Controlling and Building

Commitment

©Prentice Hall, 2000 Chapter 15 1

 Chapter Objectives
• Analyze the traditional control process
• Compare traditional and commitment-based control
• Discuss diagnostic, boundary, and interactive
control methods
• List unintended behavioral effects of controls
• Understand how belief systems and employee
commitment can expedite control
• Discuss the factors that contribute to employee
commitment
©Prentice Hall, 2000 Chapter 15 2
 Setting
The Role of a Target
Control
Measuring
Performance

Why is Control Making

Required? Corrections
©Prentice Hall, 2000 Chapter 15 3
 Timing of Controls

Steering Yes-No Post-Action

©Prentice Hall, 2000 Chapter 15 4

 Diagnostic
Diagnostic Systems
Systems

Traditional
Traditional Boundary
Boundary Systems
Systems

Interactive
Interactive Systems
Systems
Two Basic
Control
Options
Belief
Belief Systems
Systems

Commitment-
Commitment-
Based
Based
Commitment-Fostering
Commitment-Fostering
Systems
Systems

©Prentice Hall, 2000 Chapter 15 5

 Establish Standards

Measure Performance

The Traditional
Control Process
Compare to Standards

Take Corrective Action

©Prentice Hall, 2000 Chapter 15 6

 Diagnostic Controls

Management Control System

Sales
Sales Operating
Operating
Budget
Budget Budget
Budget

Income
Income Balance
Balance Cash
Cash
Statement
Statement Sheet
Sheet Budget
Budget

©Prentice Hall, 2000 Chapter 15 7

 Example of a Performance Report for
Machinery Department, June 2000

Budget Actual Variance Explanation

Direct labor
$2,107 $2,480 $373 over Overtime work
Supplies
$3,826 $4,200 $374 over Wasted Material
Repairs
$ 402 $ 150 $252 under
Overhead
$ 500 $ 500 $ 0

Total
$6,835 $7,330 $495 over

©Prentice Hall, 2000 Chapter 15 8

 Diagnostic Controls
Financial
Financial Ratios Responsibility
Centers

Enterprise Corporate
Resource Planning Scorecards

©Prentice Hall, 2000 Chapter 15 9

 Boundary
Controls
Ethical Codes of
Behavior Conduct
Strategies

©Prentice Hall, 2000 Chapter 15 10

 Interactive
Controls

Face-to-Face Strategic
Interaction Control

©Prentice Hall, 2000 Chapter 15 11

 Behavioral
Gamesmanship
Displacement

The Negative Side of Controls

Operating Attitude
Delays Problems

©Prentice Hall, 2000 Chapter 15 12

 Using Belief Systems and
Values to Foster Self-Control

Common Shared Common

Culture Values Goals

©Prentice Hall, 2000 Chapter 15 13

 Using Commitment-Building
Systems to Foster Self-Control
• Foster people-first values
• Promote two-way communication
• Build a sense of community
• Communicate a vision

©Prentice Hall, 2000 Chapter 15 14

 Using Commitment-Building
Systems to Foster Self-Control
• Practice value-based hiring

• Use financial rewards and profit sharing

• Encourage self-actualizing

©Prentice Hall, 2000 Chapter 15 15