Organizational Control

In a classic article on the control function, Douglas S. Sherwin, a business leadership expert, summarizes the concept as follows:

The essence of control is action which adjusts operations to predetermined standards, and its basis is information in the hands of managers.Douglas S. Sherwin

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 must decide what information is essential, how they will obtain that information, and how they can and should respond to it. Having the correct data is essential.

Managers decide which standards, measurements, and metrics are needed to monitor and control the organization effectively and set up systems for obtaining that information. If a hospital, for example, carefully monitors and controls its health care services, patients should receive safe, high-quality health care.

Decentralized versus Hierarchical Control Process

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

Hierarchical control and decentralized control represent different philosophies of corporate culture. Most organizations display some aspects of both hierarchical and decentralized control, but managers generally emphasize one or the other, depending on the organizational culture Opens in new window and their own beliefs about control.

In contrast, decentralized control relies on cultural values, traditions, shared beliefs, and trust to foster compliance with organizational goals. Managers operate on the assumption that employees are trustworthy and willing to perform effectively without extensive rules and close supervision.

The organization places great emphasis on the selection and socialization of employees to ensure that workers have the appropriate values needed to influence behavior toward meeting company goals.

No organization can control employees 100 percent of the time and self-discipline and self-control are what keep people performing their jobs up to standard. Empowerment of employees, effective socialization, and training all can contribute to internal standards that provide self-control.

Nick Sarillo, who owns two Nick’s Pizza & Pub shops in Illinois, says his management style is “trust and track,” which means giving people the tools and information they need, telling them the result they need to achieve, and then letting them get there in their own way. At the same time, Sarillo Keeps track of results so the company stays on solid ground.

Exhibit X1 contrasts the use of hierarchical and decentralized methods of control.

• Hierarchical methods define explicit rules, policies, and procedures for employee behavior.
• Control relies on centralized authority, the formal hierarchy, and close personal supervision.
• Responsibility for quality control rests with quality control inspectors and supervisors rather than with employees.
• Job descriptions generally are specific and task related, and managers define minimal standards for acceptable employee performance.

In exchange for meeting the standards, individual employees are given extrinsic rewards such as wages, benefits, and possibly promotions up the hierarchy. Employees rarely participate in the control process, with any participation being formalized through mechanisms such as grievance procedures.

With hierarchical control, the organizational culture Opens in new window is somewhat rigid and managers do not consider culture a useful means of controlling employees and the organization. Technology often is used to control the flow and pace of work or to monitor employees, such as by measuring the number of minutes employees spend on phone calls or how many keystrokes they make at the computer.

The hierarchical approach to control is strongly evident in many Japanese companies. Japanese culture reflects an obsession with rules that can excel at turning chaos to order.

For example, after the devastating 2011 earthquake and tsunami, the Japanese efficiently organized evacuation centers for families who lost homes during the disaster. Self-governing committees managed these temporary shelters and laid out in painstaking detail the daily responsibilities of the residents.

People were assigned specific tasks, including sorting the garbage, washing the bathrooms, and cleaning fresh-water tanks. This hierarchical method of managing the temporary evacuation centers helped survivors find routine and responsibility, which could play a big role in reducing the long-term psychological and physical toll of this natural disaster.

• With decentralized control, power is more dispersed and is based on knowledge and experience as much as formal position.
• The organizational structure is flat and horizontal, with flexible authority and teams of workers solving problems and making improvements.
• Everyone is involved in quality control on an ongoing basis.
• Job descriptions  Opens in new window generally are results-based, with an emphasis more on the outcomes to be achieved than on the specific tasks to be performed.

• Managers use not only extrinsic rewards such as pay, but the intrinsic rewards of meaningful work and the opportunity to learn and grow.
• Technology is used to empower employees by giving them the information they need to make effective decisions, work together, and solve problems.
• People are rewarded for team and organizational success as well as their individual performance, and the emphasis is on equity among employees.
• Employees participate in a wide range of areas, including setting goals, determining standards of performance, governing quality, and designing control systems.

With decentralized control, the culture is adaptive, and managers recognize the importance of organizational culture for uniting individual, team, and organizational goals for greater overall control.

Ideally, with decentralized control, employees will pool their areas of expertise to arrive at procedures that are better than managers could come up with working alone.

Campbell SoupOpens in new window is using decentralized control by enlisting its workers to help squeeze efficiency out of its plants. At the plant in Maxton, North Carolina, factory workers huddle every morning with managers to find ways to save the company money.

The daily worker-manager huddles are about “getting everybody involved,” says “Big John” Filmore, a 28-year plant veteran. “Instead of being told what to do, we get to tell people about our problems,” he said.