Controlling Work and

Organizational Processes ent

em
Manag

14 Myt
h

While high employee turnover is almost always

dysfunctional, low turnover is not necessarily the
best goal. An absence of turnover often can
mean a complacent manager, one who’s
willing to accept mediocre employee
Man
age
A lack of
men

h
t

performance. In an effective organizational

Myt
employee
Myt
h

control system, managers are encouraged to

turnover identify and remove marginal employees. Low
is a sign of a levels of employee turnover can be functional
good manager. only if the right people—those who are the
Antonio Guillem Fernández/Alamy Stock Photo weakest performers—are the ones leaving.

487
 CH A P TE R 14 • C o nt ro l l i n g Wor k a nd O rg an i z at i o n al Pr o ce ss e s 489

CONTROLLING What Is Control and Why Is It Important?

experienced a major global computer failure

one weekend in 2017, causing the cancella- “Bailout” was the magic word that cost Domino’s
control

is the final step in the management process.

14-1 Explain the nature Pizza 11,000 free pizzas. The company had prepared
an Internet coupon for an ad campaign that was con-
Management function that involves monitoring
activities to ensure that they’re being accom-
tion of hundreds of flights and affecting more and importance sidered but not approved. However, when someone plished as planned and correcting any significant
of control. apparently typed “bailout” into a Domino’s promo-
deviations

Managers must monitor whether goals that than 75,000 passengers. Although the techni-
tional code window and found it was good for a free
medium pizza, the word spread like wildfire on the Web. Somewhere, somehow, a lack
of control cost the company big time.2
were established as part of the planning pro- cal problem was resolved fairly quickly, flight
What Is Control?
cess are being accomplished efficiently and crews were still in the wrong places instead of
How do you know a control system is effective? Look at
effectively. That’s what they do when they whether goals are being achieved!
where they needed to be. The “fine-tuned sys-
Control is the management function that involves monitoring activities to ensure that they’re
control. Appropriate controls can help manag- tem” was eventually restored.1 In this chapter, being accomplished as planned and correcting any significant deviations. Managers can’t re-
ally know whether their units are performing properly until they’ve evaluated what activities
have been done and have compared the actual performance with the desired standard. An
ers look for specific performance gaps and we’ll look at the fundamental elements of effective control system ensures that activities are completed in ways that lead to the attain-
ment of the organization’s goals. The effectiveness of a control system is determined by how
well it facilitates goal achievement. The more a control system helps managers achieve their
areas for improvement. Things don’t always controlling, including the control process, the organization’s goals, the better it is.

go as planned. But that’s why controlling is types of controls that managers can use, and Why Is Control Important?
• A press operator at the Denver Mint noticed a flaw—an extra up leaf or an extra down
leaf—on Wisconsin state quarters being pressed at one of his five press machines. He
so important! For instance, British Airways contemporary issues in control. • stopped the machine and left for a meal break. When he returned, he saw the machine
running and assumed that someone had changed the die in the machine. However, after
a routine inspection, the machine operator realized the die had not been changed. The
faulty press had likely been running for over an hour and thousands of the flawed coins
were now commingled with unblemished quarters. As many as 50,000 of the faulty coins
entered circulation, setting off a coin collector buying frenzy.3
• Northrop Grumman has implemented several major changes in its satellite production
Learning Outcomes unit after serious slipups were discovered in the building of NASA’s James Webb Space
Telescope, the successor to the Hubble Space Telescope.4
• H&M, the Swedish fashion retailer has a problem: $4.3 billion of unsold inventory. For a
14-1 Explain the nature and importance of control. p. 489 •
competitor in fast fashion retailing, that’s a pretty serious problem.5
McDonald’s Japan has apologized to customers and vowed to better control product safety
after foreign objects—including a tooth and plastic—were found in food.6
14-2 Describe the three steps in the control process. p. 491 • Hundreds of KFC stores in the United Kingdom had to close after a logistics error meant
no chickens were on hand to cook and sell.7
Hackers attacked a Saudi Arabian petrochemical plant and gained control over a safety
14-3 Discuss the types of controls organizations and managers use. p. 496
•
shut-off system critical to defending against catastrophic events. The hackers would
have had the ability to control what that safety system would do in the event of an
emergency.8
14-4 Discuss contemporary issues in control. p. 502 • The 2017 Academy Awards were quite memorable...not for the emcee’s lines or the cloth-
ing choices of the nominees, but for the Best Picture Award when the wrong envelope was
handed to the presenters and the wrong picture announced as the winner, a mistake that
had to be quickly corrected. A thorough review afterward by PricewaterhouseCoopers, the

488
490 Pa r t 5 • Controlling CH A P TE R 14 • C o nt ro l l i n g Wor k a nd O rg an i z at i o n al Pr o ce ss e s 491

accounting firm in charge of the awards, of what went wrong led to revised protocols and 3. Protecting the workplace.
“ambitious controls” to ensure it would not happen again.9 The final reason that managers
• No fast-food chain wants its employees doing gross stuff behind the scenes, but social control is to protect the organi-
media photos and videos of a Taco Bell employee licking a stack of taco shells, a Wendy’s zation and its assets.12 Organizations
employee bending down under a Frosty machine with mouth wide open gobbling the treat, face threats from natural disasters,
or a Domino’s Pizza employee performing vulgar and unsanitary actions while preparing financial pressures and scandals,
food have all shown up online.10 workplace violence, supply chain
disruptions, security breaches,
and even possible terrorist attacks.
77 percent of executives say that the biggest threat Managers must protect organiza-
to their organizations comes from within.11

Richard Graulich/ZUMA Press/Newscom

tional assets in the event that any of
these should happen. Comprehensive
controls and backup plans will help
Can you see now why controlling is such an important managerial function? Planning minimize work disruptions.
can be done, an organizational structure created to facilitate efficient achievement of goals,
and employees motivated through effective leadership. But there’s no assurance that activities
are going as planned and that the goals employees and managers are working toward are, in
fact, being attained. Control is important, therefore, because it’s the only way that managers
know whether organizational goals are being met and, if not, the reasons why. The value of
the control function can be seen in three specific areas: John Jamason, media and public

1. Planning. In Chapter 6, we described goals, which provide specific direction to em-

ployees and managers, as the foundation of planning. However, just stating goals or hav-
What Takes Place as Managers Control? information manager, talks to employees
working in the social media monitoring
room at the Palm Beach County
ing employees accept goals doesn’t guarantee that the necessary actions to accomplish Emergency Operations Center. Social

