behavioural cons..ppsx
TRANSCRIPT
-
7/29/2019 behavioural cons..ppsx
1/44
MOTIVATING BEHAVIORIN
MANAGEMENT CONTROL SYSTEMS
-
7/29/2019 behavioural cons..ppsx
2/44
MANAGEMENT CONTROL SYSTEMS
1 Embedding the organizations ethical code of
conduct into MCS design
2 Using a mix of short-term and long-term qualitative
and quantitative performance measures (or the
balance scorecard approach)
3 Empowering employees to be involved in decision
making and MCS design
-
7/29/2019 behavioural cons..ppsx
3/44
MANAGEMENT CONTROL SYSTEMS
4 Developing an appropriate incentive system to
reward performance
Companies whose MCS display these fourcharacteristics subscribe to a world view of the role
of management labeled the Human Resource
Management Model.
-
7/29/2019 behavioural cons..ppsx
4/44
HUMAN RESOURCE MANAGEMENT MODELOF
MOTIVATION
The Human Resource Model is used as the basis
for presenting the four behavioral considerations in
MCS design.
Mix of performance
measures
Empowering
employees
Incentive system
Ethical code of
conduct
-
7/29/2019 behavioural cons..ppsx
5/44
ETHICAL CODEOF CONDUCT
AND MCS DESIGN
First, a well-designed MCS should incorporate the
principles of an organizations code of ethical conduct
to guide and influence behavior and decision making.
Ethics is a discipline that focuses on the investigationof standards of conduct and moral judgment.
Ethical code of
conduct
-
7/29/2019 behavioural cons..ppsx
6/44
ETHICAL CODEOF CONDUCT
AND MCS DESIGN
Hierarchy of Ethical Principles
Organizational or Group Norms
Personal Norms
Legal Rules
Societal Norms
Professional Memberships
-
7/29/2019 behavioural cons..ppsx
7/44
ETHICAL CODEOF CONDUCT
AND MCS DESIGN
How can organizations reduce ethical conflicts?
by maintaining a hierarchical order of authority
by the way the chief executive and other senior
managers behave and conduct business
-
7/29/2019 behavioural cons..ppsx
8/44
ETHICAL CODEOF CONDUCT
AND MCS DESIGN
What are some common ethical conflicts?
between the law and the organizations code of
ethics
between the organizations practiced code of ethicsand common societal expectations
between the individuals set of personal and
professional ethics and the organizations code of
ethics
-
7/29/2019 behavioural cons..ppsx
9/44
ETHICAL CODEOF CONDUCT
AND MCS DESIGN
between the organizations stated and practiced
values
Faced with a true conflict, the individual has several
choices.
What are some of these choices?
1 Point out discrepancies to a superior and refuse to
act unethically.
-
7/29/2019 behavioural cons..ppsx
10/44
ETHICAL CODEOF CONDUCT
AND MCS DESIGN
2 Point out discrepancies to a superior and
act unethically.
3 Take the discrepancy to a mediator in the
organization, if one exists.4 Work with respected leaders in the
organization to change the discrepancy.
5 Go outside the organization to publiclyresolve the issue.
-
7/29/2019 behavioural cons..ppsx
11/44
ETHICAL CODEOF CONDUCT
AND MCS DESIGN
6 Go outside the organization anonymously to
resolve the issue.
7 Resign and go public to resolve the issue.
8 Resign and remain silent.9 Do nothing, and hope that the problem will go away.
-
7/29/2019 behavioural cons..ppsx
12/44
Apply the ethical control
framework to decisions
-
7/29/2019 behavioural cons..ppsx
13/44
ELEMENTSOFAN EFFECTIVE
ETHICAL CONTROL SYSTEM
What are the elements of an effective ethical control
system?
