Measurement and
Accountability
Module 15
LIS 580: Spring 2006
Instructor- Michael Crandall
Roadmap
•
•
Control systems
Diagnostic systems
•
•
•
•
•
•
•
Financial control- the budget
Financial ratios
Other systems
Boundary control systems
Interactive control systems
Commitment-based control systems
Issues in control systems
May 16, 2006
LIS580- Spring 2006
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What is Control?
• The process of monitoring activities to
ensure that they are being accomplished
as planned and of correcting any
significant deviations
• An effective control system ensures that
activities are completed in ways that
lead to the attainment of the
organization’s goals
Prentice Hall, 2002
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The Fundamentals Of An
Effective Control System
• Control
– The task of ensuring that planned activities
are getting the desired results.
– All control systems try to influence
behavior.
– Controlling involves setting a target
(planning), measuring performance
(evaluation), and taking corrective action.
– Control also applies to monitoring every
task—large and small—that is delegated.
G.Dessler, 2003
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LIS580- Spring 2006
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Management and the Control
Process
FIGURE 14–1
G.Dessler, 2003
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Characteristics of Three
Approaches to Control Systems
• Market
– Uses external market mechanisms, such as price
competition and relative market share, to establish
standards used in system to gain competitive
advantage
• Bureaucratic
– Emphasizes organizational authority of
administrative and hierarchical mechanisms to
ensure appropriate employee behaviors and to
meet performance standards
• Clan
– Regulates employee behavior by the shared
values, norms, traditions, rituals, beliefs, and other
aspects of the organization’s culture
Prentice Hall, 2002
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Types of Control
Prentice Hall, 2002
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Steps in the Control Process
• Measuring actual performance
– Personal observation, statistical reports,
oral reports, and written reports
– Management by walking around (MBWA)
• Comparing actual performance against
a standard
– Comparison to objective measures:
budgets, standards, goals
– Range of variation
Prentice Hall, 2002
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Defining an Acceptable Range of Variation
Prentice Hall, 2002
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Steps in the Control Process
(cont’d)
• Taking managerial action to correct deviations
or inadequate standards
– Immediate corrective action
• Correcting a problem at once to get performance back on
track
– Basic corrective action
• Determining how and why performance has deviated and
then correcting the source of deviation
– Revising the standard
• Adjusting the performance standard to reflect current and
predicted future performance capabilities
Prentice Hall, 2002
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The Control Process
Prentice Hall, 2002
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Qualities of an Effective
Control System
Accuracy
Timeliness
Economy
Flexibility
Understandability
Reasonable criteria
Strategic placement
Emphasis on the
exception
Multiple criteria
Corrective action
Prentice Hall, 2002
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Approaches To Maintaining
Control
• The Traditional Control Process
– Step 1: Set a standard, target, or goal.
– Step 2: Measure actual performance against
standards (observation and timing).
– Step 3: Take corrective action.
• The Commitment-Based Control Process
– Encouraging all employees to exercise
ethical self-control (as they initiate process
improvements and new ways of responding
to customers’ needs.
G.Dessler, 2003
May 16, 2006
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Two Basic Categories of Control
Systems
FIGURE 14–4
G.Dessler, 2003
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Types of Traditional Control
Systems
• Diagnostic controls
– A control method, such as a budget, that ensures
that standards are being met and that variances
are diagnosed and explained.
• Boundary Controls
– Policies, such as codes of conduct, that establish
rules and identify the actions and pitfalls that
employees must avoid.
• Personal/Interactive Controls
– Control methods that involve direct, face-to-face
interaction with employees so as to monitor rapidly
changing information and respond proactively to
changing conditions.
G.Dessler, 2003
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Examples of Control Standards
FIGURE 14–3
G.Dessler, 2003
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The Basic Management Control
System
• Budget
– Formal financial expression of a manager’s
plans.
• Capital Budget
– Shows the expenses for equipment with a
life longer than one year.
• Operating Budget
– Shows the expected sales and/or expenses
for each of the company’s departments for
the planning period in question.
G.Dessler, 2003
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University of Alberta Library
• How does this budget present options for
different funding levels?
• What do they use to support their arguments
for increased funding levels?
– On the positive side?
– On the negative side?
• What is going to be the hardest thing to get
approval for in this budget?
• How does the budget explain the request for
changes in their operating expenses?
