performance against standards, and
taking corrective action (feedback). Let us look at each step.
Establishing Standards of Performance: The control process

begins when standards of performance or targets are set. These
are control standards against which actual performance will be
compared. When corporate goals are set, they are broken down
into goals for departments, in specific operational terms that
include the standards against which their performance will be
compared. Standards can take different forms; for example in units
of production (for the production department, eg. 1000 units in a
month), or in measures of acceptable quality (the number of
rejected items produced daily; eg. reducing the rate of reject from 5
percent to 2 percent), or in monetary terms (increasing the
company’s return on investment by 10 percent; a sales person’s
quota). In almost all cases, standards set are attainable and with
minimum levels of acceptable performance. For example, the pass
marks set for undergraduate and graduate studies respectively at
most universities are the minimum levels of performance expected
of students at the two levels. Standards must be defined in a
precise way to enable managers and workers to determine whether
performance is on target.
Measure Actual Performance: Measuring performance is an

ongoing, repetitive process. The frequency of measurement
depends on the type of activity being measured. Employee
performance is often measured in terms of quantity or quality of
output. For example, the performance of a salesperson can be
measured in terms of the quantity of items sold. The performance

of the production department can be measured in terms of both

quantity and quality. For example, it can be measured in terms of
units produced and in terms of the number of rejects per 100 units
produced. However, for many jobs, measuring performance is not
straight forward. For example, some research and development
scientists have been working for years to find a cure for HIV/AIDS,
but they are yet to make any significant breakthrough.
Compare Performance Against Standards: This is the third step

in the process. A slight departure or deviation from standard is
normal and expected. However, when performance falls far below
the standard, it signifies immediate action to correct the mistake.
Managers should therefore, distinguish between variation that can
be accepted and variation that cannot be accepted. For example if
the daily sales standard set for a salesperson is 1000 units and he
sells 950 units, deviation from the standard is 50, and this may be
accepted. But where the deviation is significant, eg. a shortfall of
200 units, the deviation is unacceptable. The frequency or
timetable for comparing actual performance to standards depends
on a variety of factors, including the complexity and complexity of
the activity being controlled. For example, annual comparisons
may be appropriate for longer-run and higher-level standards. In
some other cases, more frequent comparisons are necessary.
Take Corrective Action (Feedback): After comparing actual

performance against standards, a manager will have to decide on
one of three actions: maintain the status quo (do nothing), correct
the deviation, or change the standard. When performance
matches the standard, there is no need for change. However,
when there is a significant deviation from the control standard,
there is the need for change. In some cases, managers may have
to change the performance standards. For example, if a manager
realizes that control standards are too high or too low, he will have
to change the standards.
 Activity 2.1
Assuming you are the head of the customer service department of
Ghana Telecom. Define a performance standard for the
department and explain how actual performance can be measured.
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A performance standard for the customer service department in

terms of reduction is the time taken to respond to customer needs
(or complaints). This is standard in terms of reaction speed.
Performance can be measured in terms of the reduction in the
number of customer complaints.
Summary
In this Section I took you through the four key steps in the control
process.

Section 3 Types of Control in Organizations
Introduction
Welcome my beloved friend to Section 3. We are midway to the
end. In Section 5 of Unit 3, we discussed the different types of
plans used in organizations. You learned also in Section 1 of this
unit (Unit 6) that planning and controlling are “Siamese twins”,
virtually inseparable. In this section, you and I will look at the
various types of controls in an organization, and examine the basis
for the classification of organizational control.
Objective
 describe the different types of controls used in organizations
Categorization of Controls Used in Organizations