14-2 Describe the three

those goals have been taken. As the old saying goes, “The best-laid plans often go awry.” When Maggine Fuentes joined Ohio-based Core media such as Facebook and Twitter help
the center track and monitor information
The effective manager follows up to ensure that what employees are supposed to do is, Systems as HR manager, she knew that her top prior- during storm emergencies to get help to
in fact, being done and goals are being achieved. As the final step in the management steps in the control ity was reducing the number of employee injuries, people in need.

process, controlling provides the critical link back to planning. (See Exhibit 14–1.) If process. which was well above the industry average. The high
managers didn’t control, they’d have no way of knowing whether goals and plans were frequency and severity of the company’s injury rates
being achieved and what future actions to take. not only affected employee morale, but also resulted
in lost workdays and affected the bottom line.13 Fuentes relied on the control process to turn
2. Empowering employees. The second reason controlling is important is because of
this situation around.
employee empowerment. Many managers are reluctant to empower their employees be-
The control process is a three-step process of (1) measuring actual performance,
cause they fear something will go wrong for which they would be held responsible. But
(2) comparing actual performance against a standard, and (3) taking managerial action to cor-
an effective control system can provide information and feedback on employee perfor-
rect deviations or to address inadequate standards. (See Exhibit 14–2.) The control process
mance and minimize the chance of potential problems.
assumes that performance standards already exist, and they do. They’re the specific goals cre-
ated during the planning process.

Specific goals ARE the performance standards.

Exhibit 14–1 Planning–Controlling Link

Planning
Goals
1 What Is Measuring?
Objectives To determine actual performance, a manager must first get information about it. Thus, the
Strategies first step in control is measuring.
Plans
Controlling
Organizing HOW DO MANAGERS MEASURE? Four common sources of information frequently
Standards used to measure actual performance include personal observation, statistical reports, oral
Structure
Measurements reports, and written reports. Each has its own particular strengths and weaknesses, but us-
Human Resource
Comparison Management ing a combination of them increases both the number of input sources and the probability control process
Actions A three-step process of measuring actual perfor-
Leading of receiving reliable information. mance, comparing actual performance against a
Motivation Personal observation provides firsthand, intimate knowledge of the actual activity— standard, and taking managerial action to correct
deviations
Leadership information that is not filtered through others. It permits intensive coverage because minor
Communication as well as major performance activities can be observed, and it provides opportunities for the management by walking
Individual and manager to read between the lines. Management by walking around (MBWA) is a phrase used around (MBWA)
to describe when a manager is out in the work area, interacting directly with employees and When a manager is out in the work area interact-
Group Behavior
ing with employees
exchanging information about what’s going on. Management by walking around can pick
492 Pa r t 5 • Controlling CH A P TE R 14 • C o nt ro l l i n g Wor k a nd O rg an i z at i o n al Pr o ce ss e s 493

up factual omissions, facial expressions, and tones of voice that may be missed Exhibit 14–2 The Control Process
Making Ethical Decisions in by other sources. Unfortunately, in a time when quantitative information sug-
Today’s Workplace gests objectivity, personal observation is often considered an inferior information
source. It is subject to perceptual biases; what one manager sees, another might Is standard Yes Do
not. Personal observation also consumes a good deal of time. Finally, this method Compare being attained? nothing
Ratings. Reviews. We all look to them when we’re suffers from obtrusiveness. Employees might interpret a manager’s overt observa- actual
looking for a place to eat, a car to buy, a plumber to tion as a lack of confidence or a sign of mistrust. performance
fix plumbing problems, a doctor to fix health prob- with standard No
The widespread use of computers has led managers to rely increasingly on sta-
lems, or even a professor that you want to spend tistical reports for measuring actual performance. This measuring device, however,
a whole semester with. You’ve probably even isn’t limited to computer outputs. It also includes graphs, bar charts, and numerical
Is variance Yes Do
filled out reviews for products or services you’ve displays of any form that managers can use for assessing performance. Although acceptable? nothing
used. What would you think of a new platform statistical information is easy to visualize and effective for showing relationships,
that lets your coworkers or other business profes- it provides limited information about an activity. Statistics report on only a few key
areas and may often ignore other important, often subjective, factors. Measure No
sionals with whom you interact rate you anony- Goals Standard actual
Information can also be acquired through oral reports—that is, through performance
mously? That’s the premise behind Completed, a
conferences, meetings, one-to-one conversations, or telephone calls. In employee-
“Yelp for professionals” as its creators call it.14 Identify
oriented organizations where employees work closely together, this approach Is standard Yes
cause of
The purpose of Completed is to let professionals may be the best way to keep tabs on work performance. For instance, at the acceptable? variation
rate others’ performance and provide detailed and Ken Blanchard Companies in Escondido, California, managers are expected to
constructive feedback. Controlling who can post hold one-on-one meetings with each of their employees at least once every two
and what gets posted is a major concern that the weeks.15 The advantages and disadvantages of this method of measuring perfor- No
founders say they’ve taken into consideration with mance are similar to those of personal observation. Although the information is
its patent-pending algorithm that’s based on a filtered, it is fast, allows for feedback, and permits expression and tone of voice, Revise Correct
number of criteria. Ultimately, Completed will have as well as words themselves, to convey meaning. Historically, one of the major standard performance
geo-location and facial recognition technology so drawbacks of oral reports has been the problem of documenting information for
you can review those who are closest to you. later reference. However, our technological capabilities have progressed in the
past couple of decades to the point where oral reports can be efficiently taped and
Discussion Questions: become as permanent as if they were written.
Actual performance may also be measured by written reports. Like statisti-
1 What do you think of this feedback/review Keeping costs within budget is, therefore, a fairly common control measure. However, any
cal reports, they are slower yet more formal than firsthand or secondhand oral
platform—positive and negative? Discuss. comprehensive control system needs to recognize the diversity of activities among managers.
measures. This formality also often gives them greater comprehensiveness and
2 What potential ethical issues might arise conciseness than found in oral reports. In addition, written reports are usually For example, a production manager in a paper tablet manufacturing plant might use measures
Greeting customers with a handshake, a
with Completed? What stakeholders are easy to catalog and reference. of the quantity of tablets produced per day, tablets produced per labor hour, scrap tablet rate, smile, and a warm welcome is a practice
likely to be affected by this rating platform? Given the varied advantages and disadvantages of each of these four mea- or percentage of rejects returned by customers. On the other hand, the manager of an admin- Apple stores adopted from Ritz-Carlton,
Would YOU want your coworkers/business surement techniques, managers should use all four for comprehensive control istrative unit in a government agency might use number of document pages produced per the luxury hotel chain known as the
gold standard of customer service. Apple
associates rating your performance? Why or efforts. day, number of orders processed per hour, or average time required to process service calls. benchmarked with Ritz-Carlton because it
why not? Once you’ve answered these ques- Marketing managers often use measures such as percent of market held, number of customer wants its employees to excel at customer
tions on your own, get into your assigned visits per salesperson, or number of customer impressions per advertising medium. service that leads to customer loyalty.

