After strategies are set and plans are made, management’s primary task is to take steps to ensure that these plans are carried out, or, if conditions warrant, that the plans are modified. This is the critical control function of management. And since management involves directing the activities of others, a major part of the control function is making sure other people do what should be done.
The management literature is filled with advice on how to achieve better control. This advice usually includes a description of some type of measurement and feedback process:
- The basic control process, wherever it is found and whatever it is found and whatever it controls, involves three steps: (1) establishing standards. (2) measuring performance against these standards. and (3) correcting deviations from standards and plans.1
- A good management control system stimulates action by spotting the significant variations from the original plan and highlighting them for the people who can set things right.2
- Controls need to focus on results.3
This focus on measurement and feedback, however, can be seriously misleading. In many circumstances, a control system built around measurement and feedback is not feasible. And even when feasibility is not a limitation, use of a feedback-oriented control system is often an inferior solution. Yet, good controls can be established and maintained using other techniques.
What is needed is a broader perspective on control as a management function: this article addresses such a perspective. The first part summarizes the general control problem by discussing the underlying reasons for implementing controls and by describing what can realistically be achieved. In the second part, the various types of controls available are identified. The last part discusses why the appropriate choice of controls is and should be different in different settings.
Why Are Controls Needed?
If all personnel always did what was best for the organization, control — and even management — would not be needed. But, obviously individuals are sometimes unable or unwilling to act in the organization’s best interest, and a set of controls must be implemented to guard against undesirable behavior and to encourage desirable actions.
One important class of problems against which control systems guard may be called personal limitations. People do not always understand what is expected of them nor how they can best perform their jobs, as they may lack some requisite ability, training, or information.
1. See H. Koontz, C. O'Donnell, and H. Weihrich. Management, 7th ed. (New York: McGraw-Hill, 1980). p. 722.
2. See W. D. Brinckloe and M. T. Coughlin, Managing Organizations (Encino, CA: Glencoe Press. 1977). p. 298.
3. See P. F. Drucker. Management: Tasks, Responsibilities, Practices (New York: Harper & Row. 1974). p. 497.
4. A recent summary of many of the findings in this area (illustrating such cognitive limitations as conservative revision of prior subjective probabilities when new information is provided. and the use of simplifying decision-making heuristics when faced with complex problems) is provided by W. F. Wright, “Cognitive Information Processing Biases: Implications for Producers and Users of Financial Information,” Decision Sciences (April 1980): 284–298.
5. A similar scheme is presented in W. G. Ouchi, “A Conceptual Framework for the Design of Organizational Control Mechanisms,” Management Science (September 1979): 833–848.
6. See H. Klein, “At Harley-Davidson, Life without AMF Is Upbeat but Full of Financial Problems,” Wall Street Journal. 13 April 1982, p. 37.
7. See N. Babchukand W. J. Goode. “Work Incentives in a Self-Determined Group,” American Sociological Review (1951): 679–687.
8. For a summary of criticisms of return-an-investment (ROI) measures of performance, see J. Dearden, “The Case against ROI Control,” Harvard Business Review, May–June 1969, pp. 124–135.
9. See D. Mitchell. Control without Bureaucracy (London: McGraw-Hill Book Company Limited, 1979), p. 6.