1. Welcome to AB140
Control

2. In Unit 5……
We learned…..
How to Designate conclusions to management issues
The difference between managing and leading
Aspects of employee motivation

3. Unit 5 Review What are the differences between leading and managing?
Can good managers be good leaders?
Can you manage but not lead?
Can you lead but not manage?

4. Questions?

5. Unit 6 Objectives Distinguish between the four functions of management
Explain the significance of control systems in business
Summarize the design of a formal control system

6. Control Systems
Process that directs activities toward the achievement of organizational goals
Ensuring plans are being carried out
This can include budgets, targets, policies, procedures, regulations.
Control is one of the four primary functions of management
Control is any process that directs activities toward the achievement of organizational goals
Formal Control Systems (also referred to as Bureaucratic Control Systems) measure progress toward organizational goals, making corrections and adjustments as needed.
Management control 1. set performance standards 2. design information feedback systems 3. compare actual performance with these predetermined standards 4. determine whether there are any deviations and to measure their significance 5.take action

7. Why do companies need control systems?

8. Spinning out of control?
Lax top management
Absence of policies
Lack of agreed-upon standards
“Shoot the messenger” management
Lack of periodic reviews
Bad information systems
Lack of ethics in the culture
I know no one works for a company like this!

9. Different Types of Control
Bureaucratic Control
Market Control
Clan Control
There are three broad strategies for achieving organization control. Starting with Bureaucratic Control, what do we mean by this? Do your organization use this type?
Bureaucratic Control - the use of rules, regulations, and authority to guide performance
Market Control - control based on the use of pricing mechanisms and economic information to regulate activities within organizations
Clan Control - control based on the norms, values, shared goals, and trust among group members
Focus our discussion today on bureaucratic control.
Bureaucratic control is the use of rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms to influence employee behavior and assess performance. Bureaucratic control can be used when behavior can be controlled with market or price mechanisms.
Market control involves the use of price competition to evaluate output. Managers compare profits and prices to determine the efficiency of their organization. In order to use market control, there must be a reasonable level of competition in the goods or service area and it must be possible to specify requirements clearly.
Market control is non appropriate in controlling functional departments, unless the price for services is set through competition and its representative of the true value of provided services.
Clan control represents cultural values almost the opposite of bureaucratic control. Clan control relies on values, beliefs, corporate culture, shared norms, and informal relationships to regulate employee behaviors and facilitate the reaching of organizational goals.
Organization that use clan control require trust among their employees. Given minimal direction and standards, employees are assumed to perform well - indeed, they participate in setting standards and designing the control systems.
Where would bureaucratic control work? Nuclear power plants, functional activities
Market control? Competitive businesses
Clan? Software companies, MicroSoft, Google,

10. The Control Process Management: Bateman/Snell
Setting Performance Standards
Measuring Performance
Comparing performance against the standards and determining deviations
Taking action to correct problems and reinforce successes
Management: Bateman/Snell

11. Step 1 of Control Systems
SETTING PERFORMANCE STANDARDS
Goals
Profitability
Customer Satisfaction
Level of expected performance
- expected performance for a given goal, a target that establishes a desired performance level; motivates performance, and serves as a benchmark against which actual performance is assessed
What are some goals of your organization?
Quantity
Quality
Time used
Cost

12. Step 2 of Control Systems
2. MEASURING PERFORMANCE
Collect Data
How can you collect the data? Written reports, Oral reports, Personal observations
Key is providing timely feedback.
How are performance goals measured in your workplace?

13. Step 3 of Control Systems
COMPARE PERFORMANCE
Standards
Determine deviations
The book talks about focusing on the exceptions. They apply the principle of exception is deciding where to focus management efforts. They look at the expected results and focus on the areas that do not meet expectations.
What methods do you or your managers use to perform this step?

14. Step 4 of Control Systems
4. TAKE ACTION
Correct problems
Reinforce success
This step ensures that operations are adjusted to achieve the planned results or to continue exceeding the plan if that is the desired outcome. When variations occur, managers must act.
Can you name some methods that managers use to correct problems or reinforce successes in your workplace?
Has anyone been in an organization that uses a team approach to solve problems?
Creates buy-in
Experts are solving the problem
Digging deeper to resolve issue

