Measurement and

Accountability
Module 15
LIS 580: Spring 2006
Instructor- Michael Crandall
 Roadmap
• Control systems
• Diagnostic systems
• Financial control- the budget
• Financial ratios
• Other systems
• Boundary control systems
• Interactive control systems
• Commitment-based control systems
• Issues in control systems
May 16, 2006 LIS580- Spring 2006 2
 What is Control?
• The process of monitoring activities to
ensure that they are being accomplished
as planned and of correcting any
significant deviations
• An effective control system ensures that
activities are completed in ways that
lead to the attainment of the
organization’s goals

Prentice Hall, 2002

May 16, 2006 LIS580- Spring 2006 3
 The Fundamentals Of An
Effective Control System
• Control
– The task of ensuring that planned activities
are getting the desired results.
– All control systems try to influence
behavior.
– Controlling involves setting a target
(planning), measuring performance
(evaluation), and taking corrective action.
– Control also applies to monitoring every
task—large and small—that is delegated.
G.Dessler, 2003

May 16, 2006 LIS580- Spring 2006 4

 Management and the Control
Process

FIGURE 14–1
G.Dessler, 2003

May 16, 2006 LIS580- Spring 2006 5

 Characteristics of Three
Approaches to Control Systems
• Market
– Uses external market mechanisms, such as price
competition and relative market share, to establish
standards used in system to gain competitive
advantage
• Bureaucratic
– Emphasizes organizational authority of
administrative and hierarchical mechanisms to
ensure appropriate employee behaviors and to
meet performance standards
• Clan
– Regulates employee behavior by the shared
values, norms, traditions, rituals, beliefs, and other
aspects of the organization’s culture
Prentice Hall, 2002
May 16, 2006 LIS580- Spring 2006 6
 Types of Control

Prentice Hall, 2002

May 16, 2006 LIS580- Spring 2006 7
 Steps in the Control Process
• Measuring actual performance
– Personal observation, statistical reports,
oral reports, and written reports
– Management by walking around (MBWA)
• Comparing actual performance against
a standard
– Comparison to objective measures:
budgets, standards, goals
– Range of variation
Prentice Hall, 2002
May 16, 2006 LIS580- Spring 2006 8
Defining an Acceptable Range of Variation

Prentice Hall, 2002

May 16, 2006 LIS580- Spring 2006 9
 Steps in the Control Process
(cont’d)
• Taking managerial action to correct deviations
or inadequate standards
– Immediate corrective action
• Correcting a problem at once to get performance back on
track
– Basic corrective action
• Determining how and why performance has deviated and
then correcting the source of deviation
– Revising the standard
• Adjusting the performance standard to reflect current and
predicted future performance capabilities

Prentice Hall, 2002

May 16, 2006 LIS580- Spring 2006 10
 The Control Process

Prentice Hall, 2002

May 16, 2006 LIS580- Spring 2006 11
 Qualities of an Effective
Control System
Accuracy Timeliness

Economy Flexibility

Understandability Reasonable criteria

Emphasis on the
Strategic placement
exception

Multiple criteria Corrective action

Prentice Hall, 2002
May 16, 2006 LIS580- Spring 2006 12
 Approaches To Maintaining
Control
• The Traditional Control Process
– Step 1: Set a standard, target, or goal.
– Step 2: Measure actual performance against
standards (observation and timing).
– Step 3: Take corrective action.
• The Commitment-Based Control Process
– Encouraging all employees to exercise
ethical self-control (as they initiate process
improvements and new ways of responding
to customers’ needs.
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 13
 Two Basic Categories of Control
Systems

FIGURE 14–4
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 14
 Types of Traditional Control
Systems
• Diagnostic controls
– A control method, such as a budget, that ensures
that standards are being met and that variances
are diagnosed and explained.
• Boundary Controls
– Policies, such as codes of conduct, that establish
rules and identify the actions and pitfalls that
employees must avoid.
• Personal/Interactive Controls
– Control methods that involve direct, face-to-face
interaction with employees so as to monitor rapidly
changing information and respond proactively to
changing conditions.
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 15
 Examples of Control Standards

