TOPIC 7

CONTROLLING

Nature of Control
Definition:- The regulation of organizational
activities to facilitate goal attainment.
How does control help the manager?
- An effective control system ensures
that activities are completed aligned to
organizations goals.
- Without control, organizations have no
indication of how well they are
performing in relation to their goals.

Controlling
Definition:- a process to ensure that actual activities
conform to planned activities.
- a process of monitoring performance and
taking action to ensure desired results.

The Importance/Purpose of Control

Adapt to
environmental change

Limit the
accumulation of error

Control helps the organization

Cope with organizational

complexity

Minimize costs

The Importance/Purpose of Control

1. Adapt to environmental change

changes between the time when goals were set

and time for implementation.
- help managers to anticipate, monitor and
respond to changes.

2. Limit the accumulation of error

small mistakes can seriously damage the

financial condition of an organization if left/
accumulated without solution.
- control can help reduce small mistakes to recur.

The Importance/Purpose of Control

3. Cope with organizational complexity
- control is helpful for organization with complex
structure, complicated organizational design.
- i.e.: merger of large firms.

4. Minimize costs
- when control is practiced effectively, it can
reduce costs and boost output (less mistakes
and error)

Controlling Process

Steps in the Control Process

Step 1: Establish Standard
A control standard is a target against which
subsequent performance will be compared
i.e. Employees at Taco Bell work toward the following
standards:
A min of 95% of all customers will be greeted within 3 min
of their arrival, empty table will be cleaned within 5 min after
being vacated

Standards established for control purposes should

be expressed in measurable terms
Control standard should be consistent with
organizations goals
i.e. Taco Bell goals involving customer service, food
quality and restaurant cleanliness

Steps in the Control Process

Step 2: Measuring Performance
Performance measurement is a
constant, ongoing activity for most
organizations.
Measurement must be valid i.e.
Daily, weekly, monthly sales figures measure
sales performance
Productivity performance may be expressed in
terms of unit cost, product quality, or volume
produced
Employees performance is measured in terms
of quality or quantity of output

Valid performance measurement is

vital in maintaining effective control

Steps in the Control Process

Step 3: Compare Performance Against
Standard
Comparing measured performance against
established standards
If performance is lower, therefore analysis
should be conducted and remedial action
must be taken

Steps in the Control Process

Step 4: Determine Need for Corrective
Action
The need for corrective action
After comparing performance against
control standard, one of three actions is
appropriate:
Maintaining the status quo (do nothing)
Correct the deviation
Change the standard

Types of Control

Feedforward Control (Pre-Action Control)

Control that focuses on preventing anticipated problems before they arise
i.e. screening job applicants-view their resume, have several interviews-to
choose highly skilled people- lessens the chances of hiring less skilled
people

Concurrent Control (Steering Control)

A control that takes place while work activity is in progress
i.e. direct supervision-oversees wrong doing of an employee-correct them
immediately-before much damage/waste

Screening Control (Yes or No Control)

Specify check points that must be successfully passed before an activity
proceeds further
Before proceeding to the next sequence, an activity, product or service must
be approved or meet specific conditions
i.e. cheque clearing (to get confirmation from the person issuing the
cheque)

Post-Action Control (Corrective Control)

Controlling takes place after an action is completed
If there is problem, corrective action is taken and applied to future activities

Characteristics of Effective Control

Accuracy

Timeliness

An effective control system should suggest what action to

be taken when deviation occurs

Economy

Must be exercised at all level of management and

obtainable by all levels of employees

Corrective Action

Leaves room for modification to fit new circumstances

Consistent with Organizations Structure

Control system should be designed to measure what is

important now and in the future

Flexibility

Standard must be understandable and measurable.

Strategic & Result Oriented

Info must be collected and evaluated quickly to enable

managers to solve problems on time.

Objective and Comprehensive

Information needed for controlling must be accurate.

Economical to operate

Reasonable Criteria

Logic, reasonable, attainable

Effective Control System

Timeliness

Consistent with
orgs structure

Economy

Flexibility

Accuracy
EFFECTIVE
CONTROL
SYSTEM

Corrective
Action

Objectivity

Strategic &
Result Oriented

Reasonable
Criteria

Barriers to Successful Control

Game Playing
Managers attempt to improve their standing by
manipulating resources usage.

Over-control
Organization try to control too many things
Limiting individuals job autonomy.

Under-control
Granting a lot of autonomy to individualsorganization losses its ability to direct
individuals effort towards achieving
organizations goal.

Inappropriate focus
Control system may be narrow or focus too
much and leave no room for analysis.

Too much accountability

People who do not want to be answerable for
their mistakes or who do not want to work as
hard as their boss might resist control.

How Can Resistance to Control Be

Overcome?
Encourage Employee
Participation
When employees are involved
with planning and
implementing the control
system, they are less likely to
resist.

Develop verification
Procedures
Verification procedures need
to be developed to provide
checks and balances in order
for managers to verify the
accuracy of performance
indicators.

Characteristics of Effective Control System

1. Accuracy (information)

A control system that generates inaccurate

information can result in managements neglecting
to take action when it should or responding to a
problem that does not exist. An accurate control
system is reliable and produces valid data

2. Timely

Must provide timely information. Information must be

collected and evaluated quickly to enable managers
to solve problems on time. The best information has
little value if is dated

2007 Prentice Hall, Inc. All rights reserved.

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Characteristics of Effective Control System

3. Flexibility
Must be flexible enough to adjust to adverse
change or to take advantage of new
opportunities

4. Objective & Comprehensive

The control system should provide
information that is as objective and
comprehensive as possible

2007 Prentice Hall, Inc. All rights reserved.

1818

Characteristics of Effective Control System

5. Understandable & reasonable

Standard set in the control system must be
understood by all members of the
organization. A control system that is
difficult to understand can cause
unnecessary mistakes, frustrate
employees, and eventually be ignored
Control standard must be reasonable and
attainable. If they are too high or
unreasonable, they no longer motivate.
2007 Prentice Hall, Inc. All rights reserved.

1819

Characteristics of Effective Control System

6. Acceptable by organizational members

Should be able to motivate workers to recognize

the importance of standards and engage
themselves in an appropriate behavior to achieve
them. The more committed the employees to the
control system the more successful the
organization will be

7. Consistent with organizations

structure

Controlling must be exercised at all levels of

management and must be obtainable by all levels
of employees who work within the organization

2007 Prentice Hall, Inc. All rights reserved.

1820

Characteristics of Effective Control System

8. Focused on strategic control points

The control system should be designed to

measure what is important now and what will be
important in the future and not what was important
in the past

9. Utilize all steps of the control process

An effective control system should not ignore any

one step of the controlling process. Omitting any
of these steps will fracture the overall control
system and the future of the organization will be
doubtful

2007 Prentice Hall, Inc. All rights reserved.

1821

Characteristics of Effective Control System

10.Corrective action
An effective control system should be able
to suggest what action to be taken to
correct deviations and also indicates when
a deviation from standard occurs. Any
problem detected should come up with
appropriate solutions

2007 Prentice Hall, Inc. All rights reserved.

1822

EXTRA NOTES
Reliability of a control tool, or system, is the
same thing as the reliability of a test used to
select the best candidate for a job.