A statement of the organizations values
A clear statement of the employees ethicalresponsibilities
Training to help employees identify and deal with
ethical dilemmas
-
7/29/2019 behavioural cons..ppsx
14/44
Gather Facts
EvaluateAlternatives
MakeDecision
STEPSIN MAKINGAN ETHICAL DECISION
-
7/29/2019 behavioural cons..ppsx
15/44
DECISION MODELFOR RESOLVING ETHICAL ISSUES
Determine the Facts:
What, Who, Where
When, How
Define the Ethical
Issue
Identify MajorPrinciples, Rules,
Values
-
7/29/2019 behavioural cons..ppsx
16/44
DECISION MODELFOR RESOLVING ETHICAL ISSUES
Specify the
Alternatives
Compare Values
and Alternatives
Assess the
ConsequencesMake Your
Decision
-
7/29/2019 behavioural cons..ppsx
17/44
Discuss Task and Results
Control Systems
-
7/29/2019 behavioural cons..ppsx
18/44
MOTIVATIONAND GOAL CONGRUENCE
When designing jobs and specific tasks, system
designers should consider three dimensions of
motivation.
What are these three dimensions?
1 Direction
2 Intensity
3 Persistence
-
7/29/2019 behavioural cons..ppsx
19/44
MOTIVATIONAND GOAL CONGRUENCE
Goal congruence is present when the
actions that employees take and their
personal goals are consistent with those
of the organization. In a perfect world employers could rely on
employees self control to monitor their
own behavior.
-
7/29/2019 behavioural cons..ppsx
20/44
TYPESOF CONTROL SYSTEMS
In the real world management often relies on
different forms of behavioral control.
What are the two most commonly used types of
control?
1 Task control
2 Results control
-
7/29/2019 behavioural cons..ppsx
21/44
TASK CONTROL
What is task control?
It is the process of finding ways to control human
behavior so that a job is completed in a pre-
specified manner.
There are two categories of task control:
1 Preventive control
2 Monitoring
-
7/29/2019 behavioural cons..ppsx
22/44
TASK CONTROL
Inpreventive controlmuch, if not all, of the
discretion is taken out of performing a task.
Monitoringmeans inspecting the work or behavior
of employees while they are performing a task.
-
7/29/2019 behavioural cons..ppsx
23/44
RESULTS CONTROL
What is results control?
It is the process of measuring employee
performance against stated objectives.
For results control to be effective, the organizationmust ...
clearly define objectives which are then
communicated, and
design consistent performance measures.
-
7/29/2019 behavioural cons..ppsx
24/44
RESULTS CONTROL
When is results control most effective?
Organization members understand the
organizations objectives and their contribution to
those objectives.
They have the knowledge and skill to respond to
changing situations.
The performance measurement system is designed
to assess individual contributions.
-
7/29/2019 behavioural cons..ppsx
25/44
Understand the Balanced
Scorecard and its
applications
-
7/29/2019 behavioural cons..ppsx
26/44
USINGA MIXOF PERFORMANCE MEASURES
What is the second major behavioral characteristic of
a well designed MCS?
Using a mix of short-term and long-term qualitative
and quantitative performance measures (or the
balance scorecard approach)
Mix of performancemeasures
-
7/29/2019 behavioural cons..ppsx
27/44
USINGA MIXOFPERFORMANCE MEASURES
Occasionally, employees are so motivated to
achieve a single goal that they engage in
dysfunctional behavior.
What are some examples of dysfunctional
behavior?
gaming
data falsification
-
7/29/2019 behavioural cons..ppsx
28/44
USINGA MIXOF PERFORMANCE MEASURES
The traditional focus of performance
measures has been on quantitative financial
measures.
What are some quantitative non-financialmeasures?
Cycle
TimeYield ScheduleAdherence
MarketShare
CustomerRetention
-
7/29/2019 behavioural cons..ppsx
29/44
USINGA MIXOF PERFORMANCE MEASURES
Organizations can design performance
measurement systems that encourage a desired
behavior.
Multiple performance measures should reflect the
complexities of the work environment and the
variety of contributions that employees make.
-
7/29/2019 behavioural cons..ppsx
30/44
THE BALANCED SCORECARD
Financial perspectiveHow do we look toour stakeholders?
Customer PerspectiveHow do we look to
our customers?
Organization LearningAre we able to sustain
innovation?
