Control Based Processes

To function efficiently any organization has to achieve “homeostasis”. This word is used to describe the state of affairs wherein an organization adapts to its environment and continues its normal operational activities. At a human level, our ability to adapt to hot or cold weather and continue living is an example of “homeostasis”. At an organization level, IBM’s move from the worlds leading computer hardware manufacturer to software consulting firm can be an example of homeostasis. IBM changed to the changers in environment. Control processes strive to bring about this condition of homeostasis in the following manner:

The Principle of Feedback

All control procedures in the world are based on the simple principle of feedback. This means that the processes constantly engage in a two-way communication. As and when the communication signifies a deviation from a pre-established norm, corrective mechanisms are activated.

A good example would be how thermostats work to control temperature. A thermostat is designed to maintain a given temperature, let’s say 18 degree Celsius. The thermostat therefore continually measures the result of its own actions. If the temperature goes above or below the defined temperature (18 degrees Celsius), corrective action is initiated and homeostasis is maintained.

Deciding the Metrics

In case of a thermostat, defining metrics is a lot easier. However organizational processes are complex and need more sophisticated metrics to understand the state of affairs. Consider a call centre operation for instance. The objectives are many and varied, sometimes even conflicting. The objective in call centers is to ensure that calls are taken at the maximum speed to ensure agents and infrastructure is fully utilized. Also customer service and quality parameters have to be maintained. How would a single metric define the state of affairs in such a case? It cannot, therefore composite metrics are composed. However the principles remain the same. These numbers are monitored and corrective processes initiated just like the thermostat example.

Avoiding Conflict Metrics

Although it may seem obvious that one must ensure that the metrics must not conflict. Or else it will lead to ambiguity and disorganization. But when organizations grow into MNC’s and have operations spread across various continents, this does not remain very obvious. There must be a separate process to ensure that all divisions of the organization are aligned towards achieving their goal.

Removing Human Bias

Another important issue is to ensure that the feedback is unbiased and a true representation of the actual state of affairs. For instance, if a manager reports what his/her subordinated performance is, there is chance that the manager may misrepresent the case and the whole control process becomes pointless. If a manager can rig the metrics, they can rig the whole control process.

Take the case of Nick Lesson of Barings Bank Singapore who was hiding his own losses in a Suspense Account and finally brought down the whole bank because of the failure of the process to ensure automated control.

Reducing Time Lag

The idea of the feedback process is to ensure preventive measures. It is for this reason, that the feedback time be as small as possible. Nowadays real time systems are available that enable managers to keep a watch on the metrics and initiate corrective action as and when things happen. This minimizes the damage possible.

Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.