Four steps of a formal control system - Research Paper Example

The Four Steps of Formal Control Systems Organizations establish formal or bureaucratic control systems to help them affectively measure the progress towards the realization of goals and checking of whether the performance meets the set standards. Formal control systems also offer insight into the corrective strategies for ensuring and improving performance and achieving goals (Bateman & Snell, 2012). This paper discusses the four key steps of a formal control system: setting performance standards, measuring performance, comparing performance against standards and determining deviations, and taking corrective actions.

Setting Performance Standards At this step, an organization sets standards or performance levels for employees as well as owners, which must be met to realise customer satisfaction. Standards are set on profitability and innovation. These standards establish and define performance levels for employees, thus motivating them and act as benchmarks for the evaluation and monitoring of actual performance (Bateman & Snell, 2012). Standards are also set for the quality of products and sustainability, financial prudence, operationalisation, legality, and social corporate responsibility (Bateman & Snell, 2012).

Other standard areas are product availability, labor cost, speed of delivery and adequate supply. Performance Measurement Measurement of performance entails activities such as the counting of the number of products or units created, distributed or the amount of cash inflows, outflows and income earned. To measure performance, the requisite data must be collected. The sources of this data could be observation of production activities, written reports from supervisors or managers, and oral reports from employees.

Thus, organizations should have skilled staffs to collect and analyze the relevant data. Luckily, the current technological advances and computerization have made it easier for organizations to collect and analyze data and give reports in formats that are easily understood (Bateman & Snell, 2012). In addition to making analysis easier, technology has decreased the cost of data handling processes for organizations. Once performance is measured, the findings should be handed over to the right persons to take the recommended courses of action (Bateman & Snell, 2012).

This handover must be done in time for the timely rectification of discrepancies or variations. Comparison of Performance with the Standard The measured performance should then be compared with the standards set at the first step. This exercise is referred to as performance evaluation, to establish the extent to which the standards are met or the objectives are achieved. The impacts of variations or deviations in performance from standards vary across industries and across departments in an organization (Bateman & Snell, 2012).

For sensitive manufacturing processes, a slight deviation could be detrimental to product quality, thus, to customer satisfaction and loyalty (Bateman & Snell, 2012). There are products or systems in which slight variations are acceptable. Because of the differences in the impacts of deviations, the concerned managers must practice utmost care in performance analysis and evaluation. Taking the Corrective Action Once deviations are reported, corrective actions should be taken. The action could also be to improve performance in cases where standards and objectives are achieved (Bateman & Snell, 2012).

That is, measures can be taken to improve success. Similarly, if goals are not met, corrective actions are taken to ensure planned targets are achieved. Immediate and rigorous courses of action are normally taken in situations where deviations are significant and could have detrimental impacts on performance and profitability (Bateman & Snell, 2012). Although managers play significant roles in the corrective actions, there are situations in which operators take corrective measures at the production line or workshop level, without waiting for top management to get involved.

Timing is of essence in bureaucratic control systems. Whereas feed-forward control occurs prior to operations, concurrent (real-time) control is conducted as a process continues and feedback control depends on the information obtained from performance measurement and entails corrective measures (Bateman & Snell, 2012). Reference Bateman, T., and Snell, S. (2012). Management: leading & collaborating in a competitive world, third edition. New York, NY: McGraw-Hill Companies, Inc.