Controlling Robbins

Foundations
of Control
14
A lack of
employee
turnover is a sign of
a good manager.
Yeko Photo Studio/Shutterstock
While high employee turnover is almost always
dysfunctional, low turnover is not necessarily
the best goal. An absence of turnover often can
mean a complacent manager, one who’s willing
to accept mediocre employee performance. In
an effective organizational control system,
managers are encouraged to identify and
remove marginal employees. Low levels of
employee turnover can be functional only if the
right people—those who are the weakest
performers—are the ones leaving.
443
Controlling
managers look for specific performance
gaps and areas for improvement. Things
is the final step in the management process.

don’t always go as planned. But that’s why
Managers must monitor whether goals that

controlling is so important! In this chapter,
were established as part of the planning we’ll look at the fundamental elements of
process are being accomplished efficiently controlling, including the control process, the
and effectively. That’s what they do when types of controls that managers can use, and
they control. Appropriate controls can help contemporary issues in control. •
Learning Outcomes
14-1 Explain the nature and importance of control. p. 445

14-2 Describe the three steps in the control process. p. 447
14-3 Discuss the types of controls organizations and managers use. p. 452
14-4 Discuss contemporary issues in control. p. 458
444
C H A P T E R 14 • Foundat i o ns of C ont r ol 445
What Is Control and Why Is It Important?

“Bailout” was the magic word that cost Domino’s
14-1
control
Explain the nature Pizza 11,000 free pizzas. The company had prepared an Management function that involves monitoring
and importance Internet coupon for an ad campaign that was considered activities to ensure that they’re being accomplished
as planned and correcting any significant deviations
but not approved. However, when someone apparently
of control. typed “bailout” into a Domino’s promotional code win-
dow and found it was good for a free medium pizza,
the word spread like wildfire on the Web. Somewhere, somehow, a lack of control cost the
company big time.1
What Is Control?
How do you know a control system is effective? Look at

whether goals are being achieved!
Control is the management function that involves monitoring activities to ensure that they’re
being accomplished as planned and correcting any significant deviations. Managers can’t
really know whether their units are performing properly until they’ve evaluated what activi-
ties have been done and have compared the actual performance with the desired standard. An
effective control system ensures that activities are completed in ways that lead to the attain-
ment of the organization’s goals. The effectiveness of a control system is determined by how
well it facilitates goal achievement. The more a control system helps managers achieve their
organization’s goals, the better it is.
Why Is Control Important?

• A press operator at the Denver Mint noticed a flaw—an
extra up leaf or an extra down leaf—on Wisconsin state
A Question of Ethics
quarters being pressed at one of his five press machines.
He stopped the machine and left for a meal break. When It’s called the “walk of shame.” Marching employees through
he returned, he saw the machine running and assumed that stores in handcuffs to discourage theft and other infractions.2
someone had changed the die in the machine. However, af- At a Target store in Pasadena, California, an employee who was
ter a routine inspection, the machine operator realized the subjected to the walk of shame was released and never charged
die had not been changed. The faulty press had likely been with a crime. However, the emotional distress of the incident led
running for over an hour and thousands of the flawed coins to the individual later committing suicide. After the incident went
were now commingled with unblemished quarters. As many
public, other Target employees in other stores told of their experi-
as 50,000 of the faulty coins entered circulation, setting off
ences either witnessing or experiencing the walk of shame. Target
a coin collector buying frenzy.3
• At least 4 million records of federal government employees’ Corporation denies that it has any such policy. The company also
personal data held by the Office of Personnel Management did not elaborate on what guidance it gives managers on how to
were hacked. Hackers appeared to be looking for Social Secu- handle suspected employee theft or other work violations that
rity numbers and other personal information.4 could potentially involve law enforcement.
• After an above-ground radioactive release at a nuclear waste
If your professor has assigned this, go to the Assignments sec-
storage vault in New Mexico, a report blamed managers who
failed to “understand and control the risks.”5 tion of mymanagementlab.com to complete these discussion
• McDonald’s Japan has apologized to customers and vowed questions.
to better control product safety after objects including a tooth Talk About It 1: What do you think of this “supposed”
and plastic were found in food.6 practice—positive and negative? Discuss.
• After a number of negatively publicized incidents on its cruise
ships, Carnival Corporation accelerated its schedule of main- Talk About It 2: How could an organization make sure it’s
tenance and other renovations.7 being ethical in controlling employees’ behaviors and still achieving
• A technical error on Walmart’s Web site led to certain organizational goals?
products showing unbelievably low prices (for instance, a
446 Pa r t 5 • Controlling
treadmill for $33). The error was not the result of hacking, but rather an internal glitch,
and was quickly corrected.8
• Clothing return fraud costs U.S. retailers almost $9 billion annually. To combat this, many
high-end retailers have started placing large black plastic tags in highly visible places on
dresses and other pricey clothing items.9
• No fast-food chain wants its employees doing gross stuff behind the scenes, but social
media photos and videos of a Taco Bell employee licking a stack of taco shells, a Wendy’s
employee bending down under a Frosty machine with mouth wide open gobbling the treat,
or a Domino’s Pizza employee performing vulgar and unsanitary actions while preparing
food have all shown up online.10
77 percent of executives say that the biggest threat

to their organizations comes from within.11
Can you see now why controlling is such an important managerial function? Planning
can be done, an organizational structure created to facilitate efficient achievement of goals,
and employees motivated through effective leadership. But there’s no assurance that activities
are going as planned and that the goals employees and managers are working toward are, in
fact, being attained. Control is important, therefore, because it’s the only way that managers
know whether organizational goals are being met and, if not, the reasons why. The value of
the control function can be seen in three specific areas:
1. Planning. In Chapter 5, we described goals, which provide specific direction to em-

ployees and managers, as the foundation of planning. However, just stating goals or hav-
ing employees accept goals doesn’t guarantee that the necessary actions to accomplish
those goals have been taken. As the old saying goes, “The best-laid plans often go awry.”
The effective manager follows up to ensure that what employees are supposed to do is,
in fact, being done and goals are being achieved. As the final step in the management
process, controlling provides the critical link back to planning. (See Exhibit 14–1.) If
managers didn’t control, they’d have no way of knowing whether goals and plans were
being achieved and what future actions to take.
2. Empowering employees. The second reason controlling is important is because of em-
ployee empowerment. Many managers are reluctant to empower their employees because
Exhibit 14–1 Planning–Controlling Link
Planning
Goals
Objectives
Strategies
Plans
Controlling
Organizing
Standards
Structure
Measurements
Human Resource
Comparison Management
Actions
Leading
Motivation
Leadership
Communication
Individual and
Group Behavior
they fear something will go wrong for

which they would be held responsible.
But an effective control system can pro-
vide information and feedback on em-
ployee performance and minimize the
chance of potential problems.
3. Protecting the workplace. The final
reason that managers control is to pro-
tect the organization and its assets.12
Organizations face threats from natural
disasters, financial pressures and scan-
dals, workplace violence, supply chain
disruptions, security breaches, and
even possible terrorist attacks. Manag-
ers must protect organizational assets
in the event that any of these should
happen. Comprehensive controls and
backup plans will help minimize work
disruptions.
Richard Graulich/ZUMA Press/Corbis
John Jamason, media and public information
manager, talks to employees working in the
social media monitoring room at the Palm
What Takes Place as Managers Control? Beach County Emergency Operations Center.
Social media such as Facebook and Twitter
help the center track and monitor information
during storm emergencies to get help to
When Maggine Fuentes joined Ohio-based Core Systems people in need.
14-2 Describe the as HR manager, she knew that her top priority was reduc-
ing the number of employee injuries, which was well
three steps in the
above the industry average. The high frequency and
control process. severity of the company’s injury rates not only affected
employee morale but also resulted in lost workdays and
affected the bottom line.13 Fuentes relied on the control process to turn this situation around.
The control process is a three-step process of (1) measuring actual performance, (2)
comparing actual performance against a standard, and (3) taking managerial action to cor-
rect deviations or to address inadequate standards. (See Exhibit 14–2.) The control process
assumes that performance standards already exist, and they do. They’re the specific goals cre-
ated during the planning process.
Specific goals ARE the performance standards.
1 What Is Measuring?
To determine actual performance, a manager must first get information about it. Thus, the
first step in control is measuring.
How Do Managers Measure? Four common sources of information frequently

