Chapter 17

Question 1

What Is Controlling, and Why Is It Important?

Answer 1

Controlling:

The process of monitoring activities to ensure that they are being accomplished as planned, correcting any significant deviations, and where necessary modifying the plan.

Question 2

Why Is Control Important?

Answer 2

It is the final link in the four management functions.

It is the only way managers know whether organizational goals are being met and, if not, the reasons why.

Question 3

The Control Process

Answer 3

Step 1: Measuring Actual Performance

Step 2: Comparing Actual Performance Against Standard

Step 3: Taking Managerial Action

The Center of the Diagram is GOALS:
Organizational
Divisional
Departmental
Individual

Question 4

Control Process Steps Expanded: Step 1

Answer 4

Step 1 – Measuring Performance
How we measure - Four sources of information frequently used by managers to measure actual performance are:
- personal observations
- statistical reports
- oral reports
- written reports

What we measure: What we measure is probably more critical to the control process than how we measure.

The selection of the wrong criteria can result in serious dysfunctional consequences.

Question 5

Control Process Steps Expanded: Step 2

Answer 5

Step 2 – Comparing Performance against a Standard:

Comparing requires determining the degree of variation between actual performance and the standard.

Significance of variation is determined by:

• The acceptable range of variation from the standard (forecast or budget).
• The size (large or small) and direction (over or under) of the variation from the standard.

Range of variation: The acceptable degree of variation between actual performance and the standard.

Question 6

Control Process Steps Expanded: Step 3

Answer 6

Step 3 – Taking Managerial Action

“Doing nothing”:
- Only if deviation is insignificant

Correcting actual (current) performance:
- Immediate or basic corrective action.

Revising the standard:
- Determine whether the standard is realistic, fair, and achievable.

• In some cases, variance may be a result of an unrealistic standard—a goal that’s too low or too high. In this case, the standard—not the performance—needs corrective action.

Question 7

Types of Control:

Answer 7

Input: Feedforward control; Anticipates problems

Processes: Concurrent Control; Corrects problems as they happen

Output: Feedback Control; Corrects problems after they occur

Question 8

Tools for Measuring Organizational Performance:

Answer 8

Feed-forward Control

• A type of control that focuses on preventing anticipated problems, since it takes place before the actual activity.

Concurrent Control:

• Concurrent control: takes place while an activity is in progress.
• Management by walking around: a term used to describe a manager being out in the work area, interacting directly with employees.

Feedback Control:
- Feedback Control: Control that takes place after a work activity is done.

• Advantages:
  Feedback provides managers with information on the effectiveness of their planning efforts.
  Feedback enhances employee motivation by providing them with information on how well they are doing.

Balanced Scorecard:

• A performance measurement tool that looks at more than just the financial perspective.
• A balanced scorecard typically looks at four areas that contribute to a company’s performance:
• financial
• customer
• internal processes
• people/innovation/growth assets

Question 9

Contemporary Issues in Control?

Answer 9

Control is an important managerial function.

Some of the control issues that managers face today include:
- workplace privacy
- employee theft
- workplace violence

Workplace Privacy

Privacy versus monitoring:
- E-mail, telephone, computer, and Internet usage can all be monitored.
- Monitoring also prevents the risk of being sued for creating a hostile workplace environment because of offensive messages or an inappropriate image displayed on a co-worker’s computer screen.
- It also ensures that company secrets are not being leaked.

Question 10

Contemporary Issues in Control? Pt. 2

Answer 10

Employee Theft:

• The unauthorized taking of company property by employees for their personal use.
• Concepts of feed-forward, concurrent, and feedback controls can identify actions managers can take.

Workplace Violence:

• Anger, rage, and violence in the workplace is affecting employee productivity.
• The concept of feed-forward, concurrent, and feedback control can help identify actions that managers can take.

Organizational Governance

Organizational governance: the system used to govern a corporation so that the interests of stakeholders are protected.

The original purpose of a board of directors is to have a group, independent from management, looking out for the interests of shareholders who were not involved in the day-to-day management of the organization.