Behavior in Organizations

Faculty of Economics and Business - Accounting Undergraduate Program

Part I Introduction

Faculty of Economics and Business - Accounting Undergraduate Program

 MCS and Behavior in Organizations

• Management Control Systems influence human behavior

• MCS ensure that individual action taken to achieve

personal goals help to achieve the organization’s goals

Faculty of Economics and Business - Accounting Undergraduate Program

Part II Goal Congruence

Faculty of Economics and Business - Accounting Undergraduate Program

 Goal Congruence

• In a goal congruent process, the action people are led to take

in accordance with their perceived self-interest are also in
best interest of the organization

• Management Control Practice Questions:

• What actions does it motivate people to take in their own
self-interest?
• Are these actions in the best interest of the organization?

Faculty of Economics and Business - Accounting Undergraduate Program

Part III Informal Factors of Goal Congruence

Faculty of Economics and Business - Accounting Undergraduate Program

 Informal Factors of Goal Congruence

External Factor Work Ethic : loyalty, diligence, spirit, pride

Internal Factors Culture, Management Style, The informal

Organization, Perception and Management

Faculty of Economics and Business - Accounting Undergraduate Program

Part IV The Formal Control Systems

Faculty of Economics and Business - Accounting Undergraduate Program

 Types of Formal Control Systems

Management Control Systems

• Strategic planning, Budgeting, Responsibility
centers, Variance analysis
Rules
• Physical Controls, Manuals, System Safeguards,
task control systems

Faculty of Economics and Business - Accounting Undergraduate Program

 Formal Control Process

Goals and
Rules
Strategies

Yes
Responsibility Was
Strategic Report Actual
Budgeting Center Performance
Planning Versus Plan
Performance Satisfactory
No
Revise Revise Corrective
Action Measurement

feedback
Part V Types of Organizations

Faculty of Economics and Business - Accounting Undergraduate Program

 Types of organization’s Structure

Types of organization
A Functional Structure

structure
A Business Structure

A Matrix Structure

Faculty of Economics and Business - Accounting Undergraduate Program

 Functional Organization
CEO

Manufacturing Marketing
Manager Manager

Manager Manager Manager Manager Manager Manager

Plant 1 Plant 2 Plant 3 Region A Region B Region C

Characteristics: Disadvantages:
• Each manager is responsible for a specified function • Confusion to measure contribution’s profit
• Specialized knowledge to specific function • Inadequate for diversified product
• Preventing cross functional coordination
 Business Unit Organization
CEO

Manager Manager Manager

Business Unit Business unit Business unit
X Y Z

Marketing Marketing Marketing

Plant Manager Plant Manager Plant Manager
Manager Manager Manager

Characteristics:
• Business unit managers are responsible for most of the
activities of their particular unit
• Acting almost as if their units were separate companies
• Responsible for planning and coordinating the work of the
separate functions
Advantages:
• Providing training ground in general management
• Making sounder production and marketing
decision than headquarters
Disadvantages:
• Duplicating the same work both in BU and
Headquarter, BU manager is generalist, cost more
Matrix Organization

Characteristic:
• Functional Units have dual
responsibilities
Part VI Function of the Controller

Faculty of Economics and Business - Accounting Undergraduate Program

 Controller: Understanding

• The controller is the person who is

responsible for designing and operating the
management control system

• Another name of controller is Financial

Officers, the head of controller is Chief
Financial Officer (CFO)
 BU Controller & Corporate controller

BU Controller
• Controller who work on behalf of corporation located in
business unit or branch
• Hierarchy of reporting, can be both directly or indirectly to
corporate controller

Corporate Controller
• Controller who work mainly in corporate headquarter
• Receiving report both directly or indirectly from BU controller

Faculty of Economics and Business - Accounting Undergraduate Program

 Controller Relationships

Corporate Corporate
Controller • Business unit controller have divided Controller
loyalty

• BU controller who work primarily for

BU BU Manager, will not provide BU
Dotted Solid
Manager complete objective reports to Manager
Lines Lines
Corporate Controller

• BU controller who work primarily for

BU corporate controller, may be treated
as “Spy” by BU manager BU
Controller Controller