FIGURE 14–3
G.Dessler, 2003

May 16, 2006 LIS580- Spring 2006 16

 The Basic Management Control
System
• Budget
– Formal financial expression of a manager’s
plans.
• Capital Budget
– Shows the expenses for equipment with a
life longer than one year.
• Operating Budget
– Shows the expected sales and/or expenses
for each of the company’s departments for
the planning period in question.
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 17
 University of Alberta Library
• How does this budget present options for
different funding levels?
• What do they use to support their arguments
for increased funding levels?
– On the positive side?
– On the negative side?
• What is going to be the hardest thing to get
approval for in this budget?
• How does the budget explain the request for
changes in their operating expenses?
May 16, 2006 LIS580- Spring 2006 18
 2005 OSE Budget
Org X1107
Account Description Amount
710110 Salaries and Wages (4.0 FTE) $304,801.00
720110 FICA $18,210.00
720114 Medicare $4,550.00
820410 Health Insurance Premium $25,991.37

Example 720600
820120
820130
820310
Summary and Special Allowances
IF Unemployment
IF Worker's Compensation Claims
IF Pension-City Retirement Sys
$0.00
$208.00
$0.00
$25,195.00

of a 820320
820490
820530
820550
IF Death Benefit Contribution
IF Dental Insurance
IF Group Fund Life Insurance
IF Long Term Disability Insurance
$48.00
$5,254.00
$181.00
$157.00

Budget
810310 IF Salaries & Wages -TEMP $0.00
Personnel Total $384,595.37
730010 Subscriptions/Publications/Books $1,000.00
730220 Office Supplies $1,500.00
730410 Equip- PCs & Other DP <$5000 $2,000.00
730450 Software Purchases $250.00
730490 Equipment-Misc <5000
741190 Services-Othr Professional/Technic* $64,520.63
810310 IF Salaries & Wages INTER - (Staff Loans)* $36,868.00
841190 Services-Othr Professional/Technic**
743550 Maintenance-Data Processing Equip $250.00
744110 Postage & Delivery Costs $200.00
744320 Training Tuition & Fees $4,000.00
744350 Out Of City Travel Costs $2,000.00
744510 Dues & Memberships $4,000.00
744575 Copying/Printing/Binding & Design $3,500.00
744520 Volunteer-Employee Recognition $750.00
842580 IF-Rentals Vehicles $750.00
Operational Total $121,588.63

TOTAL $506,184.00
* This is the half-time position OSE pays Parks for Richard Gelb.
** This is where we RECEIVE money (MOAs) from other departments

May 16, 2006 LIS580- Spring 2006 19

 2006 Budget Issue Paper
Department: OSE
BIP Title: Planning & Development Specialist II
BIP Number: OSE-02
Budget program(s) affected:
2006 GF $ 2006 Other $
Estimated $ change: $55,000*
Regular positions affected: No. of Positions: 1 Total FTE change: 1.0
Other departments affected: “All Funds”

Example Capital/Operating budget:

* The total costs of the position are estimated at $75,000. We propose that OSE cover $20,000 of that (which
constitutes about 30% of our available professional services budget for 2006), reducing the “new load” on the General
Fund to $55,000 -- less when you factor in that OSE’s budget is cost-shared with City Light and Seattle Public Utilities.

(1) Summary of BIP (100 words or less)

of a
This is a request to create a one-year Planning and Development Specialist 2 position in OSE for 2006, ending
12/31/06. This would sustain OSE’s 2005 human resource capacity, and allow us to continue to deliver on the
Mayor’s priorities and OSE’s Accountability Contract -- notably the Mayor’s Climate Protection Initiative. The
position will assume the duties currently performed by a TES employee; the position will focus primarily on
implementation of the Mayor’s Climate Protection Initiative, but may be available for other priority projects as well.

