Chapter 1:

Management and Control

Management control
I

The process by which management:

ensures that people in lhe organizaiion carry

out organizational objedives and strategies;

encourages, enables, or, sometimes "forces"

employees to act in the organization's best interest.

Management conirol includes all ihe devices/mechanisms

managers use to ensure that ihe behavior of employees is
consistent with the organization's objectives and strategies.

Function and benefit

Purpose/function

- get done what management wants done;

- influence behavior in desirable ways.
o Benefit

- increased probability

that the organization's

objectives 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

,
o

purposive;

to make claims about an organization's success.

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 innumerable
ways of seeking to attain its objectives.

o Strategies define how organizations should

use their resources to meet their objectives.

Hence,
sirategies put constraints on employees to
focus aclivities on what the organization does
besi or areas where it has an advantage over
competitors.

Key questions
a Are our employees likely to behave
appropriately?

Do they understand what we expect of them?

Will they work consistently hard and try to do what
is expected oi ihem?

Are they capable of doing what is expected of them?

The basic control problem

a Management control is about encouraging
PEOPLE to take desirable actions,
D i.e., it guards againsl the possibilities that employees will
do somelhing the organization does not want them io do,
or, fail to do Eomething ihey should do.

Hence, management control has a

BEHAVIORAL ORIENTATION

lf all personnel could always be relied on to do what is

best for the organization, there would be no need for a
managemenl 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 what

is expected of them

Lack of motivation

> Are they capable of doing what is expectd of them

Personal limitations

Lack of direction
o

Employees do not know what the organization

wants from them.

When this lack of direction occurs, the likelihood of

the desired behaviors occurring is obviously small.

COMMUNICATION + REINFORCEMENT

Motivational problems
a When employees 'choose'

not to perform as
their organization would have them perform.

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 job

because of certain personal limitations they have.

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 ASSIGNMENT
JOB DESIGN

Note that
a

Management controls do not always involve a simple

cybernetic system like a thermostat

) Detector )
) Agsessor )
) Effector )

Many controls don't focus on measured performance

measure perfomancei
compare with pre-set standard;
take @rective action.

e.9., direcl superyision, employee hiring standards,

@des of conduct.

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:

Control Problem Avoidance

i_'_[T1s_:3:{_c::t:]
) Action Controls;
) Results Controls;
) People Controls.

:fIr:

_i

Control-problem avoidance
o Three possibilities:

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

Automation
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.
D

Centralization
> Superiors reserue for themselves the most
decisiore.

sitil

Control alternatives
o Controls can focus on:

the actions taken

ACTION CONTROLS

the results produced

RESULTS CONTROLS

the types of people

employed and their
shared values and

PEOPLE CONTROLS

Or any combination

Deoendino on
:6

Abilityto measure results on important peaformance dimensions

Ac{ion Control
andlo.

Action Contro!

Results Control

(e.9. large projects)

a.

Results Control

People Control

(e.9. movie director,

entity manager)

(e.9. research lab)

a
9.

Overview
can people be avoided?
(e.9. automation, centElization)

l"

Can you make people

,i

ro

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I
-to fv-" I
reliable? ''- --l

can you rely on people involved?

; \o

,*
- --

avordance

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People controls

-------l

Have knowledge about what Y6., Abte lo assess whelher

speciflc actions are desiEble? specific action was taken?