group and compare/discuss your individual

Seventy-three percent of employers have taken efforts As you might imagine, some activities are more difficult

Nati Harnik/AP Images

responses. to address productivity killers at work.16 to measure in quantifiable terms. It is more difficult, for
instance, for a manager to measure the performance of a
medical researcher or a middle school counselor than of
WHAT DO MANAGERS MEASURE? What managers measure is probably more critical a person who sells life insurance. But most
to the control process than how they measure. Why? The selection of the wrong criteria can activities can be broken down into objective
result in serious dysfunctional consequences. Besides, what we measure determines, to a segments that allow for measurement. The
great extent, what people in the organization will attempt to excel at.17 For example, as- manager needs to determine what value a
sume that your instructor has required a total of 10 writing assignments from the exercises person, department, or unit contributes to
at the end of each textbook chapter. But in the grade computation section of the syllabus, the organization and then convert the con-
you notice that these assignments are not scored. In fact, when you ask your professor tribution into standards.
about this, she replies that these writing assignments are for your own enlightenment and Most jobs and activities can be ex-
do not affect your grade for the course; grades are solely a function of how well you per- pressed in tangible and measurable terms.
form on the three exams. We predict that you would, not surprisingly, exert most, if not all, When a performance indicator cannot be
of your effort toward doing well on the three exams. stated in quantifiable terms, managers
Some control criteria are applicable to any management situation. For instance, because should look for and use subjective mea-
all managers, by definition, direct the activities of others, criteria such as employee satisfac- sures. Certainly, subjective measures have
tion or turnover and absenteeism rates can be measured. Also, most managers have budgets significant limitations. Still, they are bet-
for their area of responsibility set in monetary units (dollars, pounds, francs, lire, and so on). ter than having no standards at all and
494 Pa r t 5 • Controlling CH A P TE R 14 • C o nt ro l l i n g Wor k a nd O rg an i z at i o n al Pr o ce ss e s 495

Exhibit 14–3 Acceptable Range of Variation

◂◂◂ Classic Concepts in Today’s Workplace ▸▸▸

We introduced benchmarking in the planning chapter Today, managers in diverse industries such as health
(Chapter 6) as a way for organizations to promote quality.18 care, education, and financial services are discovering what
Not surprisingly, since planning and controlling are so closely manufacturers have long recognized—the benefits of bench-
Acceptable
linked, it also has implications for control. Benchmarking has marking. For instance, the American Medical Association de- upper limit
been a highly utilized management tool. Although Xerox is veloped more than 100 standard measures of performance
often credited with the first wide- to improve medical care. When •
spread benchmarking effort in the Carlos Ghosn was CEO of Nissan,
United States, the practice can actu- Benchmarking: he benchmarked against Walmart’s Standard • • Acceptable
range of
ally be traced back much further.
The benefits of benchmark-
How do we operations in purchasing, transporta-
tion, and logistics. At its most ba-
•
variation

ing have long been recognized in

the manufacturing industry. At the
measure up? sic, benchmarking means learning
from others. However, as a tool for Acceptable
• •
lower limit
Midvale Steel Company plant where monitoring and measuring organiza-
he was employed, Frederick W. Taylor (of scientific manage- tional and work performance, benchmarking can be used
ment fame) used concepts of benchmarking to find the “one to identify specific performance gaps and potential areas of
best way” to perform a job and to find the best worker to improvement.
perform the job. Even Henry Ford recognized the benefits.
Based on the techniques used at Chicago slaughterhouses t t+1 t+2 t+3 t+4 t+5
Discussion Questions:
where carcasses were hung from hooks mounted on a
monorail, with each man performing his job and then push- 3 What are the benefits of benchmarking? What are the
ing the carcass to the next work station, Ford’s assembly challenges in doing it? 3 What Managerial Action Can Be Taken?
line used the same concept for producing cars, beginning in 4 In your “assigned” group, discuss whether benchmarking
1913. “The idea that revolutionized manufacturing was im- would be an appropriate activity for individuals. Explain Managers can choose among three possible courses
ported from another industry.“ your answer. of action:
# Do nothing (self-explanatory)
# Correct actual performance
# Revise the standards
ignoring the control function. If an activity is important, the excuse that it’s difficult to mea-
sure is inadequate. In such cases, managers should use subjective performance criteria. Of HOW DO YOU CORRECT ACTUAL PERFORMANCE? Depending on what the problem
course, any analysis or decisions made on the basis of subjective criteria should recognize the immediate corrective action
is, a manager could take different corrective actions. For instance, if unsatisfactory work is Corrective action that addresses problems at once
limitations of the data. the reason for performance variations, the manager could correct it through training pro- to get performance back on track
grams, disciplinary action, changes in compensation practices, and so forth. One decision
basic corrective action
2 How Do Managers Compare Actual Performance that a manager must make is whether to take immediate corrective action, which corrects Corrective action that looks at how and why
problems at once to get performance back on track, or to use basic corrective action, which performance deviated before correcting the source
to Planned Goals? looks at how and why performance deviated before correcting the source of deviation. of deviation