Budget
(2) Detailed explanation:
A TES Planning & Development Specialist 2 was hired in April 2005 to support implementation of the Mayor’s
Climate Protection Initiative. This position has played a key role in the development of the highly successful US
Mayors Climate Protection Agreement, and provides much-needed staff support to the Mayor’s Green Ribbon
Commission on Climate Protection, which is developing the Seattle Climate Action Plan. The Commission is due to
deliver its final report to the Mayor in December 2005; however OSE will need to retain staff capacity to ensure
completion of the final document and implementation of the strategy. Specific duties will include:
 Provide staff support to the Mayor’s Green Ribbon Commission, including conducting research and
analysis of action recommendations and preparing briefings and presentations. The Commission is a
panel of high-level business, government and civic leaders charged with developing a set of
recommendations to reduce global warming pollution in the Seattle community. Though the Commission’s
report is due to the Mayor at the end of 2005, we anticipate that the Commission’s work will continue into at
least part of 2006;
 Help write the Green Ribbon Commission’s final report to the Mayor;
 Help develop and write-up the Mayor’s implementation strategy -- a City-wide work plan that responds
to the Commission’s recommendations).
 Help develop and implement a plan for distributing and doing extensive community outreach on the
Action Plan, including a strategy for mobilizing neighborhoods and businesses behind the Plan;
 Work closely with a number of City departments and external partners (such as the Puget Sound
Clean Air Agency) to implement the report’s recommendations. For example, work with SDOT and
others to implement transportation-related recommendations; work with City Light and others to implement
energy-related recommendations; work with SPU and others to implement waste management-related
recommendations; work with Parks and others to implement forest management-related recommendations;
work with DON and others to do community outreach and mobilize neighborhood-based action;
 Develop a system for monitoring implementation progress, and produce annual progress reports as
part of overarching Environmental Action Agenda progress reporting process

(3) Anticipated outcome of change:

This conversion will ensure the successful completion and implementation of the Seattle Climate Protection Action
Plan, an important component of the Mayor’s Climate Protection Initiative.

(4) Department workforce change (regular positions to be added, abrogated, reduced in FTE or reassigned
to different programs). Include titles when known:
Addition of 1.0 FTE Planning & Development Specialist 2 for one year (2006).

May 16, 2006 LIS580- Spring 2006 20

 Performance Reporting
• Variances
– Differences between budgeted and actual
amounts.
• Audit
– A systematic process of objectively obtaining and
evaluating evidence of the firm’s performance,
judging the accuracy and validity of the data, and
communicating the results to interested users.
• Financial Ratio
– An arithmetic comparison of one financial measure
to another, generally used to monitor and control
financial performance.
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 21
 Example of a Performance
Report

FIGURE 14–6
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 22
 Widely Used Financial Ratios

FIGURE 14–7a
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 23
 Widely Used Financial Ratios
(cont’d)

FIGURE 14–7b
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 24
 Widely Used Financial Ratios
(cont’d)

FIGURE 14–7c
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 25
 Widely Used Financial Ratios
(cont’d)

FIGURE 14–7d
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 26
 Ratio Analysis: Factors Affecting
Return on Investment

FIGURE 14–8
G.Dessler, 2003

May 16, 2006 LIS580- Spring 2006 27

 Financial Responsibility Centers
• Financial Responsibility Centers
– Individuals or groups who are assigned the responsibility for
a particular set of financial outputs and/or inputs.
• Profit centers
– Responsibility centers whose managers are held accountable
for profit.
• Revenue centers
– Responsibility centers whose managers are held accountable
for generating revenues, which is a financial measure of
output.
• Cost centers
– Groups which are supported through internal taxes on other
groups; overhead functions.

G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 28
 Other Diagnostic Financial and
Managerial Controls
• Activity-Based Costing (ABC)
– A method for allocating costs to products and
services that takes all the product’s cost drivers
into account when calculating the actual cost of
each product or service.

