Ch. 8 Organizational Control and Change

MGT 201

Controlling

the process whereby managers monitor and regulate how efficiently and effectively and organization and its member are preforming the activities necessary to achieve organizational goals.

In controlling:

managers monitor and evaluate whether the organization’s strategy and structure are working as intended, how they could be improved, and how they might be changed if they are not working

Organizational Control

Helps managers obtain superior efficiency, quality, responsiveness to customers, and innovation— the fours building blocks of competitive advantage. It is important in determining the quality of goods/services because it gives managers feedback on product quality.

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 effectively and efficiently. Effective control systems alert managers when something is going wrong and give them time to respond to opportunities and threats.

Three Characteristics of an effective control system:

1. Flexible enough to allow managers to respond as necessary to unexpected events

2. Provides accurate information about organizational performance

3. Gives managers information in a timely manner because making decisions on the basis of outdated information is a recipe for failure.

Feedforward Control

(Input Stage) Control that allows managers to anticipate problems before they arise. Ex) giving strict product specifications to suppliers in advance (a form of performance target), an organization can control the quality of the inputs it receives, thus avoiding potential problems.

Concurrent Control

(Conversion Stage) Control that gives managers immediate feedback on how efficiently inputs are being transformed into outputs so managers can correct problems as they arise.

Feedback Control

(Output Stage) Control that gives managers information about customers’ reactions to goods and services so corrective action can be taken if necessary.

Four Steps of the Control Process

1. Establish the standards of performance, goals, or target against which performance is to be evaluated

2. Measure actual performance

3. Compare actual performance against chose standards of performance

4. Evaluate the result and initiate corrective action (make changes) if the standard is not being achieved.

Step 1: Establish standards of performance

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 (such as a division, a function, or an individual). The standards that managers select measure efficiency, quality, responsiveness to customers, and innovation. Ex) In pursuit of a low cost strategy, they need to measure efficiency at all levels in the organization.

Step 2: Measuring performance

managers can measure or evaluate two things: (1) the actual outputs that result from the behavior of their members and (2) the behaviors themselves. outputs are usually easier to measure than behaviors because they are more tangible and objective. In general, the more non routine or complex organizational activities are, the harder it is for managers to measure outputs or behaviors.

Step 3: Compare actual performance against standards

managers evaluate whether—and to what extent— performance deviates from the standards of performance chosen in step 1. If performance is higher than expected, managers might decide they set standards too low. Managers at successful companies are well known for the way they try to improve performance in manufacturing settings by constantly raising performance standards to motivate managers and workers to find new ways to reduce costs or increase quality.

Step 4: Evaluate result and initiate corrective action

Whether or not performance standards have been met, managers can learn a great deal during this step. If managers decide the level of performance is unacceptable, they must try to change how work activities are performed to solve the problem. Sometimes the problems occur because standards were too high.