Achieving Organizational Control

Learning Goals
1. Explain the foundations of control 2. Identify the six phases of the corrective control model 3. Describe the primary methods of organizational control

Chapter 10: PowerPoint 10.1

 Processes for ensuring that performance, behaviors and decisions conform to an organizations standards and legal requirements, including its rules, policies, procedures, and goals. How controls and planning support each other
Controls help ensure that decisions, actions, and results are consistent with plans Controls help maintain or redirect actual behaviors and results toward those desired in plans Controls help provide essential information needed to plan Plans indicate the purposes to be served by controls
Chapter 10: PowerPoint 10.2

Control Function in Management

Ensures adjustment or conformity to objectives Ensures adjustment or conformity to specifications Control

Regulates activities /performance

Regulates behavior

Controls Feedback Loop

Planning

Control

Feedback

Changes in

Organizing

Types of control
Feed forward Control/Preventive Concurrent Control Feedback Control/Corrective

 Mechanisms intended to reduce the likelihood of an unwanted event and thereby minimize the need for corrective action. ATM security, Air traffic Controller. A few forms:
1. 2. 3. 4. Rules and regulations Standards Recruitment and selection procedures Training and development programs

Chapter 10: PowerPoint 10.3

Corrective Controls
Mechanisms intended to reduce or eliminate unwanted behaviors or results and thereby return the situation to conformity with the organizations regulations and standards. Customer tracking, News letter, Hotline Number, employee surveillance, Tracking data, HR Control A few forms:
1. 2. 3. 4. Direct supervision and feedback Disciplinary action Procedures for reporting misconduct Monthly or even daily financial reports

Chapter 10: PowerPoint 10.4

Source of Control
Stakeholders

Preventive
Maintaining quotas for hiring personnel in protected class Env. Protection agencies Using budgets to guide expenditures

Corrective
Changing recruitment policies to attract qualified personnel

Organization

Disciplining an employee for violating a No Smoking safety regulation in a hazardous area

(continued)

Chapter 10: PowerPoint 10.5 (Adapted from Table 10.1)

Source of Control
Group

Preventive
Advising a new employee about the groups norm in relation to expected level of output Deciding to skip lunch in order to complete a project on time

Corrective
Harassing and socially isolating a worker who doesnt conform to group norms Revising a report you have written because you are dissatisfied with it

Individual

Chapter 10: PowerPoint 10.6 (Adapted from Table 10.1)

Objective controls Complete control

Acceptable controls

To Achieve Strategic Goals Timely controls

Chapter 10: PowerPoint 10.7 (Adapted from Figure 10.1)

How Much Organizational Control?

Core questions
1. For what desired behaviors and results should organizational controls be developed? E.g. Span of Control 2. What are the costs and benefits of the organizational controls required to achieve the desired behaviors and results?
3. What are the costs and benefits of utilizing alternative controls; such as self-managed teams, informal peer control, or individual self-control?

Chapter 10: PowerPoint 10.8

1. Define the System

2. Identify Key Characteristics

3. Set Standards

4. Collect Information

If okay continue

5. Make Comparisons 6. Diagnose and Correct Problems

If deviations

Chapter 10: PowerPoint 10.13 (Figure 10.3)

Bureaucratic & Clan Controls

Chapter 10: PowerPoint 10.15 (Figure 10.4)

 Bureaucratic control (Formal) emphasizes on organizational authority, prescribed administrative and hierarchical mechanisms such as rules and regulations, policies, standardization of activities, Budgets. Clan control (informal) regulates employees behavior by shared values, norms, beliefs and other aspects of org. culture. E.g. Dells culture of customer service, speed and flexibility.

Mechanistic Control Methods

Use of detailed rules and procedures whenever possible Top-down authority, with emphasis on positional power

Organic Control Methods

Use of detailed rules and procedures only when necessary Flexible authority, with emphasis on expert power and networks of influence

Activity-based job descriptions that prescribe day-to-day behaviors

Results-based job descriptions that emphasize goals to be achieved

(continued)

Chapter 10: PowerPoint 10.16 (Adapted from Table 10.2)

Mechanistic Control Methods

Emphasis on extrinsic rewards (wages, pensions, status symbols) Distrust of teams, based on an assumption that team goals conflict with organizational goals

Organic Control Methods

Emphasis on both extrinsic and intrinsic rewards (meaningful work) Use of team, based on an assumption that team goals and norms assist in achieving organizational goals

Chapter 10: PowerPoint 10.17 (Adapted from Table 10.2)

 The collection and evaluation of data related to sales, prices, costs, and profits for guiding decisions and evaluating results. Profit sharing, Customer Monitoring, membership Market controls require:
1. The costs of the resources used in producing outputs to be measured monetarily 2. The value of the goods and services produced to be defined clearly and priced monetarily 3. The prices of the goods and services produced to be set competitively
Chapter 10: PowerPoint 10.18

 Mechanisms for preventing or correcting the misuse and misallocation of resources, especially monetary resources Comparative financial control: evaluation of a firms financial condition for two or more time periods. Eg.CA firms. Ratio analysis: selecting two significant figures (or a combination of a number of figures), expressing their relationship as a fraction or percent, and comparing the value for two or more periods of time Example: return on investment (ROI) ratio is net profit before tax divided by net worth and is a measure of the efficiency of total assets in generating net profits
Chapter 10: PowerPoint 10.19

 Budgetary control: the process of monitoring, comparing, and evaluating actual expenditure levels in various categories in relation to budgeted amounts, and making changes as needed during the budget time period Purposes of budgeting 1. Help in planning work effectively 2. Assist in allocating resources 3. Aid in controlling and monitoring resource utilization during the budget period
Chapter 10: PowerPoint 10.20

Common Types of Budgets in a Business

Sales budget Capital budget

Materials budget

Research and development budget

Labor budget

Cash budget

Chapter 10: PowerPoint 10.21

 Automation: the use of self-regulating devices and processes that operate independently of people

Machine control: utilizes self-regulating instruments or devices to prevent and correct deviations from preset standards
In continuous process or robotic operations, machines control other machines
Chapter 10: PowerPoint 10.22