G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 29
 Other Diagnostic Financial and
Managerial Controls (cont’d)
• Balanced Scorecard
– A management tool, usually a computerized model,
that traces a multitude of performance measures
simultaneously and shows their interactions.
• Enterprise Resource Planning System
– A companywide integrated computer system that
gives managers real-time, instantaneous
information regarding the costs and status of every
activity and project in the business.

G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 30
 Balanced Scorecard

May 16, 2006 LIS580- Spring 2006 31

 Boundary Control Systems
• Boundary Control Systems
– Define the ethical rules for proper conduct in the
organization and specify which actions and pitfalls
that employees must avoid.
– Include ethics standards, codes of conduct, and
strategic policies.
• Steps in establishing boundary controls:
– Emphasize top management’s commitment.
– Publish a code.
– Establish compliance mechanisms.
– Measure results.

G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 32
 Personal/Interactive Control
Systems
• Interactive Control
– Maintaining control by personally
monitoring how everyone is doing is
interactive control.
• Electronic Performance Monitoring
(EPM)
– Monitoring the work activities of employees
through electronic means.

G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 33
 Implementing Commitment-
based Control Systems
Motivation Belief
Techniques Systems

Commitment-
Based Control
System

Commitment-
Building Systems
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 34
 Using Commitment-Building
Systems to Foster Self-Control
• Foster People-First Values
• Guarantee Organizational Justice
• Build a Sense of Shared Fate and Community
• Use Value-based Hiring
• Financial Rewards and Profit Sharing
• Communicate Your Vision
• Encourage Personal Development and Self-
Actualization
G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 35
 Contingency Factors in
Control System Design
• Size of the organization
• The job/function’s position in the
organization’s hierarchy
• Degree of organizational
decentralization
• Type of organizational culture
• Relative importance of the control
activity to the organization’s success
Prentice Hall, 2002
May 16, 2006 LIS580- Spring 2006 36
 Controls and Cultural
Differences
• Methods of controlling employee behavior and
operations can be quite different in different countries
• Distance creates a tendency for formalized controls in
the form of extensive, formal reports
• In less technologically advanced countries, direct
supervision and highly centralized decision making
are the basic means of control
• Local laws may constrain the corrective actions that
managers can take in foreign countries

Prentice Hall, 2002

May 16, 2006 LIS580- Spring 2006 37
 The Dysfunctional Side of
Control
• Unfocused controls
– Failure to achieve desired or intended results occur
when control measures lack specificity
• Incomplete control measures
– Individuals or organizational units attempt to look
good exclusively on control measures
• Inflexible or unreasonable control standards
– Controls and organizational goals will be ignored
or manipulated

Prentice Hall, 2002

May 16, 2006 LIS580- Spring 2006 38
 Behavioral Consequences of
Controls

Controls

Behavioral Games- Operating Negative

Displacement manship Delays Attitudes

G.Dessler, 2003
May 16, 2006 LIS580- Spring 2006 39
 Contemporary Issues In Control
• The right to personal privacy in the workplace
versus:
– Employer’s monitoring of employee activities in the
workplace
– Employer’s liability for employees creating a hostile
environment
– Employer’s need to protect intellectual property

The computer on the desk typically belongs to

the organization
Prentice Hall, 2002
May 16, 2006 LIS580- Spring 2006 40
 Next Time
• Managing world-class operations
– Read Chapter 15 and the assigned articles
• Before lecture discussion group questions
(Group E):
– What impact does the streamlining of operations
have on employees?
– What process do you think SPL used to decide on
their operations changes?
– What measures could SPL institute to decide
whether their changes are improving value?
– What lessons do companies like UPS have for
service organizations like libraries?
May 16, 2006 LIS580- Spring 2006 41
 Next Time
• After lecture discussion group questions
(Group F):
– Does a library director need to have an MLS?
– Is subject matter expertise more important than
management expertise in managerial positions?
– What arguments would you make for or against
your choice?
– How well do you think our library schools are doing
in educating library managers?
– What steps would you take to provide better
management education for MLIS graduates?
May 16, 2006 LIS580- Spring 2006 42