1. Measurement and Accountability
Module 15
LIS 580: Spring 2006
Instructor- Michael Crandall

2. Roadmap Control systems Diagnostic systems Boundary control systems
Financial control- the budget
Financial ratios
Other systems
Boundary control systems
Interactive control systems
Commitment-based control systems
Issues in control systems
May 16, 2006
LIS580- Spring 2006

3. What is Control?
The process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations
An effective control system ensures that activities are completed in ways that lead to the attainment of the organization’s goals
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

4. The Fundamentals Of An Effective Control System
The task of ensuring that planned activities are getting the desired results.
All control systems try to influence behavior.
Controlling involves setting a target (planning), measuring performance (evaluation), and taking corrective action.
Control also applies to monitoring every task—large and small—that is delegated.
G.Dessler, 2003
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LIS580- Spring 2006

5. Management and the Control Process
FIGURE 14–1
G.Dessler, 2003
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LIS580- Spring 2006

6. Characteristics of Three Approaches to Control Systems
Market
Uses external market mechanisms, such as price competition and relative market share, to establish standards used in system to gain competitive advantage
Bureaucratic
Emphasizes organizational authority of administrative and hierarchical mechanisms to ensure appropriate employee behaviors and to meet performance standards
Clan
Regulates employee behavior by the shared values, norms, traditions, rituals, beliefs, and other aspects of the organization’s culture
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

7. Types of Control
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May 16, 2006
LIS580- Spring 2006

8. Steps in the Control Process
Measuring actual performance
Personal observation, statistical reports, oral reports, and written reports
Management by walking around (MBWA)
Comparing actual performance against a standard
Comparison to objective measures: budgets, standards, goals
Range of variation
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

9. Defining an Acceptable Range of Variation
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LIS580- Spring 2006

10. Steps in the Control Process (cont’d)
Taking managerial action to correct deviations or inadequate standards
Immediate corrective action
Correcting a problem at once to get performance back on track
Basic corrective action
Determining how and why performance has deviated and then correcting the source of deviation
Revising the standard
Adjusting the performance standard to reflect current and predicted future performance capabilities
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

11. The Control Process May 16, 2006 LIS580- Spring 2006
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

12. Qualities of an Effective Control System
Accuracy
Timeliness
Economy
Flexibility
Understandability
Reasonable criteria
Strategic placement
Emphasis on the
exception
Multiple criteria
Corrective action
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

13. Approaches To Maintaining Control
The Traditional Control Process
Step 1: Set a standard, target, or goal.
Step 2: Measure actual performance against standards (observation and timing).
Step 3: Take corrective action.
The Commitment-Based Control Process
Encouraging all employees to exercise ethical self-control (as they initiate process improvements and new ways of responding to customers’ needs.
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

14. Two Basic Categories of Control Systems
FIGURE 14–4
G.Dessler, 2003
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LIS580- Spring 2006

15. Types of Traditional Control Systems
Diagnostic controls
A control method, such as a budget, that ensures that standards are being met and that variances are diagnosed and explained.
Boundary Controls
Policies, such as codes of conduct, that establish rules and identify the actions and pitfalls that employees must avoid.
Personal/Interactive Controls
Control methods that involve direct, face-to-face interaction with employees so as to monitor rapidly changing information and respond proactively to changing conditions.
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

16. Examples of Control Standards
FIGURE 14–3
G.Dessler, 2003
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LIS580- Spring 2006

17. The Basic Management Control System
Budget
Formal financial expression of a manager’s plans.
Capital Budget
Shows the expenses for equipment with a life longer than one year.
Operating Budget
Shows the expected sales and/or expenses for each of the company’s departments for the planning period in question.
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

18. University of Alberta Library
How does this budget present options for different funding levels?
What do they use to support their arguments for increased funding levels?
On the positive side?
On the negative side?
What is going to be the hardest thing to get approval for in this budget?
How does the budget explain the request for changes in their operating expenses?
May 16, 2006
LIS580- Spring 2006

19. Example of a Budget
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LIS580- Spring 2006

20. Example of a Budget
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LIS580- Spring 2006

21. Performance Reporting
Variances
Differences between budgeted and actual amounts.
Audit
A systematic process of objectively obtaining and evaluating evidence of the firm’s performance, judging the accuracy and validity of the data, and communicating the results to interested users.
Financial Ratio
An arithmetic comparison of one financial measure to another, generally used to monitor and control financial performance.
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

22. Example of a Performance Report
FIGURE 14–6
G.Dessler, 2003
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LIS580- Spring 2006

23. Widely Used Financial Ratios
FIGURE 14–7a
G.Dessler, 2003
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LIS580- Spring 2006

