14

Chapter

Foundations
of Control

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Learning Outcomes
After studying this chapter, you will be able to:
• Explain the nature and importance of control.
• Describe the three steps in the control
process.
• Describe the types of controls organizations
and managers use.
• Discuss contemporary issues in control.

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The Nature of Control

Control is the management function that involves

monitoring activities to ensure that they’re being
accomplished as planned and correcting any significant
deviations.

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 The Nature of Control
Control is the management function that involves
monitoring activities to ensure that they’re being
accomplished as planned and correcting any significant
deviations.
Managers know that their
business units are performing
properly only after they’ve
evaluated which activities have
been accomplished and how the
actual performance compares
with the desired standard.

. The effectiveness of a control system is determined by how well it facilitates goal

achievement. The more a control system helps managers achieve their organization’s
goals, the better it is.
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The Importance of Control

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The Importance of Control
The value of the control function can be seen in three
specific areas:
•Planning: If managers didn’t control, they’d have no way of
knowing whether their goals and plans were being achieved
and what future actions to take.
•Empowering employees: an effective control system provides
information and feedback on employee performance and
minimizes the chance of problems.
•Protecting the workplace: Comprehensive controls and
backup plans help minimize work disruptions such as natural
disasters, financial pressures and scandals, workplace violence,
supply chain disruptions ..etc

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 The Control Process

1- Measuring
actual
performance,

2- Comparing
actual
performance
against a
standard, and

3- Taking
managerial action
to correct
deviations or to
address
inadequate
standards
Control process assumes that performance standards already exist; these standards are the
specific goals created during the planning process.
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Measuring Performance
1. Personal observation
Provides firsthand, intimate knowledge of unfiltered, actual activity. It permits intensive
coverage because minor and major performance activities can be observed, and allows
the manager to read between the lines
Management by walking around (MBWA) describes when a manager is out in the work area
and interacting directly with employees, exchanging information about what’s going
Subject to the viewer’s perceptual biases, is a time-consuming effort, may be obtrusive, and
may trigger concern in some employees.
1. Statistical reports
Statistical reports are not limited to computer outputs. They can include graphs, bar charts,
and numerical displays that managers can use for assessing performance. However,
statistical reports often focus on only a few key areas and may often ignore important
subjective factors.

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Measuring Performance
Measures of performance:
3. Oral reports
Which can be gleaned through conferences, meetings, one-to-one
conversations, or telephone calls. Although the information is filtered,
it is fast, allows for feedback, and permits expression, tone of voice,
and words themselves to convey meaning. It can also be recorded.
4. Written reports
Which require more preparation time and formality than other
measurements of performance. This often makes them more
comprehensive and concise that oral reports.

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Criteria for Measurement

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Comparing Performance to Goals

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Comparing Performance to Goals
(cont.)

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Correcting Performance
Immediate corrective
actions:
• Training programs
• Disciplinary
action
• Changes in
compensation
practices

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Revising the Standard

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Types of Control: Feedforward Control

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Types of Control: Concurrent Control

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Types of Control: Feedback Control

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Areas Managers Control

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Controlling Information

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Balanced Scorecard Approach
Balanced scorecard
evaluates four areas of
company performance:
1. Financial
2. Customer
3. Internal processes
4. People, innovation, and
growth assets

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Contemporary Issues

• Cross-cultural
differences
• Workplace
concerns

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Different Organizational Control
Systems

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Challenges of Controlling the
Workplace

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Employee Theft

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Workplace Violence

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