Chapter 7

Organizational
Control and
Change

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 Organizational Control

Organizational Control
– Managers monitor and regulate how efficiently
and effectively an organization and its members
are performing the
activities necessary to
achieve organizational
goals

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 Control Systems

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 efficiently and
effectively.

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 Three Types of Control

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 Control Systems and IT

Feedforward control
– Control that allows managers to anticipate
problems before they arise.
– Giving stringent product specifications to
suppliers in advance

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 Control Systems and IT

Concurrent control
– Control that gives managers immediate feedback
on how efficiently inputs are being transformed
into outputs so managers can correct problems as
they arise.

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 Control Systems and IT

Feedback control
– Control that gives managers information about
customers’ reactions to goods and services so
corrective action can be taken if necessary.

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 Control Process Steps

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 The Control Process
1. Establish standards of performance, goals, or
targets against which performance is to be
evaluated.
– 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

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 The Control Process

2. Measure actual performance

– Managers can measure outputs resulting from
worker behavior or they can measure the
behavior themselves.
– The more non-routine the task, the harder it is to
measure behavior or outputs

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 The Control Process
3. Compare actual performance against chosen
standards of performance
– Managers evaluate whether – and to what
extent – performance deviates from the
standards of performance chosen in step 1

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 The Control Process

4. Evaluate the result and initiate corrective

action if the standard is not being achieved
– If managers decide that the level of
performance is unacceptable, they must try to
change the way work activities are performed to
solve the problem

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 Three Organizational
Control Systems

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 Organization-Wide Goal Setting

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 Operating Budgets

Operating Budgets
– Blueprint that states how managers intend to use
organizational resources to achieve organizational
goals efficiently.

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 Problems with Output Control

Managers must create output standards that

motivate at all levels
Should not cause managers to behave in
inappropriate ways to achieve organizational
goals

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 Behavior Control

Direct supervision
– Managers who actively monitor and observe the
behavior of their subordinates
– Teach subordinates appropriate behaviors
– Intervene to take corrective action
– Most immediate and potent form of behavioral
control
– Can be an effective way of motivating employees

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 Problems with Direct Supervision

Very expensive because a manager can

personally manage only a relatively small
number of subordinates effectively
Can demotivate subordinates if they feel that
they are under such close scrutiny that they
are not free to make their own decisions

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 Management by Objectives

Management by Objectives (MBO)

– A goal-setting process in which a manager and
each of his or her subordinates negotiate specific
goals and objectives for the subordinate to
achieve and then periodically evaluate the extent
to which the subordinate is achieving those goals.

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 Management by Objectives
1. Specific goals and objectives are established
at each level of the organization
2. Managers and their subordinates together
determine the subordinates’ goals
3. Managers and their subordinates
periodically review the subordinates’
progress toward meeting goals

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 Bureaucratic Control

Bureaucratic Control
– control by means of a comprehensive system of
rules and standard operating procedures (SOPs)
that shapes and regulates the behavior of
divisions, functions, and individuals

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 Problems with
Bureaucratic Control

Rules easier to make than discarding them,

leading to bureaucratic “red tape” and
slowing organizational reaction times to
problems.
People might become so used to
automatically following rules that they stop
thinking for themselves

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 Clan Control

Clan Control
– The control exerted on individuals and groups in
an organization by shared values, norms,
standards of behavior, and expectations.

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 Organizational Change

Organizational change
– Movement of an organization away from its
present state and toward some desired future
state to increase its efficiency and effectiveness

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 Organizational Control and Change

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 Lewin’s Force-Field
Theory of Change

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 Evolutionary and
Revolutionary Change

Evolutionary change
– gradual, incremental, and narrowly focused
– constant attempt to improve, adapt, and adjust
strategy and structure incrementally to
accommodate changes in the environment

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 Evolutionary and
Revolutionary Change

Revolutionary change
– Rapid, dramatic, and broadly focused
– Involves a bold attempt to quickly find ways to be
effective
– Likely to result in a radical shift in ways of doing
things, new goals, and a new structure for the
organization

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 Steps in the
Organizational Change Process

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 Implementing the Change

Top Down Change

– A fast, revolutionary approach to change in which
top managers identify what needs to be changed
and then move quickly to implement the changes
throughout the organization.

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 Implementing the Change

Bottom-up change
– A gradual or evolutionary approach to change in
which managers at all levels work together to
develop a detailed plan for change.

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 Evaluating the Change

Benchmarking
– The process of comparing one company’s
performance on specific dimensions with the
performance of other, high-performing
organizations.

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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
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