Week 9 Management Control Patters Flashcards
what does control mean?
set of procedures, tools, performance measures, systems and incentives org use to guide/motivate employees to achieve org objective
what is behavioural risk?
- employees not behaving in best interest or against the org, leading to ‘chance of incurring increased costs’
- not acting responsibly and by direct order of org
- possibility of opportunistic behaviour from cheating, distorting info etc.
what are the 4 steps involved in control systems?
- setting performance standards
- measuring performance
- comparing performance against standards and determining deviations
- taking action to correct problems and reinforce success
what are the 4 characteristics of a well designed management control system?
- including org ethical code of conduct into control system design
- using short and long term qual and quantitative performance measures (balance scorecard) ‘
- empower employees involve in decision making
- developing appropriate incentive system
what are the 3 main objectives of management control?
- motivate managers to achieve goal
- provide incentive for managers to make decisions in line with top management goal
- determine fairly the rewards earned by managers for effort and decision making
what are formal control?
developed with explicit management guidance e.g. hiring policies, promotion policies,
what are informal control?
arise from unmanaged, and sometimes unintended, behaviour of managers and employees e.g. shared norm, culture, informal meeting
what are the 3 Control patterns from organisational theory derived by William Ouchi?
Bureaucratic/Hierarchy control
Clan control
Market control
Bureaucratic/Hierarchy control involves and uses?
involves - close personal surveillance and direction of subordinates by supervisor
uses authority, policies, procedures, day to day supervision
- use budgets for e.g. staff, travel expense, to keep behaviour targeted within set limits
Clan control based on, characterise by, relies, and gives?
based on the norms, values, shared goals, and trust among group members.
• Characterised by informal and organic structural arrangement.
• It relies heavily on group norms.
• It gives employees the responsibility for controlling themselves.
Market control uses, influenced by, businesses show?
- uses free market competition as the main device of control.
- The influence of market competition on the behaviour of organisations and their members.
- Businesses show the influence of market control in the way that they adjust products, pricing, promotions, and other practices in response to customer feedback and what competitors are doing.
Levers of control (Robert Simons)
Control of business strategy is achieved by integrating four levers of control.
?
- Belief control
- Boundary control
- Diagnostic control
- Interactive control
Levers of control (Robert Simons)
• Belief control ?
explicit set of organisational definitions that senior managers communicate formally and reinforce systematically to provide basic values, purpose, and directions for the organisation. (what to do)
Levers of control (Robert Simons) Boundary control?
standards of business conduct for all employees. Codes of business conduct are stated in negative terms; specify actions that are forbidden.(what not to do) e.g. revealing private company info
Levers of control (Robert Simons)
• Diagnostic control?
formal information systems that managers use to monitor organisational outcomes and correct deviations from pre-set standards. Eg., balanced scorecards, costs budgets, budgeted financial statements.
