Behavior in Organizations

MCS influence human behavior.

Good Management Control System
influence behavior in goal congruent
manner.
In a goal congruent process ,the actions
people are lead to take in accordance with
their perceived self interest are also in the
best interest of the organization.
 Goal Congruence

Individuals work in different But they must come together as

hierarchies and handles far as Company’s Goal is
different responsibilities & concerned,(there action must
may have different goals. speak Co’s language.)
 Goal Congruence
• Example 1– The HR manager has devised
a HR training program to enhance the skills
of its sales personnel, with an objective to
enhance their productivity
But if company is in strategic need of
attaining a certain sales volume in a given
quarter, it can not do so on account of non
availability of personnel.
• Example 2– The marketing department
has planned an impressive advertising
campaign, which promises good returns,
But say due to cash crunch Company’s
current financial position may not let to
lose the strings
 Goal Congruence
• Example 3 – Production Manager may get a
good applause for reducing cycle time;
But at what cost? Building up the high inventory
i.e. Higher investment in current assets. While
doing so he just overlooked the financial interest
of the company.
• After completing the given activity in
more efficient manner the concerned
manager scores the point/s on his score
card.
• 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 common
goal.
 Goal Congruence
• Every individual working in an organization
has got his own motive to do the work.
Individuals act in their own interest, based on
their own motivations. And it is always not
necessarily consistent with the Co’s goal.
• In a goal congruence process, the actions
the people are led to take in accordance
with their perceived self interest are also in
the best interest of the organization i.e.
• Goal congruence ensures that the action
of manager taken in their best interest is
also in the best interest of the
organization.
 Scope of Strategy
execution Goal Congruence

Strategic
Goal

Control Efforts

• MCS sees that how actions of individuals are put/led to

achieve the Co’s goal?
• Management control process helps in brining the
consistency, as far as possible, in these diverse goals.
 Significance of Goal Congruence
• Ensures frictionless working.

• Ensures achievement of organization’s goal/strategic

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

• Gives fair chance to its employees to achieve their

personal goals.
• Enhances the loyalty towards the company.
• Satisfies prime requirement of MCS.
Factors those influence the Goal Congruence
I. Informal Factors –
A.     External factors – set of attitudes of the
society, work ethics of
the society
B.     Internal factors – (Factors within the
organization)
•        Culture- “Common beliefs, shared values,
norms of behavior &
assumptions” implicitly accepted
and explicitly built into.
•        Mgt. Style – Informal/Formal
•        The Communication Channels
•        Perception and Communication –
e.g. Budget (meaning)  A strict profit
control plan
Factors those influence the Goal Congruence

II Formal Factors –
A. MCS strategy itself
B. Rules – Instructions, manuals and
circulars
Physical controls,
system safeguards,
task control system.
MCS - A Formal process Relating MCS to Organizational Goal
Co’s Goals & Strategies

Prepare Strategic
Revise Plans for
Implementation
Everything
Prepare Annual
Revise the
Revise
Programs/ Budgets percolates from
Goals
/Policies
the Company’s
Measure
(Interactive Responsibility Center’s strategic goal.
MCS) Performance
Anything loosing
Report Actual & the sight of goal
Reward
Feedback
Budgeted will be
immediately taken
Compare A V/s B
note of and a
Corrective Action corrective action is
initiated to bring
Satisfactory Non-Satisfactory
back the activity
on the track.
Feedback
 Types of Organizations
Functional Organizations
Business Unit Organizations
Matrix Organizations
 Advantage of functional organization

Benefit of specialization
Efficient Operation of specific function
Disadvantages of functional organization

No unambiguous way of measuring

effectiveness of separate functional managers
Decision and communication can be time
consuming and frustrating
Functional structures are inadequate for a firm
with diversified products and markets
Tends to create “silos” for each function
Advantages of Business Unit Organization

It provides training ground in general

management
As business unit is closer to market for its
products, the manager may make sounder
production and marketing decisions than
headquarters might.
The unit as a whole can react to new threats or
opportunities more quickly
Disadvantages of Business Unit Organizations

There are the possibilities that each business

unit staff may duplicate some work that in a
functional organization is done at headquarters.
It is difficult to obtain skilled manpower
Disputes between functional specialists in
functional organizations may be replaced by
disputes between business units in business unit
organizations
There may also be disputes between business
unit personnel and headquarters staff
 Implication on system design

If control is the only criterion, then

business unit organization is feasible
If in addition to control, the weight is also
to be given to economies of scale,
specialization benefit then functional
organization is good.
 Controller
Controller is the person who is responsible
for designing and operating the
management control system.
The title of this person in many
organization is CFO.
 Functions of the Controller

Designing and operating information and

control systems
Preparing financial statements and
financial reports
Preparing and analyzing performance
reports, interpreting those reports for
managers.
 Functions of the Controller (Conti.)

Analyzing program and budget proposals from

various segments of the company and
consolidating them into overall annual budget
Supervising internal audit and accounting control
procedures to ensure the validity of information,
establishing adequate safeguards against theft
and fraud, and performing operational audits
Developing personnel in the controller
organization and participating in the education of
management personnel in matters relating to
controller function
 Business Unit Controller

Dotted Line Relationship with Corporate

Controller
Solid Line Relationship with Corporate
Controller