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CHAPTER 21
Controlling, Information, and Technology
CHAPTER SUMMARY
As the scale and complexity of modern work organizations grow, the problem of control in
organizations gains in significance. Control is making things happen as planned. Controlling is
the process managers go through to control. The controlling process has three main steps: (1) to
evaluate performance, (2) to compare measured performance to standards, and (3) to take
corrective action. To evaluate performance, a unit of measure must be established, and
performance must be observed.
Corrective action is action taken to bring performance up to standard. Corrective action should
focus on planning, organizing, and influencing once the problem has been identified. The human
related aspect of controlling is power. Power is the ability to influence others. The total power of
a manager equals position power plus personal power. Managers can increase personal power by:
(1) making people feel obligated, (2) being seen as an expert in an area, (3) having others identify
with them, and/or (4) increasing perceptions that people are dependent on them. To make the
control process more effective, managers should: (1) verify that controlling suits the situation; (2)
use control to achieve many ends; (3) act on information quickly; and (4) make controlling
understood.
Data are facts or statistics. Information is conclusion derived from data analysis. The value of
information is defined in terms of the benefit that can accrue to the organization through the use
of information. Four primary factors determine the value of information: (1) information
appropriateness, (2) information quality, (3) information timeliness, and (4) information quantity.
Appropriate information is information relevant to the decision. High-quality information
represents reality. Timely information is received in time to benefit the organization. Sufficient
information is needed to justify decisions.
Evaluating information involves determining whether the expected value of the information
exceeds the expected cost. Information technology (IT) uses computers and telecommunication
devices that focus on the use of information in the performance of work. An information system
(IS) gets information to where it is needed. The six-step process for operating an IS involves:
(1) determining what information is needed, (2) gathering data to fit information needs,
(2) summarizing the data, (4) analyzing the data; (5) transmitting the data; and (6) using the
information. IS information should be appropriate for the manager receiving it.
Managing Information Systems involves managing user satisfaction and the IS workforce. As
companies become more dependent on information systems, they are more susceptible to security
issues with these systems. The Generally Accepted System Security Principles (GASSP) is a
guide to prevent security threats.
LEARNING OBJECTIVES
1. A definition of control
2. A thorough understanding of the controlling subsystem
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FUNDAMENTALS OF CONTROLLING
A. Defining Control
1. Control is making something happen the way it was planned to happen.
B. Defining Controlling
1. Controlling is the process the manager goes through to control.
2. The Controlling Subsystem (Figure 21.1)
a. The purpose of the controlling subsystem is to help managers enhance the
success of the overall management system through effective controlling.
3. The Controlling Process (See Figure 21.2)
a. Measuring Performance
ESSENTIALS OF INFORMATION
A. Data are facts or statistics.
B. Information is the set of conclusions derived from data analysis.
C. Factors Influencing the Value of Information
1. Information Appropriateness (Figure 21.3)
a. Information appropriateness is the degree to which information is relevant to
the decision-making situation that faces the manager.
b. Generally, when the appropriateness of information increases, the value of
that information also increases.
2. Operational Control, Management Control, and Strategic Planning
a. Three characteristics of information appropriate for decision-making
situations include:
1. Operational control decisions relating to ensuring specific organizational
tasks are carried out effectively and efficiently.
2. Management control decisions relating to obtaining and using the
resources necessary to reach organizational objectives.
3. Strategic planning decisions relating to determination of organizational
objectives and designating the action necessary to reach them.
3. Information Quality
a. Information quality is the degree to which information represents reality.
4. Information Timeliness
a. Information timeliness is the extent to which the receipt of information
allows decisions to be made and action to be taken so the organization can
gain some benefits from possessing the information.
5. Information Quantity
a. Information quantity is the amount of decision-related information a manager
possesses.
D. Evaluating Information (Figure 21.4)
1. The first step is determining the value of the information by pinpointing the data
to be analyzed and then determining the expected value or return to be received
from obtaining perfect information based on this data.
2. Next, this expected value should be reduced by the amount of benefit that will
not be realized because of deficiencies and inaccuracies expected to appear in the
information.
3. Then, the expected value of organizational information should be compared with
the expected cost of obtaining that information.
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VI.
3. Managing IS Security
a. As corporations rely more heavily on information systems, they become
more susceptible to security issues involving these systems.
b. The Generally Accepted System Security Principles (GASSP) was
produced by the International Information Security Foundation as a guide
to prevent security threats. Table 21.1 provides an overview of some of
the broad principles outlined in the GASSP.