Chapter 10* (18) CONTROL

Managers engage in controlling activities to protect the organization and its assets

TRUE

The Sarbanes-Oxley Act called for more disclosure and transparency of corporate financial information

TRUE

Identify three feedback control measures which would reduce workplace violence

The following could be used as feedback measures to control workplace violence. 1. Communicate openly about incidences and what's being done. 2. Investigate incidences and take appropriate action. 3. Review company policies and change, if necessary

Provide a few examples for feedforward strategies to reduce employee theft

The following strategies can be used to control employee theft. 1. Careful prehiring screening. 2. Educating and training employees about policies. 3. Performing professional reviews to study internal controls. 4. Involving employees in writing policies.

Managers should not consider the standards when measuring the actual performance of employees.

FALSE

Which of the following is an example of a feedforward control measure used to control possible workplace violence? A) Clearly communicate the security policies to employees. B) Use corporate hotlines for reporting and investigating incidences. C) Review company policies and change, if necessary. D) Investigate incidences and take appropriate action

A) Clearly communicate the security policies to employees.

________ refers to the process of monitoring, comparing, and correcting work performance. A) Controlling B) Checking C) Measuring D) Verifying

A) Controlling

________ is measured by the costs of acquiring and transforming organizational resources into outputs. A) Input B) Quality C) Profit D) Leverage

A) Input

The goal for the sales team at the auto dealership was to sell one new car per day every day of the month. In August the team sold 33 cars. What should management do? A) Nothing. The deviation is insignificant. B) Revise the goal. If the team sold more than the goal, obviously the goal is too low C) Wait. See if the performance is duplicated next month before taking any action. D) Celebrate. Any achievement beyond the goal is deserving of a celebration.

A) Nothing. The deviation is insignificant.

Raw, unanalyzed facts are called ________. A) data B) information C) database D) factoids

A) data

Which of the following is a feedforward control measure to prevent employee theft? A) employee assistance programs to help employees with behavioral problems B) thorough investigation of the incident by an external agency C) use of quick and decisive managerial intervention during the incident D) open communication about incidences and what's being done

A) employee assistance programs to help employees with behavioral problems

Fraudulent filing of expense reports is an example of ________. A) employee theft B) workplace piracy C) workplace violence D) privacy intrusion

A) employee theft

An organization communicates openly to its employees about violent incidences in the workplace and what's being done to handle them. This is an example of a ________ control strategy. A) feedback B) reactive C) concurrent D) feedforward

A) feedback

Donald discovers major flaws in the packaging department. He consults the production manager and formulates control measures to improve packaging. Here, Donald is using the ________ control. A) feedback B) reactive C) concurrent D) feedforward

A) feedback

Helen investigates an incident involving a shooting in her workplace. She wants to take measures to control its effects. By doing this she is exerting ________ control over the incident. A) feedback B) concurrent C) reactive D) feedforward

A) feedback

An organization hires additional personnel as soon as they get a major contract. The organization is using ________ control. A) feedforward B) concurrent C) feedback D) management

A) feedforward

Which of the following is considered the most desirable type of control to prevent anticipated problems? A) feedforward control B) concurrent control C) feedback control D) reactive control

A) feedforward control

Which of the following is considered the easiest way to increase organizational productivity? A) increasing the price of outputs B) increasing the amount of inputs C) hiring more employees D) decreasing the value of the products

A) increasing the price of outputs

For which of the following is a subjective measure most appropriate? A) level of satisfaction of patient care in a hospital B) degree of improvement in closing sales in a real estate brokerage C) quality of a water supply D) reduction of waste in a manufacturing process

A) level of satisfaction of patient care in a hospital

Which of the following sources usually provides filtered information which cannot be documented? A) oral reports B) personal observations C) online reports D) written reports

A) oral reports

Annette is watching her new employee as he executes the steps in making French fries. Her purpose is to make sure he follows the instructions exactly as given. Annette is using ________. A) personal observation B) statistical reports C) mentoring D) nonverbal feedback

