Introduction and Overview of Controlling
Regardless of the thoroughness of the planning
done, a program or decision still may be poorly or
improperly implemented without a satisfactory control system in place.
Controlling is that process of regulating organizational activities so
that actual performance conforms to
expected organizational goals and standards.
While interrelated with all
of the other management functions,
a special relationship exists between the planning function of
management and controlling. Planning,
essentially, is the deciding of goals and objectives and the means of
reaching them. Controlling lets manager
tell if the organization is on track for goal achievement, and if not,
why not. A well-developed plan should
provide benchmarks that can be used in the control process.
Controls serve other important roles including helping managers cope
with uncertainty, detecting
irregularities, identifying opportunities, handling complex situations,
and decentralizing authority. Like
planning, controlling responsibilities differ by managerial level with
control responsibilities paralleling
planning responsibilities at the strategic, tactical, and operational
There are several major steps usually identified in the basic control
process. These are, in order, determining
the areas to be controlled, establishing the appropriate standards,
measuring performance, comparing the
performance against standards, recognizing performance if standards are
met or exceeded or take corrective
actions as necessary if not, and adjusting either/or standards and
measures as necessary. Of course it would
be impossible to control all activity in an organization. Consequently,
it is important for the manager to
decide which activities should have the control process applied. Argues
that managers need to consider
controls mainly in areas in which they depend on others for resources
necessary to reach organizational
goals. Four conditions help delineate when controls should be used.
These are having a high dependence on
the resource, having a high expectation that the resource flows would be
unacceptable without proper
controls, that the instituting of a control process would be feasible,
and that the total control process costs
would be within the acceptable range.
Timing is one of the bases for differentiating control systems. Some
major control types are based on
timing. These include feed forward controls, concurrent controls, and
feedback controls. These are terms
which are unfamiliar to many students and special note needs to be made
in reviewing this material. A
variety of these types of control is frequently used in multiple control
systems and usually involve noncybernetic.
Cybernetic controls involve little, if any, human discretion as part of
the system. Rather, it is a
self-regulating system that, once put into operation, can automatically
monitor the situation and take
corrective action when necessary. Noncybernetic systems, on the other
hand rely on human discretion as a
basic part of its process.
In addition to deciding the types of controls to use, managers also have
the options regarding the
mechanisms to be used to implement controls. The three basic approaches
are bureaucratic, clan, and
market. Bureaucratic controls rely on regulation through rules,
policies, supervision, budgets, schedules,
reward systems, and other administrative mechanisms aimed at ensuring
acceptable behavior and
performance Clan controls rely on the values, beliefs, traditions,
corporate culture, shared norms, and
informal relationships to regulate behavior and to facilitate the
reaching of organizational goals. The market
controls have a somewhat more limited application in organizations than
do bureaucratic or clan controls;
all three approaches are likely to be used to some extent. Market
controls rely on market mechanisms to
regulate prices for certain goods and services used by the organization.
There are some potential dysfunctional aspects of control systems the
manager must consider. Behavioral
displacement, game playing, operating delays, and negative attitudes are
some of these. To decrease the
likelihood of the effects, managers need to avoid engaging in either
over-control or under-control. To be
effective, control systems should be
future-oriented, multidimensional, cost-effective, accurate, realistic,
timely monitor able, acceptable to organization members, and flexible.
Control as a management process
Controlling, one of the four major
functions of POLCA management, is the process of
regulating organizational activities so that actual performance conforms
organizational standards and goals.
1. Controlling is largely geared to ensuring that the behavior of
individuals in the
organization contributes to reaching organizational goals.
2. Controls encourage wanted behaviors and discourage unwanted
B. A control system
is a set of mechanisms that are designed to increase
the probability of
meeting organizational standards and goals.
C. Controls can play five important roles in organizations.
1. Control systems enable managers to cope with uncertainty by
specific activities and reacting quickly to significant changes in the
2. Controls help managers detect undesirable irregularities, such as
cost overruns, or rising personnel turnover.
3. Controls alert managers to possible opportunities by highlighting
which things are going better than expected.
4. Controls enable managers to handle complex situations by enhancing
within large organizations.
5. Controls can decentralize authority by enabling managers to encourage
making at lower levels in the organization while still remaining in
D. Control responsibilities differ according to managerial level.
1. Strategic control
involves monitoring critical environmental factors
affect the viability of strategic plans, assessing the effects of
strategic actions, and ensuring that strategic plans are implemented as
a. Strategic control is typically the domain of top-level managers who
insure core competencies are developed and maintained.
b. Long time frames are involved, although shorter time frames may be
appropriate in turbulent environments.
2. Tactical control
focuses on assessing the implementation of tactical
departmental levels, monitoring associated periodic results, and taking
action as necessary.
a. Tactical control is primarily under the direction of middle managers,
top-level managers may at times get involved.
b. Time frames are periodic, involving weekly or monthly reporting
c. Tactical control involves department-level objectives programs, and
3. Operational control
involves overseeing the implementation of operating
monitoring day-to-day results, and taking corrective action when
a. Operational control is the responsibility of lower-level managers.
b. Control is a day-to-day process.
c. The concern is with schedules, budgets, rules, and specific outputs
4. For controls and three levels to be effective they must operate in
concert with one
The control process
A. The basic process used in controlling has
several major steps.
1. Determine areas to control.
a. It is impractical, if not impossible, to control every aspect of an
b. Major controls are based on the
organizational goals and objectives developed
during the planning process.
2. Develop standards spelling out specific criteria for evaluating
related employee behaviors.
a. Standards are often incorporated into the objectives set in the
b. Standards serve three main purposes related to employee behavior.
1) Standards help employee understand what is expected and how
their work will be evaluated.
2) Standards provide a basis for detecting job difficulties that are
related to personal limitations of organization members.