The comparing step determines the variation between actual performance and the standard. It’s not unusual for managers to rationalize that they don’t have time to find the source
Although some variation in performance can be expected in all activities, it’s critical to deter- of a problem (basic corrective action) and continue to perpetually “put out fires” with
mine an acceptable range of variation (see Exhibit 14–3). Deviations outside this range need
attention. Let’s work through an example. Exhibit 14–4 Example of Determining Significant Variation: Green Earth Gardening
Chris Tanner is a sales manager for Green Earth Gardening Supply, a distributor of Supply—June Sales
specialty plants and seeds in the Pacific Northwest. Chris prepares a report during the first
week of each month that describes sales for the previous month, classified by product line.
Exhibit 14–4 displays both the sales goals (standard) and actual sales figures for the month
PRODUCT STANDARD ACTUAL OVER (UNDER)
of June. After looking at the numbers, should Chris be concerned? Sales were a bit higher Vegetable plants 1,075 913 (612)
than originally targeted, but does that mean there were no significant deviations? That de- Perennial flowers 630 634 4
pends on what Chris thinks is significant—that is, outside the acceptable range of variation. Annual flowers 800 912 112
Even though overall performance was generally quite favorable, some product lines need Herbs 160 140 (20)
closer scrutiny. For instance, if sales of heirloom seeds, flowering bulbs, and annual flow-
Flowering bulbs 170 286 116
ers continue to be over what was expected, Chris might need to order more product from
nurseries to meet customer demand. Because sales of vegetable plants were 15 percent Flowering bushes 225 220 (5)
range of variation below goal, Chris may need to run a special on them. As this example shows, both over- Heirloom seeds 540 672 132
The acceptable parameters of variance between variance and undervariance may require managerial attention, which is the third step in the
actual performance and a standard Total 3,600 3,777 177
control process.
496 Pa r t 5 • Controlling CH A P TE R 14 • C o nt ro l l i n g Wor k a nd O rg an i z at i o n al Pr o ce ss e s 497

immediate corrective action. Effective managers analyze deviations and, if the benefits jus- The key to feedforward controls is taking manage-
tify it, take the time to pinpoint and correct the causes of variance. rial action before a problem occurs. That way, prob-
lems can be prevented rather than having to correct
HOW DO YOU REVISE THE STANDARD? It’s possible that the variance was a result of an them after any damage—poor-quality products, lost
unrealistic standard—too low or too high a goal. In such cases, it’s the standard that needs customers, lost revenue, etc.—has already been done.
corrective action, not the performance. If performance consistently exceeds the goal, then However, these controls require timely and accurate in-
a manager should look at whether the goal is too easy and needs to be raised. On the other formation that isn’t always easy to get. Thus, managers
hand, managers must be cautious about revising a standard downward. It’s natural to blame frequently end up using the other two types of control.
the goal when an employee or a team falls short. For instance, students who get a low score
WHEN IS CONCURRENT CONTROL USED?
on a test often attack the grade cutoff standards as too high. Rather than accept the fact
Concurrent control, as its name implies, takes place
that their performance was inadequate, they will argue that the standards are unreason-
able. Likewise, salespeople who don’t meet their monthly quota often want to blame what while a work activity is in progress. For instance, the
they think is an unrealistic quota. The point is that when performance isn’t up to par, don’t director of business product management at Google
immediately blame the goal or standard. If you believe the standard is realistic, fair, and and his team keep a watchful eye on one of Google’s
achievable, tell employees that you expect future work to improve, and then take the neces- most profitable businesses—online ads. They watch
sary corrective action to help make that happen. “the number of searches and clicks, the rate at which Elaine Thompson/AP Images
users click on ads, the revenue this generates— Microsoft uses concurrent

What Should Managers Control? everything is tracked hour by hour, compared with the data from a week earlier and charted.”20 control to track its energy usage.
Shown here at its operations
If they see something that’s not working particularly well, they fine-tune it. center, control technician Ray Nichols
monitors real-time data on heating, cooling,
Cost efficiency. The length of time customers are kept on hold. Customers being sat- Fifty-five percent of employees say that micromanaging and other systems in the company’s buildings

14-3 Discuss the

that will help Microsoft achieve its goals of
isfied with the service provided. These are just a few of the important performance decreases their productivity.21 improving its carbon footprint and reducing

types of controls indicators that executives in the intensely competitive call-center service industry its impact on the environment.
measure. To make good decisions, managers in this industry want and need this type Technical equipment (such as computers and computerized machine controls) can be
organizations and of information so they can control work performance. designed to include concurrent controls. For example, you’ve probably experienced this with
managers use. How do managers know what to control? In this section, we’re first going to look at word-processing software that alerts you to a misspelled word or incorrect grammatical us-
the decision of what to control in terms of when control takes place. Then, we’re going age. Also, many organizational quality programs rely on concurrent controls to inform work-
to discuss some different areas in which managers might choose to establish controls. ers whether their work output is of sufficient quality to meet standards.
The best-known form of concurrent control, however, is direct supervision. For example,
When Does Control Take Place? Nvidia’s CEO Jen-Hsun Huang had his office cubicle torn down and replaced with a conference
Management can implement controls before an activity commences, during the activity, or table so he’s now available to employees at all times to discuss what’s going on.22 All managers
after the activity has been completed. The first type is called feedforward control, the second can benefit from using concurrent control because they can correct problems before they become
is concurrent control, and the last is feedback control (see Exhibit 14–5). too costly. MBWA, described earlier in this chapter, is a great way for managers to do this.

WHAT IS FEEDFORWARD CONTROL? The most desirable type of control—feedforward WHY IS FEEDBACK CONTROL SO POPULAR? The most popular type of control relies
control—prevents problems because it takes place before the actual activity.19 For instance, on feedback. In feedback control, the control takes place after the activity is done. For
when McDonald’s began doing business in Moscow, it sent company quality control experts instance, remember our earlier Denver Mint example. The flawed Wisconsin quarters were
to help Russian farmers learn techniques for growing high-quality potatoes and to help bakers discovered with feedback control. The damage had already occurred even though the orga-
learn processes for baking high-quality breads. Why? McDonald’s demands consistent product nization corrected the problem once it was discovered. And that’s the major problem with
quality no matter the geographical location. They want french fries in Moscow to taste like this type of control. By the time a manager has the information, the problems have already
feedforward control those in Omaha. Still another example of feedforward control is the scheduled preventive main- occurred, leading to waste or damage. However, in many work areas—the financial area
Control that takes place before a work activity tenance programs on aircraft done by the major airlines. These schedules are designed to detect being one example—feedback is the only viable type of control.
is done
and hopefully to prevent structural damage that might lead to an accident.
Managers should develop goals for each of the four
areas and then measure whether goals are being met.
Exhibit 14–5 “When” Does Control Take Place?
Feedback controls do have two advantages.23 First, feedback gives managers meaningful concurrent control
Control that takes place while a work activity is
information on how effective their planning efforts were. Feedback that shows little variance in progress
Input Processes Output between standard and actual performance indicates that the planning was generally on target.
If the deviation is significant, a manager can use that information to formulate new plans. feedback control
Second, feedback can enhance motivation. People want to know how well they’re doing, and Control that takes place after a work activity is
done
feedback provides that information.
Feedforward Concurrent Feedback
control control control

Anticipates Corrects problems Corrects problems

problems as they happen after they occur
 KEEPING TRACK: • Budget analysis. Budgets are used for both planning and controlling.

