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The Control Function of Management Essay

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“The Control Function of Management,” Kenneth A. Merchant, Sloan Management Review (Summer 1982), pp.43-55

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The purpose of the control function is to ensure that people do what is expected to be done.
A control process is basically constituted by establishing standards, measuring performance against the standards and correcting the deviations from the standards and plans.
In literature, control is only through feedback and adjustment processes.
This article takes a broader perspective on control.

First Part: A summary of general control problem

Why are controls needed?
§  For safety against undesirable behavior and encouragement of desirable actions.

§  As a form of security against harmful effects of personal limitations.

§  To encourage the employees’ focus on organizational goals.

§  Inadequate control can lead to lower performance or a higher risk of poor performance.

Characteristics of a good control function:
§  Future oriented.

§  Multidimensional.

§  Assessment for good performance is difficult and prejudiced.

How can good control be achieved?
§  By keeping away from some behavioral problems and implementing one or more types of control to protect against the remaining problems.

§  Types of controls

a)       Problem avoidance- can be facilitated through automation, centralization, risk-sharing and elimination of a business.

b)       Control of specific actions- based on three action types:

–         Behavioral constraints: they prevent or reduce the likelihood of a conduct occurring, e.g. personnel identification systems and administrative constraints.

–         Action accountability: it necessitates defining the limit of acceptable behavior, following up the behaviors the employees engage in and rewarding or punishing from the given list.

–         Preaction review: observing what other people are doing before completion of an activity, e.g. through direct supervision, formal planning reviews and approval on proposals for expenditures.

c)       Control of results- achieved through result accountability which requires defining the dimensions along which results are desired such as efficiency, quality and service.

d)       Control of personnel- it underlines a reliance on the personnel involved to do what is best for the organization. The system requires:

–         Upgrading of the capabilities e.g. tightening hiring policies, implementing training programs or improving job assignments.

–         Improving communication for individuals to understand their roles better.

–         Encouraging peer control e.g. establishment of cohesive workgroups with shared goals.

Second Part: Identification of the various kinds of controls

Feasibility constraints on the choice of controls- in part depend on the feasibility of the several control types.
§  Personnel controls- most situations require reinforcing personnel controls by placing controls over specific actions, results or a combination of the two.

§  Controls over specific actions- challenges arise in rare cases such as remote outpost.

§  Control over results- ability to measure the desired results is a limiting factor, since perfect measurements are rarely available.

The major factors limiting control of feasibility include knowledge of desirable actions and the ability to measure results on the important performance dimensions.
How to choose among the feasible actions
§  In a difficult control situation the desirable actions are not known and the important result areas cannot be measured as well.

§  If knowledge of desirable specific actions is poor but good results are available, control is achieved through controlling the results.

§  Specific-actions controls should dictate where there is knowledge about which actions are desirable but where results measurement is impossible or difficult.

Guiding principles in choosing control measures:
§  Need for controls- more focus should be on a strategically important attribute than a minor one.

§  Amount of control

a)       Is defined by the control design and how well how well they fit the situation in which they are used.

b)       Specific-action and results controls provide widely varying amounts of controls.

c)       In results-accountability systems the amount of control depends on the expected performance.

§ Costs: outlay and behavioral- it depends on two factors:

a)       The incremental dollar cost of the tool.

b)       The cost of any unintended behavioral effects- comes in different forms:

–          Specific action controls cause delays and rigid bureaucratic behavior.

–          Results controls can create severe unintended negative effects and data distortion when all the measurement criteria are not met as is required.

Last Part: appropriate choice of control is and should be different in different settings

Where does feedback fit in?
§  Feedback variances and results analysis can give strength to a control system.

§  Three reasons for the importance of feedback system in control systems:

a)       As a reinforcement for results-accountability system.

b)       Measurement of results can provide indications of failure in repetitive situations.

c)       Understanding of how inputs relate to results can be improved by analysis of results variations with different input combinations.

§  The feedback system is not applicable to every control system.

The design process
§  The personnel component is considered first

§  Supplementation of the personnel components prompts the choice of control options based on:

a)       How much is known about which specific actions are desirable.

b)       How well measurements can be accomplished in the important performance areas.

Conclusion
§  Management control is a behavioral problem.

§  Good control can be achieved through several different ways.

§  Not all controls are feasible in all situations.

§  Controls can be strengthened by employing a tighter version of a single type of control or by implementing more than one type of control.

§  The basic management control problems and alternatives are the same in all functional areas and all levels in an organization.

§  An understanding of control can be an important input in management decisions.

§  Control design should affect the design of other parts of the management system e.g. organizational structure.

Reference:

Merchant, A.K. (1982): The Control Function of Management, Sloan Management Review. Retrieved on 24th February, from: http://benchiang19.com/control.pdf