Organizational Control and Change The Commander Chooses the Road to Safety Or To Ruin.

Three Types of Control Figure 11.1 Feed forward Controls Used to anticipate problems before they arise so that problems do not occur later during the conversion process Giving stringent product specifications to suppliers in advance IT can be used to keep in contact with suppliers and to monitor their progress Concurrent Controls Give managers immediate feedback on how efficiently inputs are being transformed into outputs Allows managers to correct problems as they arise Feedback Controls Used to provide information at the output stage about customers’ reactions to goods and services so that corrective action can be taken if necessary Anticipate/specs run around w/toolbox monitor & manage 4

Example – University of Alabama Gameday The University of Alabama provides information for fans to be ready for football game day parking and events This is an example of feedforward control 5

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. Dramatic Example

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.

Control Process Steps Figure 11.2

The Control Process 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 Think: Can we measure behaviors? How? 9

The Control Process Managers at each organizational level need to set their own standards. 10

The Control Process Compare actual performance against chosen standards of performance 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 11

Three Organizational Control Systems Figure 11.3

Financial Measures of Performance Profit Ratios measure how efficiently managers are using the organization’s resources to generate profits Return on Investment (ROI) organization’s net income before taxes divided by its total assets most commonly used financial performance measure 13

Financial Measures of Performance Operating margin calculated by dividing a companies operating profit by sales revenue Provides managers with information about how efficiently an organization is utilizing its resources

Financial Measures of Performance Liquidity ratios measure how well managers have protected organizational resources to be able to meet short-term obligations Leverage ratios measure the degree to which managers use debt or equity to finance ongoing operations 15

Financial Measures of Performance Activity ratios Show how well managers are creating value from organizational assets Inventory turnover Days sales outstanding 16

How Fast Are You Picking Up Biz Management? What do you think “Monetizing Assets” means?

Organization-Wide Goal Setting aka “The Downhill Roll” Organizational Goals Each division within the firm is given specific goals that must be met in order to attain overall organizational goals. Goals should be set appropriately so that managers are motivated to accomplish them The Operating Budget Accounts for Resource Control 18

Effective Output Control Objective financial measures Challenging goals and performance standards (behavior and process monitoring) Appropriate operating budgets

Problems with Direct Supervision/Behavior Monitoring 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

Bureaucratic Control Bureaucratic Control Control through a system of rules and standard operating procedures (SOPs) that shapes and regulates the behavior of divisions, functions, and individuals. 21

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 22

Clan Control Clan Control The control exerted on individuals and groups in an organization by shared values, norms, standards of behavior, and expectations. “Synergy” 23

Organizational Control and Change Figure 11.5

Organizational Change Can invigorate and also scare people. Can be slow to come (evolutionary) or quick and hard-hitting (revolutionary change). Knowledge is not always as helpful as we wish it were.***

KNOW Steps in the Organizational Change Process “Plan-Do-Study-Act”

Managing Organizational Change The Best Fuel For Change Is Not Necessarily Knowledge © 2014 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.