Controls used in organizations can be classified in various ways
into different categories. They can be classified on the basis of the
following: the process being controlled, structure the for being
controlled, basic types of resources, and on the level within the
organization system.
Process Controls: These controls are designed to manage

events before, during, and after a process. Thus, there are three
types of control in this case: feedforward, concurrent and feedback
controls. Feedforward control (or preliminary control) deals with
events before the start of the production process. It focuses on
human, material, and financial resources needed for the production
process. The purpose of feedfoward control is to ensure that the
quality of resources input into the production process is sufficiently
high to prevent problems and ensure high quality product. It is,
therefore, also known as preliminary or preventive quality
control. An example of feedforward control is the selection and
hiring of new employees. Every organization uses techniques that
will help to select the right type of applicant for the job.
Concurrent Control (Screening Control): This is control that

focuses on activities during the process. It monitors current work
activities of employees to ensure that they conform with quality
standards. Concurrent control uses performance standards rules
and regulations to ensure that the performances of employees
meet expected standards. For example, a new employee is put on
probation for a certain period during which his performance is

closely monitored. If his performance meets the standards, he is

retained, but if the performance falls below standard his
employment is terminated.
Feedback Control (sometimes called postaction or output control).

This control focuses on the quality of the end product or service
after the task (or process) is completed. It involves the intensive
final inspection of the end product or service. Any end product or
service that does not meet the quality standard is then rejected.
Controls Based on Structure: There are two types of control in

this category. The traditional centralized or bureaucratic control
and decentralized control. The bureaucratic control involves the
use of rules, regulations, policies, hierarchy of authority, reward
systems, etc to control and direct employee work behaviour. It is
based on the traditional top-down control. Decentralized Control
involves participation and employee empowerment. It is based on
the belief that when employees participate in setting performance
standards, and designing the control system they perform well.
This type of control, therefore, relies on trust, shared beliefs, and
values. Managers trust their subordinates and believe that given
minimal direction and standards, subordinates are willing to
perform their tasks well.
Resource Controls (Areas of Control). These controls ensure

effective utilization of the four key resources that are used in an
organization. These include physical, human, financial, and
information resources. Physical resources controls include
inventory management (to ensure the right quantity of materials is
available at all times), quantity control (to ensure appropriate levels
of output quality).
Human resources controls include human resource management

activities such as selection and placement, training and
development, and compensation.
Financial resources controls are the most important because the

ultimate objective of business is profit maximization. Financial
controls aim at ensuring that the organization always has enough
cash on hand to meet its obligations. Examples of financial
controls are financial statements, budgets, financial analysis, etc.
Information resources controls include sales and marketing,

forecasting, environmental analysis, public relations, etc.
Levels of Control: Managers use control at a number of different

levels in the organization. The most basic levels of controls include
strategic, structural, operations, and financial control. These four
basic levels of control constitute the core management control

system in an organization. Strategic control monitors the

organizations strategic plan. It, therefore, focuses on how
effectively the organization’s corporate business, and functional
strategies are moving towards the achievement of corporate goals
and objectives. Financial controls, as we have observed earlier,
focus on the financial resources of the organization.
 Activity 3.1
Plans and controls are virtually inseparable. Strategic control goes
with strategic plans. Name the type of control that goes with
operational plan.
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Operations control goes with operational plan. In other words

operations control focuses on the processes that are used by an
organization to transform resources into products or services
(examples is quality control), feedforward, concurrent, and
feedback controls).
Summary
In this section you learned about various types of controls that
managers use in organizations, and the bases of the categorization
of organizational controls.

Section 4 Total Quality Management
Introduction
Welcome, my dear friend, to Section 4. In Section 3, we talked
about different types of control in organizations. In this section, you
and I will discuss a very important control issue that faces every
modern organization, that is quality control. We will discuss the
importance of quality, the meaning of total quality management,
and the techniques of total quality management.
Objectives
 describe the concept of total quality management (TQM)
 describe the various TQM techniques
Defining Total Quality Management

