Chapter 7

Foundations
of Control

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 Learning Outcomes

• Define control
• Describe three approaches to control
• Explain why control is important
• Describe the control process
• Distinguish among the three types of
control (continued)

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
2
 Learning Outcomes
(continued)
• Describe the qualities of an effective
control system
• Identify contingency factors in the control
process
• Explain how controls can become
dysfunctional
• Describe how national differences
influence the control process
(continued)
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
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 Learning Outcomes
(continued)
• Identify the ethical issues in employee
monitoring
• Describe how an entrepreneur controls
for growth

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 Control

Process of monitoring activities

to ensure that what is being
accomplished matches plans
and corrects significant
deviations

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 Controlling Planning

Planning-
Controlling
Linkage

Leading Organizing

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 Purpose of Controls
Goals and • Measuring Performance

Objectives
• Comparing to Standards
Organizational
Divisional
Departmental • Taking Corrective Action

Individual
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
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 Approaches to Control
• Market
• Bureaucratic
• Clan

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 The Control Process
Standard Yes
Compare Do Nothing
Attained?
Performance
to Standard No

Objectives Variance Yes

Do Nothing
Acceptable?

Measure No
Standard Performance
Standard Yes Identify
Acceptable? Causes

No
Correct
Revise
Performance
Standard

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 How Do Managers Measure?

• Personal
observations
– MBWA
(management-by-
walking about)
• Statistical reports
• Oral reports
• Written reports

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 What Do Managers Measure?

• Information
• Operations
• Finances
• People

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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Discrepancies Between Goals and Performance

Acceptable
Upper Limit

Acceptable
Standard Range of
Variation

Acceptable
Lower Limit

t t+1 t+2 t+3 t+4 t+5

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
12
 CanuckBrew’s Sales for July
(in hundreds of cases)

Brand Standard Actual Over (Under)

Propeller 1,075 913 (162)

Big Rock Ale 630 634 4
Okanagan Spring 800 912 112
Garrison 620 622 2
Oland’s Export 540 672 132
McAuslan’s 160 140 (20)
Granville Island 225 220 (5)
Unibroue’s 80 65 (15)
Nelson After Dark 170 286 116
Total Cases 4,300 4,464 164
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
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 Do Nothing

Taking Immediate/Basic
Managerial Corrective
Action
Action
Revise
the Standard
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
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 Three Types of Control

Input Processes Output

Feedback Concurrent Feedback

Control Control Control
Anticipates Corrects problems Corrects problems
problems as they happen after they occur

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 Feedback Control

• Meaningful
information
• Enhance employee
motivation

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 Qualities Of An Effective Control
System
Corrective Accuracy
Action
Multiple Timeliness
Criteria
EFFECTIVE
Emphasis on CONTROL
Economy
Exceptions SYSTEM

Strategic
Placement Flexibility

Reasonable
Understandability
Criteria
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc. FOM 7.17
 Contingency Factors in Control Systems
Contingency Variable Control Recommendations

Smal Informal, personal management

Organization Size l
Larg Formal, personal management
e
High Many complex criteria
Position and Level
Low Few, easy-to-measure criteria

High Increased number of controls

Degree of Decentralization
Low Reduced number of controls

O Informal, self-control
Organizational Culture pen
Close Formal, external controls
d
High Comprehensive controls
Importance of an Activity
Low Loose, informal controls
 
Robbins et al., Fundamentals of Management, 4th Canadian Edition FOM 7.18
©2005 Pearson Education Canada, Inc.
 Adjusting Controls
for National
Differences
Distance Technology
and the and the
Formality Comparability
of Controls of Data

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 Dysfunctional
Controls

Inflexible Unreasonab
Controls le
Standards

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
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 Contemporary Issues in Control
• Rights that manager has to monitor
employee behavior
• Rights that manager has to control
private lives of employees.
• Employers MAY be able to control
employee behavior outside the work
environment

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
21
 You and Your Computer
• Employers can read your e-mail
• Employers can listen to your phone
calls
• Employers can monitor your work by
computer

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
22
 Employee Theft
• Ranges from embezzlement to
fraudulent filing of expense reports
to equipment removal
• Nearly 85% of all organizational theft
and fraud is committed by
employees
• Ready availability of information
technology has made employee
stealing an escalating problem
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
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 Control and Inform
Ethics Employees

Written Policy

Monitor for
Business Reasons
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
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 Entrepreneurs Controlling for
Growth
• Plan for growth
• Organize for growth
• Control for growth

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
25
 Entrepreneurs Managing
Downturns
• Recognizing crisis situations
• Things can turn worse
• Exit the venture
• Business evaluation

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
26