Control

Question 1

Describe the basic control process.

Answer 1

The control process begins by setting standards, measuring performance, and then comparing
performance to the standards. The better a company’s information and measurement systems, the easier it
is to make these comparisons. The control process continues by identifying and analyzing performance
deviations, and then developing and implementing programs for corrective action. However, control is a
continuous, dynamic, cybernetic process, not a onetime achievement or result. Control requires frequent
managerial attention. The three basic control methods are feedback control (after-the-fact performance
information), concurrent control (simultaneous performance information), and feed forward control
(preventive performance information). Control, however, has regulation costs and unanticipated
consequences and therefore isn’t always worthwhile or possible.

Question 2

Discuss the various methods that managers can use to maintain control.

Answer 2

There are five methods of control: bureaucratic, objective, normative, concertive, and self-control (selfmanagement).
Bureaucratic and objective controls are top-down, management-based, and measurementbased.
Normative and concertive controls represent shared forms of control because they evolve from
company-wide or team-based beliefs and values. Self-control, or self-management, is a control system in
which managers turn much, but not all, control over to the individuals themselves. Bureaucratic control is
based on organizational policies, rules, and procedures. Objective controls are based on reliable measures
of behavior or outputs. Normative control is based on strong corporate beliefs and careful hiring practices.
Concertive control is based on the development of values, beliefs, and rules in autonomous work groups.
Self-control is based on individuals’ setting their own goals, monitoring themselves, and rewarding or
punishing themselves with respect to goal achievement. We end this section by noting that each of these
control methods may be more or less appropriate depending on the circumstances.

Question 3

Describe the behaviors, processes, and outcomes that today’s managers are choosing to
control in their organizations

Answer 3

Deciding what to control is just as important as deciding whether to control or how to control. In most
companies, performance is measured using financial measures alone. However, the balanced scorecard
encourages managers to measure and control company performance from four perspectives: financial,
customers, internal operations, and innovation and learning. Traditionally, financial control has been
achieved through cash flow analysis, balance sheets, income statements, financial ratios, and budgets.
Another way to measure and control financial performance, however, is through economic value added
(EVA). Unlike traditional financial measures, EVA helps managers assess whether they are performing
well enough to pay the cost of the capital needed to run the business. Instead of using customer
satisfaction surveys to measure performance, companies should pay attention to customer defectors, who
are more likely to speak up about what the company is doing wrong. Performance of internal operations is
often measured in terms of quality, which is defined in three ways: excellence, value, and conformance to
expectations. Minimization of waste has become an important part of innovation and learning in
companies. The four levels of waste minimization are waste prevention and reduction, recycling and
reuse, waste treatment, and waste disposal.