Before we look at some definitions of total quality management, let
us first look at what quality means. This will help us grasp the
meaning of the concept of total quality management. Certo and
Certo (2006:466) define quality as “how well a product does what it
is supposed to do – how closely and reliably it satisfies the
specifications to which it is built”. The American Society for Quality
Control defines quality as “the totality of features and
characteristics of a product or service that bear on the ability to
satisfy stated or implied needs” (cited in Griffin 2004:634). Quality
is relevant for both products and services. The Ghanaian
consumer is as concerned with the pair of shoes he buys as he is
with the quality of service he receives from MTN, Ghana Telecom,
or Tigo.
 Activity 4.1
These definitions of quality obviously give some idea about quality.
Now briefly explain what you think total quality management
means.
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These definitions imply that total quality management is

concentrated effort by management to enhance the quality of the
organization’s product or service.
Griffin (2004:637) defines total quality management as “a strategic

commitment by top management to change its whole approach to
business to make quality a guiding factor in everything it does”.
According to Daft (1997:640) “total quality management is a
philosophy of organization-wide commitment to continuous
improvement, with the focus on teamwork, increasing customer
satisfaction, and lowering costs”. Certo and Certo (2006:466)
define total quality management as “the continuous process of
involving all organization members in ensuring that every activity
related to the production of goods or services has an appropriate
role in establishing product quality”.
The Meaning of Total Quality Management (TQM)

We can observe from these definitions that TQM means infusing
quality in every activity of the organization. In other words, within
the context of TQM, quality control is not confined to only the end
product or service offered by the organization. It is an organization
wide process that cuts across all functions and departments of the
organization. Quality, therefore, becomes a core value of the
organization. The organization commits itself to continuous quality
improvement, and all members are involved in ensuring that every
organizational activity is geared towards continually achieving high
quality for the organization’s end product or service.. The
empowerment involves not only employees of the organization, but
also the organization’s suppliers and customers. This organization-
wide participation in quality control signifies a dramatic change from
the traditional bureaucratic top-down approach to quality control (a
centralized method of control) to a decentralized method of control.
TQM concept, therefore, emphasizes teamwork. Teams of workers
are trained and empowered to make decisions that help the
organization to achieve high quality standards. Therefore, under
the TQM concept, employees work both individually and collectively
to continually improve quality of end product or service. The
ultimate objective of TQM is to achieve zero defects. That is all
products or services offered by the organization must meet the
control standards; none should be defective. Quality control,
therefore, becomes part of the daily business of every employee.
You may have realized by now that the philosophy underlying TQM
is “prevention is better than cure”. Employees are therefore trained
to think in terms of preventing defects, rather than detecting
defects, and are held responsible for quality performance
standards. Prevention of defects requires also improving the

quality of materials that the organization uses in its operations. If

the quality of input materials falls below the quality control
standards, the quality of the end products will also fall below the
control standards.
TQM Tools and Techniques

The implementation of the concept of TQM involves the use of
many techniques and tools. The tools and techniques being used
by most organization’s today include quality circles, empowerment,
benchmaking, outsourcing, speed, continuous improvements,
statistical quality control, and 1S0 9000.
Quality Circles: A quality circle is a group of volunteer employees

(numbering 6 to 12) who meet regularly, outside company time, to
discuss and solve problems affecting their common work activities.
The quality circle concept is based on the belief that the person
who does the job knows the job more than anyone else and can,
therefore, make well-informed decisions for improved performance.
Empowerment: As we indicated earlier in our discussion,

empowerment involves not only employees but also the
organization’s suppliers and customers in the decision-making
process relating to quality control. The inclusion of customers
enables management to be constantly aware of the customers’
quality expectations. The suppliers have to supply materials that
meet the organization’s quality standards.
Benchmarking: This is a continuous process in which an

organization measures its products, services, and practices against
the standards of the leaders in the industry in which the
organization operates. A successful benchmarking requires that
the organization doing the benchmarking first analyzes its own
procedures in order to identify the problem areas that need
improvement. This analysis enables the organization to carefully
select competitors that are worthy of copying. Without a thorough
self analysis, benchmarking may spell doom for the organization.
For example, a small company trying to copy a big company whose
processes and procedures are incompatible with those of the small
organization.
Outsourcing: This is the process in which an organization

subcontracts its operations and services to another organization
that can do these operations and services cheaper or better, or
both. In other words, an organization subcontracts its in-house
operations and services to an organization with a high quality level
in these operations and services. An organization outsources only
the operations and services in which management believes it is not
efficient. If these operations and services are carefully identified