used to measure actual performance include personal observation, statistical reports, oral
reports, and written reports. Each has its own particular strengths and weaknesses, but us- control process
A three-step process of measuring actual perfor-
ing a combination of them increases both the number of input sources and the probability mance, comparing actual performance against a
of receiving reliable information. standard, and taking managerial action to correct
Personal observation provides firsthand, intimate knowledge of the actual activity— deviations
information that is not filtered through others. It permits intensive coverage because minor management by walking
as well as major performance activities can be observed, and it provides opportunities for around (MBWA)
the manager to read between the lines. Management by walking around (MBWA) is a phrase When a manager is out in the work area interacting
with employees
used to describe when a manager is out in the work area, interacting directly with employees
Exhibit 14–2 The Control Process
Is standard Yes Do
Compare being attained? nothing
actual
performance
with standard No
Is variance Yes Do
acceptable? nothing
Measure No
Goals Standard actual
performance
Identify
Is standard Yes
cause of
acceptable? variation
No
Revise Correct
standard performance
and exchanging information about what’s going on. Management by walking around can
Greeting customers with a handshake, a
smile, and a warm welcome is a practice pick up factual omissions, facial expressions, and tones of voice that may be missed by other
Apple stores adopted from Ritz-Carlton, sources. Unfortunately, in a time when quantitative information suggests objectivity, per-
the luxury hotel chain known as the gold sonal observation is often considered an inferior information source. It is subject to percep-
standard of customer service. Apple bench-
marked with Ritz-Carlton because it wants its tual biases; what one manager sees, another might not. Personal observation also consumes
employees to excel at customer service that a good deal of time. Finally, this method suffers from obtrusiveness. Employees might
leads to customer loyalty. interpret a manager’s overt observation as a lack of confidence or
a sign of mistrust.
The widespread use of computers has led managers to
rely increasingly on statistical reports for measuring
actual performance. This measuring device, however,
isn’t limited to computer outputs. It also includes
graphs, bar charts, and numerical displays of
any form that managers can use for assessing
performance. Although statistical information
is easy to visualize and effective for showing
relationships, it provides limited information
about an activity. Statistics report on only a
few key areas and may often ignore other
important, often subjective, factors.
Information can also be acquired
through oral reports—that is, through
conferences, meetings, one-to-one conver-
sations, or telephone calls. In employee-
oriented organizations where employees
work closely together, this approach may
Nati Harnik/AP Images
be the best way to keep tabs on work performance. For instance, at the Ken Blanchard
Companies in Escondido, California, managers are expected to hold one-on-one meet-
ings with each of their employees at least once every two weeks.14 The advantages and
disadvantages of this method of measuring performance are similar to those of personal
observation. Although the information is filtered, it is fast, allows for feedback, and permits
expression and tone of voice as well as words themselves to convey meaning. Historically,
one of the major drawbacks of oral reports has been the problem of documenting informa-
tion for later reference. However, our technological capabilities have progressed in the past
couple of decades to the point where oral reports can be efficiently taped and become as
permanent as if they were written.
Actual performance may also be measured by written reports. Like statistical reports,
they are slower yet more formal than firsthand or secondhand oral measures. This formality
also often gives them greater comprehensiveness and conciseness than found in oral reports.
In addition, written reports are usually easy to catalog and reference.
Given the varied advantages and disadvantages of each of these four measurement tech-
niques, managers should use all four for comprehensive control efforts.
Seventy-three percent of employers have taken efforts to

address productivity killers at work.15
wHat Do Managers Measure? What managers measure is probably more critical

to the control process than how they measure. Why? The selection of the wrong criteria can
result in serious dysfunctional consequences. Besides, what we measure determines, to a
great extent, what people in the organization will attempt to excel at.16 For example, as-
sume that your instructor has required a total of 10 writing assignments from the exercises
at the end of each textbook chapter. But in the grade computation section of the syllabus,
you notice that these assignments are not scored. In fact, when you ask your professor
about this, she replies that these writing assignments are for your own enlightenment and
do not affect your grade for the course; grades are solely a function of how well you per-
form on the three exams. We predict that you would, not surprisingly, exert most, if not all,
of your effort toward doing well on the three exams.
Some control criteria are applicable to any management situation. For instance, be-
cause all managers, by definition, direct the activities of others, criteria such as employee
satisfaction or turnover and absenteeism rates can be measured. Also, most managers have
budgets for their area of responsibility set in monetary units (dollars, pounds, francs, lire,
and so on). Keeping costs within budget is, therefore, a fairly common control measure.
However, any comprehensive control system needs to recognize the diversity of activi-
ties among managers. For example, a production manager in a paper tablet manufacturing
plant might use measures of the quantity of tablets produced per day, tablets produced per
labor hour, scrap tablet rate, or percentage of rejects returned by customers. On the other
hand, the manager of an administrative unit in a government agency might use number of
document pages produced per day, number of orders processed per hour, or average time
required to process service calls. Marketing managers often use measures such as percent
of market held, number of customer visits per salesperson, or number of customer impres-
sions per advertising medium.
As you might imagine, some activities are more difficult to measure in quantifiable
terms. It is more difficult, for instance, for a manager to measure the performance of a
medical researcher or a middle school counselor than of a person who sells life insurance.
But most activities can be broken down into objective segments that allow for measurement.
The manager needs to determine what value a person, department, or unit contributes to the
organization and then convert the contribution into standards.
Most jobs and activities can be expressed in tangible and measurable terms. When a
performance indicator cannot be stated in quantifiable terms, managers should look for and
use subjective measures. Certainly, subjective measures have significant limitations. Still,
◂◂◂ From the Past to the Present ▸ ▸ ▸

We introduced benchmarking in the planning chapter (Chapter Today, managers in diverse industries such as health
5) as a way for organizations to promote quality.17 Not surpris- care, education, and financial services are discovering what
ingly, since planning and controlling are so closely linked, it also manufacturers have long recognized—the benefits of bench-
has implications for control. Benchmarking has been a highly marking. For instance, the American Medical Association de-
utilized management tool. Although Xerox is often credited veloped more than 100 standard measures of performance
with the first widespread benchmarking effort in the United to improve medical care. Carlos Ghosn, CEO of Nissan,
States, the practice can actually be traced back much further. benchmarked Walmart’s operations in purchasing, transpor-
The benefits of benchmarking tation, and logistics. At its most basic,
have long been recognized in the benchmarking means learning from
manufacturing industry. At the Mid- Benchmarking: others. However, as a tool for moni-
vale Steel Company plant where he toring and measuring organizational
was employed, Frederick W. Taylor (of How do we and work performance, benchmarking
scientific management fame) used
concepts of benchmarking to find the
measure up? can be used to identify specific per-
formance gaps and potential areas of
“one best way” to perform a job and improvement.
to find the best worker to perform the job. Even Henry Ford
If your professor has assigned this, go to the Assignments
recognized the benefits. Based on the techniques used at
section of mymanagementlab.com to complete these dis-
Chicago slaughterhouses where carcasses were hung from
cussion questions.
hooks mounted on a monorail, with each man performing his
job and then pushing the carcass to the next work station, Talk About It 3: What are the benefits of
Ford’s assembly line used the same concept for producing benchmarking?
cars, beginning in 1913. “The idea that revolutionized manu-
facturing was imported from another industry.” Talk About It 4: What are the challenges in doing it?
they are better than having no standards at all and ignoring the control function. If an activity
is important, the excuse that it’s difficult to measure is inadequate. In such cases, managers
should use subjective performance criteria. Of course, any analysis or decisions made on the
basis of subjective criteria should recognize the limitations of the data.
2 How Do Managers Compare Actual Performance

to Planned Goals?
The comparing step determines the variation between actual performance and the standard.
Although some variation in performance can be expected in all activities, it’s critical to deter-
mine an acceptable range of variation (see Exhibit 14–3). Deviations outside this range need
attention. Let’s work through an example.
Chris Tanner is a sales manager for Green Earth Gardening Supply, a distributor of
specialty plants and seeds in the Pacific Northwest. Chris prepares a report during the first
week of each month that describes sales for the previous month, classified by product line.
Exhibit 14–4 displays both the sales goals (standard) and actual sales figures for the month
of June. After looking at the numbers, should Chris be concerned? Sales were a bit higher
than originally targeted, but does that mean there were no significant deviations? That de-
pends on what Chris thinks is significant—that is, outside the acceptable range of variation.
Even though overall performance was generally quite favorable, some product lines need
closer scrutiny. For instance, if sales of heirloom seeds, flowering bulbs, and annual flow-
ers continue to be over what was expected, Chris might need to order more product from
nurseries to meet customer demand. Because sales of vegetable plants were 15 percent
range of variation below goal, Chris may need to run a special on them. As this example shows, both over-
The acceptable parameters of variance between variance and undervariance may require managerial attention, which is the third step in the
actual performance and a standard
control process.
Exhibit 14–3 Acceptable Range of Variation
Acceptable
upper limit
•
Standard • • Acceptable
range of
variation
•
Acceptable
• •
lower limit
t t+1 t+2 t+3 t+4 t+5
3 What Managerial Action Can Be Taken?

