Business control or Organizational control refers to regulating organizational activities to make them consistent with the expectations established in plans, targets and standards of performance. The essence of control is action which adjusts operations to predetermined standards and its basis is information in the hands of managers. Thus, effectively controlling an organization requires information about performance standards and actual performance as well as actions taken to correct any deviations from the standards. Managers need to decide what information is essential, how they will obtain that information and share it with employees and how they can and should respond to it. Having the correct data is essential. Managers have to decide which standards, measurements, and metrics are needed to effectively monitor and control the organization and set up systems for obtaining that information. One issue of current concern to many managers is how to track valuable metrics for e-commerce.
Control can focus on events before, during or after a process. For example, a local automobile dealer can focus on activities before, during or after sales of new cars. Careful inspection of new cars and cautious selection of sales employees are ways to ensure high quality or profitable sales even before those sales take place. Monitoring how sales people act with customers would be considered control during the sales talk. Counting the number of new cars sold during the month or telephoning buyers about their satisfaction with sales transactions would constitute control after sales have occurred.
Control that attempts to identify and prevent changes before they occur is called feed forward control. Sometimes called preliminary control, it focuses on human material and financial resources that flow into the organization. Its purpose is to ensure that input quality is high enough to prevent problems when the organization performs its tasks.
Feed Forward controls are evident in the selection and hiring of new employees. Organizations attempt to improve the likelihood that the employees will perform up to the standard by identifying the necessary skills, using tests and other screening devices to hire people who have those skills and providing necessary training to upgrade important skills. Nursing homes came under fire from medical council and government failing to ensure that workers have the appropriate skills or provide them with the training needed to adequately care for residents. Another type of feed forward control is forecasting trends in environment and managing risk.
Control that monitors on-going employee activities to ensure they are consistent with performance standards is called concurrent control. Concurrent control assesses current work activities, relies on performance standards and includes rules and regulations for guiding employee tasks and behaviors.
Many manufacturing operations include devices that measure whether the items being produced meet the quality standards. Employees monitor the measurements; if they see that the standards are not met in some area, they make a correction themselves or signal to the appropriate person that a problem is occurring. Technology advancements are adding to the possibilities for concurrent control in services as well.
Other concurrent controls involve the ways in which organizations influence employees. An organization’s cultural norms and values influences employee behavior as do the norms of an employee or work group. Concurrent control also includes self-control through which individuals impose concurrent controls on their own behavior because of personal values and attitudes.
Feedback control focuses on the organization’s outputs in particular the quality of an end product or service. An example of feedback control in a manufacturing department is an intensive final inspection of a refrigerator at an assembly plant. In schools, administrators conduct feedback control by evaluating each school’s performance every other year. They review reports of students’ test scores as well as the school’s dropout and attendance rates. The state rewards schools with rising scores and brings in consultants to work with schools whose scores have fallen.
Besides producing high quality products and services, businesses need to earn a profit, and even non-profit organizations need to operate efficiently to carry out their missions. Therefore, many feedback controls focus on financial measurements. Budgeting for example is a form of feedback control because managers monitor whether they have operated within their budget targets and make adjustments accordingly.
Within the organization’s overall strategic plan, managers define goals for organizational departments in specific, operational terms that include a standard of performance against which to compare organizational activities.
Managers should carefully assess what they will measure and how they will define it. Tracking such matters as customer service, employee involvement, and turnover is an important supplement to traditional financial performance measurements but many companies fail to adequately identify and define non-financial measurements. To effectively evaluate and reward employees for the achievement of standards, managers need clear standards that reflect activities that contribute to the organization’s overall strategy in a significant way.