and outsourced to an appropriate vendor with the expertise, the

outsourcing organization will save money and realize a higher-
quality service or operation.
Speed: This refers to the time taken to complete a process, such

as designing a new car, distributing products or services, or
responding to telephone calls. In organizations of today, speed is a
number one strategic issue. In business, time is money. Therefore
reducing the time or steps taken to complete a process saves
money. TQM concept therefore focuses on improved
responsiveness and acceleration of activities into a shorter time.
Continuous Improvement. This technique involves

implementation of improvements a little bit at a time, on continuous
basis in all areas of the organization. The philosophy underlying
this technique is that when changes are introduced a little bit at a
time on continuous basis the probability of success is higher than
when major changes are introduced at one time. This implies that
one small improvement successfully implemented today, will
suggest another small improvement tomorrow. For example, little
improvements in the employee selection interview process will
gradually make the process more effective.
IS0 9000. This technique refers to a set of quality standards

created by the International Organization for Standardization.
These standards cover five areas, namely, product testing,
employee training, record keeping, supplier relations, and repair
policies and procedures. Products that meet the standards set by
the organization are given 1S0 9000 certification. You will see the
1S0 certification mark on some products in some stores in the
country.
Statistical Quality Control: Is a technique for managing quality.

It involves the use of a set of specific statistical techniques to
monitor quality. One such technique is acceptance sampling
which involves sampling of finished goods to ensure that they are
up to the organizations quality control standards. Another example
is in-process sampling which involves evaluation of products
during the production process so that relevant changes can be
made if necessary before the final product rolls off the production
line. The advantage of this method is that it allows problems to be
detected before they accumulate.
 Activity 4.2
As discussed in Section 3 of Unit 6, three types of process controls
are feed forward, concurrent, and feedback. Based on this
classification, where would you place acceptance sampling and in-
process sampling?

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Acceptance sampling is concerned with finished product and is

therefore a feedback control (which deals with finished products).
In-process sampling is a concurrent type of control because it
focuses on the product when the production is in progress.
The Importance of Quality for Organizations

To end our discussion in this section, let us look at the importance
of quality for organizations. But before then I want you to do this
activity.
 Activity 4.3
Looking at all that I have discussed with you in this section,
mention at least two benefits that you think an organization gains
by producing high-quality products and services.
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Any organization that produces high-quality products and services

enjoys three significant benefits: a positive company image, lower
costs and greater share of the market, and decreased product
liability costs.
Positive Company Image: An organization that always strives to

produce high-quality products and services that meet expectations
of customers creates a positive image for itself on the market. And
a positive image in turn offers the company many advantages. For
example, the organization is able to recruit valuable new
employees (because many people would want to work in such an
organization) its new products sell fast, and it is easy for the
organization to obtain loans from financial institutions.
Lower Costs and Greater Market Shares: When an organization

has effective control systems, all activities in the organization,
including those that support product quality are effectively
executed, and this leads to reduction in the costs of production.
Lower costs of production and high quality of the product help to

increase the organization’s share of the market (because people

generally desire high quality products).
Decreased Product Liability Cost: Organizations that produce

faulty products are held liable in the courts for damages resulting
from the use of such products. An organization that produces high-
quality products and services does not have this problem of high
liability costs.
Summary
In this section you learned about the concept of total quality
management (TQM). I explained to you the meaning of quality and
TQM. We discussed also the TQM techniques and tools used by
most organizations. You saw the benefits that effective quality
control systems deliver to organizations that operate such systems.

