Types of controls
A. Controls can be classified according to
their timing or place in the productive cycle.
1. Feedforward control
focuses on the regulation of inputs to ensure that
the standards necessary for the transformation process.
a. The emphasis is upon preventing problems.
b. Other names for feedforward control are “preliminary control,”
“preventative control” and “steering control.”
2. Concurrent control
involves the regulation of ongoing activities that
are part of
the transformation process to ensure that conform to organizational
a. Checkpoints are in place to determine whether to continue the
take corrective action, or stop work altogether.
b. Other names for concurrent control are “screening” and “yes-no
c. This type of control is not appropriate for work that requires
3. Feedback control
is regulation exercised after a product or service
completed in order to ensure that the final output meets organizational
a. Feedback control is used when feedforward and concurrent controls are
not feasible or are too costly.
b. Feedback control serves a number of functions:
1) To serve as a final means to check for deviations not detected
2) To provide information that will facilitate the planning process
3) To provide information regarding employee performance
c. Other names for feedback control are “post action control” or “output
B. Multiple control systems
are systems that use two or more of the
concurrent, and feedback control processes and involve several strategic
1. Multiple control systems develop because of the need to control
various aspects of
a productive cycle, including inputs, transformation, and outputs.
2. Computer software companies provide examples of processes complex
require multiple controls.
C. The degree to which human discretion is part of a control process
determines whether it is
cybernetic or non-cybernetic.
1. A cybernetic control system
is a self-regulated control system that, once
it is put
into operation, can automatically monitor the situation and take
when necessary, e.g., a heating system or some computerized inventory
2. A non-cybernetic control system
is a control system that relies on human
discretion as a basic part of its process.
CONTROLLING FOR ORGANIZATIONAL PERFORMANCE
A. What Is Organizational Performance?
Performance is the end result of an
activity. Managers are concerned with
the accumulated end results of all the
organization’s work processes and activities.
Measures of Organizational Performance
Employees need to see the connection between
what they do and the outcomes. The most frequently used
organizational performance measures include organizational productivity,
organizational effectiveness, and
1. Organizational productivity
is the overall output of goods or services
produced divided by the
inputs needed to generate that output. It’s the management’s job to
increase this ratio.
2. Organizational effectiveness
is a measure of how appropriate organizational
goals are and how
well an organization is achieving those goals.
TOOLS FOR MONITORING AND MEASURING ORGANIZATIONAL PERFORMANCE
Managers might use any of the following types
of performance control tools: financial controls, information
controls, balanced scorecard approach, or benchmarking best practices
A. Financial Controls.
1. Traditional Financial Control Measures.
a. Financial ratios are calculated by taking numbers from the
organization’s primary financial
statements—the income statement and the balance sheet. The four key
categories of financial ratios
are as follows.
1) Liquidity ratios measure an organization’s ability to meet its
current debt obligations.
2) Leverage ratios examine the organization’s use of debt to finance its
assets and whether it’s able to
meet the interest payments on the debt.
3) Activity ratios measure how efficiently the firm is using its assets.
4) Profitability ratios measure how efficiently and effectively the firm
is using its assets to generate
b. We have also discussed budgets as a planning tool. However, budgets
are also control tools. They
provide managers with quantitative standards against which to measure
and compare actual
performance and resource consumption.
2. Other Financial Control Measures. Managers are using measures such as
EVA (economic value
added) and MVA (market value added).
a. Economic value added
is a tool for measuring corporate and divisional
calculating after-tax operating profit minus the total annual cost of
b. Market value added
adds a market dimension by measuring the stock
market’s estimate of the
value of a firm’s past and expected capital investment projects.
B. Information Controls.
Controlling information can be vital to an
organization’s success. We need to look at the
development and use of management information systems.
1. A management information system
is a system that provides managers with needed
information on a regular basis.
a. Managers need usable information, not just data
are raw, unanalyzed facts.
Information is analyzed and processed
2. Information can help managers control the various organizational
areas efficiently and effectively.
It plays a vital role in the controlling process.
C. Balanced Scorecard Approach.
balanced scorecard is a performance
measurement tool that looks at four areas—financial,
customer, internal processes, and people/innovation/growth assets—that
contribute to a
2. The intent of the balanced scorecard is to emphasize that all of
these areas are important to an
D. Benchmarking of Best Practices
1.Benchmarking is the search for the best
practices among competitors or non-competitors that
lead to their superior performance.
2. Research shows that best practices
frequently already exist within an organization, but usually go
unidentified and unused.
Internal benchmarking best practices program.
Establishing Quality Management Systems
By implementing international quality
standards like ISO-9000, European Quality Award, Deming Prize, or
Malcom Balridge Award; an organization can boost its productivity and
quality. This will give leverage for a
continuous improvement and consistent quality products for customers and
keeping the employees happy
as well. One can also adapt TQM philosophy of Deming, Juran or Crosby or
Taguchi to outperform their
competitors in the global market.
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