![]() Belief systems encompass the company’s values, mission, and other statements of philosophy.Settling the claim cost Nordstrom more than $15 million. But then some employees brought a lawsuit claiming that supervisors were pressuring them to under-report their hours on the job, so sales per hour would look better. Nordstrom used diagnostic systems to track the performance of its sales force. But holding employees accountable for performance without having other monitoring systems in place can cause problems. Diagnostic control systems are the traditional monitors of critical performance outcomes such as costs and revenues.How can you protect your company while promoting entrepreneurial flair? Think of control as embodying four distinct levers: Managers can encourage innovation among employees while ensuring adequate control by using four powerful management systems or “levers.” This dilemma doesn’t require an either/or decision. Failure to control employees appropriately, therefore, can lead to disaster: business losses, civil or criminal penalties, and perhaps most important, loss of reputation. But on the other hand, there is no shortage of cases where the zeal of an individual employee has crossed the line into harmful behavior. Failure to nurture innovation and empower employees can lead to stagnation. On the one hand, employee initiative is more important than ever. When we praise creative employees, we generally don’t have in mind the Kidder, Peabody trader who booked fictitious profits and ultimately cost the company $350 million.
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