Chapter 1:

Management and Control

Management control

I The process by which management:

- ensures that people in lhe organizaiion carryout organizational objedives and strategies;

- encourages, enables, or, sometimes "forces"employees to act in the organization's best interest.

a Management conirol includes all ihe devices/mechanismsmanagers use to ensure that ihe behavior of employees isconsistent with the organization's objectives and strategies.

Function and benefit

I Purpose/function

- get done what management wants done;

- influence behavior in desirable ways.

o Benefit

- increased probability that the organization'sobjectives will be achieved.

Management and its components

Objective setting

a Objectives are, a neessary prerequisite for any purposeful activities.

a Without objectives, it is impossible) to assess whether the employees' actions are purposive;

, to make claims about an organization's success.

o Objectives can be

D flnancial yeErs non-flnancial,) quantified, €xplicit ye6us implicit;

, emnomic, social, environmental, societal.

Strategy formulation

a An organization must select any of innumerableways of seeking to attain its objectives.

o Strategies define how organizations shoulduse their resources to meet their objectives.

o Hence,sirategies put constraints on employees tofocus aclivities on what the organization doesbesi or areas where it has an advantage overcompetitors.

Key questions

a Are our employees likely to behaveappropriately?

- Do they understand what we expect of them?

- Will they work consistently hard and try to do whatis expected oi ihem?

- Are they capable of doing what is expected of them?

The basic control problem

a Management control is about encouragingPEOPLE to take desirable actions,

D i.e., it guards againsl the possibilities that employees willdo somelhing the organization does not want them io do,or, fail to do Eomething ihey should do.

o Hence, management control has a

BEHAVIORAL ORIENTATION !

. lf all personnel could always be relied on to do what isbest for the organization, there would be no need for amanagemenl control system.

Basic control issues

a Three issues:

D Do they understand what we expect of them

i Lack of direction

, Will they work consistently hard and try to do whatis expected of them

* Lack of motivation

> Are they capable of doing what is expect€d of them

* Personal limitations

Lack of direction

o Employees do not know what the organizationwants from them.

. When this lack of direction occurs, the likelihood ofthe desired behaviors occurring is obviously small.

COMMUNICATION + REINFORCEMENT !

Motivational problems

a When employees 'choose' not to perform astheir organization would have them perform.

a Because

- Lack ofgoal congruence> lndividual goals do not coincide with organizational goals.

- Self-interested behavior

> Generally, individuals are prone to being "lay'a e.9., take long lunches, overepend on things that make

life more pleasant, use of sick leaves when not sick, 6tc.

) More extreme examples of motivational problems:

. Employee crime (fraud and theft).

Personal limitations

o Sometimes, people are "unable'to do a good jobbecause of certain personal limitations they have.

a Some examples/causes:- lack of requisite knowledge, training, experience;

- employees are promoted above iheir level of competence;

- some jobs aE not designed properly;

TRAINING

JOB ASSIGNMENTJOB DESIGN

Note that

a Management controls do not always involve a simplecybernetic system like a thermostat

) Detector ) measure perfomancei) Agsessor ) compare with pre-set standard;) Effector ) take @rective action.

a Many controls don't focus on measured performance) e.9., direcl superyision, employee hiring standards,

@des of conduct.

a Many controls are proactive rather than reactive) i.e., they are designed to preveni contrcl problems before the

organization suffere any adverse effects on performanG.

Control can be achieved through:

I Control Problem Avoidance

i_'_[T1s_:3:{_c::t:] :fIr: _i

) Action Controls;

) Results Controls;

) People Controls.

Control-problem avoidance

o Three possibilities:

- Activity elimination> e.9., sub@ntracts, licensing agreements, divestment

- AutomationD Computere/robots eliminate the human problems

of jnacaracy, inconsistency, and lack of motivation;

> Only applimble to relatively easy decision situations;

D Aulomation en be very @stly.

- Centralization> Superiors reserue for themselves the most siti€l

decisiore.

Control alternatives

o Controls can focus on:

- the actions taken ACTION CONTROLS

RESULTS CONTROLS

PEOPLE CONTROLS

- the results produced

- the types of peopleemployed and theirshared values and

Or any combination

Deoendino on

Abilityto measure results on important peaformance dimensions :6

€eIa.

6

a

9.ds

Ac{ion Controlandlo.

Results ControlAction Contro!

(e.9. large projects)

Results Control(e.9. movie director,

entity manager)

People Control(e.9. research lab)

Overview

can people be avoided? ,* {"---lmlm.l;mtrol1**;l(e.9. automation, centElization) - --

I l" I avordance I

can you rely on people involved? -to f- - -_-l; \o v-" I People controls

]

Can you make people reliable? ''- --l -------l,i ro

Have knowledge about what Y6., Abte lo assess whelherspeciflc actions are desiEble? specific action was taken?