Section 5 Designing Control Systems
Introduction
Welcome my beloved friend to Section 5. In this section you and I
will discuss how to develop an effective control system in an
organization.
Objectives
 identify the characteristics of an effective control system
 describe how to develop an effective control system
Characteristics of an Effective Control System

Before they can develop effective control systems in the
organization, managers must first understand the features that
make a control system effective. When this is done, managers can
then build these features into the design of the control systems.
Let us look at these features of an effective control system.
An effective control system should be linked with planning:

As we discussed in Section 1 of Unit 6, planning and control are
inseparable. There cannot be a plan without the appropriate
control, and there cannot be a control when there is no plan. An
effective control should therefore be closely integrated with
planning. The more explicit and precise this integration the more
effective the control system is.
To be effective, a control system must be flexible enough to

accommodate change: That is, it should be possible to adapt the
control system to changes in the environment without causing
major disruptions. For example, most organizations have modified
their employee selection system to make use of opportunities
offered by the tremendous advances made in information
technology. On-line application is becoming the order of the day.
Since controls are designed to improve organizational
performances, they should be adoptable to changes in the
organization’s environments.

An effective control system should be capable of producing

accurate information. Management is a decision-making process,
and managers, base their decisions on information. Therefore if
the information is inaccurate, it leads to inaccurate managerial
decisions. For example, sales personnel may manipulate their
sales figures to project themselves as high performers. An
effective control system should be able to detect this.
An effective control system should be able to provide information

on time. In other words, an effective control system should be able
to provide accurate information as often as is necessary or
required. Information required from the market research unit by the
research and development (R&D) department should be readily
available. Retail organizations, for example, usually need
information on daily sales.
In addition to providing accurate information, an effective control

system should provide information that is as objective as possible.
Objective information is information which is devoid of the personal
interpretations of the person giving the information. That is, the
information is as it is.
For a control system to be meaningful, it must be understood by

those involved in its operation. For example, an employee
performance appraisal system that both managers and
subordinates do not understand cannot achieve its purpose. What
do we do if we do not understand information presented to us?
Most often we tend to disregard the information.
An effective control should conform with the structure of the

organization and be related to decision centres responsible for
performance. For example, empowerment which is one of the
quality control techniques under TQM cannot be effective in a
bureaucratic structure. It is appropriate in a decentralized
structure.
An effective control system should be capable of reporting

deviations from the desired standard of performance as quickly as
possible. In other words, the control system should discover
deviations in good time so that corrective measures can be
promptly taken to remedy the situation.
In an organization certain activities are more critical than others to

the success of the organization. An effective control system should
draw attention to such activities. In other words, certain control
points in the organization are more important than others. For
example, information on the number and type of skills available in
the organization is more important for the human resource
manager in planning for the human resource needs of the
organization than information on the religious background of the

employees. The skills of employees are critical for the success of

an organization.
An effective control system must be cost effective. In other words it

should not be too costly or elaborate; setting up controls over
comparatively unimportant activities creates a very elaborate,
uneconomical, and time-consuming system.
Designing a Control System

Managers must design control systems that are tailored to the
needs of the organization and enhance organizational
performance. Managers must consider what activities to control,
and how often progress should be measured (ie frequency of
performance feedback). Too much control over every
organizational activity produces an elaborate control system that
tends to demoralize and frustrate members of the organization, and
is expensive. About two years ago, students of one of the private
universities in the country (Ghana) voiced their frustrations with
stringent rules and regulations to control behaviour on campus. To
overcome these problems, the control system should be designed
to identify key or critical performance areas in the organization and
strategic control points. The key performance or key result areas
are those aspects of the organization that must function for the
entire organization to succeed. For example, in human resource
management, some key performance areas are labour turnover,
labour relations, and labour absenteeism. The strategic control
points are critical points in the organization where there should be
regular monitoring or feedback. For example, managers need
regular feedback on consumer satisfaction with the products or
services of the organization. And as suggested by Kinard
(1988:377) managers must set up a definite system of control in all
areas of operation. The control system should integrate eight kinds
of controls:
 Controls that standardize performance; for example written

procedures and inspections. Standardization of performance
enhances organizational efficiency and reduces cost (by
reducing waste).
 Controls that protect the assets of the organization from waste,

theft or misuse. For example, a rule that employees must get
permission before using the company telephone.
 Controls that focus on product quality, such as blueprints and

statistical quality-control procedures.

