Control Copyright 2019 Cengage Learning All Rights Reserved

Controlcopyright 2019 Cengage Learning All Rights Reserved May Not

Describe the basic control process Discuss the various methods that managers can use to maintain control Describe the behaviors, processes, and outcomes that today’s managers are choosing to control in their organizations Learning Outcomes LEARNING OUTCOMES ‹#› MGMT11| CH Control versus Standards Regulatory process of establishing standards to achieve organizational goals, comparing actual performance against the standards, and taking corrective action when necessary Control Basis of comparison for measuring the extent to which various kinds of organizational performance are satisfactory or unsatisfactory Standards LO 1 ‹#› MGMT11 | CH16 3 Setting Standards Standards are determined by: Ensuring whether they enable goal achievement Listening to customer feedback Benchmarking Involves: Identifying the company against which to benchmark those standards Collecting data to determine performance standards of other companies LO 1 ‹#› MGMT11 | CH16 4 Comparison to Standards and Corrective Action Comparison to standards Quality of comparison between actual performance and actual standards depends on the organization’s measurement and information systems Corrective action Involves identifying performance deviations, analyzing those deviations, and developing and implementing programs to correct them LO 1 â€#› MGMT11 | CH16 .1 Cybernetic Control Process LO 1 â€#› MGMT11 | CH16 Exhibit 6 Basic Control Mechanisms Gathers information about performance deficiencies after they occur and uses the same information to correct or prevent performance deficiencies Feedback control Gathers information about performance deficiencies as they occur, thereby eliminating or shortening the delay between performance and feedback Concurrent control Monitors performance inputs to minimize performance deficiencies before they occur Feedforward control LO 1 â€#› MGMT11 | CH16 7 Maintaining Control Control loss: Occurs when behavior and work procedures do not conform to standards To determine if control is worthwhile, managers must carefully assess: Regulation costs: Associated with implementing or maintaining control Cybernetic feasibility: Extent to which it is possible to implement each step in the control process LO 1 â€#› MGMT11 | CH16 8 Control Methods Bureaucratic control Objective control Normative control Concertive control Self-control LO 2 â€#› MGMT11 | CH16 9 Bureaucratic Control Use of hierarchical authority to influence employee behavior Involves rewarding or punishing employees for compliance or noncompliance with organizational rules, policies, and procedures Characteristics Emphasis on following rules and policies Higher resistance to change and slower response to competitors and customers LO 2 â€#› MGMT11 | CH16 Objective Control Use of observable measures of worker behavior or outputs to assess performance and influence behavior Types Behavior control: Regulation of behaviors and actions that workers perform on the job Output control: Regulation of workers’ results via rewards and incentives LO 2 â€#› MGMT11 | CH16 Normative Control Regulation of workers’ behavior and decisions through widely shared organizational values and beliefs Created in two ways Hiring based on attitudes and values Managers and employees learning about what should and shouldn't be done by observing and listening to stories recited by experienced personnel LO 2 â€#› MGMT11 | CH16 Concertive Control Regulation of workers’ behavior and decisions through work group values and beliefs Arises when firms assign work groups complete autonomy and responsibility for task completion Leads to more stress for workers to conform to expectations than bureaucratic control LO 2 â€#› MGMT11 | CH16 Self-Control or Self-Management Managers and workers control their own behavior by: Setting their own goals Monitoring their own progress Rewarding or punishing themselves for achieving or for not achieving their self-set goals LO 2 â€#› MGMT11 | CH16 Balanced Scorecard Measurement of organizational performance in the following areas: Finances Customers Internal operations Innovation and learning LO 3 â€#› MGMT11 | CH16 15 Balanced Scorecard - Advantages Forces managers to set specific goals and measure performance in the four areas Minimizes the chances of suboptimization Suboptimization: Improved performance in one part of an organization at the expense of decreased performance in another part LO 3 â€#› MGMT11 | CH16 16 Controlling Finances Cash flow analysis Balance sheets Income statements Financial ratios Budgets Economic value added (EVA) LO 3 â€#› MGMT11 | CH16 17 Economic Value Added (EVA) Amount by which company profits (revenues minus expenses minus taxes) exceed the cost of capital in a given year Cost of capital shows whether a business, division, department, profit center, or product is really paying for itself Makes managers and workers at all levels pay closer attention to their segment of the business LO 3 â€#› MGMT11 | CH16 Controlling Customer Defections Customer defections: Performance assessment in which companies: Identify which customers are likely to leave Measure the rate at which customers are leaving LO 3 â€#› MGMT11 | CH16 19 Controlling Customer Defections (continued) Advantages Impact on retention of profits Higher likelihood of receiving honest feedback Ability to determine who will leave and prevent it from happening LO 3 â€#› MGMT11 | CH16 16.5 Advantages and Disadvantages of Different Measures of Quality LO 3 â€#› MGMT11 | CH16 Exhibit 21 Innovation and Learning Perspective Involves: Continuous improvement in ongoing services and products Relearning and redesigning creation processes LO 3 â€#› MGMT11 | CH16 22 Innovation and Learning Perspective (continued) Maximizing sustainability Levels of sustainability - Waste prevention and reduction; recycle and reuse; waste treatment; and waste disposal LO 3 â€#› MGMT11 | CH16 Key Terms Control Standards Benchmarking Cybernetic Feedback control Concurrent control Feedforward control Control loss Regulation costs Cybernetic feasibility Bureaucratic control Objective control Behavior control Output control Normative control Concertive control Self-control (self-management) Balanced scorecard â€#› MGMT11 | CH16 ‹#› KEY TERMS ‹#› Key Terms (continued) Suboptimization Cash flow analysis Balance sheets Income statements Financial ratios Budgets Zero-based budgeting Economic value added (EVA) Customer defections Value ‹#› ‹#› KEY TERMS (continued) ‹#› MGMT11 | CH16 Summary Control is achieved when behavior and work procedures conform to standards and when company goals are accomplished Managers use five different methods to achieve control in their organizations Successful companies find a balance that comes from doing three or four things right â€#› HIST4 | CH6 â€#› MGMT11 | CH16 â€#› SUMMARY â€#› Chapter 16 - â€#› MGMT11 | CH16