A) personal observation

Productivity decreases when an organization raises the prices of its products

FALSE

________ corrects the problem at once to get performance back on track. A) Basic corrective action B) Immediate corrective action C) Verbal feedback D) Disciplinary action

B) Immediate corrective action

________ is when a manager in the work area interacts directly with employees to maintain supervision. A) Preventive maintenance B) Management by walking around C) Reactive control D) Feedforward control

B) Management by walking around

Irene was quite upset to learn her employer read her e-mails. She thought all her messages were private. Which of the following arguments would best explain her employer's actions? A) Managers want to ensure company e-mail servers are not being used for personal e-mails. B) Managers want to be certain employees are not inadvertently passing on company secrets. C) Managers are looking for information that can later be used to terminate employees. D) Managers monitor computer usage to justify system upgrades.

B) Managers want to be certain employees are not inadvertently passing on company secrets.

Frank believes organizational effectiveness is more important to the organization than organizational productivity. What could be the rationale behind this belief? A) Organizational productivity is not a measure of organizational performance. B) Organizational effectiveness is a measure of how well the organizational goals are met. C) Organizational productivity is not directly related to organizational output. D) Organizational effectiveness is a quantitative measure of the input-output relationship

B) Organizational effectiveness is a measure of how well the organizational goals are met.

Ruth, a financial consultant, determines her client's leverage ratio to be very high. What suggestion could Ruth give to help the firm reduce its leverage ratio? A) Increase the money supply by selling a part of its assets. B) Pay back part of its debts to improve the ratio. C) Maintain more current assets than current liabilities. D) Reduce the sales to total assets ratio of the firm.

B) Pay back part of its debts to improve the ratio.

Management by walking around is an example of ________ control. A) feedback B) concurrent C) feedforward D) reactive

B) concurrent

Because so many items had disappeared from the office supplies storeroom, management installed a surveillance camera to provide ________. A) feedforward control B) concurrent control C) feedback control D) evidence for prosecution

B) concurrent control

The management control that takes place while a work activity is in progress is known as ________. A) feedforward control B) concurrent control C) feedback control D) reactive contro

B) concurrent control

Organizational ________ is a measure of how appropriate organizational goals are and how well an organization is achieving those goals. A) productivity B) effectiveness C) efficiency D) yield

B) effectiveness

Factors that have been found to be linked to workplace violence include ________. A) too much caffeine B) employee stress C) poor employee diet D) poor personal hygiene

B) employee stress

Cindy's elementary school-aged children brought home lists of supplies required for their classes so Cindy raided the office supplies cabinet. Her rationale is that her employer doesn't pay her enough to buy these items. Cindy is engaging in ________. A) workplace piracy B) employee theft C) equity adjustment D) compensation management

B) employee theft

Which of the following ratios examines the organization's use of debt to finance its assets and its ability to meet the interest payments on the debt? A) liquidity ratios B) leverage ratios C) profitability D) activity ratios

B) leverage ratios

The ________ ratios measure an organization's ability to meet its current debt obligations. A) activity B) liquidity C) leverage D) profitability

B) liquidity

The first step in the control process is ________. A) setting the desired standards B) measuring actual performance C) comparing performance against expectations D) enforcing managerial contro

B) measuring actual performance

The Sarbanes-Oxley Act called for ________. A) increased pollution control measures from the government B) more disclosure and transparency of corporate financial information C) limited accountability of directors and executives of corporates D) more social contribution from companies in the United States

B) more disclosure and transparency of corporate financial information

Which of the following sources of information for measuring performance is subject to personal biases, time consuming, and obtrusive? A) oral reports B) personal observations C) statistical reports D) written reports

B) personal observations

Andrew prefers to get his performance data in the form of charts and graphs. Andrew prefers ________. A) personal observations B) statistical reports C) oral reports D) written reports

B) statistical reports

Managers could choose to do nothing when ________. A) an employee fails to attain the standard because of internal problems B) the difference between actual performance and standard performance is low and acceptable C) performance standards are acceptable, though the employees have not attained it D) the variance observed from the expected performance is caused due to unrealistic standards

B) the difference between actual performance and standard performance is low and acceptable

________ is the final step in the management process, which provides a critical link back to ________. A) Organizing; planning B) Planning; controlling C) Controlling; planning D) Leading; organizing

C) Controlling; planning

Which of the following is one of the main advantages of using statistical reports as the source of information? A) Statistical reports can be used to obtain firsthand knowledge. B) Unfiltered information can be obtained using statistical reports. C) Statistical reports are effective for showing relationships. D) Statistical reports provide unbiased information.