24. Widely Used Financial Ratios (cont’d)
FIGURE 14–7b
G.Dessler, 2003
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LIS580- Spring 2006

25. Widely Used Financial Ratios (cont’d)
FIGURE 14–7c
G.Dessler, 2003
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LIS580- Spring 2006

26. Widely Used Financial Ratios (cont’d)
FIGURE 14–7d
G.Dessler, 2003
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LIS580- Spring 2006

27. Ratio Analysis: Factors Affecting Return on Investment
FIGURE 14–8
G.Dessler, 2003
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LIS580- Spring 2006

28. Financial Responsibility Centers
Individuals or groups who are assigned the responsibility for a particular set of financial outputs and/or inputs.
Profit centers
Responsibility centers whose managers are held accountable for profit.
Revenue centers
Responsibility centers whose managers are held accountable for generating revenues, which is a financial measure of output.
Cost centers
Groups which are supported through internal taxes on other groups; overhead functions.
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

29. Other Diagnostic Financial and Managerial Controls
Activity-Based Costing (ABC)
A method for allocating costs to products and services that takes all the product’s cost drivers into account when calculating the actual cost of each product or service.
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

30. Other Diagnostic Financial and Managerial Controls (cont’d)
Balanced Scorecard
A management tool, usually a computerized model, that traces a multitude of performance measures simultaneously and shows their interactions.
Enterprise Resource Planning System
A companywide integrated computer system that gives managers real-time, instantaneous information regarding the costs and status of every activity and project in the business.
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

31. Balanced Scorecard
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LIS580- Spring 2006

32. Boundary Control Systems
Define the ethical rules for proper conduct in the organization and specify which actions and pitfalls that employees must avoid.
Include ethics standards, codes of conduct, and strategic policies.
Steps in establishing boundary controls:
Emphasize top management’s commitment.
Publish a code.
Establish compliance mechanisms.
Measure results.
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

33. Personal/Interactive Control Systems
Maintaining control by personally monitoring how everyone is doing is interactive control.
Electronic Performance Monitoring (EPM)
Monitoring the work activities of employees through electronic means.
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

34. Implementing Commitment-based Control Systems
Commitment-Building Systems
Motivation Techniques
Belief Systems
Commitment-Based Control System
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

35. Using Commitment-Building Systems to Foster Self-Control
Foster People-First Values
Guarantee Organizational Justice
Build a Sense of Shared Fate and Community
Use Value-based Hiring
Financial Rewards and Profit Sharing
Communicate Your Vision
Encourage Personal Development and Self-Actualization
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

36. Contingency Factors in Control System Design
Size of the organization
The job/function’s position in the organization’s hierarchy
Degree of organizational decentralization
Type of organizational culture
Relative importance of the control activity to the organization’s success
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

37. Controls and Cultural Differences
Methods of controlling employee behavior and operations can be quite different in different countries
Distance creates a tendency for formalized controls in the form of extensive, formal reports
In less technologically advanced countries, direct supervision and highly centralized decision making are the basic means of control
Local laws may constrain the corrective actions that managers can take in foreign countries
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

38. The Dysfunctional Side of Control
Unfocused controls
Failure to achieve desired or intended results occur when control measures lack specificity
Incomplete control measures
Individuals or organizational units attempt to look good exclusively on control measures
Inflexible or unreasonable control standards
Controls and organizational goals will be ignored or manipulated
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

39. Behavioral Consequences of Controls
Negative Attitudes
Behavioral Displacement
Games- manship
Operating Delays
G.Dessler, 2003
May 16, 2006
LIS580- Spring 2006

40. Contemporary Issues In Control
The right to personal privacy in the workplace versus:
Employer’s monitoring of employee activities in the workplace
Employer’s liability for employees creating a hostile environment
Employer’s need to protect intellectual property
The computer on the desk typically belongs to the organization
Prentice Hall, 2002
May 16, 2006
LIS580- Spring 2006

41. Next Time Managing world-class operations
Read Chapter 15 and the assigned articles
Before lecture discussion group questions (Group E):
What impact does the streamlining of operations have on employees?
What process do you think SPL used to decide on their operations changes?
What measures could SPL institute to decide whether their changes are improving value?
What lessons do companies like UPS have for service organizations like libraries?
May 16, 2006
LIS580- Spring 2006

42. Next Time After lecture discussion group questions (Group F):
Does a library director need to have an MLS?
Is subject matter expertise more important than management expertise in managerial positions?
What arguments would you make for or against your choice?
How well do you think our library schools are doing in educating library managers?
What steps would you take to provide better management education for MLIS graduates?
May 16, 2006
LIS580- Spring 2006