MONITORING

AND
CONTROLLING

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 LEARNING OBJECTIVES
1. Explain the nature and importance of control.
2. Describe the three steps in the control process.
3. Explain how organizational and employee performance are
measured.
 Know how to be effective at giving feedback.
4. Describe tools used to measure organizational
performance.
5. Discuss contemporary issues in control.
 Develop your skill at dealing with difficult people.

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 WHAT IS CONTROLLING?

 Controlling – the process of monitoring,

comparing, and correcting work performance.
• The Purpose of Control
– To ensure that activities are completed in ways
that lead to the accomplishment of
organizational goals.

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 WHY IS CONTROLLING IMPORTANT?

As the final link in management functions:

– Planning – controls let managers know whether their
goals and plans are on target and what future actions
to take.
– Empowering employees – control systems provide
managers with information and feedback on
employee performance.
– Protecting the workplace – controls enhance physical
security and help minimize workplace disruptions.

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 EXHIBIT 18-1
PLANNING-CONTROLLING LINK

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 THE CONTROL PROCESS

Control process – a three-step process of

measuring actual performance, comparing
actual performance against a standard, and
taking managerial action to correct deviations or
inadequate standards.

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 EXHIBIT 18-2
THE CONTROL PROCESS

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 THE CONTROL PROCESS (CONT.)

Step 1: Measuring Actual Performance

– How We Measure – personal observations,
statistical reports, oral reports, and written
reports.
– What We Measure – what is measured is
probably more critical to the control process than
how it’s measured.

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SOURCES OF INFORMATION FOR
MEASURING PERFORMANCE

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 Sources of Information for
Measuring Performance
• Management By
Walking Around
(MBWA)
– When a manager is
out in the work area
interacting with
employees

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 THE CONTROL PROCESS (CONT.)

Step 2: Comparing Actual Performance

Against the Standard:
– Determining the degree of variation between
actual performance and the standard.
– Range of variation – the acceptable
parameters of variance between actual
performance and the standard.

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 THE CONTROL PROCESS (CONT.)

Step 3: Taking Managerial Action

– Immediate corrective action – corrective
action that corrects problems at once in order
to get performance back on track.
– Basic corrective action – corrective action
that looks at how and why performance
deviated before correcting the source of
deviation.

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 THE CONTROL PROCESS (CONT.)

Step 3 (cont.)
– Revise the Standard – if performance
consistently exceeds the goal, then a
manager should look at whether the goal is
too easy and needs to be raised.
– Managers must be cautious about revising a
standard downward.

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 EXHIBIT 18-6
MANAGERIAL DECISIONS
IN THE CONTROL PROCESS

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 TYPES OF CONTROL
• Feed forward control – control that takes
place before a work activity is done.
• Concurrent control – control that takes place
while a work activity is in progress.
• Feedback control – control that takes place
after a work activity is done.

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 EXHIBIT 18-9
TYPES OF CONTROL

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TOOLS FOR MEASURING ORGANIZATIONAL
PERFORMANCE

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 FINANCIAL CONTROLS

 Traditional Controls

– Ratio analysis
• Liquidity
• Leverage
• Activity
• Profitability
– Budget Analysis
• Quantitative standards
• Deviations

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 EXHIBIT 18-10
POPULAR FINANCIAL RATIOS

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 THE BALANCED SCORECARD
Balanced scorecard – a performance
measurement tool that examines more than
just the financial perspective.
– Measures a company’s performance in four
areas:
• Financial
• Customer
• Internal processes
• People/innovation/growth assets

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BENCHMARKING OF BEST PRACTICES

Benchmarking – the search for the best

practices among competitors or non-competitors
that lead to their superior performance.
• Benchmark – the standard of excellence to
measure and compare against.

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 WHAT IS ORGANIZATIONAL
PERFORMANCE?
Performance – the end result of an
activity.
• Organizational performance – the
accumulated results of all the organization’s
work activities.

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 MEASURES OF ORGANIZATIONAL
PERFORMANCE
Productivity– the amount of goods or services
produced divided by the inputs needed to
generate that output.
• Organizational effectiveness – a measure of
how appropriate organizational goals are and
how well those goals are being met.

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 CONTROLLING FOR EMPLOYEE
PERFORMANCE

Disciplinary actions – actions taken by a

manager to enforce the organization’s work
standards and regulations.
• Delivering Effective Performance Feedback –
managers need to provide their employees with
feedback so that the employees know where
they stand in terms of their work.

