Chapter 18
Monitoring and Controlling
Managers must monitor whether goals that were established as part of the planning
process are being accomplished efficiently and effectively. That’s what they do when
they control. Appropriate controls can help managers look for specific performance gaps
and areas for improvement. Focus on the following learning objectives as you read and
study this chapter.
LEARNING OBJECTIVES
1. Explain the nature and importance of control.
2. Describe the three steps in the control process.
4. Describe tools used to measure organizational performance.
5. Discuss contemporary issues in control.
• Develop your skill at dealing with difficult people.
It’s Your Career
2. Be realistic. Focus your feedback on what can be changed.
4. Know when to give feedback—make it well timed. Feedback is most
5. Ensure understanding. Make sure your feedback is concise and complete so
6. Watch your body language, tone of voice, and facial expressions. Think
about what you want to communicate and make sure your body language
supports that message.
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18.1 WHAT IS CONTROLLING AND WHY IS IT IMPORTANT?
18.2 THE CONTROL PROCESS
The control process is a three-step process including measuring actual
1. How We Measure. Measurement is frequently achieved through
four common sources of information (Exhibit 18-3):
2. What We Measure. What we measure is probably more critical
than how we measure. What is measured often determines the
1. Comparing determines the degree of variation between actual
performance and the standard.
2. Of critical importance to the control process is determining the
3. An example of comparing actual performance to standards is
presented in Exhibit 18-5.
1. Correct Actual Performance. Once the manager has decided to
correct actual performance, he/she must make another decision:
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2. Revise the Standard. If the standard was set too high or too low, a
manager may decide to revise the standard.
18.3 CONTROLLING FOR ORGANIZATIONAL PERFORMANCE
A. What Is Organizational Performance?
1. Organizational Productivity. Productivity is the overall output of
goods or services produced divided by the inputs needed to
measure of how appropriate organizational goals are and how well
an organization is achieving those goals.
3. Industry and Company Rankings. Industry and company rankings
are often used as a measure to describe organizational
1. Managers are responsible for making sure employees’ work
2. Delivering Effective Performance Feedback. Managers need to
provide their employees with feedback so that the employees
3. Using Disciplinary Actions. Exhibit 18-8 lists some common types
of work discipline problems and examples of each. To ensure that
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18.4 TOOLS FOR CONTROLLING ORGANIZATIONAL PERFORMANCE
1. Feedforward Control. Feedforward control is a type of control
that takes place before a work activity is done.
2. Concurrent Control. Concurrent control is a type of control that
takes place while a work activity is in progress.
3. Feedback Control. Feedback control is a type of control that
1. Traditional Financial Control Measures (See Exhibit 18–10)
a. Financial ratios are calculated by taking numbers from the
2. Leverage ratios examine the organization’s use of
3. Activity ratios assess how efficiently the firm is
using its assets.
4. Profitability ratios measure how efficiently and
effectively the firm is using its assets to generate
C. Information Controls.
1. Managers deal with information controls in two ways: (1)
as a tool to help them control other organizational activities
and (2) as an organizational area they need to control.
a. How Is Information Used in Controlling? Managers
system can be manual or computer based,
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1. The balanced scorecard is a performance measurement
tool that looks at four areas—financial, customer, internal
1. Benchmarking is the search for the best practices among
2. The benchmark is the standard of excellence against
which to measure and compare.
a. Benchmarking can be used to monitor and
measure organizational performance.
b. This practice can be used to identify specific
performance gaps and potential areas of
improvement.
c. Exhibit 18-11 provides a summary to guide
managers in implementing benchmarking
programs.
LEADER WHO MADE A DIFFERENCE
Bo Iger took on the top position at Walt Disney Company in 2005. At the time, many
thought the Disney brand had become outdated. Iger introduced a concept called the
Disney Difference designed to address a perception in the market place that too many
Disney products lacked quality. By 2014, Disney was ranked number seven on
Fortune’s Most Admired list.
What can you learn from this leader who made a difference?
18.5 CONTEMPORARY ISSUES IN CONTROL
A. Adjusting Controls for Cross-Cultural Differences and Global
Turmoil.
Should global organizations use particular control systems? What should
global managers know about adjusting controls for national differences?
1. Methods of controlling people vary in different countries.
3. Managers must consider the legal constraints in different
countries.
4. Managers face challenges in making comparisons of goods and
services among countries, even when comparing similar products
and services.
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5. Organizations need to have controls in place for protecting their
1. Employers monitor workers for a number of reasons.
a. Web surfing while at work is thought to cost billions of
dollars in lost work productivity each year. Employers do
not want to risk being sued for creating a hostile workplace
environment because of offensive messages or material
displayed on an employee’s computer screen.
b. Managers want to ensure that the company’s secrets are
not being leaked by employees.
