1. Organizational Control
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
Chapter 13
Organizational Control

2. LEARNING OBJECTIVES LEARNING OBJECTIVES
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
LEARNING OBJECTIVES
LEARNING OBJECTIVES
After studying the chapter, you should be able to:
Define organizational control, and describe the four steps of the control process.
Define the main output controls, the main behaviour controls and organizational culture in terms of the impact on the motivation of employees.
Discuss the advantages and disadvantages of using output controls, behaviour controls and organizational culture as a means to coordinate and motivate employees.
Recognize appropriate situations where organizational control, behaviour control and organizational culture should be used to motivate employees so that an organization can achieve high performance.

3. What Is Organizational Control?
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
CHAPTER OUTLINE
What Is Organizational Control?
The Importance of Organizational Control
Control Systems
The Control Process
Output Control
Financial Measures of Performance
Organizational Goals
Operating Budgets
Problems with Output Control

4. The Role of Culture Organizational Control
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
CHAPTER OUTLINE
Behaviour Control
Direct Supervision
Management by Objectives
Bureaucratic Control
Problems with Bureaucratic Control
The Role of Culture Organizational Control
Output and Behaviour Controls: The Underlying Assumption
Getting Control of the Innovative, Flexible Organization
Culture and the Four Activities of Management

5. Managers must monitor and evaluate:
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
Managers must monitor and evaluate:
Is the firm efficiently converting inputs into outputs?
Are units of inputs and outputs measured accurately?
Is product quality improving?
Is the firm’s quality competitive with other firms?
Are employees responsive to customers?
Are customers satisfied with the services offered?
Are our managers innovative in outlook?
Does the control system encourage risk-taking?

6. A good control system should:
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
CONTROL SYSTEM
Formal, target-setting, monitoring, evaluation and feedback systems that provide managers with information about how well the organization’s strategy and structure are working.
A good control system should:
be flexible so managers can respond as needed.
provide accurate information about the organization.
provide information in a timely manner.

7. THREE TYPES OF CONTROL Culture & Output What is Organizational Control
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
THREE TYPES OF CONTROL

8. Feedforward Control Concurrent Control TYPES OF CONTROL
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
TYPES OF CONTROL
Feedforward Control
Used in the input stage of the process
Managers can anticipate problems before they arise.
Managers can give rigorous specifications to suppliers to avoid quality problems with inputs.
Concurrent Control
Give immediate feedback on how inputs are converted into outputs
Allows managers to correct problems as they arise
Managers can see that a machine is becoming out of alignment and fix it.

9. Feedback Controls TYPES OF CONTROL
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
TYPES OF CONTROL
Feedback Controls
Provide after-the-fact information managers can use in the future
Customers’ reactions to
products are used to take
corrective action in the future.

10. Establish standards of performance, goals, or targets
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
CONTROL PROCESS STEPS
Establish standards of performance, goals, or targets
Measure actual performance
Compare actual performance against chosen standards
Evaluate Result and Initiate Corrective Action if Needed
Step 1
Step 2
Step 3
Step 4

11. What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
THE CONTROL PROCESS
1. Establish standards, goals, or targets against which performance is to be evaluated.
Managers at each organizational level need to set their own standards.
Standards must be consistent with the strategy of the organization (i.e., for a low cost strategy, standards should be focused closely on reducing costs).

12. 2. Measure actual performance
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
THE CONTROL PROCESS
2. Measure actual performance
Managers can measure outputs resulting from worker behaviour or they can measure the behaviour themselves.
The more non-routine the task, the harder it is to measure performance or output, causing managers to measure an employee’s behaviour (e.g., that an employee comes to work on time) rather than the employee’s output.

13. 3. Compare actual performance against chosen standards.
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
THE CONTROL PROCESS
3. Compare actual performance against chosen standards.
Does performance actually deviate from standard? If so, by how much?.
4. Evaluate result and take corrective action.
Standards may have been set too high or too low.
Workers may need additional training or equipment.
This step is hard when environment is constantly changing.

14. THREE STEPS OF PLANNING
Figure 7.1

15. SIX STEPS IN DECISION MAKING
Recognize the need for a decision
Step 1
Generate Alternatives
Step 2
Assess Alternatives
Step 3
Choose among Alternatives
Step 4
Implement the choose Alternatives
Step 5
Step 6
Learn from feedback

16. THREE ORGANIZATIONAL CONTROL SYSTEMS
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
THREE ORGANIZATIONAL CONTROL SYSTEMS

17. FINANCIAL MEASURE OF PERFORMANCE
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
FINANCIAL MEASURE OF PERFORMANCE
Financial Controls
Profit ratios
Measures of how efficiently managers convert resources into profits—return on investment (ROI).
Liquidity ratios
Measures of how well managers protect resources to meet short term debt—current and quick ratios.
Leverage ratios
Measures of how much debt is used to finance operations—debt-to-asset and times-covered ratios.

