Chapter 11
Controlling the
organisation
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-1
Lecture outline
•
•
•
•
Control as a management function
The control process
Types of controls
Managerial approaches to implementing
controls
• Assessing control systems
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-2
Control as a management
function
Controlling:
Process of regulating organisational activities
so that actual performance conforms to
expected organisational standards and goals.
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-3
Control as a management
function
Significance of the control system:
Set of mechanisms designed to increase
probability of meeting organisational
standards and goals.
Controlling ensures resources are used for
organisational objectives, supporting
organising and leading functions.
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-4
Control as a management
function
Role of controls:
• Coping with uncertainty
Watching environmental factors for change
• Detecting irregularities
Such as quality, cost, or staff turnover
• Identifying opportunities
Alerting management to opportunities
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-5
Control as a management
function
Role of controls (cont.):
• Handling complex situations
Aiding coordination of complex situations
• Decentralising authority
Controls allow decision-making at lower levels
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-6
Control as a management
function
Levels of control:
• Strategic control
Monitoring critical environmental factors
• Tactical control
Assessing implementation of tactical plans at
department level
• Operational control
Overseeing implementation of operating plans,
monitoring day-to-day results
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-7
Control as a management
function
• Levels of control:
• Strategic planning Top
Strategic control
management
Tactical planning Middle
management
Operational planning 1st level
Tactical control
Operational control
management
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-8
The control process
Steps in the control process:
1.
2.
3.
4.
5.
Determine areas to control
Establish standards
Measure performance
Compare performance against standards
Recognise positive performance; take
corrective action as necessary
6. Adjust standards and measures as
necessary
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-9
The control process
Steps in the control process:
Determine areas to control
Establish standards
Measure performance
Control
process
steps
Compare performance
Recognise positive
performance
Take corrective action
Adjust standards
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-10
The control process
Deciding what to control:
• Resource dependence
– Approach that argues that managers need to
control areas where they depend on others for
resources.
– Four conditions must be met before a final
decision is made.
– Areas meeting all four conditions are known as:
Strategic control points
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-11
The control process
Deciding what to control:
• Four conditions for control
1.
2.
3.
4.
Is dependence on the resource sufficiently high?
Is expected resource flow unacceptable?
Is control process feasible?
Is control process cost acceptable?
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-12
The control process
Deciding what to control:
High dependence on the resource
Chance that expected resource flow will
be unacceptable
Determining
strategic
control
points
Control-process feasibility
Cost acceptability
Alternatives to control:
•Change dependence relationships
•Change nature of dependence relationships
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-13
The control process
Deciding what to control:
• Alternatives to control
If the first of these conditions show a need
for control, but such control process is
either not feasible or too costly, then
managers must develop alternatives to
control, e.g.
–
–
–
–
Change dependence relationship on suppliers etc.
Change nature of dependence relationship
Build reliability
Eliminate dependence
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-14
The control process
• Major control types by timing
– Feedforward control
Regulation of inputs to ensure they meet
standards
– Concurrent control
Regulation of ongoing activities to ensure they
conform to standards
– Feedback control
Regulation of completed product to ensure
standards are met
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-15
The control process
Control types by timing:
Input
Feed-forward
control
Anticipating
problems
Transformation
processes
Concurrent
control
Attending to
problems as
they occur
Outputs
Feedback
control
Correcting
problems after
product/service
is produced
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-16
The control process
• Multiple controls
Systems using two or more of the feedforward,
concurrent and feedback control processes and
involving several strategic control points.
• Cybernetic control
Self-regulating control system which, once
operating, can automatically monitor the situation
and take corrective action when necessary.
• Non-cybernetic control
Control system relying on human discretion as a
basic part of its process.
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-17
Managerial approaches to
implementing controls
•
•
•
•
Bureaucratic control
Clan control
Market control
Control and innovation
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-18
Managerial approaches to
implementing controls
Bureaucratic control:
Managerial approach relying on regulation
through rules, policies, supervision, budgets,
schedules, reward systems and other
administrative mechanisms aimed at ensuring
employees exhibit appropriate behaviours
and meet performance standards.
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-19
Managerial approaches to
implementing controls
Clan control:
Managerial approach relying on values,
beliefs, traditions, corporate culture, shared
norms and informal relationships to regulate
employee behaviours and facilitate reaching
of organisational goals.
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-20
Managerial approaches to
implementing controls
Market control:
Managerial approach relying on market
mechanisms to regulate prices for certain
clearly-specified goods and services needed
by an organisation.
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-21
Managerial approaches to
implementing controls
Control and innovation:
• Four levers for strategic control as well as fostering
innovation
–
–
–
–
Belief systems
Boundary systems
Performance management systems
Interactive monitoring systems
• Incrementalist approach
Control of an innovative project that relies on clan
control but also involves a phased set of plans and
accompanying bureaucratic controls.
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-22
Assessing control systems
Potential dysfunctional aspects:
• Behavioural displacement
• Game playing
• Operating delays
• Negative attitudes
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-23
Assessing control systems
Overcontrol versus undercontrol:
• Overcontrol
Limiting individual job autonomy to the point where it
seriously inhibits effective job performance.
• Undercontrol
Granting autonomy to an employee to the point
where the organisation loses its ability to direct
individual effort towards achieving organisational
goals.
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-24
Assessing control systems
Characteristics of an effective control
system:
•
•
•
•
•
Future-oriented
Multidimensional
Cost effective
Accurate
Realistic
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-25
Assessing control systems
Characteristics of effective control
Systems (continued):
• Timely
• Monitorable
• Acceptable to organisation members
• Flexible
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-26
Lecture summary
• Control as a management function
– Significance of the control process
– Role of controls
– Levels of control
• The control process
– Steps in the process
– Strategic control points
• Types of control
– Types by timing, multiple, cybernetic, noncybernetic
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-27
Lecture summary
• Managerial approaches to control
– Bureaucratic, clan, market
– Balancing control and innovation
• Assessing control systems
– Dysfunctional aspects
– Over-control/under-control
– Characteristics of an effective control system
© 2008 McGraw-Hill Australia Pty Ltd.
Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al
Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat
11-28