Managers can choose among three possible courses
of action:
• Do nothing (self-explanatory)
• Correct actual performance
• Revise the standards
How Do You CorreCt aCtual PerforManCe? Depending on what the problem

immediate corrective action
is, a manager could take different corrective actions. For instance, if unsatisfactory work is Corrective action that addresses problems at once
the reason for performance variations, the manager could correct it through training pro- to get performance back on track
grams, disciplinary action, changes in compensation practices, and so forth. One decision
basic corrective action
that a manager must make is whether to take immediate corrective action, which corrects Corrective action that looks at how and why
problems at once to get performance back on track, or to use basic corrective action, which performance deviated before correcting the source
looks at how and why performance deviated before correcting the source of deviation. It’s of deviation
not unusual for managers to rationalize that they don’t have time to find the source of a
Exhibit 14–4 Example of Determining Significant Variation: Green Earth Gardening

Supply—June Sales
ProduCt Standard aCtual over (under)

Vegetable plants 1,075 913 (612)
Perennial flowers 630 634 4
Annual flowers 800 912 112
Herbs 160 140 (20)
Flowering bulbs 170 286 116
Flowering bushes 225 220 (5)
Heirloom seeds 540 672 132
Total 3,600 3,777 177
problem (basic corrective action) and continue to perpetually “put out fires” with immedi-
ate corrective action. Effective managers analyze deviations and, if the benefits justify it,
take the time to pinpoint and correct the causes of variance.
How Do You revise tHe stanDarD? It’s possible that the variance was a result of an
unrealistic standard—too low or too high a goal. In such cases, it’s the standard that needs
corrective action, not the performance. If performance consistently exceeds the goal, then
a manager should look at whether the goal is too easy and needs to be raised. On the other
hand, managers must be cautious about revising a standard downward. It’s natural to blame
the goal when an employee or a team falls short. For instance, students who get a low score
on a test often attack the grade cutoff standards as too high. Rather than accept the fact
that their performance was inadequate, they will argue that the standards are unreason-
able. Likewise, salespeople who don’t meet their monthly quota often want to blame what
they think is an unrealistic quota. The point is that when performance isn’t up to par, don’t
immediately blame the goal or standard. If you believe the standard is realistic, fair, and
achievable, tell employees that you expect future work to improve, and then take the neces-
sary corrective action to help make that happen.
Watch it 1!
If your professor has assigned this, go to the Assignments section of mymanagementlab.com to
complete the video exercise titled CH2MHill: Foundations of Control.
What Should Managers Control?

Cost efficiency. The length of time customers are kept on hold. Customers being satisfied
14-3 Discuss the with the service provided. These are just a few of the important performance indicators that
executives in the intensely competitive call-center service industry measure. To make good
types of controls
decisions, managers in this industry want and need this type of information so they can con-
organizations trol work performance.
and managers How do managers know what to control? In this section, we’re first going to look at the
use. decision of what to control in terms of when control takes place. Then, we’re going to dis-
cuss some different areas in which managers might choose to establish controls.
When Does Control Take Place?

Management can implement controls before an activity commences, during the activity, or
after the activity has been completed. The first type is called feedforward control, the second
is concurrent control, and the last is feedback control (see Exhibit 14–5).
Exhibit 14–5 “When” Does Control Take Place?
Input Processes Output
Feedforward Concurrent Feedback

control control control
Anticipates Corrects problems Corrects problems

problems as they happen after they occur
wHat is feeDforwarD Control? The most

desirable type of control—feedforward control—
prevents problems because it takes place before the
actual activity.18 For instance, when McDonald’s
began doing business in Moscow, it sent company
quality control experts to help Russian farmers
learn techniques for growing high-quality pota-
toes and to help bakers learn processes for baking
high-quality breads. Why? McDonald’s demands
consistent product quality no matter the geographi-
cal location. They want french fries in Moscow to
taste like those in Omaha. Still another example
of feedforward control is the scheduled preventive
maintenance programs on aircraft done by the ma-
jor airlines. These schedules are designed to detect
and hopefully to prevent structural damage that Elaine Thompson/AP Images
might lead to an accident. Microsoft uses concurrent
control to track its energy usage.
The key to feedforward controls is taking managerial action before a problem occurs. Shown here at its operations
That way, problems can be prevented rather than having to correct them after any damage— center, control technician Ray
poor-quality products, lost customers, lost revenue, etc.—has already been done. However, Nichols monitors real-time data on heating,
cooling, and other systems in the company’s
these controls require timely and accurate information that isn’t always easy to get. Thus, buildings that will help Microsoft achieve its
managers frequently end up using the other two types of control. goals of improving its carbon footprint and
reducing its impact on the environment.
wHen is ConCurrent Control useD? Concurrent control, as its name implies,

takes place while a work activity is in progress. For instance, the director of business
product management at Google and his team keep a watchful eye on one of Google’s most
profitable businesses—online ads. They watch “the number of searches and clicks, the rate
at which users click on ads, the revenue this generates—everything is tracked hour by hour,
compared with the data from a week earlier and charted.”19 If they see something that’s not
working particularly well, they fine-tune it.
Fifty-five percent of employees say that micromanaging

decreases their productivity.20
Technical equipment (such as computers and computerized machine controls) can be
designed to include concurrent controls. For example, you’ve probably experienced this
with word-processing software that alerts you to a misspelled word or incorrect grammati-
cal usage. Also, many organizational quality programs rely on concurrent controls to inform
workers whether their work output is of sufficient quality to meet standards.
The best-known form of concurrent control, however, is direct supervision. For
example, Nvidia’s CEO Jen-Hsun Huang had his office cubicle torn down and replaced
with a conference table so he’s now available to employees at all times to discuss what’s
going on.21 Even GE’s CEO, Jeff Immelt, spends 60 percent of his workweek on the road
talking to employees and visiting the company’s numerous locations.22 All managers
can benefit from using concurrent control because they can correct problems before they
become too costly. MBWA, which we described earlier in this chapter, is a great way for
managers to do this.
wHY is feeDBaCk Control so PoPular? The most popular type of control relies feedforward control
Control that takes place before a work activity
on feedback. In feedback control, the control takes place after the activity is done. For is done
instance, remember our earlier Denver Mint example. The flawed Wisconsin quarters were
discovered with feedback control. The damage had already occurred even though the orga- concurrent control
Control that takes place while a work activity is in
nization corrected the problem once it was discovered. And that’s the major problem with progress
this type of control. By the time a manager has the information, the problems have already
occurred, leading to waste or damage. However, in many work areas—the financial area feedback control
Control that takes place after a work activity is done
being one example—feedback is the only viable type of control. (Continued on p. 457)
KeePing traCK:
What gets Controlled?
Countless activities are taking place in
different organizational locations and
functional areas!
1 Keeping track of an organization’s Finances
Want to earn a profit?

