CHAPTER 2

Prevalence of results controls

 Results controls are commonly used for controlling the behaviors of employees at many
organizational levels. They are a necessary element in the employee empowerment
approach to management, which became a major management trend starting in the 1990s.
 Results controls are particularly dominant as a means of controlling the behaviors of
professional employees; those with decision authority, like managers.
 Results controls are consistent with, and even necessary for, the implementation of
decentralized forms of organization with largely autonomous entities or responsibility
centers.
 decentralization attempts to replicate an “entrepreneurial model” within typically large
corporations, where entity managers are given decision authority but then held responsible
for the results that their decisions produce.
 Results controls need not be limited to management levels only; they can also be driven
down to lower levels in the organization, as many companies have done with good effects.

Results controls and the control problems

 Results controls also can be particularly effective in addressing motivational problems. Even
without direct supervision or interference from higher up, the results controls induce
employees to behave so as to maximize their chances of producing the results the
organization desires. This motivational effect arises particularly when incentives for
producing the desired results also further the employees’ own personal rewards
 results controls also can mitigate personal limitations. Because results controls typically
promise rewards for good performers, they can help organizations to attract and retain
employees who are confident about their abilities.
 The results measures help managers answer questions about how various strategies,
organizational entities, and/or employees are performing. If performance fails to meet
expectations, managers can consider changing the strategies, the processes, or the
managers.

Elements of results controls

(1) defining the dimension(s) on which results are desired;

(2) measuring performance in the chosen dimensions;
(3) setting performance targets for employees to attain for each of the measures;
(4) providing rewards for target attainment to encourage the behaviors that will lead to the
desired results.

Conditions determining the effectiveness of results controls

They work best only when all of the following conditions are present:
 Organizations can determine what results are desired in the areas being controlled;
 The employees whose behaviors are being controlled have significant influence on the
results for which they are being held accountable;
 Organizations can measure the results effectively
 CHAPTER 3

Organizations can supplement or replace results controls with other forms of control that aim to
make it more likely that employees will act in the organization’s best interest.

Action controls
the most direct form of management control because they involve taking steps to ensure that
employees act in the organization’s best interest by making their actions themselves the focus of
control.
Action controls take any of four basic forms:
 behavioral constraints
- Behavioral constraints are a “negative” or, as the word suggests, a “constraining” form
of action control.
- They make it impossible, or at least more difficult, for employees to do things that they
should not do. The constraints can be applied physically or administratively.
- Most companies use multiple forms of physical constraints
 preaction reviews
- Preaction reviews involve the scrutiny of action plans.
- Reviewers can approve or disapprove the proposed actions, request modifications, or
ask for a more carefully considered plan before granting final approval.
- takes place during planning and budgeting processes, characterized by multiple levels of
reviews of planned actions and budgets at consecutively higher organizational levels
 action accountability
- Action accountability involves holding employees accountable for the actions they take.
–
- The implementation of action accountability controls requires:
(1) defining what actions are acceptable or unacceptable
(2) communicating those defined actions to employees
(3) observing or otherwise tracking what happens
(4) rewarding good actions or punishing actions that deviate from the acceptable.
- The actions for which employees are to be held accountable once properly defined are
typically communicated through work rules, policies and procedures, contract
provisions, and/or company codes of conduct.
- Common in fast-food franchises
 Redundancy
- assigning more employees (or equipment) to a task than is strictly necessary, or at least
having backup employees available, also can be considered an action control because it
increases the probability that a task will be reliably completed.
- Redundancy is common in computer facilities, security functions, and other critical
operations.
- rarely used in other areas because it is expensive. Further, assigning more than one
employee to the same task usually results in conflict, frustration, and/or boredom.

Action controls can also be usefully classified according to whether they serve to prevent or detect
undesirable behaviors. This distinction is important.
- Prevention controls are, when they are effective, the most powerful form of control
because the costs and harm stemming from the undesirable behaviors will be avoided.
- Detection controls differ from prevention controls in that the former are applied after
the occurrence of the behavior.
Personnel Control

Personnel controls build on employees’ natural tendencies to control or motivate themselves.

Personnel controls serve three purposes.

(1) some personnel controls help clarify expectations. They help ensure that each employee
understands what the organization wants.
(2) Second, some personnel controls help ensure that each employee is able to do a good job;
that they have all the capabilities (e.g. experience, intelligence) and resources (e.g.
information and time) needed to do the job.
(3) Third, some personnel controls increase the likelihood that each employee will engage in
self-monitoring.

Personnel controls can be implemented through

 selection and placement
- Organizations devote considerable time and effort to employee selection and
placement.
 Training
- Training can provide useful information about what actions or results are expected and
how the assigned tasks can be best performed. T
 job design and resourcing.
- allow motivated and qualified employees a high probability of success.

Cultural Controls
designed to encourage mutual monitoring; a powerful form of group pressure on individuals who
deviate from group norms and values.
Cultures are built on shared traditions, norms, beliefs, values, ideologies, attitudes, and ways of
behaving. The cultural norms are embodied in written and unwritten rules that govern employees’
behaviors.
Organizational cultures can be shaped in many ways, both in words and by example:
 codes of conduct
- Most organizations above minimal size attempt to shape their organizational culture
through what are known, variously, as codes of conduct, codes of ethics, organizational
credos, or statements of mission, vision, or management philosophy.
- These formal, written documents provide broad, general statements of organizational
values, commitments to stakeholders, and the ways in which management would like
the organization to function.
- The codes are designed to help employees understand what behaviors are expected
even in the absence of a specific rule; that is, they are to some extent principle-based
rather than merely rule-based
 group rewards
- Providing rewards or incentives based on collective achievement also encourages
cultural control
- Such incentive plans based on collective achievement can come in many forms
 intra-organizational transfers
 physical and social arrangements
 tone at the top.