Foundations of Control 2.

Comparing – Determine the acceptable range of variation

 Range of variation – the acceptable parameters of
Controlling – the process of monitoring, comparing and variance between actual performance and the
correcting work performance. standard.
3 approaches to designing control system: 3. Taking managerial action
 Correct actual performance
 Market control
Changing:
- an approach to control that emphasizes the use
of external market mechanisms to establish the
 Structure  Redesigning jobs
control standards.
 Strategy  Firing employees
- Usually used by organisation with highly specified and
 Compensation programs
distinct product with high marketplace competition.
- Market mechanisms include: price competition,  Needs or make decision between
relative market share. - Immediate corrective action – corrective action that
 Bureaucratic Control corrects problems at once to get performance back on
- an approach to control that emphasises track
organisational authority and relies on administrative - Basic corrective action – corrective action that looks at
rules, regulations, procedures and policies. how and why performance deviated and then
- Standardised activities, well defined job descriptions proceeds to correct the source of deviation
and budgets.
- Based on strict hierarchical structure Revised the standard
 Clan Control
- an approach to control in which employee behaviour is - It is possible the deviation was a result of an unrealistic
regulated by organisational culture. goal
- Used by organisations in which teams are common and - Difficult to revise a standard downwards
technology is changing rapidly. - Be aware it is common for employees not meeting
- Depends on the individual and the group to identify standards to blame the standards instead of their
appropriate and expected behaviours and performance
performance measures.
Controlling from organisational performance
Why is control important?
Organisational performance
- There needs to be assurance that activities are going as
planned and that goals are being attained.  Performance – is the process or action of performing a
- It is the final in the management functions. function or task.
- Without control you would have no idea whether the  Organisational performance – involves analyzing a
organisation as on tract to complete goals and what company’s performance against its objectives and
future actions should be. goals.
- Protects the organisation and its assets from threats
such as natural disasters, financial scandals, workplace Organizational Performance Measures
violence, supply-chain disruptions, security breaches
Organisational productivity – is the capacity of an organisation,
and even terrosist attacks.
institution, or business to produce desired results with a
> Plans in place to protect employees, infrastructure, minimum expenditure of energy, time, money, personnel,
facilities and data. materiel, etc.

 Control Process Organisational effectiveness – is the concept of how effective

- Controlling is a three-step process an organization is in achieving the outcomes the organization
- Assumes that performance standards already exist intends to produce.
- Specific goals are created in the planning process.
Tools for controlling organisational performances
1. Measuring actual performance
Control concepts:
a. Personal observations
 Feedforward control
i. Get first-hand knowledge, information isn’t filtered, - a type of control that takes place before a work activity
intensive coverage of work activities. is done
ii. Subject to personal bias, time consuming, obtrusive - anticipates problems
b. Statistical Reports - Allow managers to prevent problems
i. Easy to visualise, effective for showing relationships  Concurrent control
ii. Provide limited information, ignored subjective - a type of control that takes place whole a work
factors activity is in progress
c. Oral Reports - corrects problem as they happen
i. Fast way to get information, allow for verbal and non - correct before they become too costly
verbal feedback.  Feedback control
ii. Information is filtered, information can’t be - corrects problem after they occur
documented - Drawback – leads to waste or damage
d. Written Reports - Provides managers with meaningful information
i. Comprehensive, formal, easy to file and retrieve on how effective their planning efforts were
ii. Take more time to prepare
1
Balanced Scorecard approach

Balanced scorecard

- a performance measurement tool that looks at

four areas: financial, customers, internal process
and people/innovation/growth assets – that
contribute to company’s performance
- Managers should develop goals in each of these
areas
- Scorecard reflect organisational strategies

Information Control

- Management Information System (MIS) —collects

data from many different sources and then
processes and organizes that data to help
businesses make decisions.

Benchmarking of Best Practices

 Benchmark – serves as a standard by which others may be

measured or judged.
 Benchmarking – is the continuous process of comparing
one’s business processes and performance metrics to
industry bests and/or best practices from other industries.
 Improvements from learning mean doing things
better,faster, and cheaper.

Contemporary issues in control

 adjusting controls for cross-culture differences

 workplace concerns
 workplace privacy
 employee theft
 any unauthorised taking of company property by
employees for their personal use.
 Workplace violence

•Controlling customer interactions

- Service profit chain – a the service sequence from

employees to customers to profits