C) Statistical reports are effective for showing relationships.

The operations manager suggests a hike in the prices to improve productivity. However, the marketing manager rules this option out. What could be the possible reason for this? A) Product prices are not related to organizational productivity. B) Selling price is negatively correlated to organizational productivity. C) The industry is characterized by intense competition. D) Such an action would lead to reduced employee satisfaction.

C) The industry is characterized by intense competition.

The ________ approach to performance measurement was introduced as a way to evaluate organizational performance from more than just the financial perspective. A) market value B) balance sheet C) balanced scorecard D) income statement

C) balanced scorecard

Which of the following is a performance measurement tool that looks at four areas that contribute to a company's performance? A) market value method B) economic value method C) balanced scorecard approach D) information control approach

C) balanced scorecard approach

Contours, Inc., knows each drill bit can cut approximately 100,000 holes before the hole size is smaller than the print specification so it changes drill bits after 95,000 uses. Contours, Inc., is using ________ control. A) preventive B) predictive C) feedforward D) concurrent

C) feedforward

Charles wants to prevent problems before their occurrence. Which of the following is the most desirable type of control to achieve this goal? A) proactive control B) preventive control C) feedforward control D) feedback control

C) feedforward control

Clinical psychologists suggest that employee theft ________. A) occurs primarily when there are poor management-labor relations B) is a symptom of poor planning and management control C) happens because people find ways to rationalize this behavior as correct D) reflects deep cultural problems in the society

C) happens because people find ways to rationalize this behavior as correct

"No, James, you must start the timer after you lower the French fry basket into the fryer, not before." This supervisor is using ________. A) basic corrective action B) disciplinary action C) immediate corrective action D) delayed corrective action

C) immediate corrective action

Connor interacts directly with the employees in the work area to identify problem areas. He works with various departments to obtain a holistic idea of the business. This type of direct supervision is an example of ________ control. A) proactive B) preventive C) management by walking around D) feedback

C) management by walking around

Brenda is always ready with a story to tell about performance in her area. Unfortunately, Brenda sometimes leaves out important facts and makes statements that cannot be corroborated. Brenda is delivering ________. A) personal observations B) statistical reports C) oral reports D) written reports

C) oral reports

In a short essay, define corporate governance and describe some of the current trends in this area.

Corporate governance is the system used to govern a corporation so that the interests of corporate owners are protected. In response to several recent business scandals, two areas in which corporate governance is being reformed are the role of boards of directors and financial reporting. The cozy, quid pro quo composition of corporate boards, where board members are frequently peers of other corporations, is changing considerably. The Sarbanes-Oxley Act of 2002, puts greater demands on board members of publicly traded companies in the United States to do what they were empowered and expected to do. To help boards do their job better, researchers at the Corporate Governance Center at Kennesaw State University developed 10 governance principles for U.S. public companies that have been endorsed by the Institute of Internal Auditors. In addition to expanding the role of boards of directors, the Sarbanes-Oxley Act also called for more disclosure and transparency of corporate financial information. In fact, senior managers in the United States are now required to certify their companies' financial results. These types of changes should lead to better information - that is, information that is more accurate and reflective of the firm's financial condition. In fulfilling their financial reporting responsibilities, managers might also want to follow the 15 principles developed by the researchers at the Corporate Governance Center at Kennesaw State University.

________ ratios measure how efficiently the firm is using its assets. A) Liquidity B) Leverage C) Profitability D) Activity

D) Activity

________ is the search for the best practices among competitors or noncompetitors that lead to their superior performance. A) Factor analysis B) Total quality management C) Market positioning D) Benchmarking

D) Benchmarking

Helen noticed employee theft has increased. She has considered several options to deal with this loss. Which of the following is likely to be the most effective concurrent control? A) Carefully screen job applicants using honesty testing. B) Publicly announce thefts when they are discovered. C) Dismiss any employee involved in theft. D) Publicize progress in reducing theft.