16. Bureaucratic Control – 3 Types
Feedforward control
Concurrent control
Feedback control
Feedforward Control - the control process used before operations begin, including policies, procedures, and rules designed to ensure that planned activities are carried out properly. Feedforward controls are desirable because they allow management to prevent problems rather than having to cure them later. Unfortunately, these control require timely and accurate information that is often difficult to develop. Examples?
Concurrent control - the control process used while plans are being carried out, including directing, monitoring, and fine-tuning activities as they are performed. Concurrent control takes place while an activity is in progress. It involves the regulation of ongoing activities that are part of transformation process to ensure that they conform to organizational standards. Concurrent control is designed to ensure that employee work activities produce the correct results. Since concurrent control involves regulating ongoing tasks, it requires a through understanding of the specific tasks involved and their relationship to the desired and product. Checkpoints Examples?
Feedback Control - Control that focuses on the use of information about previous results to correct deviations from the acceptable standard. Sometimes, feedback is the only viable type of control available. Moreover, feedback has two advantages over feedforward and concurrent control. First, feedback provides managers with meaningful information on how effective its planning effort was. If feedback indicates little variance between standard and actual performance, this is evidence that planning was generally on target. If the deviation is great, a manager can use this information when formulating new plans to make them more effective. Second, feedback control can enhance employees motivation.
The major drawback of this type of control is that, the time the manager has the information and if there is significant problem the damage is already done. But for many activities, feedback control fulfils a number important functions. Examples?

17. Are there downsides to this type of system?

18. Are there downsides to this type of system?
Rigid bureaucratic behavior
Tactical behavior
Resistance
Rigid bureaucratic behavior occurs when control systems prompt employees to stay out of trouble by following the rules. It promotes rigid, inflexible behavior geared toward doing only what the system requires.
Tactical behavior is when employees manipulate information or report false performance data in order to “beat the system.”
Finally, people tend to resist control systems. Why?
Good systems make employees more accountable.
Control systems can change the social structure of an organization. They create competition and disrupt social groups and friendships
Control systems may be seen as an invasion of privacy, lead to lawsuits, and cause low morale

19. How can we develop effective control systems?

20. Effective Control Systems
Systems based on valid performance standards
Communicate adequate information to employees
Acceptable to employees
Use multiple approaches
Effective control systems must be based on valid and accurate performance standards. The most effective standards are quantitative. You also want to make sure there are not too many measures in place
Management must communicate to employees the importance and nature of the control system. People must receive feedback about their performance
Control system must have useful performance standards but are not overcontrolling. The standards must be possible to achieve. The system should emphasize positive behavior.
Use both financial and non-financial control systems. Use Financial, customer satisfaction, business processes, and learning and growth measures

21. Audits Internal Audit External Audit
Another control system is the use of audits.
To aid in control, firms will occasionally perform audits to ensure that certain aspects of their operations are in order
Audits are used as another tool towards evaluating an organization
What is an internal audit?
What is an external audit? Why conduct these?
HR Departments are routinely audited in many companies, especially when federal regulations and compliance are involved.
Hospitals have to do internal audits of their records for certification purposes.
External Audit - an evaluation conducted by one organization, such as a CPA firm, on another. External audits can be useful if a company wants to examine another companies financial data if they are looking into a merger or takeover. You can also determine the strengths and weakness of a competitor to maintain or better exploit the competitive advantage you may have. Data is publicly available for this type of analysis.
Internal Audit - a periodic assessment of a company’s own planning, organizing, leading, and controlling processes. A company can look at things like financial stability, production efficiency, sales effectiveness, public relations
Uncover: unnecessary work, duplication of work, poor inventory control, uneconomical use of equipment and machines, procedures that are more costly than necessary, and wasted resources
Has anyone been involved in company audits? Results? Changes implemented?

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23. What’s Due This Week

24. Reading…
This week's textbook reading is Chapter 13 of the Bateman and Snell textbook. All reading materials for this course can be found in the Doc Sharing area. Additional required readings are Web Readings. Click the Web Reading icon to access them.

25. Review This week your review will be a 20 question quiz regarding POLC
You can only take the quiz ONE time!!
It must be completed/submitted within 2 hours!
If you do not complete or submit the quiz within 2 hours you cannot make up the quiz!

26. Discussion Board
Lei has some control issues within Sandwich Blitz and the managers
This week we’ll discuss the systems Lei needs to develop to deal with the issues
Don’t forget the following:
Post a minimum of three posts per discussion question. One initial response and two replies to classmates
Post on a minimum of three different days
Initial post must be completed by Saturday
Initial Post must be 100 words 
Be sure to check spelling and grammar
Ensure your responses add value and further the conversation
You cannot post to the boards late

27. Assignment
This week you’ll help Lei apply the 4 step control process to a control issue with the managers of Sandwich Blitz
Don’t forget to………
Click the PDF for detailed instructions on the assignment page
The following requirements apply:
One page double spaced paper
Proper grammar, spelling, punctuation, syntax, etc.
Don’t forget to properly reference any material used
I expect a professional paper
Submit your Assignment in the proper Dropbox for grading, as an attachment
Ensure you submit the assignment by Tuesday night at 11:59pm EST

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29. Good Night! Don’t hesitate to contact me with questions
See you January 9
Same time
Same Station!