You need financial controls!
Traditional financial controls include:
• ratio analysis. (See Exhibit 14–6.)
Ratios are calculated using selected
information from the organization’s
balance sheet and income statement. Ekaterina Semenova/Fotolia
Exhibit 14–6 Popular Financial Ratios
objeCtive ratio CalCulation Meaning
Current assets Tests the organization’s ability to meet
liquidity ratios: measure an
Current ratio
Current liabilities short-term obligations
organization’s ability to meet
its current debt obligations Current assets - Inventories Tests liquidity more accurately when inventories turn over
Acid test
Current liabilities slowly or are difficult to sell
leverage ratios: Total debt

Debt to assets The higher the ratio, the more leveraged the organization
examine the organization’s Total assets
use of debt to finance its as-
sets and whether it’s able to Times interest Profits before interest and taxes Measures how many times the organization is able to cover
meet the interest payments earned its interest expenses
Total interest charges
on the debt
Sales The higher the ratio, the more efficiently inventory
Inventory turnover
activity ratios: assess how Inventory assets are being used
efficiently a company is The fewer assets used to achieve a given level of sales, the
using its assets Sales
Total asset turnover more efficiently management is using the organization’s
Total assets total assets
Profitability ratios: Profit margin on Net profit after taxes
Identifies the profits that are being generated
measure how efficiently and sales Total sales
effectively the company is
using its assets to generate Return on Net profit after taxes
Measures the efficiency of assets to generate profits
profits investment Total assets
454
• budget analysis. Budgets are used for both planning and controlling.
◾ Planning tool: indicates which work activities are important and what and how much
resources should be allocated to those activities.
◾ Controlling tool: provides managers with quantitative standards against which to measure
and compare resource consumption. Significant deviations require action and a manager to
examine what has happened and why and then take necessary action.
2 Keeping track of organization’s information

A information—a critical tool for controlling other organizational activities
WHY Managers need rigHt inForMation at the rigHt tiMe and in the
rigHt aMount to help them monitor and measure organizational activities:
• about what is happening within their area of re-
sponsibility.
• about the standards in order to be able to
compare actual performance with the standard.
• to help them determine if deviations are acceptable.
• to help them develop appropriate courses of action.
Morena/Shutterstock
Information is important!
HOW A Management information System (MiS) Dusit/Shutterstock
• Can be manual or computer-based,

although most organizational MIS
are computer-supported applications.
• System in MIS implies order,
arrangement, and purpose.
• Focuses specifically on providing
managers with information
(processed and analyzed data), not
merely data (raw, unanalyzed facts). management information system (MIS)
A system used to provide management with needed information on a regular basis
455
B information—an organizational resource that needs controlling
▸▸▸ in 2014—79,700 reported security incidents

23 ▸▸▸
and 2,122 confirmed data breaches.
• Information is critically important to everything an organization does—
that information needs to be protected.
◾ Controls: data encryption, system
firewalls, data backups, and other
techniques.24
◾ Look for problems in places that might
not even have been considered, like
search engines.
◾ Equipment such as laptop computers,
tablets, and even RFID (radio-frequency
identification) tags are vulnerable to
viruses and hacking.
◾ Monitor information controls regularly to
ensure that all possible precautions are Bedrin/Shutterstock
in place to protect important information.
3 Keeping track of employee Performance
• Are employees doing their jobs as planned

and meeting goals that have been set?
• If not, employee counseling or employee
discipline may be needed.
See p. 238 in Chapter 7.
Over 81 percent of managers say they don’t

do very well at giving difficult feedback.25
Mike Charles/Shutterstock
456
4 Keeping track using a balanced Scorecard
approach
balanced scorecard approach looks at more than the financial perspective26 by
typically looking at four areas that contribute to a company’s performance:
1 Financial
2 Customer
3 Internal processes
4 People/innovation/
growth assets
Sharifulin Valery/Itar-Tass Photos/Newscom
Managers should: develop goals for each of the

four areas and then measure whether goals
are being met.
balanced scorecard
A performance measurement tool that looks at more than just the
financial perspective
Feedback controls do have two advantages.27 First, feedback gives managers meaningful
information on how effective their planning efforts were. Feedback that shows little variance
between standard and actual performance indicates that the planning was generally on target.
If the deviation is significant, a manager can use that information to formulate new plans.
Second, feedback can enhance motivation. People want to know how well they’re doing, and
feedback provides that information.
try it!
complete the Simulation: Controlling.
457
What Contemporary Control Issues Do

Managers Confront?
The employees of Integrated Information Systems Inc. didn’t think twice about exchang-
14-4 Discuss ing digital music over a dedicated office server they had set up. Like office betting on col-
lege and pro sports, it was technically illegal, but harmless—or so they thought. But after
contemporary
the company had to pay a $1 million settlement to the Recording Industry Association of
issues in control. America, managers wished they had controlled the situation better.28 Control is an important
managerial function. We’re going to look at two control issues that managers face today:
cross-cultural differences and workplace concerns.
Watch it 2!
complete the video exercise titled Zane’s Cycles: Foundations of Control.
Do Controls Need to Be Adjusted for Cultural Differences?

The concepts of control that we’ve discussed are appropriate for organizational units that
aren’t geographically distant or culturally distinct. But what about global organizations?
Would control systems be different, and what should managers know about adjusting controls
for national differences?
Methods of controlling employee behavior and operations can be quite different in dif-
ferent countries. In fact, the differences in organizational control systems of global organiza-
tions are primarily in the measurement and corrective action steps of the control process. In
a global corporation, for instance, managers of foreign operations tend not to be closely con-
trolled by the home office if for no other reason than that distance keeps managers from being
able to observe work directly. Because distance creates a tendency for formalized controls,
Yum! Brands, a global restaurant firm, estab-
the home office of a global company often relies on extensive, formal reports for control.
lished tighter control systems in China after The global company may also use information technology to control work activities. For
learning that some of its poultry suppliers for instance, Seven and i Holdings (Japan’s biggest retail conglomerate and parent company of
its KFC restaurants violated company rules
on the use of drugs to fatten chickens. Cor-
the 7-Eleven convenience store chain in the United States) uses automated cash registers not
rective actions of its control process included only to record sales and monitor inventory but also to schedule tasks for store managers and
strengthening the oversight of its suppliers to track their use of the built-in analytical graphs and forecasts. If managers don’t use them
and establishing the principle of zero toler-
ance in food safety.
enough, they’re told to increase their activities.29
Technology’s impact on control is most evident
in comparisons of technologically advanced nations
with countries that aren’t as technologically ad-
vanced. Organizations in technologically advanced
nations such as the United States, Japan, Canada,
Great Britain, Germany, and Australia use indi-
rect control devices—particularly computer-related
reports and analyses—in addition to standardized
rules and direct supervision to ensure that activi-
ties are going as planned. In less technologically
advanced countries, direct supervision and highly
centralized decision making are the basic means of
control.
Also, constraints on what corrective action
managers can take may affect managers in foreign
countries because laws in some countries do not al-
low managers the option of closing facilities, laying
off employees, or bringing in a new management
Zhou Junxiang/AP Images
::::::: Technology and the Manager’s Job :::::::