D) Publicize progress in reducing theft.

The service profit chain is the service sequence from employees to customers to profit. According to this concept, the company's strategy and service delivery system determines ________. A) the skill development of employees B) how the firm performs in the short run C) the employee satisfaction in the company D) how employees serve customers

D) how employees serve customers

Every March, Bill, who owns and operates a small retail shop, takes a large box of receipts and invoices to his accountant so the accountant can file Bill's taxes in April. Only then does Bill know if his business has been profitable. Bill could benefit from a(n) ________. A) concurrent control system B) balanced scorecard system C) inventory control system D) management information system

D) management information system

Control techniques can be quite different for different countries. The differences are primarily in the ________. A) types of tasks that employees perform in various countries B) way employees respond to the controlling measures C) strategic orientation of each technique D) measurement and corrective action steps of the control process

D) measurement and corrective action steps of the control process

Which of the following management responsibilities determines if organizational goals are being achieved? A) designing the organization's structure B) motivating employees C) formulating business strategy D) measuring firm performance

D) measuring firm performance

Which of the following refers to the overall output of goods or services produced divided by the inputs needed to generate that output? A) yield B) efficiency C) effectiveness D) productivity

D) productivity

Which of the following ratios measures how efficiently and effectively the firm is using its assets to generate revenue? A) total asset turnover ratios B) inventory turnover ratios C) acid test ratio D) return on investment

D) return on investment

Employers are increasingly monitoring employees' activities involving the use of company technology, particularly computers and cell phones. Explain why employers believe such monitoring is necessary.

Employees are hired to work, not to surf the Web. Recreational on-the-job Web surfing is thought to cost billions of dollars in lost work productivity annually. Watching online video clogs corporate computer networks, making the transmission of business-related data slower. Employers don't want to risk being sued for creating a hostile work environment because of offensive messages or an inappropriate image on a coworker's computer screen. Concerns about racial or sexual harassment are one reason companies might want to monitor or keep back-up copies of all e-mail. Managers want to ensure that company secrets are not being leaked.

Activity ratios measure an organization's ability to meet its current debt obligations

FALSE

Basic corrective action corrects problems at once to get performance back on track.

FALSE

Benchmarks for a company must be created based on the previous performance of the company.

FALSE

Workplace violence is a difficult problem for managers to handle. Managers can take anticipatory steps to control workplace violence. Provide a few suggestions.

Managers can implement feedforward control as a preventive measure. Some of the feedforward control measures include the following: a. Identify potential problems by observing how employees treat and interact with each other. b. Use careful prehiring screening. c. Train employees about how to avoid danger if the situation arises. d. Enforce organizational policy that any workplace rage, aggression, or violence will not be tolerated.

Contours, Inc., quality auditors pull one part from the production line every 15 minutes. These parts are measured against the production print; any variation that is beyond acceptable levels is reported to the machine operators. Contours, Inc., is using ________ control. A) feedforward B) concurrent C) feedback D) concentric

B) concurrent

Two areas in which corporate governance is being reformed are the role of boards of directors and ________. A) executive bonus systems B) financial reporting C) reports to stockholders D) reporting to government agencies

B) financial reporting

The earthquake/tsunami which hit Japan in March of 2011 highlights the contemporary need to design organizational controls for ________. A) cross-cultural differences B) global turmoil and disasters C) workplace privacy D) workplace safety

B) global turmoil and disasters

In order to increase the ratio of outputs to inputs, a manager would have to ________. A) decrease the selling price B) increase productivity C) increase the quality of inputs D) hire additional employees

B) increase productivity

When data is analyzed and processed, it becomes ________. A) a system B) information C) fact D) a structure

B) information

The plant superintendent wants to know the value of products per man hour. She is concerned with ________. A) costs B) waste C) productivity D) profits

C) productivity

What are the major reasons why the control function is important to managers?

