Organizational Dynamics

Controlling

Control
Monitoring activities to ensure that they are being accomplished as planned and Correcting any significant deviations The effectiveness of a control system depends on how well it facilitates goal achievement

Control helps in:

Knowing if plans are on target Facilitating employee empowerment Protecting the organization and the physical workplace

Approaches to designing control systems

Bureaucratic control
Emphasizes organizational authority Relies on administrative and hierarchical mechanisms to ensure that employees exhibit appropriate behaviours and meet performance standards E.g.: rules, regulations, policies, budgets, procedures, job descriptions, standardization

Approaches to control (contd.)

Market control
Uses external market mechanisms such as price competition and relative market share to establish the standards used in the system Typically used by organizations with clearly specified and distinct products or services that face considerable marketplace competition

Approaches to control (contd.)

Clan control
Regulates work behaviour and performance standards through the prevailing organizational culture I.e. by the shared values, beliefs, norms, traditions, rituals and other aspects of the culture Often used by organizations in which teams are common and technology is changing rapidly

The Control Process

1. Measurement

of actual performance
of actual performance against standard for correction

2. Comparison 3. Action

1. Measuring
WHAT
The criteria for measurement may vary depending on the job or activity performed

HOW
Information about performance may be obtained through
Personal observation Statistical reports Oral reports Written reports

2. Comparing
Determining the degree of variation between actual performance and the standard Deviations that exceed the acceptable range of variation need attention
Management by Exception

3. Taking Managerial Action

Correct the performance
Immediate corrective action Basic corrective action

Revise the standards Do nothing

If deviations are within the acceptable range

Types of Controls
Feedforward control
Prevents anticipated problems since it takes place before the actual activity Examples : Preventive maintenance Training programmes Budgets Safety systems

Types of Controls (contd.)

Concurrent control
Takes place while an activity is in progress, so problems can be corrected before they become too costly Examples : Direct supervision MBWA Word processor programs

Types of Controls (contd.)

Feedback control
The most popular type of control which takes place after the activity is done Examples : Performance appraisals Any reports on organizational performance (weekly / monthly / quarterly / annual)

Measures of Organizational Performance

Organizational Productivity
Is a measure of Efficiency Is the overall Output of goods or services produced divided by the Inputs needed to generate that output (Sales Revenue received when the goods and services are sold) / (Costs of acquiring and transforming the resources into the outputs)

Measures of Organizational Performance (contd.)

Organizational Effectiveness
Measure of how appropriate organizational goals are and how well an organization is achieving those goals Several different effectiveness measures could be used, reflecting the different criteria of the organizations constituencies (suppliers, customers, security analysts etc.)

Measures of Organizational Performance (contd.)

Industry Rankings
Are indicators of how well a company is performing in comparison with others Rankings are determined by specific performance measures, which are different for each list

Tools for Controlling Organizational Performance

Financial controls
Traditional methods such as budget analysis and ratio analysis which determine how efficiently and profitably the organization is using its assets, debts, inventories, etc. Newer measures such as EVA, MVA which indicate whether organizations have created wealth or destroyed it To watch out for Management of earnings which gives an unrealistic picture of the organizations financial performance, by timing income and expenses to enhance current financial performance

Tools for Controlling Organizational Performance (contd.)

Balanced Scorecard
Developing goals and measures in four areas:
1. 2. 3. 4. financial customer internal processes employee learning and growth / innovation

Information controls
A tool to control other activities (MIS ) An area to be controlled

Benchmarking
Both internal and external

Assignment III: Group Exercise - Controlling for Safety

Pick an organization (sector) that you are familiar with List possible safety concerns* for the above Suggest appropriate measures to control these issues * Safety concerns could be:
Physical (things; people - employees/customers) Financial Information Environment Image Business continuity