MoNIToRING EMPLoyEES
Technological advances have made the process of managing an locations in the organization. Smart badges, too, can transmit
organization much easier.30 And technological advancements where the employee is at all times!
have also provided employers a means of sophisticated employee Just how much control a company should have over the private
monitoring. Although most of this monitoring is designed to lives of its employees also becomes an issue. Where should an em-
enhance worker productivity, it could, and has been, a source ployer’s rules and controls end? Does the boss have the right to dictate
of concern over worker privacy. These advantages bring with what you do on your free time and in your own home? Could your boss
them difficult questions regarding what managers have the right keep you from engaging in riding a motorcycle, skydiving, smoking,
to know about employees and how far they can go in control- drinking alcohol, or eating junk food? Again, the answers may surprise
ling employee behavior, both on and off the job. Consider the you. Today many organizations, in their quest to control safety and
following: health insurance costs, are delving into their employees’ private lives.
Although controlling employees’ behaviors on and off the job
• The mayor of Colorado Springs, Colorado, reads the e-mail mes-
may appear unjust or unfair, nothing in our legal system prevents
sages that city council members send to each other from their
employers from engaging in these practices. Rather, the law is
homes. He defended his actions by saying he was making sure
based on the premise that if employees don’t like the rules, they
that e-mails to each other were not being used to circumvent the
have the option of quitting. Managers, too, typically defend their ac-
state’s “open meeting” law that requires most council business
tions in terms of ensuring quality, productivity, and proper employee
to be conducted publicly.
behavior. For instance, an IRS audit of its southeastern regional
• The U.S. Internal Revenue Service’s internal audit group monitors
a computer log that shows employee access to taxpayers’ ac- offices found that 166 employees took unauthorized looks at the tax
counts. This monitoring activity allows management to check and returns of friends, neighbors, and celebrities.
see what employees are doing on their computers. If your professor has assigned this, go to the Assignments section of
• American Express has an elaborate system for monitoring mymanagementlab.com to complete these discussion questions.
telephone calls. Daily reports provided to supervisors detail the
frequency and length of calls made by employees, as well as talK about it 5: When does management’s need for
how quickly incoming calls are answered. information about employee performance cross over the line and
interfere with a worker’s right to privacy?
• Employers in several organizations require employees to wear
talK about it 6: Is any action by management acceptable
badges at all times while on company premises. These badges as long as employees are notified ahead of time that they will be
contain a variety of data that allow employees to enter certain monitored? Discuss.
team from outside the country. Finally, another challenge for global companies in collect-
ing data is comparability. For instance, a company’s manufacturing facility in Mexico might
produce the same products as a facility in Scotland. However, the Mexican facility might be
much more labor intensive than its Scottish counterpart (to take advantage of lower labor
costs in Mexico). If top-level executives were to control costs by, for example, calculating
labor costs per unit or output per worker, the figures would not be comparable. Managers in
global companies must address these types of global control challenges.
What Challenges Do Managers Face in Controlling the Workplace?

Today’s workplaces present considerable control challenges for managers. From monitoring
employees’ computer usage at work to protecting the workplace against disgruntled employ-
ees intent on doing harm, managers need controls to ensure that work can be done efficiently
and effectively as planned.
Sixty-eight percent of employees admit to using company

computers to check personal email.31
is MY work CoMPuter reallY Mine? If

you work, do you think you have a right to privacy
at your job? What can your employer find out
about you and your work? You might be surprised
at the answers! Employers can (and do), among
other things, read your e-mail (even those marked
“personal or confidential”), tap your telephone,
monitor your work by computer, store and review
computer files, monitor you in an employee bath-
room or dressing room, and track your where-
abouts in a company vehicle. And these actions
aren’t that uncommon. In fact, some 30 percent
of companies have fired workers for misusing the
Internet and another 28 percent have terminated
workers for e-mail misuse.32
Why do managers feel they need to monitor
what employees are doing? A big reason is that em-
Miami Herald/MCT/Landov ployees are hired to work, not to surf the Web check-
At Citrix, a provider of virtualization, network-
ing, and cloud technologies for businesses, ing stock prices, watching online videos, playing
employees are allowed to BYOD—Bring Your fantasy baseball, or shopping for presents for family or friends. Recreational on-the-job Web
Own Device. Although more companies are surfing is thought to cost billions of dollars in lost work productivity annually. In fact, a survey
adopting BYOD policies, the control risks are
still very much the same. Even in a BYOD of U.S. employers said that 87 percent of employees look at non-work-related Web sites while
environment, workplace monitoring policies at work and more than half engage in personal Web site surfing every day.33 Watching online
are very much needed. video has become an increasingly serious problem not only because of the time being wasted by
employees but also because it clogs already-strained corporate computer networks.34 If you had
to guess the video site viewed most often at work, what would you guess? If you said YouTube,
you’d be absolutely correct!35 However, as innocent as it may seem (after all, it may be just a
30-second video), all this nonwork adds up to significant costs to businesses.
Another reason that managers monitor employee e-mail and computer usage is that
they don’t want to risk being sued for creating a hostile workplace environment because of
offensive messages or an inappropriate image displayed on a coworker’s computer screen.
Concerns about racial or sexual harassment are one reason companies might want to monitor
or keep backup copies of all e-mail. Electronic records can help establish what actually hap-
pened so managers can react quickly.36
Finally, managers want to ensure that company secrets aren’t being leaked.37 In addition
to typical e-mail and computer usage, companies are monitoring instant messaging, blogs,
and other social media outlets, and banning phone cameras in the office. Managers need to
be certain that employees are not, even inadvertently, passing information on to others who
could use that information to harm the company.
Because of the potentially serious costs and given the fact that many jobs now entail
computers, many companies have workplace monitoring policies. Such policies should con-
trol employee behavior in a nondemeaning way, and employees should be informed about
those policies.
Write it!
complete MGMT 3: Technology.
is eMPloYee tHeft on tHe rise? Would you be surprised to find that up to 85 per-
cent of all organizational theft and fraud is committed by employees, not outsiders?38 And
it’s a costly problem—estimated to be about $4,500 per worker per year.39 In a survey of
U.S. companies, 20 percent said that workplace theft has become a moderate to very big
employee theft problem.40
Any unauthorized taking of company property by Employee theft is defined as any unauthorized taking of company property by employees
employees for their personal use
for their personal use.41 It can range from embezzlement to fraudulent filing of expense
reports to removing equipment, parts, software, or office supplies from company premises.
Although retail businesses have long faced serious potential losses from employee theft,
loose financial controls at startups and small companies and the ready availability of informa-
tion technology have made employee stealing an escalating problem in all kinds and sizes
of organizations. It’s a control issue that managers need to educate themselves about and be
prepared to deal with it.42
Global employee fraud is estimated to cost organizations

$3.7 trillion a year.43
Why do employees steal? The answer depends on whom you ask.44 Experts in various
fields—industrial security, criminology, clinical psychology—have different perspectives.
The industrial security people propose that people steal because the opportunity presents
itself through lax controls and favorable circumstances. Criminologists say that it’s because
people have financial-based pressures (such as personal financial problems) or vice-based
pressures (such as gambling debts). And the clinical psychologists suggest that people
steal because they can rationalize whatever they’re doing as being correct and appropriate
behavior (“everyone does it,” “they had it coming,” “this company makes enough money
and they’ll never miss anything this small,” “I deserve this for all that I put up with,” and so
forth).45 Although each approach provides compelling insights into employee theft and has
been instrumental in attempts to deter it, unfortunately, employees continue to steal. What
can managers do?
The concept of feedforward, concurrent, and feedback control is useful for identifying
measures to deter or reduce employee theft.46 Exhibit 14–7 summarizes several possible
managerial actions.
Exhibit 14–7 Controlling Employee Theft
FEEDFORWARD CONCURRENT FEEDBACK

Make sure employees
know when theft or fraud has
Use careful prehiring Treat employees with
occurred—not naming names
screening. respect and dignity.
but letting people know this
is not acceptable.
Establish specific
policies defining theft Openly communicate Use the services of
and fraud and discipline the costs of stealing. professional investigators.
procedures.
Let employees know on

Involve employees a regular basis about their
Redesign control measures.
in writing policies. successes in preventing
theft and fraud.
Evaluate your organ-

Educate and train Use video surveillance
ization’s culture and the
employees about the equipment if conditions
relationships of managers
policies. warrant.
and employees.
Install “lock-out” options on computers,

