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9609 · 7.1.4

Control, authority and trust — practice questions

Practice and worked examples for 9609 Control, authority and trust. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

Retail bank introduces strict call monitoring and script compliance after mis-selling scandal. Sales fall but complaints drop. Evaluate the control–trust balance.

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Need for control: Mis-selling harmed customers and regulator fines — tight scripts reduce legal risk.

Cost: Scripts kill upselling and employee autonomy — sales fall; Herzberg motivators lost (2.2.3).

Trust path: Training on ethics, commission reform, sample audits instead of 100% scripting.

Verdict: Necessary tightening short term; long term rebuild trust-based culture with smarter controls not only surveillance.

Worked example 2

A marketing department was given a budget of $50,000 for a new product launch campaign with a target of 1,000 new leads. The actual expenditure was $58,000, and the campaign generated 1,200 new leads. The Marketing Manager, who has delegated authority for the budget, argues the overspend was justified. Evaluate this situation in terms of financial control and empowerment.

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Step 1: Calculate the Budget Variance. This is the primary financial control measure.

  • Formula: Budget Variance = Actual Spend - Budgeted Spend
  • Calculation: 58,000−58,000 - 50,000 = $8,000 (Adverse)
  • As a percentage: (8,000/8,000 / 50,000) * 100% = 16% over budget. From a strict control perspective, this is a significant failure to adhere to the budget.

Step 2: Analyse Performance Against Objectives. The campaign's objective was not just to stay within budget, but to generate leads.

  • Target Leads: 1,000
  • Actual Leads: 1,200
  • Performance: The campaign exceeded its lead generation target by 200 leads, or 20%.

Step 3: Evaluate Efficiency using Cost Per Lead (CPL). This combines financial and operational data to assess the balance between control and results.

  • Planned CPL: $50,000 / 1,000 leads = $50.00 per lead
  • Actual CPL: $58,000 / 1,200 leads = $48.33 per lead

Step 4: Synthesise and Evaluate.

  • Control Failure: The manager exceeded their financial authority by 16%, a clear breach of the budgetary control system.
  • Empowerment Success: The empowered manager used their initiative to deliver results 20% above target. Crucially, the efficiency (CPL) was better than planned (48.33vs48.33 vs 50.00). The overspend was not wasted; it generated a higher return.

Conclusion: While the manager failed a key financial control, they succeeded in the overall commercial objective more efficiently than planned. A purely control-oriented culture would punish the manager for the overspend, discouraging future initiative. A culture balancing control with trust would investigate the overspend, praise the excellent results and improved efficiency, and use the data to set more realistic or flexible budgets in the future. This might involve building in contingency or a process for authorising extra funds when a campaign is performing well. This demonstrates the classic trade-off between rigid control and the benefits of empowered decision-making.

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