Topic 8Part 5 Control Challenges in the 21st CenturyMGT 420PRINCIPLES & PRACTICES OF MANAGEMENTControllingMGT 420

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15*Define and discuss the importance of organizational control.Identify the sequence of steps/process to be undertaken in a thorough control system.Describe the various criteria of effective control.Identify the factors that help determine the proper amount of control.Define feed-forward control, concurrent control, feedback control and multiple focal points. Describe the difference between the philosophies of bureaucratic control and organic control.Discuss some of the ethical issues related to the control of employee behavior.

LEARNING OBJECTIVESWhen you have finished studying this chapter, you should be able to:

15*Organizational Control DefinedOrganizational ControlThe 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.

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

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15*Figure 15.1 Steps in the Control Process

Control ProcessSet performing standardsA target against which performance is comparedMeasure actual performanceWhat, when and how frequent to measureCompare actual performance with standardsDetermine if there is any deviation in performanceResponding to deviationsTake corrective or no corrective actions15*

15*Criteria for Effective ControlRelated to Organizational StrategyA 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 ProcessTo be effective, a control system must employ all of the steps in the control process.Composed of Objective and Subjective MeasuresEffective control systems typically require managers to blend quantitative (objective) and qualitative (subjective) performance measures.

15*Criteria for Effective Control (contd)Incorporates Timeliness in Feedback ReportingTimeliness is the degree to which the control system provides information when it is needed.Acceptable to a Diverse Work ForceTo be effective, organizational controls must be accepted by employees.The control system should motivate workers to recognize standards and act to achieve them.Economically realisticCost of implementing should be small than the benefits derived from it.

15*Selecting the Proper Amount of ControlCosts in Control SystemsTwo 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.

15*Figure 15.4 Cost Trade-Offs in a Control System

15*Selecting the Proper Amount of Control (contd)Reliability of the SystemReliability 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 ControlledThe more important the object or process being controlled, the greater the amount of control that should be exercised.

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

15*Figure 15.5 Control Focal Points

15*Control Philosophies for LeadersBureaucratic ControlUse 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.

15*Bureaucratic versus Organic Controls

Bureaucratic ControlOrganic ControlTask-oriented management styleRelationship-oriented management styleCulture favors decision making at the topCulture encourages employee participationEmployees that lack education and experienceHighly educated, highly trained employeesPerformance that can be quantified and measuredPerformance that is difficult to measure

15*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 performanceperformance Organizational Tall structure, top-down controlsFlat 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, 7685. Copyright by the President and Fellows of Harvard College. All rights reserved.

15*Selecting A Control Style In Todays Diverse And Multinational OrganizationsTop-level leaders are faced with a dilemma in choosing a control style for their organization.Managers should evaluate:Individual management styleOrganizational cultureEmployee professionalismPerformance measures.The choice of a control style is contingent on all of these situational factors.

15*Impact of Information Technology on Organizational ControlTechnological 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.

15*Ethical Issues in the Control of a Diverse Work ForceDrug TestingPre-employment testingTesting current employeesRandomProbable causeAccidentUndercover SurveillanceInternal securityExternal securityElectronic devicesComputer MonitoringPrivacy in communicationsMeasuring performanceLiability for harassment

15*Implications for LeadersDevelop 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.

15*Implications for Leaders (contd)Gauge the control systems 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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