Have a professional telephones, and e-mail.
review of your internal
Use corporate hotlines for reporting incidences.
security controls.
Set a good example.
Source: Robbins, Stephen P., Coulter, Mary, Management, 13th Ed., © 2016, p. 541. Reprinted and
electronically reproduced by permission of Pearson Education, Inc., New York, NY.
wHat Can Managers Do aBout workPlaCe violenCe? In January 2015, a

cardiologist at Boston’s Brigham and Women’s Hospital was gunned down by a man
whose mother had been operated on by the doctor and subsequently died. After kill-
ing the cardiologist, the man shot himself. In September 2014, a man who was recently
fired walked into the UPS he had worked at and killed two individuals and then took his
own life. In April 2014, an individual who worked as a baggage handler opened fire at
a FedEx facility near Atlanta injuring six employees. In August 2010, a driver about to
lose his job at Hartford Distributors in Hartford, Connecticut, opened fire killing eight
other employees and himself. In July 2010, a former employee at a solar products manu-
facturer in Albuquerque, New Mexico, walked into the business and opened fire, killing
two people and wounding four others. On November 6, 2009, in Orlando, Florida, an
engineer who had been dismissed from his job for poor performance returned and shot
and killed one person while wounding five others. This incident happened only one day
after a U.S. Army psychiatrist went on a shooting rampage at Fort Hood Army post,
killing 13 and wounding 27.47 These are just a few of the deadly workplace attacks in
recent years. Is workplace violence really an issue for managers? Yes. Despite these
examples, thankfully, the number of workplace shootings has decreased.48 However, the
U.S. National Institute of Occupational Safety and Health still says that each year, some
2 million American workers are victims of some form of workplace violence. In an aver-
age week, one employee is killed and at least 25 are seriously injured in violent assaults
by current or former coworkers. And according to a Department of Labor survey, 58
percent of firms reported that managers received verbal threats from workers.49 Anger,
rage, and violence in the workplace are intimidating to coworkers and adversely affect
their productivity. The annual cost to U.S. businesses is estimated to be between $20 bil-
lion and $35 billion.50 And office rage isn’t a uniquely American problem. A survey of
aggressive behavior in Britain’s workplaces found that 18 percent of managers say they
have personally experienced harassment or verbal bullying, and 9 percent claim to have
experienced physical attacks.51
What factors are believed to contribute to workplace violence? Undoubtedly, employee
stress caused by job uncertainties, declining value of retirement accounts, long hours, infor-
mation overload, other daily interruptions, unrealistic deadlines, and uncaring managers play
a role. Even office layout designs with small cubicles where employees work amidst the noise
and commotion from those around them have been cited as contributing to the problem.52
Other experts have described dangerously dysfunctional work environments characterized by
the following as primary contributors to the problem:53
• Employee work driven by TNC (time, numbers, and crises)

• Rapid and unpredictable change where instability and uncertainty plague employees
• Destructive communication style where managers communicate in excessively aggressive,
condescending, explosive, or passive-aggressive styles; excessive workplace teasing or
scapegoating
• Authoritarian leadership with a rigid, militaristic mind-set of managers versus employees;
employees not allowed to challenge ideas, participate in decision making, or engage in
team-building efforts
• Defensive attitude with little or no performance feedback given; only numbers count; and
yelling, intimidation, or avoidance as the preferred ways of handling conflict
• Double standards in terms of policies, procedures, and training opportunities for managers
and employees
• Unresolved grievances due to an absence of mechanisms or only adversarial ones in place
for resolving them; dysfunctional individuals protected or ignored because of long-standing
rules, union contract provisions, or reluctance to take care of problems
• Emotionally troubled employees and no attempt by managers to get help for these people
• Repetitive, boring work and little chance for doing something else or for new people coming in
• Faulty or unsafe equipment or deficient training, which keeps employees from being able
to work efficiently or effectively
• Hazardous work environment in terms of temperature, air quality, repetitive motions, over-
crowded spaces, noise levels, excessive overtime, and so forth; to minimize costs, a failure
Exhibit 14–8 Controlling Workplace Violence
FeedForWard ConCurrent FeedbaCK

Ensure management’s commitment Use MBWA (managing by walking around) to Communicate openly about
to functional, not dysfunctional, work identify potential problems; observe how violent incidents and what’s
environments. employees treat and interact with each other. being done.
Provide employee assistance Allow employees or work groups to “grieve” Investigate incidents and take
programs (EAPs) to help employees during periods of major organizational change. appropriate action.
with behavioral problems. Be a good role model in how you treat others. Review company policies and
Enforce organizational policy that any Use corporate hotlines or some other change, if necessary.
workplace rage, aggression, or mechanism for reporting and investigating
violence will not be tolerated. incidents.
Use careful prehiring screening. Use quick and decisive intervention.
Never ignore threats. Get expert professional assistance if violence erupts.
Train employees about how to avoid Provide necessary equipment or procedures for
danger if a situation arises. dealing with violent situations (cell phones, alarm
Clearly communicate policies to system, code names or phrases, and so forth).
employees.
Sources: Based on M. Gorkin, “Five Strategies and Structures for Reducing Workplace Violence,” Workforce Management Online,
December 3, 2000; “Investigating Workplace Violence: Where Do You Start?” Workforce Management Online, December 3, 2000;
“Ten Tips on Recognizing and Minimizing Violence,” Workforce Management Online, December 3, 2000; and “Points to Cover in a
Workplace Violence Policy,” Workforce Management Online, December 3, 2000.
to hire additional employees when workload becomes excessive, leading to potentially dan-
gerous work expectations and conditions
• Culture of violence perpetuated by a history of individual violence or abuse, violent or ex-
plosive role models, or tolerance of on-the-job alcohol or drug abuse
Reading through this list, you surely hope that workplaces where you’ll spend your pro-
fessional life won’t be like this. However, the competitive demands of succeeding in a 24/7
global economy put pressure on organizations and employees in many ways.
What can managers do to deter or reduce possible workplace violence? Once again, the
concept of feedforward, concurrent, and feedback control can help identify actions that man-
agers can take.54 Exhibit 14–8 summarizes several suggestions.
MyManagementLab®
Go to mymanagementlab.com to complete the problems marked with this icon .
14 Review
CHAPTER SUMMARY
14-1 Explain the nature and importance of control. 14-3 Discuss the types of controls organizations
and managers use.
Control is the management function that involves monitoring
activities to ensure that they’re being accomplished as planned Feedforward controls take place before a work activity is
and correcting any significant deviations. done. Concurrent controls take place while a work activity is
As the final step in the management process, controlling being done. Feedback controls take place after a work activity
provides the link back to planning. If managers didn’t control, is done.
they’d have no way of knowing whether goals were being met. Financial controls that managers can use include finan-
Control is important because (1) it’s the only way to know cial ratios (liquidity, leverage, activity, and profitability) and
whether goals are being met and, if not, why; (2) it provides infor- budgets. One information control managers can use is an MIS,
mation and feedback so managers feel comfortable empowering which provides managers with needed information on a regu-
employees; and (3) it helps protect an organization and its assets. lar basis. Others include comprehensive and secure controls,
such as data encryption, system firewalls, data backups, and
14-2 Describe the three steps in the control so forth, that protect the organization’s information. Also, bal-
process. anced scorecards provide a way to evaluate an organization’s
performance in four different areas rather than just from the
financial perspective.
The three steps in the control process are measuring, compar-
ing, and taking action. Measuring involves deciding how to
measure actual performance and what to measure. Comparing 14-4 Discuss contemporary issues in control.
involves looking at the variation between actual performance
and the standard (goal). Deviations outside an acceptable range Adjusting controls for cross-cultural differences may be neces-
of variation need attention. sary, primarily in the areas of measuring and taking corrective
Taking action can involve doing nothing, correcting the actions.
actual performance, or revising the standards. Doing nothing is Workplace concerns include workplace privacy, employee
self-explanatory. Correcting the actual performance can involve theft, and workplace violence. For each of these, managers
different corrective actions, which can either be immediate or ba- need to have policies in place to control inappropriate actions
sic. Standards can be revised by either raising or lowering them. and ensure that work is getting done efficiently and effectively.
diSCuSSion QueStionS
14-1 What is the role of control in management? 14-8 “Every individual employee in an organization
14-2 Describe four methods managers can use to acquire plays a role in controlling work activities.” Do you
information about actual work performance. agree with this statement, or do you think control is
something that only managers are responsible for?
14-3 Planning and controlling are the opposite sides of the
Explain.
same coin. Do you think this statement is true at all
levels of organizational hierarchy? Why or why not? 14-9 What are some work activities in which the acceptable
range of variation might be higher than average? What
14-4 Contrast feedforward, concurrent, and feedback controls.
about lower than average? (Hint: Think in terms of the
14-5 Feedback control is after the fact. Illustrate why its use output from the work activities, whom it might affect,
may be perceived as a disadvantage for any organization. and how it might affect them.)
14-6 In Chapter 8 we discussed the “white-water rapids” 14-10 How could you use the concept of control in your
view of change. Do you think it’s possible to establish personal life? Be specific. (Think in terms of feed-
and maintain effective standards and controls in this forward, concurrent, and feedback controls as well
type of environment? Discuss. as specific controls for the different aspects of your
14-7 Why is it that what is measured is more critical to the life—school, work, family relationships, friends,
control process than how it is measured? hobbies, etc.)
464
MyManagementLab
Go to mymanagementlab.com for the following Assisted-graded writing questions:
14-11 Why is it important for managers to understand the 14-13 MyManagementLab Only – comprehensive writing
control process? assignment for this chapter.
14-12 Discuss the various types of tools used to monitor
and measure organizational performance.
Management Skill Builder | diSCiPlining diFFiCult

eMPloyeeS
Almost all managers will, at one time or another, have to deal with employees who are difficult. There is
no shortage of characteristics that can make someone difficult to work with. Some examples include being:
short-tempered, demanding, abusive, angry, defensive, complaining, intimidating, aggressive, narcissistic, ar-
rogant, and rigid. Successful managers have learned how to cope with difficult people.
PERSoNAL INVENToRy ASSESSMENT P I A