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2005 OSE Budget
Org X1107
Example
of a
Budget
Account
710110
720110
720114
820410
720600
820120
820130
820310
820320
820490
820530
820550
810310
730010
730220
730410
730450
730490
741190
810310
841190
743550
744110
744320
744350
744510
744575
744520
842580
Description
Amount
Salaries and Wages (4.0 FTE)
$304,801.00
FICA
$18,210.00
Medicare
$4,550.00
Health Insurance Premium
$25,991.37
Summary and Special Allowances
$0.00
IF Unemployment
$208.00
IF Worker's Compensation Claims
$0.00
IF Pension-City Retirement Sys
$25,195.00
IF Death Benefit Contribution
$48.00
IF Dental Insurance
$5,254.00
IF Group Fund Life Insurance
$181.00
IF Long Term Disability Insurance
$157.00
IF Salaries & Wages -TEMP
$0.00
Personnel Total
$384,595.37
Subscriptions/Publications/Books
$1,000.00
Office Supplies
$1,500.00
Equip- PCs & Other DP <$5000
$2,000.00
Software Purchases
$250.00
Equipment-Misc <5000
Services-Othr Professional/Technic*
$64,520.63
IF Salaries & Wages INTER - (Staff Loans)*
$36,868.00
Services-Othr Professional/Technic**
Maintenance-Data Processing Equip
$250.00
Postage & Delivery Costs
$200.00
Training Tuition & Fees
$4,000.00
Out Of City Travel Costs
$2,000.00
Dues & Memberships
$4,000.00
Copying/Printing/Binding & Design
$3,500.00
Volunteer-Employee Recognition
$750.00
IF-Rentals Vehicles
$750.00
Operational Total
$121,588.63
TOTAL
* This is the half-time position OSE pays Parks for Richard Gelb.
$506,184.00
** This is where we RECEIVE money (MOAs) from other departments
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2006 Budget Issue Paper
Department:
BIP Title:
BIP Number:
Budget program(s) affected:
Estimated $ change:
Example
of a
Budget
Regular positions affected:
Other departments affected:
Capital/Operating budget:
OSE
Planning & Development Specialist II
OSE-02
2006 GF $
$55,000*
No. of Positions: 1
“All Funds”
2006 Other $
Total FTE change: 1.0
* The total costs of the position are estimated at $75,000. We propose that OSE cover $20,000 of that (which
constitutes about 30% of our available professional services budget for 2006), reducing the “new load” on the General
Fund to $55,000 -- less when you factor in that OSE’s budget is cost-shared with City Light and Seattle Public Utilities.
(1) Summary of BIP (100 words or less)
This is a request to create a one-year Planning and Development Specialist 2 position in OSE for 2006, ending
12/31/06. This would sustain OSE’s 2005 human resource capacity, and allow us to continue to deliver on the
Mayor’s priorities and OSE’s Accountability Contract -- notably the Mayor’s Climate Protection Initiative. The
position will assume the duties currently performed by a TES employee; the position will focus primarily on
implementation of the Mayor’s Climate Protection Initiative, but may be available for other priority projects as well.
(2) Detailed explanation:
A TES Planning & Development Specialist 2 was hired in April 2005 to support implementation of the Mayor’s
Climate Protection Initiative. This position has played a key role in the development of the highly successful US
Mayors Climate Protection Agreement, and provides much-needed staff support to the Mayor’s Green Ribbon
Commission on Climate Protection, which is developing the Seattle Climate Action Plan. The Commission is due to
deliver its final report to the Mayor in December 2005; however OSE will need to retain staff capacity to ensure
completion of the final document and implementation of the strategy. Specific duties will include:
 Provide staff support to the Mayor’s Green Ribbon Commission, including conducting research and
analysis of action recommendations and preparing briefings and presentations. The Commission is a
panel of high-level business, government and civic leaders charged with developing a set of
recommendations to reduce global warming pollution in the Seattle community. Though the Commission’s
report is due to the Mayor at the end of 2005, we anticipate that the Commission’s work will continue into at
least part of 2006;
 Help write the Green Ribbon Commission’s final report to the Mayor;
 Help develop and write-up the Mayor’s implementation strategy -- a City-wide work plan that responds
to the Commission’s recommendations).
 Help develop and implement a plan for distributing and doing extensive community outreach on the
Action Plan, including a strategy for mobilizing neighborhoods and businesses behind the Plan;
 Work closely with a number of City departments and external partners (such as the Puget Sound
Clean Air Agency) to implement the report’s recommendations. For example, work with SDOT and
others to implement transportation-related recommendations; work with City Light and others to implement
energy-related recommendations; work with SPU and others to implement waste management-related
recommendations; work with Parks and others to implement forest management-related recommendations;
work with DON and others to do community outreach and mobilize neighborhood-based action;
 Develop a system for monitoring implementation progress, and produce annual progress reports as
part of overarching Environmental Action Agenda progress reporting process
(3) Anticipated outcome of change:
This conversion will ensure the successful completion and implementation of the Seattle Climate Protection Action
Plan, an important component of the Mayor’s Climate Protection Initiative.
(4) Department workforce change (regular positions to be added, abrogated, reduced in FTE or reassigned
to different programs). Include titles when known:
Addition of 1.0 FTE Planning & Development Specialist 2 for one year (2006).
May 16, 2006
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Performance Reporting
• Variances
– Differences between budgeted and actual
amounts.
• Audit
– A systematic process of objectively obtaining and
evaluating evidence of the firm’s performance,
judging the accuracy and validity of the data, and
communicating the results to interested users.
• Financial Ratio
– An arithmetic comparison of one financial measure
to another, generally used to monitor and control
financial performance.
