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Foundations and Types of Organizational Control in Management

Learn about the foundations of control, phases of the corrective control model, methods, and corporate governance issues in achieving organizational control.

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Foundations and Types of Organizational Control in Management

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  1. John W. Slocum, Jr. Susan E. Jackson Don Hellriegel COMPETENCY-BASED MANAGEMENT 11th Edition Chapter 10: Achieving OrganizationalControl

  2. Learning Goals • Explain the foundations of control 2. Identify the six phases of the corrective control model 3. Describe the primary methods of organizational control 4. Explain key corporate governance issues and control mechanisms Chapter 10: PowerPoint 10.1

  3. Foundations of Control • Processes for ensuring that behaviors and decisions conform to an organization’s standards and legal requirements, including its rules, policies, procedures, and goals • How controls and planning support each other • Controls help ensure that decisions, actions, and results are consistent with plans • Controls help maintain or redirect actual behaviors and results toward those desired in plans • Controls help provide essential information needed to plan • Plans indicate the purposes to be served by controls Chapter 10: PowerPoint 10.2

  4. Preventive Controls • Mechanisms intended to reduce the likelihood of an unwanted event and thereby minimize the need for corrective action • A few forms: • Rules and regulations • Standards • Recruitment and selection procedures • Training and development programs Chapter 10: PowerPoint 10.3

  5. Corrective Controls • Corrective Controls • Mechanisms intended to reduce or eliminate unwanted behaviors or results and thereby return the situation to conformity with the organization’s regulations and standards • A few forms: • Direct supervision and feedback • Disciplinary action • Procedures for reporting misconduct • Monthly or even daily financial reports Chapter 10: PowerPoint 10.4

  6. Sources of Control • Stakeholder Controlsare expressed as presents from sources and entities on organization to maintain or change their behaviors and decisions. • Organizational Controls comprise the formal policies, rules, procedures and records for preventing or correcting decisions from plans and for achieving desired goals. • Group Controls comprise the norms and values that group or team members share and maintain through rewards and punishments. • Individual self-controls comprise the guiding mechanisms the operate consciously and unconsciously within each person.

  7. Examples of Sources and Types of Control Source of Control Preventive Corrective Stakeholders Maintaining quotas for hiring personnel in protected class Changing recruitment policies to attract qualified personnel Organization Using budgets to guide expenditures Disciplining an employee for violating a “No Smoking” safety regulation in a hazardous area Chapter 10: PowerPoint 10.5 (Adapted from Table 10.1) (continued)

  8. Examples of Sources and Types of Control (cont'd) Source of Control Preventive Corrective Group Advising a new employee about the group’s norm in relation to expected level of output Harassing and socially isolating a worker who doesn’t conform to group norms Individual Deciding to skip lunch in order to complete a project on time Revising a report you have written because you are dissatisfied with it Chapter 10: PowerPoint 10.6 (Adapted from Table 10.1)

  9. Linkage to Strategic Goals for Effectiveness Objective controls To AchieveStrategicGoals Acceptable controls Complete controls Timely controls Chapter 10: PowerPoint 10.7 (Adapted from Figure 10.1)

  10. How Much Organizational Control? • Core questions • For what desired behaviors and results should organizational controls be developed? 2. What are the costs and benefits of the organizational controls required to achieve the desired behaviors and results? 3. What are the costs and benefits of utilizing alternative controls; such as self-managed teams, informal peer control, or individual self-control? Chapter 10: PowerPoint 10.8

  11. Internal Control • A process—effected by an organization’s board of directors, management, and other personnel—designed to provide reasonable assurance regarding the achievement of goals in the various categories • Major categories of internal control • Effectiveness and efficiency of operations • Reliability of financial reporting • Compliance with applicable laws and regulations Chapter 10: PowerPoint 10.9

  12. Interrelated Components and Layers of Internal Control Control Environment Risk Assessment Control Activities Information and Communication Monitoring Internal Control Chapter 10: PowerPoint 10.10 (Figure 10.2)

  13. Limitations of internal control • Cannot change a bad manager into a good one • External influences may be beyond management’s control • Judgments may be faulty • May be circumvented by collusion of two or more employees • Management can override the control system Chapter 10: PowerPoint 10.12

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