PERSONAL
INVENTORY
ASSESSMENT
Workplace discipline indicator

Disciplining, especially with difficult employees, is usually not a manager’s favorite
thing to do. But it is important. Take this PIA and discover how you prefer to discipline
employees.
Skill Basics • Try polite confrontation. If you can’t avoid the difficult
person, consider standing up to them in a civil but firm
No single approach is always effective in dealing with difficult
manner. Let them know that you’re aware of their behavior,
people. However, we can offer several suggestions that are
that you find it unacceptable, and that you won’t tolerate it.
likely to lessen the angst these people create in your life and
For people who are unaware of the effect their actions have
may have some influence in reducing their difficult behavior.55
on you, confrontation might awaken them to altering their
• Don’t let your emotions rule. Our first response to a dif- behavior. For those who are acting purposefully, taking a
ficult person is often emotional. We get angry. We show clear stand might make them think twice about the conse-
frustration. We want to lash out at them or “get even” when quences of their actions.
we think they’ve insulted or demeaned us. This response is • Practice positive reinforcement. We know that positive
not likely to reduce your angst and may escalate the other reinforcement is a powerful tool for changing behavior.
person’s negative behavior. So fight your natural tenden- Rather than criticizing undesirable behavior, try reinforc-
cies and keep your cool. Stay rational and thoughtful. At ing desirable behaviors with compliments or other positive
worst, while this approach may not improve the situation, comments. This focus will tend to weaken and reduce the
it is also unlikely to encourage and escalate the undesirable exhibiting of the undesirable behaviors.
behavior.
• Recruit fellow victims and witnesses. Finally, we know
• Attempt to limit contact. If possible, try to limit your con- strength lies in numbers. If you can get others who are also
tact with the difficult person. Avoid places where they hang offended by the difficult person to support your case, several
out and limit nonrequired interactions. Also, use commu- positive things can happen. First, it’s likely to lessen your
nication channels—like e-mail and text messaging—that frustrations because others will be confirming your percep-
minimize face-to-face contact and verbal intonations. tion and can offer support. Second, people in the organization
with authority to reprimand are more likely to act when com- Mark is the vice president of company operations. He has
plaints are coming from multiple sources. And third, the dif- been with the company for eight years. Your first impression of
ficult person is more likely to feel pressure to change when Mark was that he was a “know-it-all.” He was quick to put you
a group is speaking out against his or her specific behaviors down and acted as if he was your superior rather than an equal.
than if the complaint is coming from a single source. Based on comments you’ve heard around the offices, it seems
you are not alone. Other executives all seemed to agree that
Mark is a brilliant engineer and operations manager but very
Practicing the Skill difficult to work with. Specific comments you’ve heard include
“an abrasive attitude”; “talks down to people”; “arrogant”;
Read through this scenario and follow the directions at the end
“thinks everyone is stupid”; and “poor listener.”
of it:
In your short time in the new job, you’ve already had sev-
Your career has progressed even faster than you thought pos- eral run-ins with Mark. You’ve even talked to your boss, the
sible. After graduating from college with an accounting degree, company president, about him. The president’s response wasn’t
you passed your CPA exam and worked three years for a major surprising: “Mark isn’t easy to deal with. But no one knows
accounting firm. Then you joined General Electric in their fi- this company’s operations like he does. If he ever leaves, I
nance department. Two employers and four jobs later, you have don’t know how we’d replace him. But, that said, he gives me
just been hired by a Fortune 100 mining company as their vice a lot of grief. Sometimes he makes me feel like I work for him
president for finance. What you didn’t expect in the new job rather than the other way around.” Describe what you could do
was having to deal with Mark Hundley. to improve your ability to work with Mark.
Collins State College, School of Accountancy Experiential Exercise

