Chapter : 3 Behavior in organizations

Presented By:

Kinjal Patel Kinjal Vyas Sharad Patel Vatsal Patel

Goal Congruence
Senior management wants the organization to attain the organization's goal, but the individual member have their own goals. The central purpose of a management control system to ensure a high level of goal congruence.

 There are two factors that influence human behavior in organizations, consequently they affect the degree to which goal congruence can be achieved. 1) Informal factors 2) Formal factors

Informal Factor That influence Goal congruence

External Factors

Internal Factors

External Factors
Set of attitudes Loyalty towards the organizations Diligence Pride in doing a good job

Culture

Management style

Internal factors
Perception & communication

Informal organizations

The formal control system

Physical control

manuals
System safeguard Task control systems

Goals & strategies

Rules

Other information

Reward (feedback)

Strategic planning

Budgeting

Responsibility center

Report Actual V/s plan

Was Performance Satisfactory ?

Yes

No Revise Corrective actions Measurement

Formal control process

Feedback communication

Types of organizations
Functional organizations Business unit organizations Matrix organizations

Functional Organizations

C.E.O

Staff

Manufacturing Manager

Marketing Manager

Manager Plant 1

Manager Plant 2

Manager Region A

Manager Region B

 A skilled marketing manager & production manager are likely to make better decisions in their respective fields than would a manager responsible for both functions. Advantage - efficiency is the important advantage of the functional structure. Disadvantage - It is difficult to measure the effectiveness of the separate functional managers. - Dispute between managers of different functions can be resolved only at the top. - Functional structure are inadequate for a firm with diversified products & markets.

Business Unit Organizations

C.E.O

Staff

Manager Business Unit X

Manager Business Unit Y

Manager Business Unit Z

Plant Manager

Marketing Manager

Plant Manager

Marketing Manager

Plant Manager

Marketing Manager

 A business unit also called a division is responsible for all the functions involved in producing & marketing a special product line. Headquarter is responsible for obtaining funds for the company as whole. Headquarter staff may assist business unit production,marketing,human resource, controller & treasury matters.

An advantage of this structure is that it provides a training ground in general

management. Another advantage is that they closer to the market they make an sound decisions. Disadvantage is the possibility that each business unit staff may duplicate some work that is done in headquarter.

Matrix Organizations
C.E.O

Staff

Function A Manager

Project X Manager

Function B Manager

Project Y Manager

Function C Manager

Project Z Manager

Function of the controller

Designing & operating Information & control systems

Preparing financial statements Preparing & analyzing reports interpreting this reports & making overall budget Supervising internal audit & accounting control procedures to ensure the validity of the information

Developing controller personnel in the organization & educate them.

Relations to Line organization

The controllership function is staff function. controller is usually responsible for the design of the systems which collect & report information. The controller does not make or enforce management decisions. The responsibility for actually exercising control runs from the line organizations.

Controller play an important role in the preparation of strategic plans & budgets.

The business unit controller

Business unit controller inevitably have divided loyalty. They owe some allegiance to the corporate controller. On the other hand they also owe allegiance to the business unit manager. There are two possible Relationship between controller & business unit manager 1) Dotted line relationship 2) solid line relationship

Dotted line Relationship

In some companies the business unit controller reports to the business unit manager this called as the dotted line relationship with the corporate controller. The business unit manager is the controllers immediate boss, and has the ultimate authority in the hiring, training, transferl,compensation & firing of the controllers within that business unit.

Solid line relationships

In other companies, business unit controller report directly to the corporate controller, that corporate controller is their boss, as indicated by solid line on the organization chart. There are problems with each of these relationship. If the business unit controller work for the business unit manager there is possibility that he will not provide complete report to the senior management. On the other hand if the business unit controller works primarily for the corporate controller, the business unit manger treat him as spy from the front office.