Chapter 12 Control

1. Chapter 12 Control • What is control? • Three approaches to control systems • The control process • Types of control • Qualities of an effective control system • Contingency factors of control

2. Control is the process of monitoring activities to ensure that they are being accomplished as planned and correcting any significant deviations.

3. Market control is an approach to control that emphasizes the use of external market mechanisms such as price competition and market share. • Bureaucratic control is an approach to control that emphasizes authority and relies on administrative rules, regulations, procedures, and policies. • Clan control is an approach to designing control systems in which employee behaviors are regulated by the shared values, norms, traditions, rituals, beliefs, and other aspects of the organization’s culture.

4. Is standard being attained? Yes Do nothing Compare actual performance with standard No Is variance acceptable? Yes Do nothing Measure actual performance Objectives Standard No Is standard acceptable? Identify cause of variation Yes No Revise standard Correct performance Exhibit 12-1 the Control Process

5. Three Steps: • Measuring actual performance • Comparing actual performance against a standard • Taking managerial action to correct deviations or inadequate standards.

6. How do managers measure?(means) • Personal observation • Statistical reports • Oral report • Written report

7. What do manager measure?(content) • Control areas: information, operations, finances, people • Quantifiable criteria • Subjective measure

8. Acceptable range of variation Standard t t+1 t+2 t+3 t+4 t+5 Exhibit 12-2 defining an acceptable range of variation Acceptable upper limit Acceptable lower limit

9. Do nothing • Correct the actual performance Immediate corrective action Basic corrective action • Revise the standard

10. Input Processes Output Feedforward control Concurrent control Feedback Control Anticipates problems Corrects problems as they happen Corrects problems after they occur Exhibit 12-3 Types of Control

11. Accuracy Timeliness Economy Flexibility Understandability Reasonable criteria Strategic placement Emphasis on the exception Multiple criteria Corrective action Qualities of an effective control system

12. Small Informal, personal, management by walking around Organization size Large Formal, impersonal, extensive rules and regulation Many criteria High Position and level Low Few, easy-to-measure criteria High Increased number and breath of controls Degree of decentralization Low Reduced number of control Open and supportive Informal, self-control Organizational culture Formal, externally imposed controls Threatening High Elaborate, comprehensive controls Importance of an activity Low Loose, informal controls Exhibit 12-4 Contingency Factors

13. Practices: • Explain qualities of an effective control system • What managers who find discrepancies between actual performance and standard will do?