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Discuss the attributes of a typical organizational control system. In order for organizations to ensure that operations are efficient and in compliance with intended strategies, control systems must be in place. The five main elements of control systems are: establishing goals and standards, measuring performance, comparing performance against goals and standards, taking corrective action, and providing reinforcement. |
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Describe the different kinds of controls that are used in organizations. To realize organizational goals and standards, activities of individuals and units can be controlled through personal, bureaucratic, output, cultural, incentive, and market controls. |
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Explain how different controls should be matched to the strategy and structure of an organization. A different mix of controls tends to vary with the size, strategy, and structure of an organization. As firms grow and become dynamic and complex, more reliance is placed on controls than on simple integrating mechanisms such as liaison roles. For the single business firms, integrating mechanisms could be low for the stable environment within functional structures or high integration if the organization is dynamic. For diversified firms, integrative mechanisms could be low for those organizations that do not share resources or leverage core competencies. Integrative mechanisms are higher for diversified firms whose need is to leverage core competencies across product divisions and to realize economies of scope. |
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Outline the features of the balance score card approach to control metrics, and explain why it is useful. For long-term welfare of the organization’s competitiveness and profits, a balanced scorecard provides managers with many different financial and operational metrics in tracking performance and control, instead of just solely relying on financial metrics of profitability, growth, and cash flow. The scorecard looks at the financial perspective (growth, profitability, and cash flow), innovation perspective (new product sales and development time), operational perspective (quality output and unit costs) and customer perspective (response time and customer service quality). |
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Discuss informal or backchannel control methods. Organizations can get a broader “real-life” picture of qualitative information on how the organization is performing through backchannel control methods. Backchannel methods are derived from social networks of contacts that inform the organization about the “honest picture” of performance. |