The Meaning of Control Organizational control is the systematic process through which managers regulate organizational activities to make them consistent with expectations established in plans, targets, and standards of performance Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
Organizational Control The systematic process of regulating organizational activities Control can focus on events before, during, or after a process Three types of control Feed forward Sometimes called preliminary or preventive control Concurrent Assesses current work activities, relies on performance standards Includes rules and regulations for guiding employee tasks and behaviors Intent to ensure that work activities produce the correct results Feedback Focuses on the organization’s outputs; also called post-action or output control The American Productivity & Quality Center devoted specifically to improve organizational effectiveness
Organizational Control Focus Concurrent Control Solve Problems as They Happen Feedback Control Solves Problems After They Occur Feed forward Control Anticipates Problems Examples • Pre-employment drug testing • Inspect raw materials • Hire only college graduates Examples • Adaptive culture • Total quality management • Employee self-control Examples • Analyze sales per employee • Final quality inspection • Survey customers Focus is on Focus is on Focus is on Ongoing Processes Inputs Outputs
19.2 Feedback Control Model Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
Steps of Feedback Control Establish Standards of Performance Measure Actual Performance Compare Performance to Standards Take Corrective Action Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
Controlling Managers use a variety of measures to monitor performance: Controlling work processes Regulating employee behavior Systems for financial resources Evaluating profitability Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
Choosing Standards and Measures Common measures and controls = financial: Sales Revenue Profit More focus on measuring intangibles Customer service Increased revenue Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
Application to Budgeting Budgetary control – setting targets and monitoring expenditures Budgets list planned and actual expenditures Budgets are associated with a division or department The unit of analysis for budgeting is the responsibility center Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
Financial Control Financial Statements provide basic information for financial control Balance Sheet shows firm’s financial position Income Statement profit-and-loss statement or P&L highlights firm’s financial performance Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
Hierarchical versus Decentralized Approaches Hierarchical controls include the monitoring of behavior through rules, policies, reward systems, and written documentation Decentralized controls based on values and assumptions; rules are only used when necessary Culture is adaptive, uniting individuals and teams Managers’ approach to control is changing in many of today’s organizations Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.