Paper For Above instruction

Control is a fundamental management function that ensures organizational activities align with established standards and goals. It involves a systematic process of setting performance standards, measuring actual performance, comparing the two, and taking corrective actions when deviations occur. The control process is vital for maintaining efficiency, effectiveness, and competitiveness within organizations and is applicable across various organizational levels and functions.

The Basic Control Process

The control process begins with establishing standards of performance that serve as benchmarks for evaluating progress. These standards can be derived from organizational goals, customer feedback, or industry best practices through benchmarking. Once standards are set, the next step involves measuring actual performance through various monitoring mechanisms. Comparing actual results against standards highlights deviations requiring managerial intervention. Corrective actions are then implemented to address performance gaps, ensuring objectives are met and standards maintained. Effective control relies heavily on reliable measurement and information systems to ensure accuracy and timeliness of data.

Methods of Maintaining Control

Managers can employ diverse methods to maintain control, broadly categorized into bureaucratic, objective, normative, concertive, and self-control. Bureaucratic control emphasizes hierarchical authority, using rules, policies, and sanctions to influence employee behavior. It is characterized by a focus on compliance and procedures but can be resistant to change. Objective control involves measuring observable behaviors or outputs, such as workflow behaviors or results, and influencing them through incentives or regulation. Normative control is based on shared organizational values and beliefs, fostering behavior in alignment with cultural norms. It is often established through storytelling, onboarding, and shared rituals.

Concertive control arises from workgroup cohesion, shared values, and collective responsibility, especially when organizations delegate autonomy to teams. This form of control significantly influences worker behavior, often leading to high levels of conformity and shared accountability. Self-control or self-management empowers employees to set personal goals, monitor their performance, and self-reward or punish based on outcomes. This method promotes autonomy, responsibility, and engagement, contributing to organizational flexibility and innovation.

Contemporary Control Techniques

In addition to traditional methods, modern control techniques such as the balanced scorecard enable organizations to assess performance across multiple dimensions, including financial, customer, internal processes, and learning and growth (Kaplan & Norton, 1992). The balanced scorecard encourages strategic alignment, goal-setting, and continuous improvement. Financial controls, including cash flow analysis, balance sheets, income statements, ratios, budgets, and economic value added (EVA), provide quantitative measures of organizational performance and financial health (Penman, 2013).

Controlling Customer and Quality Metrics

Customer control mechanisms focus on reducing customer defections by identifying at-risk clients and implementing retention strategies. This involves tracking customer satisfaction, loyalty metrics, and departure rates, providing insights into service quality and customer relationship management (Reichheld & Sasser, 1990). Reliable measurement of customer metrics enables organizations to proactively address issues, improve service delivery, and sustain profitability.

Quality control involves various measures such as defect rates, process efficiency, and product reliability. The advantages and disadvantages of different quality measurement methods should be considered to optimize strategies for continuous improvement, aligning with Total Quality Management (TQM) principles (Evans & Lindsay, 2014).

Innovation and Learning for Sustainable Control

Organizations are increasingly adopting an innovation and learning perspective, emphasizing continuous improvement, adaptability, and sustainability. Waste reduction, reuse, and recycling are integral components of sustainable control, supporting corporate responsibility and environmental stewardship (Sroufe, 2017). Continuous learning, process redesign, and maximizing sustainability contribute to long-term organizational resilience and competitiveness (Argyris & Schön, 1996).

Challenges and Limitations of Control

Despite its importance, control processes can incur costs, and excessive control may hamper creativity and responsiveness, leading to control loss. Managers must balance regulation costs against cybernetic feasibility to determine the most effective control mechanisms. Resistance to change, bureaucratic inertia, and misaligned incentives can undermine control efforts. Therefore, selecting appropriate control methods that align with organizational culture and strategic objectives is critical.

Conclusion

Effective control involves a blend of traditional and modern techniques tailored to organizational needs. Managers must balance control costs, feasibility, and cultural factors to foster an environment of accountability, innovation, and continuous improvement. Ultimately, control is most successful when it ensures that behaviors and processes conform to standards and organizational goals while promoting adaptability and learning for future challenges.

References

• Argyris, C., & Schön, D. A. (1996). Organizational Learning II: Theory, Method, and Practice. Addison-Wesley.
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• Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard—Measures That Drive Performance. Harvard Business Review.
• Penman, S. H. (2013). Financial Statement Analysis and Security Valuation. McGraw-Hill Education.
• Reichheld, F. F., & Sasser, W. E. (1990). Zero Defections: Quality Comes to Services. Harvard Business Review.
• Sroufe, R. (2017). Integration and Innovation in Sustainability Strategies. Journal of Business Ethics.
• Merchant, K. A., & Van der Stede, W. A. (2017). Management Control Systems. Pearson Education.
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• Kaplan, R. S., & Norton, D. P. (2004). Measuring Organizational Performance in the Modern Era. Business Horizons.
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