To: Matt Wrobeck, Ethics Committee Chair
From: Dr. Rebecca Rodriguez, Director
Re: Minimizing student cheating
Matt, you’ve probably heard that several of our faculty Keep your list brief (around a page) and send it to me by
members want to develop some specific controls to minimize the end of the week. I’d like to get this out to our entire faculty
opportunities for our students to cheat on homework assign- at our next scheduled monthly meeting.
ments and exams. As the ethics committee chair, I’d like you to This fictionalized organization and message were created for educational
work with them on developing some suggestions. As you look purposes only, and not meant to reflect positively or negatively on manage-
at this topic, please think in terms of ways to control cheating ment practices by any company that may share this name.
(1) before it happens, (2) while in-class exams or assignments
are being completed, and (3) after it has happened.
CaSe aPPliCation # 1
Top Secret
“P
risons are easier to enter than Visa’s top-secret castle moat, which was also designed as protection. There
Operations Center East (OCE), its biggest, newest are also hundreds of security cameras and a superb security
and most advanced U.S. data center.”56 And Rick team of former military personnel. If you’re lucky enough to
Knight, senior vice president at Visa and formerly the head be invited as a guest to OCE (which few people are), you’ll
of global operations and engineering, is responsible for its have your photo taken and right index fingerprint encoded
security and functioning. Why all the precautions? Because on a badge. Then you’re locked into a “mantrap portal”
Visa acknowledges that (1) hackers are increasingly savvy, where you put your badge on a reader that makes sure you
(2) data is an increasingly desirable black-market commodity, are you, and then put it on another reader with your finger
and (3) the best way to keep on a fingerprint detector. If
itself safe is with an informa- you make it through, you’re
tion network in a fortress that Prisons are easier to enter than clear to enter the network op-
instantly responds to threats. Visa’s OCE! erations center. With a wall
In a year’s time, Visa pro- of screens in front of them,
cesses more than 91.6 billion each employee sits at a desk
retail electronic payments from around the globe. And every with four monitors. In a room behind the main center, three
day, Visa’s system connects up to 2.2 billion debit and credit top-notch security experts keep an eye on things. Knight says
cards, millions of acceptance locations, 2.1 million ATMs, and that “about 60 incidents a day warrant attention.”
14,400 financial institutions.57 Visa, which completes an an- Although hackers are a primary concern, OCE also wor-
nual “stress test” of its system in preparation for the holiday ries about network capacity. Right now, maximum capacity is
season, recently processed a peak volume of 56,000 messages currently at 56,000 transactions per second. If the network goes
per second.58 (Do some math on that and be amazed!) So what over that capacity, the network wouldn’t just stop processing
seems to us a simple swipe of a card or keying in our card one message, it would stop processing all of them. OCE is de-
numbers on an online transaction actually triggers a robust set scribed as a “Tier-4” center, which is a certification from a data
of activities including the basic sales transaction processing, center organization. To achieve that certification, every (and
risk management, and information-based services. That’s why yes, we mean every) mainframe, air conditioner, and battery
OCE’s workers have two jobs: “Keep hackers out and keep has a backup.
the network up, no matter what.” And that’s why Visa doesn’t
reveal the location of OCE—on the eastern seaboard is as spe- Discussion Questions
cific as the description gets.
14-14 Is Visa being overly cautious? Why or why not?
Beneath the road leading to the OCE, hydraulic posts
14-15 Why is this level of managerial controls necessary?
can rise up fast enough to stop a car going 50 miles per
14-16 Which controls would be more important to Visa: feedfor-
hour. And a car won’t be able to go that fast or it will miss ward, concurrent, or feedback? Explain.
a “vicious hairpin turn” and drive off into a drainage pond. 14-17 What other managerial controls might be useful to the
Back in medieval days, that would have been known as the company?
If You Can’t Say Something Nice, Don’t Say Anything at All
C
ontrolling employee performance is a vitally important their future with the organization. These “career outlook” dis-
responsibility of managers. After all, it’s your employ- cussions focus more on where an employee fits in, rather than
ees who are working to accomplish established goals, on where they screwed up. The company also encourages its
and you want to see that those goals are being accomplished staff to send shout-outs via e-cards praising colleagues or sub-
as planned. So wouldn’t it seem that managing employees’ ordinates for work done. Managers have also allocated money
performance would cover the good and the not-so-good? Well, to further reward positive accomplishments.
some organizations are encouraging managers to lighten up on But there are companies not following this positivism
the harsh feedback and focus only on the positive.59 trend. These companies take a more “tough-love” approach
At consulting firm the Boston Consulting Group, man- and don’t shy away from giving negative feedback. For in-
agers now frequently praise employees, encourage them to stance, at Netflix, CEO Reed Hasting’s view is that they’re a
celebrate even small victories, “pro sports team, not a Little
and conduct performance re-
views focusing on an individ-
No Negativism Allowed! League squad,” noting that
“adequate performance gets a
ual employee’s strengths in- generous severance package.”
stead of any mistakes that may have happened. And managers Not everyone in the company is going to get a trophy. There’s
are to bring up only one or two areas that require improvement little doubt as to what that company’s performance expecta-
and development. It never used to be this way. When employ- tions are.
ees didn’t do a good job with a client’s assignment, managers
would focus on what went wrong and where and how the em- Discussion Questions
ployee needed to improve and develop his or her skills. This
14-18 Is controlling employee performance an important responsi-
shift towards more positive feedback occurred after the com-
bility of managers? Discuss.
pany noticed some employees leaving the company and other
14-19 Why should managers focus on positive feedback?
employees who were still upset for a period of time after a
14-20 What are the risks associated with providing employees only
negative performance review. And BCG isn’t the only company
positive feedback and providing limited feedback on areas of
taking this approach. Others are increasing the use of positive improvement?
feedback and minimizing any discussion of the areas that need
14-21 Where would you be more comfortable? An organization with
improvement. At PricewaterhouseCoopers LLP, for instance, a performance review approach more like the Boston Consult-
managers are asked to have discussions with employees about ing Group or more like Netflix? Why?
Too Relaxed
A
s yoga classes gained in popularity, one company that Lululemon was founded by Dennis (Chip) Wilson, who
had benefited greatly was Lululemon. In fact, at one had noticed in his yoga class that other students’ yoga pants
point, it was on Fortune’s Fastest-Growing Companies became see-through when they bent over after class to roll up
List three years in a row. Company executives had positioned their mats. Having just sold his surf/skateboard/snowboard
the company as a lifestyle brand and customers were hooked clothing company, he sensed an opportunity to pair his ex-
and loyal. Then, a rare stumble happened. The company had pertise in “technical” athletic wear with the surging demand
to recall a large batch of its signature black “Luon” yoga pants by yoga enthusiasts. What he developed was revolutionary!
because the fabric was too sheer.60 Instead of following what others had done—essentially cutting
down men’s workout wear and then selling them in feminine hit 12 percent, Lululemon had no choice but to pull the pants
colors—Wilson believed that women would prefer working out off the store shelves. The CEO at that time said the pants had
in clothes that actually fit them. So, in addition to fashionable passed quality assurance tests, but admitted that the only way
styles, he concentrated on technical elements including seam- to actually quality test the product was to put them on and bend
less stitching and breathable fabrics. And surprise, surprise: over. And the company hadn’t done that … until it was too late.
women were willing to pay $100 or more for his company’s That was in 2013, and the company is still trying to get
workout clothes. Lululemon was off and running. Like many back to where it was in terms of customer loyalty and sales
smaller companies, executives numbers. Although the com-
focused on the product and not pany’s core business is still
so much on the “infrastruc- Losing your pose… women, it is seeing strong
ture” side of the business (hu- growth in men’s and girl’s
man resources, IT, finance). That works … up to a point. When businesses. It’s no longer one of the fastest-growing compa-
the chief information officer was hired, she actually found it nies, but it has certainly learned something about the impor-
fairly easy to implement the technology she felt was needed tance of control!
because there wasn’t really anything in place to work around.
One area where former executives felt focus was lacking Discussion Questions
was in the production area. No rigorous manufacturing model 14-22 What type (or types) of control—feedforward, concurrent, or
was in place. There were no schedules or deadlines. The com- feedback—do you think would have been helpful in this situ-
pany countered that by saying it wanted to remain flexible. But ation? Explain your choice.
the manufacturing weakness was also evident in the lack of 14-23 Using Exhibit 14–2, discuss if and how this situation could
people who had expertise in the technical aspects of clothing have been prevented.
manufacturing, such as quality control or control over raw ma- 14-24 Could Lululemon’s controls have been more effective? How?
terials. Which brings us to the problem of sheer yoga pants— 14-25 What role would information controls play in this situation?
yoga pants being a core product of the company. As customers Customer interaction controls? What other controls do you
began returning the product and as the product complaint rate think might have been useful?
Endnotes
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Too Good to Be True on Walmart’s L. D. McNary, “Thinking about 2003, 32–34; K. Ellis, “A Ticket to field, and K. Maher, “Snooping
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Foundations

gaps and areas for improvement. Things

is the final step in the management process.

Managers must monitor whether goals that

they control. Appropriate controls can help contemporary issues in control. •

14-1 Explain the nature and importance of control. p. 445

What Is Control and Why Is It Important?

How do you know a control system is effective? Look at

Why Is Control Important?

77 percent of executives say that the biggest threat

1. Planning. In Chapter 5, we described goals, which provide specific direction to em-

Exhibit 14–1 Planning–Controlling Link

they fear something will go wrong for

Specific goals ARE the performance standards.

How Do Managers Measure? Four common sources of information frequently

Exhibit 14–2 The Control Process

Seventy-three percent of employers have taken efforts to

wHat Do Managers Measure? What managers measure is probably more critical

◂◂◂ From the Past to the Present ▸ ▸ ▸

2 How Do Managers Compare Actual Performance

Exhibit 14–3 Acceptable Range of Variation

t t+1 t+2 t+3 t+4 t+5

3 What Managerial Action Can Be Taken?

How Do You CorreCt aCtual PerforManCe? Depending on what the problem

Exhibit 14–4 Example of Determining Significant Variation: Green Earth Gardening

ProduCt Standard aCtual over (under)

What Should Managers Control?

When Does Control Take Place?

Exhibit 14–5 “When” Does Control Take Place?

Input Processes Output

Feedforward Concurrent Feedback

Anticipates Corrects problems Corrects problems

wHat is feeDforwarD Control? The most

wHen is ConCurrent Control useD? Concurrent control, as its name implies,

Fifty-five percent of employees say that micromanaging

1 Keeping track of an organization’s Finances

Want to earn a profit?

leverage ratios: Total debt

2 Keeping track of organization’s information

• Can be manual or computer-based,

▸▸▸ in 2014—79,700 reported security incidents

in place to protect important information.

3 Keeping track of employee Performance

• Are employees doing their jobs as planned

Over 81 percent of managers say they don’t

Sharifulin Valery/Itar-Tass Photos/Newscom

Managers should: develop goals for each of the

What Contemporary Control Issues Do

Do Controls Need to Be Adjusted for Cultural Differences?

::::::: Technology and the Manager’s Job :::::::

What Challenges Do Managers Face in Controlling the Workplace?

Sixty-eight percent of employees admit to using company

is MY work CoMPuter reallY Mine? If

Global employee fraud is estimated to cost organizations

Exhibit 14–7 Controlling Employee Theft

FEEDFORWARD CONCURRENT FEEDBACK

Let employees know on

Evaluate your organ-

Install “lock-out” options on computers,

wHat Can Managers Do aBout workPlaCe violenCe? In January 2015, a

• Employee work driven by TNC (time, numbers, and crises)

Exhibit 14–8 Controlling Workplace Violence

FeedForWard ConCurrent FeedbaCK

Management Skill Builder | diSCiPlining diFFiCult