What Gets Controlled?

▪ Planning tool: indicates which work activities are important and what and how much
resources should be allocated to those activities.
▪ Controlling tool: provides managers with quantitative standards against which to measure
and compare resource consumption. Significant deviations require action and a manager to
examine what has happened and why and then take necessary action.
Countless activities are taking place in

2
different organizational locations and
functional areas!
Keeping Track of Organization’s Information

1 Keeping Track of an Organization’s Finances

A Information—a critical tool for controlling other organizational activities
WHY Managers need RIGHT INFORMATION at the RIGHT TIME and in the
RIGHT AMOUNT to help them monitor and measure organizational activities:
Want to earn a profit?
• about what is happening within their area of
You need financial controls!
responsibility.
Traditional financial controls include:
• about the standards in order to be able to com-
• Ratio analysis. (See Exhibit 14–6.) pare actual performance with the standard.
Ratios are calculated using selected • to help them determine if deviations are acceptable.
information from the organization’s
• to help them develop appropriate courses of action.
balance sheet and income statement.
Ekaterina Semenova/Fotolia
Morena/Shutterstock

Exhibit 14–6 Popular Financial Ratios

OBJECTIVE RATIO CALCULATION MEANING Information is important!
Current assets Tests the organization’s ability to meet short-term
Liquidity ratios: measure an organiza- Current ratio
Current liabilities
tion’s ability to meet its current debt
Current assets - Inventories
obligations
HOW A management information system (MIS) Dusit/Shutterstock
obligations Tests liquidity more accurately when inventories turn
Acid test Current liabilities over slowly or are difficult to sell • Can be manual or computer-based,
Leverage ratios: examine the orga- Debt to assets
Total debt
Total assets
The higher the ratio, the more leveraged the
organization
although most organizational MIS are
nization’s use of debt to finance its
assets and whether it’s able to meet Profits before interest and taxes Measures how many times the organization is able to
computer-supported applications.
the interest payments on the debt Times interest earned Total interest charges cover its interest expenses
Sales The higher the ratio, the more efficiently inventory as-
• System in MIS implies order, arrange-
Inventory turnover
Activity ratios: assess how efficiently
Inventory sets are being used ment, and purpose.
a company is using its assets The fewer assets used to achieve a given level of
Total asset turnover
Sales
Total assets
sales, the more efficiently management is using the • Focuses specifically on providing man-
organization’s total assets
Net profit after taxes
agers with information (processed and
Profit margin on sales Identifies the profits that are being generated
Profitability ratios: measure how Total sales analyzed data), not merely data (raw,
efficiently and effectively the company
is using its assets to generate profits Return on investment
Net profit after taxes
Measures the efficiency of assets to generate profits unanalyzed facts). management information system (MIS)
A system used to provide management with needed information on a regular basis
Total assets

498 499
 B Information—an organizational resource that needs controlling

▸▸▸ In 2017—79,700 reported security incidents

24 ▸▸▸
4 Keeping Track Using a Balanced Scorecard
Approach
and 2,122 confirmed data breaches.
Balanced scorecard approach looks at more than the financial perspective27 by
• Information is critically important to everything an organization does—that typically looking at four areas that contribute to a company’s performance:
information needs to be protected. 1 Financial
▪ Controls: data encryption, system
firewalls, data backups, and other 2 Customer
techniques.25
▪ Look for problems in places that might not 3 Internal processes
even have been considered, like search
engines. 4 People/innovation/
▪ Equipment such as laptop computers, growth assets
tablets, and even RFID (radio-frequency
identification) tags are vulnerable to
viruses and hacking.
▪ Monitor information controls regularly to
Andriy Popov/Alamy Stock Photo
Bedrin/Shutterstock
ensure that all possible precautions are in
place to protect important information. Managers should: develop goals for each of
the four areas and then measure whether

3
goals are being met.
Keeping Track of Employee Performance balanced scorecard
A performance measurement tool that looks at more than just
the financial perspective

• Are employees doing their jobs as planned

and meeting goals that have been set?
• If not, employee counseling or employee
discipline may be needed.
See p. 300 in Chapter 8.

Over 81 percent of managers say they don’t

do very well at giving difficult feedback.26

Mike Charles/Shutterstock

500 501
502 Pa r t 5 • Controlling CH A P TE R 14 • C o nt ro l l i n g Wor k a nd O rg an i z at i o n al Pr o ce ss e s 503