18. FINANCIAL MEASURE OF PERFORMANCE (Cont’d)
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
FINANCIAL MEASURE OF PERFORMANCE (Cont’d)
Financial Controls (cont’d)
Activity ratios
Measures of how efficiently managers
are creating value from assets—
inventory turnover, days sales
outstanding ratios.

19. What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
Organizational Goals
Each division within the firm is given specific goals that must be met in order to attain overall organizational goals.
Goals should be specific and difficult, but not impossible to achieve (stretch goals).

20. ORGANIZATION- WIDE GOAL SETTING
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
ORGANIZATION- WIDE GOAL SETTING

21. What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
Operating Budgets
state how managers intend to allocate and use the resources they control.
Each division is evaluated on its own budgets for cost, revenue or profit.
Managers are evaluated by how well they meet goals for controlling costs, generating revenues, or maximizing profits while staying within their budgets.

22. Objective financial measures
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
ESSENCE OF EFFECTIVE OUTPUT CONTROL
Objective financial measures
Challenging goals and performance standards
Appropriate operating budgets
Most organizations develop sophisticated output control systems

23. PROBLEMS WITH OUTPUT CONTROL
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
PROBLEMS WITH OUTPUT CONTROL
Managers must create output standards that motivate at all levels.
They must be careful not to create short-term goals that motivate managers to ignore the future.
Example: Cutting costs by curtailing research and development (R&D) now may lead to a loss of competitiveness in the future.
If standards are set too high, workers may engage in unethical behaviours to attain them.
Example: Attempting to increase output regardless of product quality issues caused by omitting steps in the production process.

24. What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
Direct Supervision
Actively monitor, observe, teach, reward, lead by example, and take corrective action as needed.
can be very expensive
can de-motivate workers who desire less scrutiny and more autonomy
difficult to do effectively in complex job settings

25. MANAGEMENT BY OBJECTIVES
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
MANAGEMENT BY OBJECTIVES
Management by Objectives (MBO)
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.
Specific goals are set at each level of the firm.
Goal setting is participation with manager and worker
Periodic reviews of subordinates’ progress toward goals are held
Pay raises and promotions are tied to goal attainment
Teams are also measured in this way with goals and performance measured for the team.

26. Bureaucratic Control BUREAUCRATIC CONTROL
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
BUREAUCRATIC CONTROL
Bureaucratic Control
Control through a system of rules and standard operating procedures (SOPs) that shapes the behaviour of divisions, functions, and individuals.
Rules and SOPs tell the worker what to do (standardized actions) so outcomes are predictable.
There is still a need for output
control to correct mistakes.
Bureaucratic control is best used for routine problems in stable environments.

27. Problems with Bureaucratic Control
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
BUREAUCRATIC CONTROL
Problems with Bureaucratic Control
Rules easier to make than discarding them, leading to bureaucratic “red tape” and slowing organizational reaction times to problems.
Firms become too standardized and lose flexibility to learn, to create new ideas, and solve to new problems.
Less useful in complex, changing situations

28. ORGANIZATIONAL CULTURE
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
ORGANIZATIONAL CULTURE
Organizational Culture
The set of internalized values, norms, standards of behaviour, and common expectations that control the ways in which individuals and groups in an organization interact with each other and work to achieve organizational goals.

29. OUTPUT & BEHAVIOR CONTROLS: THE UNDERLYING ASSUMPTION
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
OUTPUT & BEHAVIOR CONTROLS: THE UNDERLYING ASSUMPTION
To use output and behaviour controls, the organization must know what is to be done in every situation an employee might face.
Every situation:
Has been anticipated
Is clearly understood
Has an optimal reaction
Governing behaviour with standard procedures is nearly impossible if need innovation and flexibility to compete.

30. GETTING CONTROL OF THE INNOVATIVE, FLEXIBLE ORGANIZATION
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
GETTING CONTROL OF THE INNOVATIVE, FLEXIBLE ORGANIZATION
Organizational culture can be used as a control system
Broad guidelines for desired behaviours are internalized.
Allows flexibility and innovation, consistent with company
values and norms.
Can provide control where output and behavioural control does not work.

31. Culture of innovative, flexible organizations: Planning
What is
Organizational
Control
Output
Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
Culture of innovative, flexible organizations:
Planning
High level of involvement from all areas
Focus on innovation, creativity
Organizing
Organic, flexible structures with teams
Flat with decentralized authority
Leading
Leading by example
Leaders take risks, celebrate success, openly discuss failure
Controlling
Long term goals and flexible MBO programs

32. SUMMARY Culture & Output What is Organizational Control Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
SUMMARY

33. THE END Culture & Output What is Organizational Control Behavior
The Role
of Culture
Culture &
The 4 Activities of
Management
THE END