The process whereby managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals.
Formal target setting, monitoring, evaluation, and feedback systems that provide managers with information about how well the organization's strategy and structure are working.
Control that allows managers to anticipate problems before they arise.
Control that gives managers immediate feedback on how efficiently inputs are being transformed into outputs so that managers can correct problems as they rise.
Control that gives managers information about customers' reactions to goods and services so that corrective action can be taken if necessary.
The control process
Step 1: establish the standards of performance, goals, or targets against which performance is to be evaluated.
Step 2: Measure actual performance.
Step 3: Compare actual performance against chosen standards of performance.
Step 4: Evaluate the result and initiate corrective action if the standard is not being achieved.
Measure how efficiently managers are using the organization's resources to generate profits.
Measure how well managers have protected organizational resources to be able to meet short term obligations.
Measure the degree to which managers use debt or equity to finance ongoing operations.
Measures of how well managers are creating value from organizational assets.
A budget that states how managers intend to use organizational resources to achieve organizational goals.
Financial measures of performance
Management by objectives
Rules and standard operating procedures
Organizational culture/clan control
Involves the management of costs and expenses in order to control them in relation to budgeted amounts.
Operating budgets: cost or expense
Amount of goods or services produced from a fixed budget.
Operating budgets: revenue
Max revenues from the sale of goods and services produced.
Operating budgets: profit
Difference between revenues generated and the budgeted costs of making those goods and services.
Problem with output control
Short term vs long term challenges and changes in task environment.
Direct supervision, Management by objectives, Bureaucratic control
Actively monitor and observe the behavior of their subordinates. Teach subordinates & reinforce the behaviors that are appropriate and inappropriate. Intervene to take corrective action as needed.
Problems with direct supervision
Very expensive, Can demotivate subordinates, Might not be feasible, Privacy issues.
Control through a system of rules and standard operating procedures(SOPs)
Problems with bureaucratic control
Easy to make rules, hard to discard them. Firms become too standardized. Incompatible with innovation.
Organizational culture and clan control
Set of beliefs, values, norms, expectations and work routines.
What a society believes to be good and desirable.
Unwritten rules and codes of conduct
Internalizing organizational values and norms
The set of values, norms, standards of behavior, and common expectations that controls the ways in which individuals and groups in an organization interact with one another and work to achieve organizational goals.
The control exerted on individuals and groups in an organization by shared values, norms, standards of behavior, and expectations.
Controls employee attitudes and behaviors.
Those who lead to values and norms that fail to motivate or inspire employees.
Organizational change process
Assessing the need to change, deciding on what change to make, Implement the change, evaluate the change
Assessing the need to change
Recognizing that there is a problem and identify the source of the problem.
Deciding on what change to make
Decide what the ideal future state would be and identify obstacles to change.
Reducing obstacles to change
Improve communication, emphasizing group or shared goals and empowering employees
Implement the change--Top to down
Quicker to implement. Top managers identify the need to change, decide what to do, and the move quickly to implement it.
Implement the change--Bottom to up
Is more gradual. Top managers consult with middle and first line managers. Develop a plan for change. Reduces resistance from employees.
Evaluate the change--compare pre change to post change
Using various performance measures: market share, profits, or the ability of the managers to meet their goals.
Evaluate the change--use benchmarking
Compared performance on specific dimensions with the performance of high performing organizations.