What Contemporary Control Issues Do Managers Confront? ::::::: Managing Technology in Today’s Workplace :::::::
MONITORING EMPLOYEES
The employees of Integrated Information Systems Inc. didn’t think twice about exchanging
14-4 Discuss digital music over a dedicated office server they had set up. Like office betting on college and Technological advances have made the process of managing an Just how much control a company should have over the private
contemporary pro sports, it was technically illegal, but harmless—or so they thought. But after the company
organization much easier.30 And technological advancements have lives of its employees also becomes an issue. Where should an
issues in control. had to pay a $1 million settlement to the Recording Industry Association of America, man-
agers wished they had controlled the situation better.28 Control is an important managerial also provided employers a means of sophisticated employee moni- employer’s rules and controls end? Does the boss have the right to
function. We’re going to look at two control issues that managers face today: cross-cultural toring. Although most of this monitoring is designed to enhance dictate what you do on your free time and in your own home? Could
differences and workplace concerns. worker productivity, it could, and has been, a source of concern over your boss keep you from engaging in riding a motorcycle, skydiving,
worker privacy. These advantages bring with them difficult ques- smoking, drinking alcohol, or eating junk food? Again, the answers
tions regarding what managers have the right to know about em- may surprise you. Today many organizations, in their quest to control
Do Controls Need to Be Adjusted for Cultural Differences?
ployees and how far they can go in controlling employee behavior, safety and health insurance costs, are delving into their employees’
The concepts of control that we’ve discussed are appropriate for organizational units that
aren’t geographically distant or culturally distinct. But what about global organizations? both on and off the job. Consider the following: private lives.
Would control systems be different, and what should managers know about adjusting controls • The mayor of Colorado Springs, Colorado, reads the e-mail mes- Although controlling employees’ behaviors on and off the
for national differences? sages that city council members send to each other from their job may appear unjust or unfair, nothing in our legal system
Methods of controlling employee behavior and operations can be quite different in homes. He defended his actions by saying he was making sure prevents employers from engaging in these practices. Rather,
different countries. In fact, the differences in organizational control systems of global that e-mails to each other were not being used to circumvent the the law is based on the premise that if employees don’t like the
organizations are primarily in the measurement and corrective action steps of the control state’s “open meeting” law that requires most council business rules, they have the option of quitting. Managers, too, typically
process. In a global corporation, for instance, managers of foreign operations tend not to to be conducted publicly.
be closely controlled by the home office if for no other reason than that distance keeps defend their actions in terms of ensuring quality, productivity,
• The U.S. Internal Revenue Service’s internal audit group moni-
managers from being able to observe work directly. Because distance creates a tendency and proper employee behavior. For instance, an IRS audit of its
tors a computer log that shows employee access to taxpayers’
for formalized controls, the home office of a global company often relies on extensive, accounts. This monitoring activity allows management to check southeastern regional offices found that 166 employees took
formal reports for control. The global company may also use information technology to and see what employees are doing on their computers. unauthorized looks at the tax returns of friends, neighbors, and
control work activities. For instance, Seven and i Holdings (Japan’s biggest retail con- celebrities.
• American Express has an elaborate system for monitoring tele-
glomerate and parent company of the 7-Eleven convenience store chain in the United
phone calls. Daily reports provided to supervisors detail the fre-
States) uses automated cash registers not only to record sales and monitor inventory, but Discussion Questions:
quency and length of calls made by employees, as well as how
also to schedule tasks for store managers and to track their use of the built-in analytical 5 When does management’s need for information about employee
quickly incoming calls are answered.
graphs and forecasts. If managers don’t use them enough, they’re told to increase their performance cross over the line and interfere with a worker’s right
activities.29 • Employers in several organizations require employees to wear
badges at all times while on company premises. These badges to privacy?
Technology’s impact on control is most evident in comparisons of technologically
advanced nations with countries that aren’t as technologically advanced. Organizations contain a variety of data that allow employees to enter certain 6 Is any action by management acceptable as long as employees
These African railway attendants prepare to
greet guests at the opening ceremony for a in technologically advanced nations such as the United States, Japan, Canada, Great locations in the organization. Smart badges, too, can transmit are notified ahead of time that they will be monitored? Discuss.
Chinese-built electric high-speed railway that Britain, Germany, and Australia use indirect control devices—particularly computer- where the employee is at all times!
connects Ethiopia and Djibouti. The techno-
logically advanced Chinese staff who will ini- related reports and analyses—in addition to standardized rules and direct supervision
tially manage the railway need to adjust their to ensure that activities are going as planned. In less technologically advanced coun-
controls for cultural differences as they train tries, direct supervision and highly centralized decision making are the basic means of
local African counterparts how to operate and
control.
manage the rail system.
Also, constraints on what corrective action What Challenges Do Managers Face in Controlling the Workplace?
managers can take may affect managers in for- Today’s workplaces present considerable control challenges for managers. From monitoring
eign countries because laws in some countries employees’ computer usage at work to protecting the workplace against disgruntled employ-
do not allow managers the option of closing fa- ees intent on doing harm, managers need controls to ensure that work can be done efficiently
cilities, laying off employees, or bringing in a and effectively as planned.
new management team from outside the country.
Finally, another challenge for global companies Sixty-eight percent of employees admit to
in collecting data is comparability. For instance, a
company’s manufacturing facility in Mexico might using company computers to check personal e-mail.31
produce the same products as a facility in Scotland.
However, the Mexican facility might be much more IS MY WORK COMPUTER REALLY MINE? If you work, do you think you have a right to
labor intensive than its Scottish counterpart (to privacy at your job? What can your employer find out about you and your work? You might
take advantage of lower labor costs in Mexico). If be surprised at the answers! Employers can (and do), among other things, read your e-mail
top-level executives were to control costs by, for (even those marked “personal or confidential”), tap your telephone, monitor your work by
example, calculating labor costs per unit or output computer, store and review computer files, monitor you in an employee bathroom or dress-
per worker, the figures would not be comparable. ing room, and track your whereabouts in a company vehicle. And these actions aren’t that
Managers in global companies must address these uncommon. In fact, some 30 percent of companies have fired workers for misusing the
types of global control challenges. Internet and another 28 percent have terminated workers for e-mail misuse.32
Qin bin/AP Images
504 Pa r t 5 • Controlling CH A P TE R 14 • C o nt ro l l i n g Wor k a nd O rg an i z at i o n al Pr o ce ss e s 505

