Chapter 3
Behavior In Organizations
3.1 Goal Congruence: The actions people
are led to take in accordance with their
perceived self-interest are also in the best
interest of the organization.
In evaluating any management control practice,
the two important questions to ask are:
[Link] actions does it motivate people to take
their own self-interest
2. Are these actions in the best interest of the
organization.
3.2 Informal factors that influence goal
congruence
External factors
– General societal conditions, cultural values and
norms, legal and political situations.
– Work ethic –loyalty to the organization, diligence, spirit,
pride in doing good job.
Internal Factors
– Culture
– Management style
– Informal organization
– Perception and communication
3.3 Formal Control System
Rules: rules are shorthand for all types of
formal instructions and controls, including
standing instructions, job descriptions,
standard operating procedures, manuals,
and ethical guidelines. Some specific types
of rules are as follows:
Physical Controls: security guards, locked
storerooms, vaults, computer passwords,
television surveillance, and other physical
controls may be part of the control structure.
Manuals: written guidelines for accomplishing
any task.
System Safeguards: various safeguards are
build into the information processing system
to ensure that the information flowing the
system is accurate, and to prevent or at least
minimizing fraud of every sort.
Task Control Systems: the process of
ensuring that specific tasks are carried out
efficiently and effectively. Many of these
tasks are controlled by rules.
Formal Control Process
Strategic planning
Budgeting
Responsibility center performance
Report actual versus plan
Is performance satisfactory
Reward or corrective action and revision
3.4 Types of Organizations
Functional Organization: each manager is
responsible for a specified function such as
production or marketing.
Business Unit Structure: business unit
managers are responsible for most of the
activities of their particular unit, and the
business unit functions as semi-independent
part of the company.
MatrixStructure : functional units have dual
responsibility.
Implication for System Design
For ease of control, companies should
organize into business units whenever
feasible.
A functional unit may be more efficient if the
organization wants to achieve the benefits of
economies of scale.
Once management has decided that a given
structure is best, all things considered, then
system designer must take that structure as
given.
3.5 Functions of the Controller
Controller is the person who is responsible
for designing and operating the management
control system. In many organizations, the
title of this person is chief financial officer
(CFO). The controller usually performs the
following functions:
Designing and operating information and control
systems
Preparing financial statements and financial reports
(including tax returns) for shareholders and other
external parties.
Preparing and analyzing performance reports,
interpreting these reports for managers, and
analyzing program and budget proposals form
various segments of the company and consolidating
them into an overall annual budget.
Supervising internal audit and accounting
control procedures to ensure the validity of
information.
Developing personnel in the controller
organization and participating in the
education of management personnel in
matters relating to the controller function.