Business ProcessesWhat processes arethe value drivers??
-
7/29/2019 behavioural cons..ppsx
31/44
EMPOWERING EMPLOYEESTOBE INVOLVED
IN MCS DESIGN
What is the third major behavioral characteristic of
a well designed MCS?
It is empowering employees to be involved in
decision making and MCS design.
Empoweringemployees
-
7/29/2019 behavioural cons..ppsx
32/44
EMPOWERING EMPLOYEESTOBE INVOLVED
IN MCS DESIGN
Empowering employees requires two essential
elements:
1 Allowing employees to participate in decision
making
2 Ensuring that they understand the information they
are using and generating
-
7/29/2019 behavioural cons..ppsx
33/44
DEVELOPING APPROPRIATE INCENTIVE
SYSTEMS
What is the fourth major behavioral characteristic of
a well designed MCS?
Developing an appropriate incentive system to
reward performance.
Incentive system
-
7/29/2019 behavioural cons..ppsx
34/44
DEVELOPING APPROPRIATE INCENTIVE
SYSTEMS
What are intrinsic rewards?
They are those rewards that come from within an
individual.
They reflect satisfaction from doing the job.
What are extrinsic rewards?
They are rewards that one person provides to
another to recognize a job well done.
-
7/29/2019 behavioural cons..ppsx
35/44
PERFORMANCE MEASUREMENT AND
REWARD SYSTEM
There are six attributes of a measurement system
that must be in place to motivate desired
performance.
1 Employees must understand their job.
2 Designers of the performance measurement
system must make a careful choice about whether
it measures employees inputs or outputs.
-
7/29/2019 behavioural cons..ppsx
36/44
PERFORMANCE MEASUREMENT AND
REWARD SYSTEM
3 The elements of performance that the performance
measurement system monitors and rewards should
reflect the organizations critical success factors.
4 The reward system must set clear standards for
performance that employees accept.
-
7/29/2019 behavioural cons..ppsx
37/44
PERFORMANCE MEASUREMENT AND
REWARD SYSTEM
5 The measurement system must be calibrated so
that it can accurately assess performance.
6 In certain situations the reward system should
reward group rather than individual performance.
-
7/29/2019 behavioural cons..ppsx
38/44
PERFORMANCE MEASUREMENT AND
REWARD SYSTEM
What is incentive compensation?
It is a reward system that provides monetary
(extrinsic) rewards based on measured results.
It is a pay-for-performance system that bases
rewards on achieving or exceeding some measured
performance.
-
7/29/2019 behavioural cons..ppsx
39/44
TYPESOF INCENTIVE COMPENSATION
Cash bonus
Profit sharing
Gainsharing
Stock Options
-
7/29/2019 behavioural cons..ppsx
40/44
TYPESOF INCENTIVE COMPENSATION
What is a cash bonus?
It is a payment of cash based on some measured
performance.
It is also called a lump-sum reward, pay for
performance, and merit pay.
What is profit sharing?
It is a cash bonus that reflects the organizations, or
an organization units, reported profit.
-
7/29/2019 behavioural cons..ppsx
41/44
TYPESOF INCENTIVE COMPENSATION
What is Gainsharing?
It is a system for distributing cash bonuses from a
pool when the total amount available is a function of
performance relative to some target.
What are the three most widely used Gainsharing
programs?
-
7/29/2019 behavioural cons..ppsx
42/44
TYPESOF INCENTIVE COMPENSATION
1 Improshare (Improved Productivity Sharing)
2 Scalon plan: Base Ratio = Payroll costs Value of
goods or service
3 Rucker Standard = Payroll costs Production value
-
7/29/2019 behavioural cons..ppsx
43/44
TYPESOF INCENTIVE COMPENSATION
What is a stock option?
It is a right to purchase a stated number of the
organizations shares at a stipulated price (the
option price).
-
7/29/2019 behavioural cons..ppsx
44/44
CONCLUSION
Four key behavioral characteristics comprise a well-
designed MCS.
As a result, manager has to be careful to involve
employees in designing a MCS for the organization.