For instance, “controlling costs” applies to both running a household and a business. Interestingly, although the definition in the dictionaries provided the same meaning, they use different words for their definition.
The Google dictionary refers to ”…the power to influence or direct people’s behaviour or the course of events” whilst the Cambridge dictionary states “…to order, limit, or rule something, or someone’s actions or behaviour…”. Inevitably, the idea is to control the behaviour of the individual who exerts influence over the organisation. In terms of business this is not a new concept – just look at the advertising world and how it approaches or approached its customers.
The question therefore is does a business ever really have control and if so, over what or whom and by whom? Or is it all just perception of control? Control can come in many shades; some are obvious such as larger corporates (here I mean anyone that has more power than a small/medium enterprise of the SME sector) exerting their “control” in terms of contract terms.
For example, many suppliers are now insisting contract terms are 36 months as opposed to 12 months with an automatic renewal. Let’s face it, from anyone’s viewpoint a lot can happen in three years – and particularly in the life of an SME. So why not try to negotiate? Maybe because the perceived control is with the larger corporate.
However, you can negotiate how the contract is “rolled over” – for instance insist on a new signature upon renewal. As a business owner myself and like any other MD or CEO, we all want to keep the external costs down and believe we are exerting control over this particular part of the business. Therefore, are we basing our decisions in this scenario on external cost, terms of a contract and need for the service or goods or are our decisions based upon our environment and its requirements coupled with our perceptions within that situation?
There is a theory known as Perceptual Control Theory which “is a theory of human behaviour that says we act to keep our perception of the world within acceptable boundaries…..[that]the environment dictates which actions are possible to bring the perception under control. Control is not about planning; it’s about adjusting to environmental changes as they happen.” Josh Kaufman.
The thing about control is that a business cannot do without it, regardless of perception. Controls act as a layer of protection for companies from careless decision making and protection for employees and customers. There are some fundamental controls that most business will have or should have.
An example is output controls: measuring the company’s output and understanding where to add controls. Ensuring the systems for both the employees and customers are in place to achieve the desired result. Delta Airlines in 2010, according to the Federal Government Data, were the bottom of the list for airlines in terms of flights that arrived on time and in 2011 ranked “fifteenth out of eighteen total carriers” (Yamanouchi, 2011). Delta decided to take control and took “important corrective steps”. It chose to:
Add to its ability to service aeroplanes
Provide additional customer service training for its employees
Start a Twitter account called Delta Assist around the clock to help passengers whose flights are delayed.
The changes and new controls worked. By the end of 2011, the airline saw a turnaround in both ratings and profit.
Another is behaviour control: whether this is for the people within the organisation or consumers/customers, there is always some form of control. When we apply it to people, we can feel uneasy, but the truth is there are always elements of control.
Control is required on a level to ensure that the business is running and achieving its objectives. However, if we add an element of perceptual control we may find that business will act to ensure that it acts within the” boundaries” of its external environment and “correct” their course of actions despite themselves.