 Controls that set limits for delegated authority; for example

bureaucratic control and decentralized control (participation
and empowerment).
 Controls that measure employee job performance, for example

employee performance appraisal and periodic reviews of
employee performance.
 Controls that are concerned with planning and programming

operations, such as production scheduling and sales budget.
 Controls that allow top management to integrate corporate

goals and strategies, for example the corporate budget and
policy manuals (i.e. strategic controls).
 Controls designed to motivate employees for higher

performance; for example award schemes that recognize
hardwork, for example promotions, suggestion awards and
employee benefits.
In summary, controls should be designed for the purposes of

standardizing performance, protecting organizational assets from
theft and waste.
Summary
In this section, you learned about essential features of effective
control systems. We also discussed some issues that managers
must take into consideration when designing control systems.

Section 6 Management of Organizational

Control
Introduction
Welcome my valued friend to the Section 6 of Unit 6 of this course
“Principles of Management”. This is the final section of the course.
We have made it my friend! I hope you are as delighted as I am.
In this section we will focus our attention on the management of

controls in organizations. Our discussion will focus on barriers to
successful controlling, and how to make controlling effective.
Objectives
 identify potential barriers to effective controlling in

organizations.
 discuss how to overcome the barriers to effective management

of control in organizations.
Barriers to Effective Controlling

Control in organization is basically about controlling human
behaviour in organization. Controlling human behaviour in an
organization is not an easy task, and as the organization grows in
size, controlling becomes more difficult. To effectively manage
control in organizations managers must identify barriers to control
and develop mechanisms to overcome them. The greatest barrier
to effective controlling is employees’ resistance to control.
Employees resist control for various reasons: if they feel
overcontrolled, if they think that control is not appropriately focused
or rewards ineffeciency, or if they are uncomfortable with
accountability.
Overcontrol: Employees feel overcontrolled when management

exerts considerable control over their daily activities. When
employees feel overcontrolled, they become frustrated and resist
being controlled. Employees generally want to be given some
freedom to do their job and do it well.
Control Inappropriately Focused: When employees think that

control is too narrow or is focused too much on quantity and
ignores quality or unforeseen circumstances, they tend to resist it.
For example, a salesperson who is unable to achieve the sales

target set for him or her, because there are high quality, low-priced
alternative products on the market. The salesperson is not
rewarded because management is more concerned with quantity
sold, than with this unforeseen circumstance which is beyond the
control of the saleperson. The reward system in the university
bases promotion of teachers on the number of articles published,
and ignores the quality of teaching. This system is inappropriately
focused. Where employees perceived control as inappropriately
focused, they tend to falsify records (figures) in order to improve
their position. For example, employees in the production
department, may manipulate production figures to improve the
department’s position.
Rewarding Inefficiency: If employees think that a control rewards

inefficiency rather than hard work, they resist it. For example, if
employees perceive the performance appraisal system in the
organization to be unfair, because people are promoted not
because of hard work but because their superiors like them, they
loose faith in the appraisal system and tend to resist it.
Too Much Accountability: When employees think that control

holds them accountable for too many things they resist it. There
are some people who do not want to be held answerable for their
mistakes. Such people tend to blame others for their mistakes, and
will therefore resit any control system that makes them answerable
for their mistakes. Such employees will readily blame their
supervisors or colleagues for their mistakes (such people are said
to have external focus of control).
Means Versus Ends: Control activities are designed to eliminate

problems in order to ehnance organizational report. These
activities are therefore, means to an end. They are not the end in
themselves. Some managers behave as if controls are the end
and not the means to the end. For example, a rule or regulation
relating to employee punctuality is meant to get employees to start
work on time. If an employee who comes to work late is made to
make up for the time lost, the aim of the punctuality rule or
regulation (which is productivity) is achieved. On the other hand, if
the employee is asked to go home as punishment, the purpose of
the rule is defeated.
Achieving Successful Management of Control in

