1 When the organization experiences problems in coordinating and motivating employees, organizations often: Increase the number of managers Increase the number of levels in the management hierarchy Authority and Control

Copyright 2001 Prentice Hall FIGURE 3.4 The Relationship between Organizational Size and Number of Hierarchical Levels Number of employees ,0003,0009,00010,000100,000 Number of hierarchical levels 3-6

3 Communication Problems—both timing and distortion Motivation Problems—an increase in levels of management leads to a decrease in responsibility and motivation Bureaucratic Costs—managers cost money Problems with Tall Hierarchies

4 Contingencies Affecting Span of Control Contingencies Narrow SpanWide Span Environmental Uncertainty HighLow ProfessionalismLowHigh InterdependenceHighLow

Copyright 2001 Prentice Hall FIGURE 3.9 Horizontal Differentiation into Functional Hierarchies Sales EngineeringManufacturingPurchasingResearch and Development

6 The Control Process Respond: Formal Consequences Structural Change Social Outcomes Measure Performance: Inputs Processes Outputs Set Standards

7 Calvin & Mom People do keep score Rules create expectations Discipline affects attitudes

8 Au bon pain How did they initially approach organizational control? Identify principles that make the revised plan more likely to be effective. pros and cons? side issues?

9 Organizational Control at Grease Galore The Scenario Chris is a manager at Grease Galore, a local fast food restaurant. As in other establishments of this kind, most employees work part-time for low wages. At Grease Galore, workers tend to be sloppy in the kitchen and to treat customers brusquely. Recently, there have been several new hires. Chris would like to take this opportunity to make changes that might improve performance in the kitchen and with customers. The business operates on a narrow profit margin, so the available budget for incentives is small.

10 Design an organizational approach to address the problems Chris faces at Grease Galore. First, consider the existing organizational setting and structure. Decide if there might be structural answers to the problems. Then design an incentive program that appropriately rewards desirable behaviors and discourages undesirable behaviors. Finally, think about cultural and social aspects of the organizational setting, and determine how you might successfully nudge these. You will have about 30 minutes to work through this scenario and produce a plan of action. Please be prepared to discuss and defend your recommendations. Organizational Control at Grease Galore

11 How can we decide which control and incentive systems are best in our situation? Methods of Control Incentive Design Coordinating Interdependencies Level of Incentives Process Stages Structural Bureaucratic Market Social Sequential Reciprocal Pooled Grease Galore Individual Group Department Input Process Output