Control is important because it's the only way managers know whether organizational goals are being met and if not, the reasons why. The value of the control function can be seen in three specific areas: planning, empowering employees, and protecting the workplace. As the final step in the management process, controlling provides the critical link back to planning. If managers didn't control, they'd have no way of knowing whether their goals and plans were being achieved and what future actions to take. The second reason controlling is important is because of employee empowerment. Many managers are reluctant to empower their employees because they fear employees will do something wrong for which they would be held responsible. Many managers are tempted to do things themselves and avoid empowering. But an effective control system can provide information and feedback on employee performance, thus reducing potential problems. The final reason that managers control is to protect the organization and its assets. Today's environment brings heightened threats from natural disasters, financial scandals, workplace violence, supply chain disruptions, security breaches, and even possible terrorist attacks. Managers must have plans in place to protect the organization's employees, facilities, data, and infrastructure. Having comprehensive controls and backup plans will help assure minimal work disruptions.

Organizational effectiveness is a measure of how appropriate organizational goals are and how well those goals are being met

TRUE

Some control criteria, such as employee satisfaction, can be used for any management situation

TRUE

The balanced scorecard approach evaluates organizational performance from more than just the financial perspective

TRUE

Most employees do their jobs well and never require disciplinary action

TRUE

Diane wants to take corrective measures to prevent future theft. Which of the following is a feedback tactic that Diane could use to control theft? A) use the services of professional investigators B) openly communicate the costs of stealing C) use corporate hotlines for reporting incidences D) educate and train employees about the policies

A) use the services of professional investigators

Managers should use subjective measures when ________. A) work activities cannot be expressed in quantifiable terms B) work activities are critical to the organization C) organizational processes and activities are complex D) employee attitudes are at stake

A) work activities cannot be expressed in quantifiable terms

Corporate governance ________. A) refers to executive governance practices in companies B) is a system used to govern a corporation so that the interests of corporate owners are protected C) is a term that refers to legal agreements made between two or more partner firms D) refers to the compliance of the company to applicable laws and regulations

B) is a system used to govern a corporation so that the interests of corporate owners are protected

Which of the following observations best explains why the control function is important? A) An effective control system includes employee empowerment. B) An effective control system assures that the organization will meet or exceed its goals. C) An effective control system is the only way managers know whether organizational goals are being met. D) Organizational strategies are formed during the controlling stage.

C) An effective control system is the only way managers know whether organizational goals are being met.

Following a customer complaint, ABC Mfg. formed a problem solving team to find out why the system was producing unacceptable parts and make a recommendation to fix it. This is an example of ________. A) delayed corrective action B) immediate corrective action C) basic corrective action D) preventive corrective action

C) basic corrective action

If a manager investigates how and why performance has deviated beyond the acceptable range of variation, and then corrects the source of the deviation, she is using ________. A) feedback control B) immediate corrective action C) basic corrective action D) concurrent control

C) basic corrective action

Mark recommends that the managers at Statco should identify how and why performance has deviated beyond the acceptable range of variation, and then correct the source of the deviation. Here, Mark is recommending ________. A) feedforward control B) immediate corrective action C) basic corrective action D) concurrent control

C) basic corrective action

Elaine wants to analyze her company's ability to meet its current debt obligations. Which of the following ratios is most helpful to Ruth in analyzing this? A) inventory turnover ratio B) return on investment ratio C) current ratio D) total asset turnover ratio

C) current ratio

Statco, Inc., has struggled to meet projected revenues for each of the past ten quarters. The firm hired Mark Adams to design a control system and offer suggestions to improve the firm's performance. Which of the following is a key activity that the proposed control system should perform? A) organizational planning B) organizational structuring C) performance measurement D) corporate governance

C) performance measurement

The control process assumes that ________. A) feedback is the only way to improve performance B) managers will be aware of the actions and activities of their employees C) performance standards are already in place D) employee monitoring costs are part and parcel of doing business

C) performance standards are already in place

Mark wants to use a tool which is easy to visualize and effective for showing relationships. Which of the following tools is best suited for this? A) benchmarking B) balanced scorecard C) written reports D) statistical reports