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TYPES OF DISCIPLINE PROBLEMS AND
EXAMPLES OF EACH

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 CONTEMPORARY ISSUES IN CONTROL
(CONT.)

Employee theft – any unauthorized taking of

company property by employees for their
personal use.
• Workplace Violence – the U.S. National Institute
of Occupational Safety and Health still says that
each year, some 2 million American workers are
victims of some form of workplace violence.

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 EXHIBIT 18-12
CONTROLLING EMPLOYEE THEFT

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REVIEW QUESTIONS

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EXERCISES –CHOOSE ONE BEST ANSWER

1) Which of the following management responsibilities determines if

organizational goals are being achieved? 1) _______

A) formulating business strategy B) designing the organization's structure

C) measuring firm performance D) motivating employees

2) Mark wants to use a tool which is easy to visualize and effective for
showing relationships. Which of the following tools is best suited for this?
2) _______

A) statistical reports B) written reports

C) balanced scorecard D) benchmarking

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EXERCISES –CHOOSE ONE BEST ANSWER

3) If a manager investigates how and why performance has deviated beyond the
acceptable range of variation, and then corrects the source of the deviation, she
is using ________. 3) _______

A) concurrent control B) feedback control

C) basic corrective action D) immediate corrective action

4) Which of the following observations best explains why the control function is
important? 4) _______
A) Organizational strategies are formed during the controlling stage.
B) An effective control system includes employee empowerment.
C) An effective control system is the only way managers know whether
organizational goals are being met.
D) An effective control system assures that the organization will meet or exceed
its goals.

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EXERCISES –CHOOSE ONE BEST ANSWER

5) The control process assumes that ________. 5) _______

A) managers will be aware of the actions and activities of their employees
B) feedback is the only way to improve performance
C) performance standards are already in place
D) employee monitoring costs are part and parcel of doing business

6) Which of the following sources of information for measuring

performance is subject to personal biases, time consuming, and
obtrusive? 6) _______

A) oral reports
B) statistical reports
C) personal observations
D) written reports

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 EXERCISES –CHOOSE ONE BEST ANSWER

7) ________ corrects the problem at once to get performance back on track. 7)

_______
A) Immediate corrective action B) Verbal feedback
C) Disciplinary action D) Basic corrective action

8) The goal for the sales team at the auto dealership was to sell one new car per day
every day of the month. In August the team sold 33 cars. What should management
do? 8) _______

A) Revise the goal. If the team sold more than the goal, obviously the goal is too low
B) Wait. See if the performance is duplicated next month before taking any action.
C) Nothing. The deviation is insignificant.
D) Celebrate. Any achievement beyond the goal is deserving of a celebration.

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 EXERCISES –CHOOSE ONE BEST ANSWER

9) In order to increase the ratio of outputs to inputs, a manager would have

to ________. 9) _______
A) increase the quality of inputs
B) hire additional employees
C) increase productivity
D) decrease the selling price

10) Organizational ________ is a measure of how appropriate

organizational goals are and how well an organization is achieving those
goals. 10) ______

A) Effectiveness B) efficiency C) yield D) productivity

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 TRUE OR FALSE
1. Control is the process of monitoring and evaluating activities to ensure that
they are being accomplished as planned. T
2. The criterion that determines the effectiveness of a control system is how well
it reduces unnecessary costs. F
3. Control is the only managerial function that allows managers to make sure that
organizational goals are being met. T
4. Motivation and leadership are two primary parts of the control function. F
5. The control process is a two-step process that measures and compares. F
6. MBWA can pick up moods and attitudes that other forms of measurement
miss. T
7. What is measured in the control process is often less critical than how it is
measured. F

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TRUE OR FALSE
8. A gap between actual performance and planned goals that falls within an
acceptable range of variation usually requires managerial action. F
9. A single business cannot experience both underperformance and over-
performance at the same time. F
10. Immediate corrective action might include changing the way employees are
paid for their work. T
11. The key to feed forward controls is taking action while the problem is
occurring. F
12. A spell-checker that corrects words as you type in a word processing program
is an example of feed forward control. F
13. The major drawback of feedback control is that by the time the manager has
the information, the problem has already occurred. T

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