Why do managers feel they need to monitor Why do employees steal? The answer depends on whom you ask.44 Experts in various
what employees are doing? A big reason is that fields—industrial security, criminology, clinical psychology—have different perspectives.
employees are hired to work, not to surf the Web The industrial security people propose that people steal because the opportunity presents
checking stock prices, watching online videos, itself through lax controls and favorable circumstances. Criminologists say that it’s because
playing fantasy baseball, or shopping for presents people have financial-based pressures (such as personal financial problems) or vice-based
for family or friends. Recreational on-the-job Web pressures (such as gambling debts). And the clinical psychologists suggest that people steal
surfing is thought to cost billions of dollars in lost because they can rationalize whatever they’re doing as being correct and appropriate behavior
work productivity annually. In fact, a survey of (“everyone does it,” “they had it coming,” “this company makes enough money and they’ll
U.S. employers said that 87 percent of employees never miss anything this small,” “I deserve this for all that I put up with,” and so forth).45
look at non-work-related websites while at work, Although each approach provides compelling insights into employee theft and has been
and more than half engage in personal website instrumental in attempts to deter it, unfortunately, employees continue to steal. What can
surfing every day.33 Watching online video has managers do?
become an increasingly serious problem not only The concept of feedforward, concurrent, and feedback control is useful for identifying
because of the time being wasted by employees, measures to deter or reduce employee theft.46 Exhibit 14–7 summarizes several possible
but also because it clogs already-strained corporate managerial actions.
computer networks.34 If you had to guess the video
site viewed most often at work, what would you WHAT CAN MANAGERS DO ABOUT WORKPLACE VIOLENCE? In January 2015, a
At Citrix, a provider of virtualization, network-
Charles Trainor Jr./Miami Herald/MCT/Newscom
guess? If you said YouTube, you’d be absolutely cardiologist at Boston’s Brigham and Women’s Hospital was gunned down by a man
ing, and cloud technologies for businesses, correct!35 However, as innocent as it may seem (after all, it may be just a 30-second video), whose mother had been operated on by the doctor and subsequently died. After killing
employees are allowed to BYOD—bring your all this nonwork adds up to significant costs to businesses. the cardiologist, the man shot himself. In September 2014, a man who was recently fired
own device. Although more companies are
adopting BYOD policies, the control risks are
Another reason that managers monitor employee e-mail and computer usage is that walked into the UPS he had worked at and killed two individuals and then took his own
still very much the same. Even in a BYOD en- they don’t want to risk being sued for creating a hostile workplace environment because of life. In April 2014, an individual who worked as a baggage handler opened fire at a FedEx
vironment, workplace monitoring policies are offensive messages or an inappropriate image displayed on a coworker’s computer screen. facility near Atlanta, injuring six employees. In August 2010, a driver about to lose his
very much needed.
Concerns about racial or sexual harassment are one reason companies might want to monitor job at Hartford Distributors in Hartford, Connecticut, opened fire, killing eight other em-
or keep backup copies of all e-mail. Electronic records can help establish what actually hap- ployees and himself. In July 2010, a former employee at a solar products manufacturer in
pened so managers can react quickly.36 Albuquerque, New Mexico, walked into the business and opened fire, killing two people
Finally, managers want to ensure that company secrets aren’t being leaked.37 In addition
to typical e-mail and computer usage, companies are monitoring instant messaging, blogs,
and other social media outlets and are banning phone cameras in the office. Managers need Exhibit 14–7 Controlling Employee Theft
to be certain that employees are not, even inadvertently, passing information on to others who
could use that information to harm the company. FEEDFORWARD CONCURRENT FEEDBACK
Because of the potentially serious costs and given the fact that many jobs now entail comput-
Make sure employees
ers, many companies have workplace monitoring policies. Such policies should control employee know when theft or fraud has
behavior in a nondemeaning way, and employees should be informed about those policies. Use careful prehiring Treat employees with
occurred—not naming names
screening. respect and dignity.
but letting people know this
is not acceptable.
IS EMPLOYEE THEFT ON THE RISE? Would you be surprised to find that up to 85
percent of all organizational theft and fraud is committed by employees, not outsiders?38 Establish specific
policies defining theft Openly communicate Use the services of
And it’s a costly problem—estimated to be about $4,500 per worker per year.39 In a and fraud and discipline the costs of stealing. professional investigators.
survey of U.S. companies, 20 percent said that workplace theft has become a moderate to procedures.
very big problem.40
Employee theft is defined as any unauthorized taking of company property by employ- Let employees know on
ees for their personal use.41 It can range from embezzlement to fraudulent filing of expense Involve employees a regular basis about their
Redesign control measures.
in writing policies. successes in preventing
reports to removing equipment, parts, software, or office supplies from company premises. theft and fraud.
Although retail businesses have long faced serious potential losses from employee theft,
loose financial controls at startups and small companies and the ready availability of informa-
Evaluate your organ-
tion technology have made employee stealing an escalating problem in all kinds and sizes Educate and train Use video surveillance
ization’s culture and the
of organizations. It’s a control issue that managers need to educate themselves about and be employees about the equipment if conditions
relationships of managers
policies. warrant.
prepared to deal with it.42 and employees.

employee theft Global employee fraud is estimated to cost organizations Have a professional
Install “lock-out” options on computers,
Any unauthorized taking of company property by telephones, and e-mail.
employees for their personal use $3.7 trillion a year.43 review of your internal
Use corporate hotlines for reporting incidences.
security controls.
Set a good example.

Source: Robbins, Stephen P., Coulter, Mary, Management, 13th Ed., © 2016, p. 541. Reprinted and
electronically reproduced by permission of Pearson Education, Inc., New York, NY.
506 Pa r t 5 • Controlling CH A P TE R 14 • C o nt ro l l i n g Wor k a nd O rg an i z at i o n al Pr o ce ss e s 507

