Behavioral Properties of Variance Controls

See, for example, Blau Peter M. , The Dynamics of Bureaucracy (2nd ed.; Chicago: University of Chicago Press, 1963), esp. pp. 36–47; Argyris Chris , The Impact of Budgets on People (Ithaca: The Controllership Foundation, Inc., 1952); Strauss George Sayles Leonard R. , Personnel (Englewood Cliffs: Prentice-Hall, Inc., 1960), pp. 326–335; and Stedry Andrew C. , Budget Controls and Cost Behavior (Englewood Cliffs: Prentice-Hall, Inc., 1960).

For a detailed treatment of the theory and techniques of variance controls, see Grant Eugene L. , Statistical Quality Control (2nd ed.; New York: McGraw-Hill Book Co., Inc., 1952).

The behavioralists' criticisms and control theory discussed here draw heavily on the concepts presented by McGregor, Likert, Haire, and others. See particularly McGregor Douglas , The Human Side of Enterprise (New York: McGraw-Hill Book Co., Inc., 1961); Haire Mason , “The Concept of Power and the Concept of Man.” in Strother George , ed., Social Science Approaches to Business Behavior (Homewood, Ill.: The Dorsey Press, 1962), pp. 163–183; and Likert Rensis , New Patterns of Management (New York: McGraw-Hill Book Co., Inc., 1961).

For a typical statement of traditional control theory, see Koontz Harold O'Donnell Cyril , Principles of Management (2nd ed.; New York: McGraw-Hill, 1959), pp. 37–38.

The development of electronic data processing equipment is making it increasingly possible for control centers to be located farther and farther away from the actual point of operation. Organizations in which a few top managers establish over-all performance goals and guide the entire process by remote “computer” control are now within the realm of possibility, and would appear to represent the zenith in the traditional control design. See. Leavitt Harold J. Whisler T. L. , “Management in the 1980's,” Harvard Business Review, XXXVI:6 (Nov.-Dec., 1958), 41–48.

It is, in fact, the elaborate devices for subterfuge which may best serve to demonstrate the capacity of organizational members to exercise self-direction, self-discipline, and self-control. Work groups and individuals in a number of settings have shown remarkable ability to turn out no more and no less than a minimally acceptable level of production—high enough to avoid reprisal, but not high enough to arouse greater expectations on the part of management.

See McGregor , op. cit., pp. 150–151.

See Likert , op. cit., pp. 208–209.

See McGregor Douglas , “Conditions of Effective Leadership in the Industrial Organization,” Journal of Consulting Psychology, VIII (March-April, 1944), 55–63.

The general desirability of short feedback cycles is discussed by Likert , op. cit., pp. 203–206.

That is, the control limits indicate when to leave the process alone and when to take action to locate assignable causes for satiations in the process. They, of course, do not give the cause for the variation or explain how to correct it.

See, for example, Ballowe J. M. , “Statistical Quality Control of Clerical and Manual Operations,” Paper No. 10. Fourth National Convention of American Society for Quality Control, June, 1950; and Lobsinger D. L. , “Air Transportation Finds New and Lucrative Uses for SQC,” Industrial Quality Control, VI:6 (May, 1950), 76–78.

Vance Lawrence L. Neter John , Statistical Sampling for Auditors and Accountants (New York: John Wiley & Sons, Inc.), 1956.

Noble Carl E. , “Calculating Control Limits for Cost Control Data,” NACA Bulletin, XXXV: 10 (June, 1954), 1309–1317.

Gaynor Edwin W. , “Use of Control Charts in Cost Control,” NACA Bulletin, XXXV: 7 (June, 1954), 1300–1308.

A survey of recent literature in these areas appears to support these conclusions. For example, Only one of the 700 articles abstracted in the 1962 Quality Control Yearbook reported a nonmanufacturing application of variance control methodology. See Meyers Arthur C. Jr. , “Statistical Controls in a Police Department,” Transactions of the 16th Midwest Quality Control Conference of the American Society for Quality Control (St. Louis, Oct. 19, 1961), pp. 111–117 (abstracted in the Quality Control Yearbook 1962, p. 747). Similarly, the accounting literature continues to suggest a wide range of possible applications of variance controls but reports few instances of actual application.

Grant Eugene L. , op. cit., p. 476.

See, for example. Cogan Ben H. , “The Trouble with Inspection,” Transactions of the 8th Annual Quality Control Conference, Los Angeles and Orange-Empire Sections, American Society for Quality Control (March 16, 1961); Ravello Henri , “Safeguarding Quality in Mass Production,” Association Français pour le Controle Industriel de Qualité Bulletin, No. 6 (May. 1961), 19–37; Nixon Frank , “Organization, Man and Reliability,” Industrial Quality Control, IXX: 2 (August, 1962), 15–21.

Marks A. R. , “A Theory of Job Design and Research Findings,” paper presented to the Congress of the International Association of Applied Psychology (Rome, Italy, 1958).

Accountants generally do perform “variance” analysis on standard cost data. Until recently, however, this analysis usually did not involve efforts to define statistically the limits of normal variation. There is some indication, as suggested earlier, that variance control theory and techniques as defined in this paper are gaining acceptance and some application by accountants.

See, for example, Argyris , op. cit.; and McGregor , The Human Side of Enterprise, loc. cit., pp 150–153.

See, for example, Peirce James L. , “The Budget Comes of Age,” Harvard Business Review, XXXII: 3 (May-June, 1954), 58–66; and McGregor , op cit., pp. 150–153 and pp. 61–76.

Livingstone John L. , “Management Controls and Organizational Performance,” Personnel Administration, in press.

Bierman Harold Jr. Fouraker Lawrence E. Jaedicke Robert K. , Quantitative Analysis for Business Decisions (Homewood, Ill.: Richard D. Irwin, Inc., 1961), pp. 111–116.

See, for example, Smith Clagett G. Tannenbaum Arnold E. , “Organizational Control Structure: A Comparative Analysis,” Human Relations, XVI: 4 (Nov., 1963), 299–316.