D) statistical reports

The comparing step in the control process determines ________. A) a company's relative position in the industry in terms of the standards used B) a company's relative position in the industry in terms of performance variances C) the variation between actual performance and an external benchmark from a noncompetitor D) the variation between actual performance and the standard

D) the variation between actual performance and the standard

MegaMogul Mfg. was a very successful company about 50 years ago. Its managers still behave today as they did back then. They are rigid, aggressive and condescending in their communication. Their favorites are given the easiest assignments. No one is allowed to question them. This situation is ripe for ________. A) employee theft B) employee fraud C) a control system makeover D) workplace violence

D) workplace violence

At the end of every month, the accounting department submits a balance sheet, statement of profit and loss, and cash flow statement to the senior management team. These are all ________. A) personal observations B) statistical reports C) oral reports D) written reports

D) written reports

Which of the following sources provides information which is comprehensive, formal, and easy to file and retrieve? A) oral reports B) personal observations C) online reports D) written reports

D) written reports

Employers establish specific policies defining theft and fraud and discipline procedures. This is an example of a concurrent control measure to control employee theft.

FALSE

Feedforward control takes place while a work activity is in progress.

FALSE

Having a control system reduces the scope of employee empowerment and autonomy.

FALSE

Using corporate hotlines or other mechanisms for reporting and investigating workplace violence is an example of feedback control.

FALSE

Feedforward control is more popular and effective than the other forms of control.

FASLE

In a short essay explain feedforward, concurrent, and feedback controls and provide an example for each one

Feedforward control is the most desirable type of control. Feedforward control prevents anticipated problems since it takes place before the actual activity. Example - At St. Joseph's Hospital in West Bend, Indiana, a new facility was designed with identical rooms, nonslip floors, and glass walls to reduce errors in patient care and to increase employee safety. Concurrent control, as its name implies, takes place while an activity is in progress. When control occurs while the work is being performed, management can correct problems before they become too costly. Example - When managers use management by walking around, which is a term describing when a manager is out in the work area interacting directly with employees, they're using concurrent control. Feedback control, the most popular type of control relies on feedback. In feedback control, the control takes place after the activity is done. Example - When the Denver Mint discovered flawed Wisconsin quarters, it was discovered with feedback control. The damage had already occurred even though the organization corrected the problem once it was discovered

A service profit chain is the service sequence from employees to customers to profit.

TRUE

Controlling is the process of monitoring, comparing, and correcting work performance.

TRUE

Deviations that exceed the acceptable range of variation become significant and need a manager's attention.

TRUE

Embezzlement and fraudulent filing of expenses are examples of employee theft

TRUE

Job uncertainties and employee stress are factors that contribute to workplace violence

TRUE

Managers should do nothing if the variance observed from the standard is acceptable.

TRUE

Managers tend to use more direct supervision and highly centralized decision making for control in less technologically advanced countries

TRUE

In a short essay, list and briefly explain the steps, processes, and best practices managers typically utilize in the control process. Provide examples where appropriate.

a. Measuring - the first step in the control process is measuring. Most jobs and activities can be expressed in tangible and measurable terms. Managers frequently use a variety of sources of information to measure actual performance, such as personal observation, statistical reports, oral reports, and written reports. For most managers, using a combination of approaches increases both the number of input sources and the probability of getting reliable information. b. Comparing - the second step involves determining the degree of variation between actual performance and the prespecified standard. Some variation is to be expected. However, it is important for managers to determine the acceptable range of variation. c. Taking managerial action - managers can choose among three possible courses of action: do nothing, correct the actual performance, or revise the standards. Examples of corrective actions might include changing strategy, structure, compensation plans, training programs, redesigning jobs, or firing employees. Revising standards is an appropriate response if the variance was the result of unrealistic expectations. However, revising standards downwards can be troublesome when an employee or work unit fall short of reaching a goal. If they don't meet the standard, their natural response is to attack the standard. If the manager believes the standard is fair, they should explain their position, reaffirm their desire for the employee or work unit to meet the standard, and then take necessary corrective action to turn that expectation into reality.