and wounding four others. On November 6, 2009, in Orlando, Florida, an engineer who Exhibit 14–8 Controlling Workplace Violence
had been dismissed from his job for poor performance returned and shot and killed one
person while wounding five others. This incident happened only one day after a U.S. Army
psychiatrist went on a shooting rampage at Fort Hood Army post, killing 13 and wounding FEEDFORWARD CONCURRENT FEEDBACK
27.47 These are just a few of the deadly workplace attacks in recent years. Is workplace vio- Ensure management’s commitment Use MBWA (managing by walking around) to Communicate openly about
lence really an issue for managers? Yes. Despite these examples, thankfully, the number of to functional, not dysfunctional, work identify potential problems; observe how violent incidents and what’s
workplace shootings has decreased.48 However, the U.S. National Institute of Occupational environments. employees treat and interact with each other. being done.
Safety and Health still says that each year, some 2 million American workers are victims of Provide employee assistance programs Allow employees or work groups to “grieve” Investigate incidents and
some form of workplace violence. In an average week, one employee is killed and at least (EAPs) to help employees with behavioral during periods of major organizational change. take appropriate action.
25 are seriously injured in violent assaults by current or former coworkers. And accord- problems. Be a good role model in how you treat others. Review company policies
ing to a Department of Labor survey, 58 percent of firms reported that managers received Enforce organizational policy that any and change, if necessary.
Use corporate hotlines or some other
verbal threats from workers.49 Anger, rage, and violence in the workplace are intimidating workplace rage, aggression, or violence mechanism for reporting and investigating
to coworkers and adversely affect their productivity. The annual cost to U.S. businesses will not be tolerated. incidents.
is estimated to be between $20 billion and $35 billion.50 And office rage isn’t a uniquely Use careful prehiring screening. Use quick and decisive intervention.
American problem. A survey of aggressive behavior in Britain’s workplaces found that 18 Never ignore threats. Get expert professional assistance if violence
percent of managers say they have personally experienced harassment or verbal bullying, Train employees about how to avoid erupts.
and 9 percent claim to have experienced physical attacks.51 danger if a situation arises. Provide necessary equipment or procedures for
What factors are believed to contribute to workplace violence? Undoubtedly, employee
Clearly communicate policies to dealing with violent situations (cell phones, alarm
stress caused by job uncertainties, declining value of retirement accounts, long hours, infor- employees. systems, code names or phrases, and so forth).
mation overload, other daily interruptions, unrealistic deadlines, and uncaring managers play
Sources: Based on M. Gorkin, “Five Strategies and Structures for Reducing Workplace Violence,” Workforce Management Online,
a role. Even office layout designs with small cubicles where employees work amid the noise
December 3, 2000; “Investigating Workplace Violence: Where Do You Start?” Workforce Management Online, December 3, 2000;
and commotion from those around them have been cited as contributing to the problem.52 “Ten Tips on Recognizing and Minimizing Violence,” Workforce Management Online, December 3, 2000; and “Points to Cover in a
Other experts have described dangerously dysfunctional work environments characterized by Workplace Violence Policy,” Workforce Management Online, December 3, 2000.
the following as primary contributors to the problem:53
• Employee work driven by TNC (time, numbers, and crises)
What can managers do to deter or reduce possible workplace violence? Once again, the
• Rapid and unpredictable change where instability and uncertainty plague employees
concept of feedforward, concurrent, and feedback control can help identify actions that man-
• Destructive communication style where managers communicate in excessively aggressive, agers can take.54 Exhibit 14–8 summarizes several suggestions.
condescending, explosive, or passive-aggressive styles; excessive workplace teasing or
scapegoating
• Authoritarian leadership with a rigid, militaristic mind-set of managers versus employees;
employees not allowed to challenge ideas, participate in decision making, or engage in
team-building efforts
• Defensive attitude with little or no performance feedback given; only numbers count; and
yelling, intimidation, or avoidance as the preferred ways of handling conflict
• Double standards in terms of policies, procedures, and training opportunities for managers
and employees
• Unresolved grievances due to an absence of mechanisms or only adversarial ones in
place for resolving them; dysfunctional individuals protected or ignored because of
long-standing rules, union contract provisions, or reluctance to take care of problems
• Emotionally troubled employees and no attempt by managers to get help for these
people
• Repetitive, boring work and little chance for doing something else or for new people
coming in
• Faulty or unsafe equipment or deficient training, which keeps employees from being able
to work efficiently or effectively
• Hazardous work environment in terms of temperature, air quality, repetitive motions, over-
crowded spaces, noise levels, excessive overtime, and so forth; to minimize costs, a failure
to hire additional employees when workload becomes excessive, leading to potentially
dangerous work expectations and conditions
• Culture of violence perpetuated by a history of individual violence or abuse, violent or
explosive role models, or tolerance of on-the-job alcohol or drug abuse
Reading through this list, you surely hope that workplaces where you’ll spend your profes-
sional life won’t be like this. However, the competitive demands of succeeding in a 24/7
global economy put pressure on organizations and employees in many ways.
Knowing: Getting Ready for Exams and Quizzes
CHAPTER SUMMARY BY LEARNING OUTCOME
14-1 Explain the nature and importance of control. 14-3 Discuss the types of controls organizations
and managers use.
Control is the management function that involves monitoring
activities to ensure that they’re being accomplished as planned Feedforward controls take place before a work activity is done.
and correcting any significant deviations. Concurrent controls take place while a work activity is being
As the final step in the management process, controlling done. Feedback controls take place after a work activity is
provides the link back to planning. If managers didn’t control, done.
they’d have no way of knowing whether goals were being met. Financial controls that managers can use include finan-
Control is important because (1) it’s the only way to know cial ratios (liquidity, leverage, activity, and profitability) and
whether goals are being met and, if not, why; (2) it provides infor- budgets. One information control managers can use is an MIS,
mation and feedback so managers feel comfortable empowering which provides managers with needed information on a regu-
employees; and (3) it helps protect an organization and its assets. lar basis. Others include comprehensive and secure controls,
such as data encryption, system firewalls, data backups, and
14-2 Describe the three steps in the control so forth, that protect the organization’s information. Also, bal-
process. anced scorecards provide a way to evaluate an organization’s
performance in four different areas rather than just from the
financial perspective.
The three steps in the control process are measuring, compar-
ing, and taking action. Measuring involves deciding how to
measure actual performance and what to measure. Comparing 14-4 Discuss contemporary issues in control.
involves looking at the variation between actual performance
and the standard (goal). Deviations outside an acceptable range Adjusting controls for cross-cultural differences may be neces-
of variation need attention. sary, primarily in the areas of measuring and taking corrective
Taking action can involve doing nothing, correcting the actions.
actual performance, or revising the standards. Doing nothing is Workplace concerns include workplace privacy, employee
self-explanatory. Correcting the actual performance can involve theft, and workplace violence. For each of these, managers
different corrective actions, which can either be immediate or need to have policies in place to control inappropriate actions
basic. Standards can be revised by either raising or lowering them. and ensure that work is getting done efficiently and effectively.

DISCUSSION QUESTIONS
14-1 What is the role of control in management? 14-8 “Every individual employee in an organization
14-2 Describe four methods managers can use to acquire plays a role in controlling work activities.” Do you
information about actual work performance. agree with this statement, or do you think control is
14-3 Planning and controlling are the opposite sides of the something that only managers are responsible for?
same coin. Do you think this statement is true at all Explain.
levels of the organizational hierarchy? Why or why not? 14-9 What are some work activities in which the acceptable
14-4 Contrast feedforward, concurrent, and feedback range of variation might be higher than average? What
controls. about lower than average? (Hint: Think in terms of the
14-5 Feedback control is after the fact. Illustrate why its use output from the work activities, whom it might affect,
may be perceived as a disadvantage for any organization. and how it might affect them.)
14-6 In Chapter 5 we discussed the “white-water rapids” 14-10 How could you use the concept of control in your
view of change. Do you think it’s possible to establish personal life? Be specific. (Think in terms of feed-
and maintain effective standards and controls in this forward, concurrent, and feedback controls as well
type of environment? Discuss. as specific controls for the different aspects of your
14-7 Why is it that what is measured is more critical to the life—school, work, family relationships, friends,
control process than how it is measured? hobbies, etc.)

508