Organization
Since the main barrier to successful management of control
systems in organizations is employees’ resistance, management
must find ways to overcome this resistance. As indicated in
Section 5, the best way is to create a control system that
incorporates the salient features of effective control systems. The

control system should be properly linked to organziational plans. In

other words, every organizational plan or type of plan must be
linked to the appropriate control. Remember, planning and
controlling are “siamese twins”. In addition, the control system
should be flexible, accurate, timely and objective, and should
encourage employee participation. All these features will
overcome employee resistance and make the management of
control systems effective.
In addition to building these features into the control system,

managers must ensure that employees clearly understand how the
system works. Employees must know the information required for
a particular control process, how the information is to be collected
and used and for what purpose. If those involved in (or affected
by) the control system have a working knowledge of the system,
the system can be effectively managed.
Finally, managers should develop procedures for verifying the

accuracy of performance indicators. These verification procedures
sometimes help explain the impact of unforeseen or exterminating
circumstances on performance. For example, a properly designed
control system by the marketing department should be able to
verify the salesperson’s argument that he fails to meet his or her
target because of the presence of high-quality low-period,
alternative products on the market. The records of “marketing
research “unit will either support or contradict the salesperson’s
claim.
 Activity 6.1
An employee is suspended for absenting himself from work for one
week without permission. But the employee argues that he was
sick and produces medical report to support his argument.
However, the human resource manager explains that the employee
did not go to the designated hospital. Is the suspension of the
employee justified? What is the element of control in this scenario?
……………………………………………………………………………
……………………………………………………………………………
……………………………………………………………………………
The element of control here is the designated hospital.

Management is very much aware that employees can get friends
who are medical practitioners to grant them sick leave for a number
of days when they are actually not sick. To be able to verify
information on the health of employees, management makes it
obligatory for all employees to attend a designated hospital
(hospitals). The suspension of the employee is, therefore, justified
because he did not attend the designated hospital.

These verification procedures help to reduce resistance to control

because they protect both management and employees.
 Assignment 6
You planned for and joined the Distance Education Programme.

You have learned about the close relationship between planning
and controlling. In pursuing this programme, you would have
designed for yourself a self-control mechanism to help you stay
focused on the programme and to evaluate your progress on the
programme. Describe the self-control mechanism you have put in
place to see you through this programme successfully.
Summary
In this last section of this course, you and I identified some factors
that act as barriers to effective management of control systems in
organizations, the greatest barrier being employees’ resistance to
control. You have learned from our discussions that to overcome
this resistance, control systems designed by management should
incorporate the characteristics of effective control systems.
Unit summary
In this unit, I explained to you the nature of the management
function of controlling and the purpose of control in organizations.
You learned about different types of controls used in organizations.
Course summary
This course was designed to introduce you to the principles
underlying the management of organizations. We examined some
definitions of management, and from these definitions we derived
the meaning of management and its purpose. You learned about
the skills managers require to manage and the roles that managers
play. We examined the university of management and you learned
that managers’ jobs are not exactly the same in all organizations
and in all countries. We discussed the various schools of thought
on management and their contributions to our understanding of
management today. You learned about ethics and the significance
of ethics in management practices, and how to manage ethical
behaviour in organizations. We discussed corporate social
responsibility, and examined arguments for and against corporate
social responsibility. The rest of our discussions focused on the
principles underlying the basic functions of management, planning,
organizing, leading, and controlling.

I hope you and I have been able to achieve the objectives set out in
this course. I hope you now know more about management and its
significance not only in organizations but also in our individual daily
lifes. I hope you are now able to explain the basic concepts,
theories, and principles in management, analyze the basic
functions of management, and critically examine the concepts of
corporate social responsibility and ethics in management. I would
advise you to keep on reading this manual (make it your
companion) to fully grasp the information contained therein, so that
you can put into practice the knowledge you have acquired.
Organizations of today need managers who are leaders, and I see
in you just that. You are a potential manager who can provide the
right leadership to your subordinates. I do congratulate you whole
heartedly my valued friend for your determination to develop
yourself. I do wish you all that you wish for yourself.

