Organizational Control and Change Chapter Eleven Organizational Control and Change

Organizational Control Managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals Controlling is the process in which managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve the goals of the organization. Organizational control is necessary in order to determine how efficiently resources are being used. Managers must be able to accurately measure how many units of raw materials and human resources are being used to produce goods and services. 2

Control Systems Control Systems Formal, target-setting, monitoring, evaluation and feedback systems that provide managers with information about whether the organization’s strategy and structure are working efficiently and effectively. Control systems include formal target-setting, monitoring, evaluations, and feedback systems that provide managers with information about whether the organization’s strategy and structure are working efficiently. An effective control system provides managers with information necessary so they can respond to environmental opportunities and threats. A good control system should: be flexible so managers can respond as needed, provide accurate information about the organization and provide information in a timely manner. 3

Control Process Steps Figure 11.2 The control process can be broken down into four steps: establishing standards of performance, and then measuring, comparing, and evaluating actual performance. This process is illustrated in Figure 11.2 in your textbook. Step one of this process requires the managers to establish standards of performance, goals, or targets against which performance is to be evaluated. In the second step managers measure actual performance followed by step three a comparison of actual performance against chosen standards of performance. The final stage requires an evaluation of the result and initiate correct action if the standard is not being achieved. Figure 11.2

Output Control Operating Budgets Blueprint that states how managers intend to use organizational resources to achieve organizational goals efficiently. Once managers have been given targets to achieve, the next step in developing a control system is to establish operating budgets that regulate how all employees attain the organization’s goals. The operating budget provides a blueprint of how managers intend to use organizational resources to achieve organizational goals. Managers are evaluated by how well they meet goals for controlling costs, generating revenues, or maximizing profits while staying within their budgets. 5

Behavior Control Direct supervision Managers who actively monitor and observe the behavior of their subordinates Teach subordinates appropriate behaviors Intervene to take corrective action Most immediate and potent form of behavioral control Can be an effective way of motivating employees Organizational structure is important, but it will not provide the means to motivate managers and their employees. The most immediate and potent form of behavior control is direct supervision by managers who actively monitor and observe the behavior of their subordinates, teach subordinates the behaviors that are appropriate and inappropriate, and intervene to take corrective action as needed. 6

Management by Objectives Management by Objectives (MBO) formal system of evaluating subordinates for their ability to achieve specific organizational goals or performance standards and to meet operating budgets One method implemented by many organizations to evaluate subordinates’ behavior which allows managers to monitor progress toward achieving goals is called management by objectives. Management by objectives is a goal setting process in which managers and subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodically evaluate their attainment of those goals. 7

Bureaucratic Control Bureaucratic Control Control through a system of rules and standard operating procedures (SOPs) that shapes and regulates the behavior of divisions, functions, and individuals. If direct supervision is too expensive and management by objectives is not appropriate, managers often use bureaucratic control. Bureaucratic control is control by means of a comprehensive system of rules and standard operating procedures that shapes the behaviors of divisions, functions, and individuals. Rules and SOPs tell the worker what to do through the standardization of actions so outcomes are predictable. Bureaucratic control is best used for routine problems in stable environments. While some element of bureaucratic control is important too much can create an organization that is unresponsive to customer needs. 8

Organizational Change Movement of an organization away from its present state and toward some desired future state to increase its efficiency and effectiveness Effective organization’s are always evolving. Organizational change is the movement of an organization away from its present state and towards some desired future state to increase its efficiency and effectiveness. Many researchers believe that the highest-performing organizations are those that are constantly changing. Companies like UPS, Dell, and Home Depot are constantly changing and evolving in order to become efficient.

Lewin’s Force-Field Theory of Change One interesting theory on how change occurs within an organization is Lewin’s Force-Field theory. This theory is illustrated in 11.6 in your textbook. According to his theory a wide variety of forces arise from the way an organization operates, from its structure, culture, and control systems, that make organizations resistant to change. At the same time, a wide variety of forces arise from changing task and general environments that push organizations to change. These two sets of forces are always in opposition in an organization. To get an organization to change, managers must find a way to increase the forces for change, reduce resistance to change, or do both simultaneously. Figure 11.6 10

Steps in the Organizational Change Process The need to constantly search for ways to improve efficiency and effectiveness makes it vital that managers develop the skills necessary to manage change effectively. Figure 11.7 in your textbook outlines the steps in a model developed by several researchers that managers can follow to implement change. According to this model there are four steps in the organizational change process. The first step in this model involves assessing the need for organizational change. Once this has been completed managers need to decide on the change to make followed by an implementation of the change. The final step is an evaluation of the change comparing prechange performance with post change or using benchmarking. Figure 11.7

Evaluating the Change Benchmarking The process of comparing one company’s performance on specific dimensions with the performance of other, high-performing organizations. In order to provide world class products and services companies must adapt. Organizational change is the movement away from the organization’s current state and toward some desired future state in order to increase efficiency and effectiveness. One method of evaluating change is via benchmarking. Benchmarking is the process of comparing one company’s performance on specific dimensions with the performance of other high performance organizations.