behavior in organization

8/7/2019 Behavior in organization

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Behavior in OrganizationsBehavior in Organizations

MCS influence human behavior.MCS influence human behavior.

Good Management Control SystemGood Management Control System

influence behavior in goal congruentinfluence behavior in goal congruentmanner.manner.

In a goal congruent process ,the actionsIn a goal congruent process ,the actions

people are lead to take in accordance withpeople are lead to take in accordance with

their perceived self interest are also in thetheir perceived self interest are also in the

best interest of the organization.best interest of the organization.



Goal CongruenceGoal Congruence

Individuals work in differenthierarchies and handlesdifferent responsibilities &may have different goals.

But they must come together asfar as Company’s Goal isconcerned,(there action mustspeak Co’s language.)




• Example 1– The HR manager has deviseda HR training program to enhance the skillsof its sales personnel, with an objective toenhance their productivity

But if company is in strategic need of attaining a certain sales volume in a givenquarter, it can not do so on account of nonavailability of personnel.• Example 2– The marketing department

has planned an impressive advertisingcampaign, which promises good returns,

But say due to cash crunch Company’scurrent financial position may not let tolose the strings




• After completing the given activity inmore efficient manner the concernedmanager scores the point/s on his score

card.

• Example 3 – Production Manager may get agood applause for reducing cycle time;

But at what cost? Building up the high inventoryi.e. Higher investment in current assets. While

doing so he just overlooked the financial interestof the company.

• Whether his actions are leading to scoring of points on the organization’s score card too??,if it is so then only one can say the

organization is marching towards a commongoal.




• Goal congruence ensures that the actionof manager taken in their best interest isalso in the best interest of the

organization.

• Every individual working in an organization

has got his own motive to do the work.Individuals act in their own interest, based ontheir own motivations. And it is always notnecessarily consistent with the Co’s goal.

• In a goal congruence process, the actionsthe people are led to take in accordancewith their perceived self interest are also inthe best interest of the organization i.e.




Strategic

Goal

S c ope of S t r at egy

ex ec ut i on

Control Efforts

• MCS sees that how actions of individuals are put/led toachieve the Co’s goal?

• Management control process helps in brining the

consistency, as far as possible, in these diverse goals.



Significance of Goal CongruenceSignificance of Goal Congruence

• Ensures frictionless working.

• Ensures achievement of organization’s goal/strategic

objective•

Ensures coordination & motivation of allconcerned.• Ensures consistency in the working of all concerned.

• Gives fair chance to its employees to achieve theirpersonal goals.

• Enhances the loyalty towards the company.

• Satisfies prime requirement of MCS.



II Formal Factors –

A. MCS strategy itself

B. Rules – Instructions, manuals andcirculars

Physical controls,system safeguards,

task control system.

Factors those influence the Goal CongruenceFactors those influence the Goal Congruence



MCS - A Formal process Relating MCS to Organizational GoalMCS - A Formal process Relating MCS to Organizational Goal Co’s Goals & Strategies

Satisfactory Non-Satisfactory

Compare A V/s B

Report Actual &

Budgeted

Measure

Responsibility Center’s

Performance

Prepare Annual

Programs/ Budgets

Prepare Strategic

Plans for

Implementation

Revise

Revise

Corrective Action

Reward

Feedback

Feedback

Revise the

Goals

/Policies

(Interactive

MCS)

Everythingpercolates fromthe Company’sstrategic goal.

Anything loosingthe sight of goalwill beimmediately takennote of and a

corrective action isinitiated to bringback the activityon the track.



Types of OrganizationsTypes of Organizations

Functional OrganizationsFunctional Organizations

Business Unit OrganizationsBusiness Unit Organizations

Matrix OrganizationsMatrix Organizations



Advantage of functional organizationAdvantage of functional organization

Benefit of specializationBenefit of specialization

Efficient Operation of specific functionEfficient Operation of specific function



Disadvantages of functional organizationDisadvantages of functional organization

No unambiguous way of measuringNo unambiguous way of measuring

effectiveness of separate functional managerseffectiveness of separate functional managers

Decision and communication can be timeDecision and communication can be time

consuming and frustratingconsuming and frustratingFunctional structures are inadequate for a firmFunctional structures are inadequate for a firm

with diversified products and marketswith diversified products and markets

Tends to create “silos” for each functionTends to create “silos” for each function



Advantages of Business Unit OrganizationAdvantages of Business Unit Organization

It provides training ground in generalIt provides training ground in general

managementmanagement

As business unit is closer to market for itsAs business unit is closer to market for its

products, the manager may make sounder products, the manager may make sounder production and marketing decisions thanproduction and marketing decisions than

headquarters might.headquarters might.

The unit as a whole can react to new threats or The unit as a whole can react to new threats or

opportunities more quicklyopportunities more quickly



Disadvantages of Business Unit OrganizationsDisadvantages of Business Unit Organizations

There are the possibilities that each businessThere are the possibilities that each businessunit staff may duplicate some work that in aunit staff may duplicate some work that in afunctional organization is done at headquarters.functional organization is done at headquarters.

It is difficult to obtain skilled manpower It is difficult to obtain skilled manpower Disputes between functional specialists inDisputes between functional specialists infunctional organizations may be replaced byfunctional organizations may be replaced bydisputes between business units in business unitdisputes between business units in business unit

organizationsorganizationsThere may also be disputes between businessThere may also be disputes between businessunit personnel and headquarters staff unit personnel and headquarters staff



Implication on system designImplication on system design

If control is the only criterion, thenIf control is the only criterion, then

business unit organization is feasiblebusiness unit organization is feasible

If in addition to control, the weight is alsoIf in addition to control, the weight is also

to be given to economies of scale,to be given to economies of scale,

specialization benefit then functionalspecialization benefit then functional

organization is good.organization is good.



Controller Controller

Controller is the person who is responsibleController is the person who is responsible

for designing and operating thefor designing and operating the

management control system.management control system.

The title of this person in manyThe title of this person in many

organization is CFO.organization is CFO.



Functions of the Controller Functions of the Controller

Designing and operating information andDesigning and operating information and

control systemscontrol systems

Preparing financial statements andPreparing financial statements and

financial reportsfinancial reports

Preparing and analyzing performancePreparing and analyzing performance

reports, interpreting those reports for reports, interpreting those reports for

managers.managers.



Functions of the Controller (Conti.)Functions of the Controller (Conti.)

Analyzing program and budget proposals fromAnalyzing program and budget proposals fromvarious segments of the company andvarious segments of the company andconsolidating them into overall annual budgetconsolidating them into overall annual budget

Supervising internal audit and accounting controlSupervising internal audit and accounting controlprocedures to ensure the validity of information,procedures to ensure the validity of information,establishing adequate safeguards against theftestablishing adequate safeguards against theftand fraud, and performing operational auditsand fraud, and performing operational audits

Developing personnel in the controller Developing personnel in the controller organization and participating in the education of organization and participating in the education of management personnel in matters relating tomanagement personnel in matters relating tocontroller functioncontroller function



Business Unit Controller Business Unit Controller

Dotted Line Relationship with CorporateDotted Line Relationship with Corporate


Solid Line Relationship with CorporateSolid Line Relationship with Corporate


behavior in organization

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