References
Certo, S. & Certo, T. S. (2006) Modern Management (10th ed.),
New Jersey, Prentice Hall.
Daft, R. L. (1997) Management (4th ed), fort Worth, The Dryden

Press.
Griffin, R. W. (2004) Management, Delhi, A.I.T.S. Publishers and

Distributors (Regd).
Herriegel, D.; Slocum, J. W.; and Woodman, Richard M. (2001)

Organizational Behaviour (9th ed), Ohio, South-Western College
Publishing.
Kinard, J. (1988) Management, Lexington, D.C. Heath &

Company.
McFarland, D. E. (1979) Management: Foundations &

Practices (5th ed), New York, Macmillan Publishing Company.
Mullins, L. J. (2005) Management and Organizational

Behaviour (7th ed), London, Prentice Hall.
Robbins, S. & Judge T. (2007) Organizational Behaviour (12th

ed), New Jersey, Prentice Hall.
Stoner, J. A.F. Freeman, E. R. & Gilbert, D. R. Jr. (1995)

Management (6th ed), New Jersey, Prentice Hall International Inc.
CIMA Study Text Stage 3 (6/94) Organizational management and

Development

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Unit

Centre for Distance Education, IAE, University of Ghana, Legon

Section 1 The Nature and Purpose of Control in

Section 2 Steps in the Control Process

Section 3 Types of Control

Section 4 Total Quality Management

Section 5 Designing Control Systems

Section 6 Management of Organizational Control

 define organizational control and explain its importance in

 explain the steps involved in the controlling process

 describe the different types of controls in organizations

 discuss bureaucratic and decentralized approaches to quality

 discuss the concept of total quality management

 describe the elements of effective organizational control

208 Centre for Distance Education, IAE, University of Ghana, Legon

Section 1 The Nature and Purpose of Control

 define organizational control

 explain the importance of control as a key management

What is Organizational Control (Control in

As you can see from these definitions, there is very close

Centre for Distance Education, IAE, University of Ghana, Legon 209

system put in place to monitor performance to determine if things

Managers must always monitor how a plan is doing so that they

The Purpose of Control in Organizations

210 Centre for Distance Education, IAE, University of Ghana, Legon

The definitions of control that we have examined and the meaning

Adapting to Environmental Change. As indicated in our

Detecting Mistakes and Correcting Mistakes: A properly

Coping with Organizational Complexity: As an organization

Minimizing costs: An effective control system enables an

Centre for Distance Education, IAE, University of Ghana, Legon 211

(maintaining appropriate levels of quality of output), and equipment

212 Centre for Distance Education, IAE, University of Ghana, Legon

Section 2 The Steps in the Control Process

 describe the key steps in the control process

Any well-designed control system consists of favour key steps:

Establishing Standards of Performance: The control process

Measure Actual Performance: Measuring performance is an

Centre for Distance Education, IAE, University of Ghana, Legon 213

of the production department can be measured in terms of both

Compare Performance Against Standards: This is the third step

Take Corrective Action (Feedback): After comparing actual

214 Centre for Distance Education, IAE, University of Ghana, Legon

A performance standard for the customer service department in

Centre for Distance Education, IAE, University of Ghana, Legon 215

Section 3 Types of Control in Organizations

 describe the different types of controls used in organizations

Categorization of Controls Used in Organizations

Process Controls: These controls are designed to manage

Concurrent Control (Screening Control): This is control that

216 Centre for Distance Education, IAE, University of Ghana, Legon

closely monitored. If his performance meets the standards, he is

Feedback Control (sometimes called postaction or output control).

Controls Based on Structure: There are two types of control in

Resource Controls (Areas of Control). These controls ensure

Human resources controls include human resource management

Financial resources controls are the most important because the

Information resources controls include sales and marketing,

Levels of Control: Managers use control at a number of different

Centre for Distance Education, IAE, University of Ghana, Legon 217

system in an organization. Strategic control monitors the

Operations control goes with operational plan. In other words

218 Centre for Distance Education, IAE, University of Ghana, Legon

Section 4 Total Quality Management