G.Dessler, 2003
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Example of a Performance
Report
FIGURE 14–6
G.Dessler, 2003
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Widely Used Financial Ratios
FIGURE 14–7a
G.Dessler, 2003
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Widely Used Financial Ratios
(cont’d)
FIGURE 14–7b
G.Dessler, 2003
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Widely Used Financial Ratios
(cont’d)
FIGURE 14–7c
G.Dessler, 2003
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Widely Used Financial Ratios
(cont’d)
FIGURE 14–7d
G.Dessler, 2003
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Ratio Analysis: Factors Affecting
Return on Investment
FIGURE 14–8
G.Dessler, 2003
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Financial Responsibility Centers
• Financial Responsibility Centers
– Individuals or groups who are assigned the responsibility for
a particular set of financial outputs and/or inputs.
• Profit centers
– Responsibility centers whose managers are held accountable
for profit.
• Revenue centers
– Responsibility centers whose managers are held accountable
for generating revenues, which is a financial measure of
output.
• Cost centers
– Groups which are supported through internal taxes on other
groups; overhead functions.
G.Dessler, 2003
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Other Diagnostic Financial and
Managerial Controls
• Activity-Based Costing (ABC)
– A method for allocating costs to products and
services that takes all the product’s cost drivers
into account when calculating the actual cost of
each product or service.
G.Dessler, 2003
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Other Diagnostic Financial and
Managerial Controls (cont’d)
• Balanced Scorecard
– A management tool, usually a computerized model,
that traces a multitude of performance measures
simultaneously and shows their interactions.
• Enterprise Resource Planning System
– A companywide integrated computer system that
gives managers real-time, instantaneous
information regarding the costs and status of every
activity and project in the business.
G.Dessler, 2003
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Balanced Scorecard
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Boundary Control Systems
• Boundary Control Systems
– Define the ethical rules for proper conduct in the
organization and specify which actions and pitfalls
that employees must avoid.
– Include ethics standards, codes of conduct, and
strategic policies.
• Steps in establishing boundary controls:
–
–
–
–
Emphasize top management’s commitment.
Publish a code.
Establish compliance mechanisms.
Measure results.
G.Dessler, 2003
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Personal/Interactive Control
Systems
• Interactive Control
– Maintaining control by personally
monitoring how everyone is doing is
interactive control.
• Electronic Performance Monitoring
(EPM)
– Monitoring the work activities of employees
through electronic means.
G.Dessler, 2003
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Implementing Commitmentbased Control Systems
Motivation
Techniques
Belief
Systems
CommitmentBased Control
System
CommitmentBuilding Systems
G.Dessler, 2003
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Using Commitment-Building
Systems to Foster Self-Control
•
•
•
•
•
•
•
Foster People-First Values
Guarantee Organizational Justice
Build a Sense of Shared Fate and Community
Use Value-based Hiring
Financial Rewards and Profit Sharing
Communicate Your Vision
Encourage Personal Development and SelfActualization
G.Dessler, 2003
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Contingency Factors in
Control System Design
• Size of the organization
• The job/function’s position in the
organization’s hierarchy
• Degree of organizational
decentralization
• Type of organizational culture
• Relative importance of the control
activity to the organization’s success
Prentice Hall, 2002
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Controls and Cultural
Differences
• Methods of controlling employee behavior and
operations can be quite different in different countries
• Distance creates a tendency for formalized controls in
the form of extensive, formal reports
• In less technologically advanced countries, direct
supervision and highly centralized decision making
are the basic means of control
• Local laws may constrain the corrective actions that
managers can take in foreign countries
Prentice Hall, 2002
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The Dysfunctional Side of
Control
• Unfocused controls
– Failure to achieve desired or intended results occur
when control measures lack specificity
• Incomplete control measures
– Individuals or organizational units attempt to look
good exclusively on control measures
• Inflexible or unreasonable control standards
– Controls and organizational goals will be ignored
or manipulated
Prentice Hall, 2002
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Behavioral Consequences of
Controls
Controls
Behavioral
Displacement
Gamesmanship
Operating
Delays
Negative
Attitudes
G.Dessler, 2003
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Contemporary Issues In Control
• The right to personal privacy in the workplace
versus:
– Employer’s monitoring of employee activities in the
workplace
– Employer’s liability for employees creating a hostile
environment
– Employer’s need to protect intellectual property
The computer on the desk typically belongs to
the organization
Prentice Hall, 2002
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Next Time
•
Managing world-class operations
– Read Chapter 15 and the assigned articles
•
Before lecture discussion group questions
(Group E):
– What impact does the streamlining of operations
have on employees?
– What process do you think SPL used to decide on
their operations changes?
– What measures could SPL institute to decide
whether their changes are improving value?
– What lessons do companies like UPS have for
service organizations like libraries?
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Next Time
• After lecture discussion group questions
(Group F):
– Does a library director need to have an MLS?
– Is subject matter expertise more important than
management expertise in managerial positions?
– What arguments would you make for or against
your choice?
– How well do you think our library schools are doing
in educating library managers?
– What steps would you take to provide better
management education for MLIS graduates?
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