MGT 420

PRINCIPLES & PRACTICES Part 5 Control Challenges in the 21st Century

OF MANAGEMENT
Topic
8
Controlling

MGT 420
 LEARNING OBJECTIVES
When you have finished studying this chapter, you
should be able to:
1. Define and discuss the importance of organizational control.
2. Identify the sequence of steps/process to be undertaken in a
thorough control system.
3. Describe the various criteria of effective control.
4. Identify the factors that help determine the proper amount of
control.
5. Define feed-forward control, concurrent control, feedback
control and multiple focal points.
6. Describe the difference between the philosophies of
bureaucratic control and organic control.
7. Discuss some of the ethical issues related to the control of
employee behavior.

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Organizational Control Defined
• Organizational Control
 The systematic process through which managers
regulate organizational activities to make them
consistent with the expectations established in plans,
and to help them achieve all predetermined standards
of performance.
• This definition implies that leaders must:
 Establish performance standards.
 Develop mechanisms for gathering performance
information in order to assess the degree to which
standards are being met.

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Importance of Controlling
• Assists managers in the management process of planning,
organizing , leading and motivating.
 By determining what & when is necessary and the way it is
required
• It deals with the change or uncertainty.
• Controlling activities deal with complexity.
 Helps to coordinate activities and accomplish integration
• Control also deals with human limitations (mistakes).
 Helps to spot the mistakes and enable managers to make
correction
• It ensures delegation and decentralization are operated
smoothly.
 Enables managers to check on performance

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Figure 15.1 Steps in the Control Process

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Control Process
• Set performing standards
 A target against which performance is compared
• Measure actual performance
 What, when and how frequent to measure
• Compare actual performance with standards
 Determine if there is any deviation in performance
• Responding to deviations
 Take corrective or no corrective actions

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Criteria for Effective Control
• Related to Organizational Strategy
 A control system should measure what is important
now and what will be important in the future… not what
was important in the past.
• Uses All Steps in the Control Process
 To be effective, a control system must employ all of the
steps in the control process.
• Composed of Objective and Subjective Measures
 Effective control systems typically require managers to
blend quantitative (objective) and qualitative
(subjective) performance measures.

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Criteria for Effective Control (cont’d)
• Incorporates Timeliness in Feedback Reporting
 Timeliness is the degree to which the control system
provides information when it is needed.
• Acceptable to a Diverse Work Force
 To be effective, organizational controls must be
accepted by employees.
 The control system should motivate workers to
recognize standards and act to achieve them.
• Economically realistic
 Cost of implementing should be small than the
benefits derived from it.

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Selecting the Proper Amount of Control
• Costs in Control Systems
 Two basic categories of costs need to be considered
relative to control systems:
 The costs associated with the information needed
to perform the control process.
 The costs associated with undesirable deviations
from standards.

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Figure 15.4 Cost Trade-Offs in a Control System

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Selecting the Proper Amount of Control
(cont’d)
• Reliability of the System
 Reliability refers to the probability that the object or
process being controlled will consistently behave in
an acceptable manner.
 The basic premise is that the more reliable the
process, the less control that is needed.
• Importance of the Process Being Controlled
 The more important the object or process being
controlled, the greater the amount of control that
should be exercised.

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Selecting the Focal Point for Control
• Feed-forward (Preventive) Control
 Focuses on detecting undesirable material, financial, or human
resources that serve as inputs to the transformation process.
• Concurrent Control
 Focuses on the transformation process to ensure that it is
functioning properly.
• Feedback (Corrective) Control
 Focuses on discovering undesirable output and implementing
corrective action.
• Multiple Focal Points
 Most organizations use several control systems focused on
various phases of the transformation process.

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Figure 15.5 Control Focal Points

Pre-process In-process Post-process

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Control Philosophies for Leaders
• Bureaucratic Control
 Use of formal mechanisms to influence behavior,
assess performance, and correct unacceptable
deviations from standards.
 Use of rules, procedures, policies, SOPs and hierarchy
of authority.
• Organic Control (“Clan Control”)
 Reliance upon social values, traditions, shared beliefs,
flexible authority, and trust to assess performance and
correct unacceptable deviations.
 Suitable more where there is a strong organizational
culture and values shared by all employees.

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Bureaucratic versus Organic Controls

Bureaucratic Control Organic Control

Task-oriented Relationship-oriented
management style management style

Culture favors decision Culture encourages

making at the top employee participation

Employees that lack Highly educated, highly

education and experience trained employees

Performance that can be Performance that is

quantified and measured difficult to measure

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 Table 15.2 Bureaucratic and Organic Methods of Control

Bureaucratic Organic
Purpose Employee compliance Employee commitment

Technique Rigid rules and policies, Corporate culture, individual self-

strict hierarchy, formalized discipline, cohesive peer groups,
selection and training selection and socialization

Performance Clearly defined standards Emphasizes group or system

expectation of individual performance performance

Organizational Tall structure, top-down controls Flat structure, mutual influence

structure Rules and procedures for Shared values, goals, and traditions
coordination and control for coordination and control
Authority resides in position Authority resides with knowledge
and expertise

Rewards Based upon individual employee Based upon group achievements

achievements and equity across employees

Participation Formalized and narrow Informal and broad

Source: Adapted and reprinted by permission of Harvard Business Review. An exhibit from “From Control to Commitment in the
Workplace” by R. E. Walton, March/April 1985, 76–85. Copyright © by the President and Fellows of Harvard College. All rights
reserved. 15–16
Selecting A Control Style In Today’s Diverse
And Multinational Organizations
• Top-level leaders are faced with a dilemma in
choosing a control style for their organization.
• Managers should evaluate:
 Individual management style
 Organizational culture
 Employee professionalism
 Performance measures.
• The choice of a control style is contingent on all
of these situational factors.

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Impact of Information Technology on
Organizational Control
• Technological advances and improvements
serve to:
 Get critical control information to managers in a more
timely fashion.
 Allow managers to make the proper control
responses more quickly.
 Disseminate the information on those decisions more
quickly so that the negative consequences associated
with out-of-control situations can be minimized.

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Ethical Issues in the Control of a Diverse
Work Force
• Drug Testing • Computer Monitoring
 Pre-employment testing  Privacy in communications
 Testing current employees  Measuring performance
 Random  Liability for harassment
 Probable cause
 Accident

• Undercover Surveillance
 Internal security
 External security
 Electronic devices

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Implications for Leaders
• Develop a control system for each important
product, service, process, or activity within the
organization.
• Incorporate sufficient variety, sensitivity,
anticipation capability, and feedback into the
control system.
• Determine the appropriate points within the
organization where control systems should be
focused.

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Implications for Leaders (cont’d)
• Gauge the control system’s effectiveness by:
 Considering its relationship to corporate strategy.
 Its completeness.
 The degree to which it incorporates objective and
subjective performance measures.
 Its timeliness.
 Its acceptability to individuals within the organization.
• Adopt a philosophy of control that is consistent
with the management style, corporate culture,
employee professionalism, and performance
measures present within the organization.
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