FUTURE VISION: Real-Time Feedback
How would you like to get feedback about your performance at work right away?
Some companies today are doing just that. Using a mobile device or an app,
companies can provide feedback immediately. Companies that are using this
approach believe that it is beneficial because it allows for corrective action to be
taken right away rather than at some point in the future after a more formalized
review. Productivity is improved as employees know whether they are doing well
or whether they need to make changes.
The following discussion questions are posed:
Talk About It 1: Would you like getting feedback through an app? Could the use
of such an app create any problems?
Talk About It 2: Should real-time feedback be delivered anonymously? Why or
why not?
D. Workplace Violence. Anger, rage, and violence in the workplace
adversely affect productivity.
1. Exhibit 18-13 provides actions managers can take in dealing with
workplace violence. A number of primary contributors to
dangerously dysfunctional work environments have been
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1. The service profit chain is the service sequence from employees
1. Corporate governance is the system used to govern a
corporation so that the interests of corporate owners are
protected.
18-1. What are the three steps in the control process? Describe in detail.
18-2. What is organizational performance?
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18-4. Discuss the various types of tools used to monitor and measure organizational
performance.
Financial controls that managers can use include financial ratios (liquidity, leverage,
18-5. Explain the balanced scorecard approach to evaluating organizational
performance.
18-6. Why is control important to customer interactions?
18-7. In Chapter 7 we discussed the white-water rapids view of change, which refers to
situations in which unpredictable change is normal and expected, and managing it is a
continual process. Do you think it’s possible to establish and maintain effective
standards and controls in this type of environment? Discuss.
18-8. “Every individual employee in an organization plays a role in controlling work
activities.” Do you agree with this statement, or do you think control is something that
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correcting the work of the organization. (LO: 5, Discuss contemporary issues in control,
AACSB: Analytical thinking)
PERSONAL INVENTORY ASSESSMENTS
ETHICS DILEMMA
It’s Cyber Monday. What are you going to do? If you’re like many other Americans,
18–11. Other than the obvious, what problems do you see here, especially as it relates to
control?
18–12. How would you handle this? How could organizations make sure they’re
addressing work controls ethically?
(LO: 5, Discuss contemporary issues in control, AACSB: Ethical understanding and
reasoning)
SKILLS EXERCISE: MANAGING CHALLENGING EMPLOYEES
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WORKING TOGETHER: TEAM EXERCISE
Working in groups of three or four, students are asked to assume the leadership of a
directly to employee theft. Students should consider why employees may be tempted to
steel and how they can prevent theft. Students should use Figure 18-2 in their
assessment of the situation.
MY TURN TO BE A MANAGER
• You have a major class project due in a month. Identify some performance
measures that you could use to help determine whether the project is going as
planned and will be completed efficiently (on time) and effectively (high quality).
(LO: 3, Explain how organizational and employee performance are measured,
AACSB: Reflective thinking)
• Survey 30 people about whether they have experienced office rage. Ask them
specifically whether they have experienced any of the following: yelling or other
verbal abuse from a coworker, yelling at coworkers themselves, crying over
work-related issues, seeing someone purposely damaging machines or furniture,
seeing physical violence in the workplace, or striking a coworker. Compile your
findings in a table. Are you surprised at the results? Be prepared to present these
in class. (LO: 5, Discuss contemporary issues in control, AACSB: Analytical
thinking)
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• Figure 18-7 lists several industry and company ranking lists. Find the Web site
for each list and identify the performance measures that are used to determine
the rankings on each. Are there any similar measures? Any unique measures?
Summarize your findings in a brief report. (LO: 4, Explain how organizational and
employee performance are measured, AACSB: Analytical thinking)
ANSWERS TO CASE APPLICATION 1
QUESTIONS
The Challenge of “Healthy” Fast–Food
18-13. Why is it important for Chipotle to revise the company’s food-handling standards?
18–14. Which controls would be more important to Chipotle: feedforward, concurrent, or
feedback? Explain.
18–15. How can Chipotle make sure that employees are following the new food handling
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18–16. What are some measures of organizational performance that Chipotle
ANSWERS TO CASE APPLICATION 2
QUESTIONS
Bring Your Own Device
18-17. Would you want to use your personal device for work purposes?
18-18. Can you think of any other privacy or security concerns for companies that have a
BYOD program?
18–19. Given the privacy and security concerns, are BYOD programs really a good idea
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program. (LO: 5, Discuss contemporary issues in control, AACSB: Ethical understanding
and reasoning)
18–20. Are there any productivity concerns with allowing employees to use their personal
devices at work?