1. Chapter 18 FOUNDATIONS OF CONTROL © 2003 Pearson Education Canada Inc.18.1

2. LEARNING OBJECTIVES You should be able to: – Define control – Describe the three approaches to control – Explain why control is important – Describe the control process – Distinguish among the three types of control – Describe the qualities of an effective control system 18.2

3. © 2003 Pearson Education Canada Inc. LEARNING OBJECTIVES (continued) You should be able to: – Discuss the contingency factors that influence the design of an organization’s control system – Identify how controls need to be adjusted for cultural differences – Explain how three contemporary issues - workplace privacy, employee theft, and workplace violence - affect control 18.3

4. © 2003 Pearson Education Canada Inc. WHAT IS CONTROL? Control – The process of monitoring activities to ensure that they are being accomplished as planned and of correcting significant deviations – Control systems are judged in terms of how well they facilitate goal achievement Three basic approaches to control – Market control - emphasizes the use of external market mechanisms to establish standards of performance 18.4

5. © 2003 Pearson Education Canada Inc. WHAT IS CONTROL? (continued) Three basic approaches to control (continued) – Bureaucratic control - emphasizes organizational authority and relies on administrative rules and procedures – Clan control - behaviour regulated by shared values, traditions, and other aspects of organizational culture 18.5

6. © 2003 Pearson Education Canada Inc. WHY IS CONTROL IMPORTANT? Control is the Final Link in the Management Process – Provides the critical link back to planning – Only way managers know whether organizational goals are being met Permits delegation of authority – Fear that employees will do something wrong for which the manager will be held responsible – Provides information and feedback on employee performance 18.6

7. Structure Human Resource Management Organizing THE PLANNING-CONTROLLING LINK (Exhibit 18.2) Standards Measurements Comparisons Actions Controlling Goals Objectives Strategies Plans Planning Motivation Leadership Communication Individual and Group Behaviour Leading © 2003 Pearson Education Canada Inc.18.7

8. THE CONTROL PROCESS (Exhibit 18.3) 18.8

9. © 2003 Pearson Education Canada Inc. THE CONTROL PROCESS Controlling is a three-step process Assumes that performance standards already exist – specific goals are created in the planning process Measuring – How We Measure personal observation - permits intensive coverage – Management By Walking Around (MBWA) – drawbacks - subject to personal biases 18.9

10. © 2003 Pearson Education Canada Inc. THE CONTROL PROCESS (continued) Measuring (continued) – How We Measure (continued) statistical reports - numerical data are easy to visualize and effective for showing relationships – drawbacks - not all operations can be measured oral reports - includes meetings, telephone calls – may be best way to control work in a virtual environment – technology permits creation of written record from oral report – drawbacks - filtering of information 18.10

11. © 2003 Pearson Education Canada Inc. THE CONTROL PROCESS (continued) Measuring (continued) – How We Measure (continued) – written reports - often more comprehensive and concise than oral reports usually easy to file and retrieve – comprehensive control efforts should use all four approaches 18.11

12. © 2003 Pearson Education Canada Inc. THE CONTROL PROCESS (continued) Measuring (continued) – What We Measure what we measure more critical than how we measure control criteria applicable to any management situation: – employee satisfaction, absenteeism, and turnover – keeping costs within budgets – Control system needs to recognize the diversity of activities – Some activities difficult to measure in quantifiable terms 18.12

13. © 2003 Pearson Education Canada Inc. THE CONTROL PROCESS (continued) Comparing – Determines the degree of variation between actual performance and standard – Acceptable range of variation - deviations that exceed this range become significant 18.13

14. DEFINING THE ACCEPTABLE RANGE OF VARIATION (Exhibit 18.4) Acceptable Upper Limit Standard Acceptable Lower Limit Measurement of Performance Acceptable Range of Variation tt+1t+2t+3t+4t+5 Time Period (t) © 2003 Pearson Education Canada Inc.18.14

