Four common sources of information frequently used to measure actual performance include personal observation, statistical reports, oral reports, and written reports. Each has its own particular strengths and weaknesses, but using a combination of them increases both the number of input sources and the probability of receiving reliable information.

Personal observation provides firsthand, intimate knowledge of the actual activity—information that is not filtered through others. It permits intensive coverage because minor as well as major performance activities can be observed, and it provides opportunities for the manager to read between the lines. Management by walking around (MBWA) is a phrase used to describe when a manager is out in the work area, interacting directly with employees and exchanging information about what’s going on. Management by walking around can pick up factual omissions, facial expressions, and tones of voice that may be missed by other sources. Unfortunately, in a time when quantitative information suggests objectivity, personal observation is often considered an inferior information source. It is subject to perceptual biases; what one manager sees, another might not. Personal observation also consumes a good deal of time. Finally, this method suffers from obtrusiveness. Employees might interpret a manager’s overt observation as a lack of confidence or a sign of mistrust.

The widespread use of computers has led managers to rely increasingly on statistical reports for measuring actual performance. This measuring device, however, isn’t limited to computer outputs. It also includes graphs, bar charts, and numerical displays of any form that managers can use for assessing performance. Although statistical information is easy to visualize and effective for showing relationships, it provides limited information about an activity. Statistics report on only a few key areas and may often ignore other important, often subjective, factors.

Information can also be acquired through oral reports—that is, through conferences, meetings, one-to-one conversations, or telephone calls. In employee-oriented organizations where employees work closely together, this approach may be the best way to keep tabs on work performance. For instance, at the Ken Blanchard Companies in Escondido, California, managers are expected to hold one-on-one meetings with each of their employees at least once every two weeks.15 The advantages and disadvantages of this method of measuring performance are similar to those of personal observation. Although the information is filtered, it is fast, allows for feedback, and permits expression and tone of voice, as well as words themselves, to convey meaning. Historically, one of the major drawbacks of oral reports has been the problem of documenting information for later reference. However, our technological capabilities have progressed in the past couple of decades to the point where oral reports can be efficiently taped and become as permanent as if they were written.

Actual performance may also be measured by written reports. Like statistical reports, they are slower yet more formal than firsthand or secondhand oral measures. This formality also often gives them greater comprehensiveness and conciseness than found in oral reports. In addition, written reports are usually easy to catalog and reference.

Given the varied advantages and disadvantages of each of these four measurement techniques, managers should use all four for comprehensive control efforts.

What managers measure is probably more critical to the control process than how they measure. Why? The selection of the wrong criteria can result in serious dysfunctional consequences. Besides, what we measure determines, to a great extent, what people in the organization will attempt to excel at.17 For example, assume that your instructor has required a total of 10 writing assignments from the exercises at the end of each textbook chapter. But in the grade computation section of the syllabus, you notice that these assignments are not scored. In fact, when you ask your professor about this, she replies that these writing assignments are for your own enlightenment and do not affect your grade for the course; grades are solely a function of how well you perform on the three exams. We predict that you would, not surprisingly, exert most, if not all, of your effort toward doing well on the three exams.

Some control criteria are applicable to any management situation. For instance, because all managers, by definition, direct the activities of others, criteria such as employee satisfaction or turnover and absenteeism rates can be measured. Also, most managers have budgets for their area of responsibility set in monetary units (dollars, pounds, francs, lire, and so on). Keeping costs within budget is, therefore, a fairly common control measure. However, any comprehensive control system needs to recognize the diversity of activities among managers. For example, a production manager in a paper tablet manufacturing plant might use measures of the quantity of tablets produced per day, tablets produced per labor hour, scrap tablet rate, or percentage of rejects returned by customers. On the other hand, the manager of an administrative unit in a government agency might use number of document pages produced per day, number of orders processed per hour, or average time required to process service calls. Marketing managers often use measures such as percent of market held, number of customer visits per salesperson, or number of customer impressions per advertising medium.

As you might imagine, some activities are more difficult to measure in quantifiable terms. It is more difficult, for instance, for a manager to measure the performance of a medical researcher or a middle school counselor than of a person who sells life insurance. But most activities can be broken down into objective segments that allow for measurement. The manager needs to determine what value a person, department, or unit contributes to the organization and then convert the contribution into standards.

Most jobs and activities can be expressed in tangible and measurable terms. When a performance indicator cannot be stated in quantifiable terms, managers should look for and use subjective measures. Certainly, subjective measures have significant limitations. Still, they are better than having no standards at all and ignoring the control function. If an activity is important, the excuse that it’s difficult to measure is inadequate. In such cases, managers should use subjective performance criteria. Of course, any analysis or decisions made on the basis of subjective criteria should recognize the limitations of the data.