3) Standards help reduce the potential negative effects of
a condition in which there are major
incompatibilities between the goals of an organization member
and those of the organization.
3. Make a decision about how and how often to measure performance
related to a
a. MBO is a popular technique for coordinating the measurement of
performance throughout an organization.
b. The means of measuring performance depends upon the performance
standards that have been set, as well as data, such as units produced,
quality of output, or profits.
c. Most organizations use combinations of both quantitative and
d. The period of measurement usually depends upon
1) The importance of the goal to the organization
2) How quickly the situation is likely to change
3) The difficulty and expense of rectifying a problem if one were to
4. Compare performance against standards.
a. Reports that summarize planned versus actual results are often
b. Management by exception
is a control principle which suggests that
managers should be informed of a situation only if control data show a
significant deviation from standards.
c. Mangers may compare performance and standards through personal
d. The 360-degree feedback system described in chapter 10 is being used
a number of organizations as an evaluation approach.
5. Recognize above-standard performance both to give precognition to top
performing employees and also to aid improving performance on regular
6. Assess the reason why standards are not met, and take corrective
7. Adjust standards and measures as necessary.
a. Standards and measures need to be checked for relevance.
b. Managers must decide whether the cost of meeting certain standards is
worth the resources consumed.
c. Exceeding a standard may signal opportunities, the potential to raise
standards, and/or the need for possible adjustments in organizational
B. Managers can take a number of approaches to deciding what to control.
1. Resource dependence
is an approach based on the view that managers need
consider controls mainly in areas in which they depend on others for
consider control mainly in areas in which they depend on others for
necessary to reach organizational goals.
a. Strategic control points
are performance areas chosen for control
because these are particularly important in meeting organizational
b. Strategic control points meet four
1) Dependence on a resource is high because the resource is
important and limited in availability.
2) The probability that the expected resource flow will be
unacceptable is high because of anticipated problems with
quantity, quality, or timeliness.
3) Instituting a control system is feasible.
4) The cost of instituting the control system is acceptable.
2. Mangers need to develop an alternative to controls if they are
needed, but cannot
be instituted due to problems of feasibility or cost.
a. The dependence relationship can be changed so that controls are
unnecessary, e.g., lining up several suppliers.
b. The nature of the dependence relationship can be changed so that a
control system is feasible and/or cost-effective, e.g., job
c. Organizational goals can be changed so that the resources in question
no longer necessary.
REVISITING CONTROL PROCESS
Let us take the
as the three-step process of measuring actual
performance, comparing it
against a standard, and taking managerial action to correct deviations
or inadequate standards.
Measuring is the first step in the control process.
1. How we measure
is done through four common sources of information
that managers use. Each of
these sources has its own advantages and drawbacks.
a. Personal observation
b. Statistical reports
c. Oral reports
d. Written reports
2. What we measure
is probably more critical than the how. Both
objective and subjective measures are
B. Comparing is the next step in the control process.
1. It determines the degree of variation between
performance and the standard.
2. It’s critical to determine the
range of variation, which are the
acceptable parameters of variance
between actual performance and the standard.
C. Taking managerial action is the final step in the control process.
Although the manager might
decide to “do nothing,” two other alternatives are possible.
1. Correct actual performance.
Once the manager has decided to correct actual
performance, he or she has
another decision to make.
a. Take immediate corrective action,
which is correcting an activity at once in order to get
performance back on track.
b. Take basic corrective action,
which is determining how and why performance has deviated and
correcting the source of deviations.
c. The action taken will depend on the cost/benefit of doing so.
2. Revise the standard.
If the standard was set too high or too low, a
manager may decide to revise it.
D. Summary of Managerial Decisions.
The control process is a continuous flow between measuring, comparing,
and managerial action.
Designing Control Systems
Since control is the process of monitoring
activities to ensure they are being accomplished as planned and
of correcting any significant deviations. There are three different
approaches to designing organizational
control is an approach that emphasizes the
use of external market mechanisms to establish
the standards used in the control system.
B. Bureaucratic control
is an approach that emphasizes organizational
authority and relies on
administrative rules, regulations, procedures, policies, standardization
of activities, well-defined job
descriptions, and other administrative mechanisms to ensure that
employees exhibit appropriate
behaviors and meet performance standards.
1. Bureaucratic control has advantages.
a. Unlike market control, bureaucratic control does not require that all
requirements be specified in advance.
b. Bureaucratic control is useful for keeping recurring, relatively
activities running smoothly.
c. Bureaucratic control focuses on doing the job and aids extrinsic
2. Bureaucratic control has disadvantages.
a. Innovation is not encouraged.
b. Needed changes may be inhibited.
c. Employees tend to comply with regulations rather than committing to a
course of action.
C. Market control
relies on market mechanisms to regulate prices for
certain clearly specified goods
and services needed by an organization.
1. Two conditions must hold if market control is to be used.
a. There must be a reasonable level of competition in the goods or
b. It must be possible to specify requirements clearly.
2. Market controls may be used to regulate internal operations as well
a. Profit centers, e.g., photocopying centers, are set up and charge
departments for their services.
b. The intra-organizational use of market controls is limited because
conditions of competitiveness and specificity or requirements may not
The use of market controls is increasing. For example,
using outside vendors to perform
services normally carried out within the organization, is becoming a
more common practice.
D. 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
Clan control relies on values, beliefs, traditions, corporate culture,
share norms and information
relationships to regulate employee behaviors and facilitate the reaching
of organizational goals.
1. Clan control differs from bureaucratic control.
a. Internal motivation is emphasized.
b. Duties are flexible and tasks are broadly defined.
c. Influence is based on relevant information and expertise, rather than
position in the hierarchy.
2. A primary advantage of clan control is that it is conducive to