15. CANUCKBREW’S SALES PERFORMANCE FOR JULY (Exhibit 18.5) Brand Alexander Keith Big Rock Warthog Okanagan Spring Moosehead Olands Export Ale McAuslan’s Granville Island Unibroue’s Nelson After Dark Total cases Standard* 1,075 630 800 620 540 160 225 80 170 4,300 Actual* 913 634 912 622 672 140 220 65 286 4,464 Over (under)* (162) 4 112 2 132 (20) (5) (15) 116 164 * hundreds of cases © 2003 Pearson Education Canada Inc.18.15

16. THE CONTROL PROCESS (continued) Taking Managerial Action – Correct Actual Performance - action taken when the performance variation is unsatisfactory immediate corrective action - corrects problems at once to get performance back on track basic corrective action - identifies reason for performance variation – Revise the Standard - variance results from an unrealistic standard standard, not performance, needs correction 18.16

17. © 2003 Pearson Education Canada Inc. MANAGERIAL DECISIONS IN THE CONTROL PROCESS (Exhibit 18.6) 18.17

18. © 2003 Pearson Education Canada Inc. TYPES OF CONTROL Feedforward Control – prevents anticipated problems – most desirable type of control – requires timely and accurate information that often is difficult to get Concurrent Control – takes place while activity is in progress – corrects problem before it becomes too costly – best-known form is direct supervision 18.18

19. © 2003 Pearson Education Canada Inc. TYPES OF CONTROL (continued) Feedback Control – Takes place after the activity is done – Problems may already have caused damage or waste – The most popular type of control – Feedback has two advantages provides meaningful information on the effectiveness of planning can enhance employee motivation 18.19

20. TYPES OF CONTROL (Exhibit 18.7) InputOutputProcesses Anticipates problems Feedforward Control Corrects problems after they occur Feedback Control Corrects problems as they happen Concurrent Control © 2003 Pearson Education Canada Inc.18.20

21. Flexibility QUALITIES OF AN EFFECTIVE CONTROL SYSTEM (Exhibit 18.8) Strategic Placement Understandability Reasonable Criteria EFFECTIVE CONTROL SYSTEM Timeliness Multiple Criteria Corrective Action Accuracy Economy Emphasis on Exceptions © 2003 Pearson Education Canada Inc.18.21

22. CONTINGENCY FACTORS IN THE DESIGN OF CONTROL SYSTEMS (Exhibit 18.9) 18.22

23. © 2003 Pearson Education Canada Inc. IMPLICATIONS FOR MANAGERS Adjusting Controls for Cultural Differences – Methods of controlling people and work can be quite different in other countries – In technologically advanced nations, controls are indirect – In less technologically advanced nations, controls are more direct – Laws in different countries provide different constraints on corrective action – Data used for controlling may not be comparable in different countries 18.23

24. © 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN CONTROL Workplace Privacy – Employers have the right to monitor employee communications, examine employee computers and files, and use surveillance cameras – Reasons for monitoring include prevention of: recreational on-the-job Web surfing creation of hostile work environments with e-mail security leaks of critical information 18.24

25. © 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN CONTROL (continued) Workplace Privacy (continued) – Companies are developing and enforcing workplace monitoring policies develop unambiguous computer usage policy inform employees that computers may be monitored provide clear guidelines on acceptable use of company e-mail system and the Web 18.25

26. © 2003 Pearson Education Canada Inc. WORKPLACE MONITORING (Exhibit 18.10) Track telephone calls (numbers and time spent)39% Store and review employee e-mail messages27% Store and review computer files21% Log computer time and keystrokes entered15% Record and review telephone conversations11% Store and review voice-mail messages 6% 18.26

27. © 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN CONTROL (continued) Employee Theft – Unauthorized taking of company property by employees for their personal use – Is an escalating problem in all types of organizations – Different proposals to explain employee theft 18.27

28. © 2003 Pearson Education Canada Inc. CONTROL MEASURES FOR DETERRING OR REDUCING EMPLOYEE THEFT (Exhibit 18.11) 18.28

29. © 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN CONTROL (continued) Workplace Violence – Many factors contribute to workplace violence including: employee work driven by time, numbers, and crises rapid and unpredictable change destructive communication style of manager authoritarian leadership defensive attitude double standards unresolved grievances emotionally troubled employees repetitive, boring work 18.29