Organizational Control in Management

This course introduces basic mechanisms for controlling an organization. We begin by defining organizational control and summarizing the four steps in the control process. Then we discuss the use of the balanced scorecard to measure performance and examine the changing philosophy of control.

Organizational control refers to the systematic process of 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.

A feedback control model can help managers meet strategic goals by monitoring and regulating the organization’s activities and using feedback to determine whether performance meets established standards. Managers set up control systems that consist of the four key steps: Establish standards, Measure performance, Compare performance to standards, and Make corrections.

A current approach to organizational control is to take a balanced perspective on company performance, integrating various dimensions of control that focus on markets and customers, as well as employees and financials. The balanced scorecard is a comprehensive management control system that balances traditional financial measures with operational measures relating to a company’s critical success factors.

Managers’ approach to control is changing in many of today’s organizations. In connection with the shift to employee participation and empowerment, many companies are adopting a decentralized rather than a hierarchical control process.