BBA MCIS Behavior in Organization

Management Control and
Information Systems
Chapter 6:
Behavior in Organization
Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

1
School (IBS) Hyderabad
Behavior in Organizations
Management control systems influence human
behavior
Good management control systems influence

behavior in a goal congruent manner, that is
they ensure that individual actions taken to
achieve personal goals also help to achieve the
organization’s goals
2
Goal Congruence:
In a goal congruent process, the actions people

are led to take in accordance with their
perceived self-interest are also in the best
interest of the organization

3
Goal Congruence
Two importance questions to check the goal
congruence:
1. What actions does it motivate people to take

in their own self-interest?
2. Are these actions in the best interest of the
organization?

4
Factors that influence Goal Congruence
Both formal systems and informal processes

influence human behavior in organizations,
consequently, they affect the degree to which
goal congruence can be achieved

5

6
Formal Control System:
The formal system can be classified into two types:
1.Management control system

2.Rules

7
The formal system can be classified into two types:
1.Management control system

2.Rules

8
Rules: We use the word rules as shorthand for all types

of formal instructions and controls, including standing
instructions, job descriptions, standard operating
procedures, manuals, and ethical guidelines.
Rules range from the most trivial to the most

important.
9
Rules: We use the word rules as shorthand for all types

of formal instructions and controls, including standing
instructions, job descriptions, standard operating
procedures, manuals, and ethical guidelines.
Rules range from the most trivial to the most

important.
10
Most trivial :
Paper clips will be issued only on the basis of a signed
requisition
Most important:
Capital expenditures above $5 million must be
approved by the board of directors

11

12
Guidelines:
Example of extending the credit. Departures may
require some approval.
Positive Requirements:
Fire drills at prescribed intervals
Prohibitions:
Unethical , illegal and undesirable activities
13
Some specific types of rules:
• Physical Controls
• Manuals
• System safeguards
• Task Control Systems

14
Physical Controls:
Security guards, locked storerooms, vaults, computer

passwords, television surveillance are part of physical
controls

15
Manuals:
Much judgement is involved in deciding which rules

should be written into a manual, which should be
considered to be guidelines rather than fiats(arbitrary
order), how much discretion should be allowed, and a
host of considerations.

16
Manuals:
Manuals in bureaucratic organizations are more

detailed than are those in other organizations, large
organizations have more manuals than small ones,
centralized organizations have more than
decentralized ones.

17
Manuals:
Organizations with geographically dispersed units
performing similar functions have more manuals than
single site organizations.
With the passage of time, some rules become outdated.

Manuals and other sets of rules should be therefore be re-
examined periodically to ensure that they are still
consistent with the wishes of current senior management
18
System Safeguards:
Various safeguards are built into the information
processing system to ensure that the information flowing
is accurate and to prevent any fraud of every sort.
These include
Cross-checking the details
Separation of duties

19
Formal Control Process:
The strategic plan is converted into an annual budget

that focuses on the planned revenues and expenses for
individual responsibility centers.
Responsibility centers are also guided by rules and

other formal information

20
Formal Control Process:
• Strategic Planning Team (SPT)

• Budgeting
• Performance
• Report actual versus planned
• Checking performance

21
Formal Control Process
Other
Goals and Rules Information
Strategies Reward (Feedback)
Yes
Responsibility
Center Report Was
Strategic Budgeting actual Performance
Planning Performance
versus Satisfactory?
Plan
No
Revise Revise Corrective
Measurement Feedback
action
Communication
22
Behavior:
• Rationality
• Creativity
• Mastery
• Morality
• Community

23
Behavior:
Rationality: Human beings are rational and as such are

able to reason, make plan and control behavior

24
Behavior:
Creativity: A basic human instinct is the desire to be

creative

25
Behavior:
Mastery: Human beings desire to manage. The desire to

be in contol is inherent.

26
Behavior:
Morality:Human beings have strong moral instinct,

although these instincts may not always dominate
behavior

27
Behavior:
Community: Human beings have strong needs and
desire for human association
As organizations pursue their goals and objectives,

control systems are designed to favourably influence
human behaviour, and therefore, system designers
must understand these five basic assumptions about
the human behavior
28
Again, since control is achieved through the action
of managers,the MCS differes in ways :
Problem of perception
Problem of Motivation

29
Thank You

30

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Management Control and

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Good management control systems influence

In a goal congruent process, the actions people

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

1. What actions does it motivate people to take

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Both formal systems and informal processes

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Formal Control System:

The formal system can be classified into two types:

1.Management control system

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Formal Control System:

The formal system can be classified into two types:

1.Management control system

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Rules: We use the word rules as shorthand for all types

Rules range from the most trivial to the most

Rules: We use the word rules as shorthand for all types

Rules range from the most trivial to the most

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Security guards, locked storerooms, vaults, computer

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Much judgement is involved in deciding which rules

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Manuals in bureaucratic organizations are more

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

With the passage of time, some rules become outdated.

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

The strategic plan is converted into an annual budget

Responsibility centers are also guided by rules and

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

• Strategic Planning Team (SPT)

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Rationality: Human beings are rational and as such are

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Creativity: A basic human instinct is the desire to be

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Mastery: Human beings desire to manage. The desire to

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Morality:Human beings have strong moral instinct,

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

As organizations pursue their goals and objectives,

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

Dr. Ajay Prasad Adepu, Assistant Professor ICFAI Business

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