Contemporary Management - Chapter 11 PDF

Because learning changes everything. ® Chapter 11 Organizational Control and Change © 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of Mc...

Because learning changes everything. ® Chapter 11 Organizational Control and Change © 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill.  Learning Objectives 1. Define organizational control, and explain how it increases organizational effectiveness. 2. Describe the four steps in the control process and the way it operates over time. 3. Identify the main output controls, and discuss their advantages and disadvantages as means of coordinating and motivating employees. 4. Identify the main behavior controls, and discuss their advantages and disadvantages as means of coordinating and motivating employees. 5. Discuss the relationship between organizational control and change, and explain why managing change is a vital management task. © McGraw Hill 2  What Is Organizational Control? Organizational control: Managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals. © McGraw Hill 3  The Importance of Organization Control To obtain superior efficiency, quality, responsiveness to customers, and innovation: Control system to monitor inputs and outputs. Control system to monitor the quality of goods. Control system to monitor how well customer-contact employees perform jobs. Control system to encourage risk-taking. © McGraw Hill 4  The Importance of Organization Control 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? © McGraw Hill 5  Control Systems and Technology 1 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. © McGraw Hill 6  Control Systems and Technology 1 Control systems: 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. A control system contains the measures or yardsticks that allow managers to assess how efficiently the organization is producing goods and services. Without a control system in place, managers have no idea how their organization is performing and how its performance can be improved. © McGraw Hill 7  Figure 11.1 Three Types of Control Access the text alternative for slide images. © McGraw Hill 8  Control Systems and Technology 3 Input Stage. Feedforward control: Control that allows managers to anticipate problems before they arise so that problems do not occur later during the conversion process. Technology can be used to maintain contact with suppliers, monitor their progress, and control the quality of inputs received from them. (e.g. Giving stringent product specifications to suppliers in advance.) Development of management information systems promotes feedforward control that gives managers timely information about changes in the task and general environments that may impact their organization later on. Effective managers always monitor trends and changes in the external environment to try to anticipate problems. © McGraw Hill 9  Control Systems and Technology 3 Input Stage. Feedforward control: Used to anticipate problems before they arise so that problems do not occur later during the conversion process Gives stringent product specifications to suppliers in advance IT can be used to keep in contact with suppliers and to monitor their progress © McGraw Hill 10  Example: University of Alabama Gameday The University of Alabama provides information for fans to be ready for football game day parking and events. This is an example of feedforward control. © McGraw Hill 11  Control Systems and Technology 2 Concurrent control: Control that gives managers immediate feedback on how efficiently inputs are being transformed into outputs so managers can correct problems as they arise. Concurrent control through technology alerts managers to the need to react quickly to the source of the problem. It is at the heart of total quality management programs. When problems are corrected on an ongoing basis, the result is finished products that are more valuable to customers and command higher prices. © McGraw Hill 12  Control Systems and Technology 2 Concurrent control: Gives managers immediate feedback on how efficiently inputs are being transformed into outputs Allows managers to correct problems as they arise Example: Toyota’s production system allows workers to press a button to stop the assembly line. © McGraw Hill 13  Control Systems and Technology 4 Output Stage. Feedback control: Control that gives managers information about customers’ reactions to goods and services so corrective action can be taken if necessary. Manage problems after they arise. © McGraw Hill 14  Figure 11.2 Four Steps in Organizational Control Access the text alternative for slide images. © McGraw Hill 15  The Control Process 1 1. Establish standards of performance, goals, or targets against which performance is to be evaluated. Managers decide on the standards of performance, goals, or targets that they will use in the future to evaluate the performance of the entire organization or part of it. The standards of performance that managers select measure: efficiency, quality, responsiveness to customers, innovation © McGraw Hill 16  The Control Process 1 Performance standards selected at one level affect those at the other levels, and ultimately the performance of individual managers is evaluated in terms of their ability to reduce costs. Managers at each level are responsible for selecting standards that will best allow them to evaluate how well the part of the organization they are responsible for is performing. Managers must be careful to choose standards of performance that let them assess how well they are doing with all four building blocks of competitive advantage. © McGraw Hill 17  The Control Process 2 2. Measure actual performance. Managers measure: Actual outputs resulting from worker behavior (output control) or measure the behavior themselves. (behavior control) The more non-routine the task, the harder it is to measure behavior or outputs. Outputs are usually easier to measure than behaviors, because they are more tangible and objective. © McGraw Hill 18  The Control Process 3 3. Compare actual performance against chosen standards of performance. Managers evaluate whether, and to what extent, performance deviates from the standards of performance chosen in step 1. If performance is too low and standards were not reached, or if standards were set so high that employees could not achieve them, managers must decide whether to take corrective action. It is easy to take corrective action when the reasons for poor performance can be identified. © McGraw Hill 19  The Control Process 4 4. Evaluate the result and initiate corrective action if the standard is not being achieved. If managers decide that the level of performance is unacceptable, they must try to change the way work activities are performed to solve the problem. © McGraw Hill 20