[Slide 1 –So far in this course, we’ve examined the external environment, discussed the decision making process, and proceeded smoothly through the PLANNING function. Then we determined how to ORGANIZE our resources; how to best structure our organization, and how to attract, develop, and maintain an effective workforce to support this overall plan. Then we turned our attention to LEADING our organization’s employees, through motivation, communication and leadership. Now we turn our attention to CONTROLLING to help ensure our decisions and plans are proceeding as we had initially desired.

[Slide 2 – Control is the process of monitoring and correcting activities to ensure that they are being accomplished as planned.

Back when we engaged in our planning stage, we identified goals and objectives for our organization and employees. When these objectives become specific, measurable, verifiable they essentially become the standards by which we monitor organizational progress. For instance, a restaurant might have as an objective to reduce annual employee turnover by 5 percent. By definition, this objective becomes the standard by which we will assess our restaurant’s progress towards reducing turnover. Once identified and communicated throughout the organization, we assess periodically our progress towards meeting these standards by 1) measuring actual performance. We then 2) compare actual performance against our pre-determined standard, and 3) correct deviations or decide to re-set that standard itself if we decide it is unrealistic or inappropriate.

Let’s briefly walk through these three basic steps.

[Slide 3 – We need to measure actual performance. The most common sources of information for performance measurement are personal observation, statistical reports, oral reports, and written reports. Personal observation provides first-hand knowledge of an activity, thereby permitting intensive coverage and allowing managers to “read between the lines.” Because it is subjective, however, personal observation may be biased. Also, it is time-consuming and obtrusive.

Statistical reports consist of computer print-outs, graphs, bar charts, and numerical displays. Although they represent relationships clearly and accurately, statistical reports provide limited information about an activity and ignore qualitative elements which may be important factors in performance deviations.

Oral reports consist of one-on-one conversations, telephone calls, and conferences. The advantages and disadvantages of oral reports are similar to those of personal observation.
Written reports can also measure performance. They are more formal, comprehensive, and concise than oral reports. In addition, they are easy to catalog and reference. Comprehensive control efforts by management will require the use of all four of these methods

[Slide 4 –So, once measured, managers must now compare actual performance to the pre-determined objective or standard to determine the degree of variation. This is sometime known as identification of the performance gap. Some variation is normal, but management must determine the acceptable degree of variation. Your text has a discussion of the issue of acceptable variation.

[Slide 5- Action must then be taken when a significant performance gap has been identified. As discussed in your textbook, managers can take action in three ways: do nothing, take corrective action, or revise the standard.

[Slide 6 – Recall earlier in this course we discussed the organization as a system. The issue of control can also be thought of as a system. Management can decide to focus on events before, during or after a process. For example, a local automobile dealer can focus on activities before, during, or after sales of new cars. Careful inspection of new cars and cautious selection of sales employees are ways to ensure high quality or profitable sales even before those sales take place. Monitoring how salespeople act with customers would be considered control during the sales task. Counting the number of new cars sold during the month or telephoning buyers about their satisfaction with the sales experience would constitute control after the sales have occurred. These three types of control are formally called feedforward, concurrent, and feedback.

Feedforward control is the most desirable because it prevents anticipated problems. Thus, it is proactive. Unfortunately, this type of control requires timely, accurate information that is often difficult to obtain. As a result, managers often rely on concurrent and feedback control mechanisms. Concurrent control occurs while an activity is in progress. The best known form is direct supervision. Even though there is some delay between the activity and the manager’s response, it is minimal. Feedback control, the most commonly used type, occurs after the action. The major drawback is that by the time that the manager has the information, the damage has already been done. But, for many activities, feedback is the type of control that is workable. Compared to feedforward and concurrent control, feedback has two advantages. First, it helps managers to gauge the effectiveness of their planning efforts – did things work out as planned? Second, feedback can enhance employee motivation.

[Slide 7 – Effective control systems share certain common qualities, the importance of which varies with the situation. However, we can generalize that the following characteristics should make a control system more effective. Your text discusses these in more detail.

[Slide 8 - The effectiveness of a given system of controls will be influenced by several situational factors. You are already familiar with the idea of a contingency perspective. Your text offers five different contingency factors which impact our control process. For example, organizations that are larger, more decentralized, with a weak organizational culture should typically have a more formal and well established control process in place. That is because it would be much more difficult for top level management in this type of organization, to directly assess progress towards organizational objectives, and they could not count on employees monitoring and adjusting their own behaviors through a strong clan culture.

[Slide 9 –Technological advances in computer hardware and software have made the process of controlling much easier. As a result, difficult questions have been raised about what managers have the right to know about employees and how far they can go in controlling employee behavior, both on the job and at home. How can organizations benefit from the information provided by computer monitoring systems and yet minimize the behavioral and legal drawbacks? What does your text suggest on these topics? What do you think?

[Slide 10 & Slide 11 –Lastly, your text discusses the special topic of control and entrepreneurs. Controlling a new venture can be a critical aspect of whether that fledgling firm will survive the first few tumultuous years. This section of your text does nice job thinking through the basic managerial functions for a new venture. In particular, pay attention to your text’s discussion of how to encourage a growth-oriented culture. These are useful suggestions for a manager of almost any organization, not just a new start-up organization