Organizational Control in Management

Summary

This course introduces the fundamentals of organizational control, explaining the systematic process of regulating activities to align with established goals. It highlights the importance of measuring performance through methods like the balanced scorecard, which integrates financial, customer service, internal processes, and growth perspectives. The control process involves setting clear standards, measuring performance, comparing results, and making necessary adjustments. Emphasizing feedback and management judgment, the course explores how decentralized control models and employee empowerment are shaping modern organizations, aiming to improve overall performance and achieve strategic goals.

Takeaways

• 😀 Organizational control is the systematic process of regulating activities to meet performance expectations and predetermined standards.
• 😀 Effective control requires managers to have access to performance data, compare actual results to standards, and take corrective action if necessary.
• 😀 The feedback control model helps managers meet strategic goals by using feedback to assess performance against established standards.
• 😀 The control process consists of four key steps: establishing standards, measuring performance, comparing performance to standards, and making corrections.
• 😀 Standards should be clearly defined so employees know exactly what is expected and can assess their performance against those standards.
• 😀 Formal performance reports should be tied to the standards set in the first step of the control process, and should help managers evaluate performance objectively.
• 😀 When performance deviates from the set standards, managers must analyze the cause of the deviation using both subjective judgment and objective data analysis.
• 😀 The balanced scorecard is a comprehensive management tool that integrates financial and operational measures to assess company performance.
• 😀 The balanced scorecard includes four perspectives: financial, customer service, internal business processes, and learning and growth.
• 😀 The financial perspective focuses on improving short and long-term financial performance, while customer service indicators focus on customer satisfaction and retention.
• 😀 Business process indicators assess production and operations, and the learning and growth perspective looks at human capital management and the organization’s potential for future success.

Q & A

What is the definition of organizational control?

Organizational control is the systematic process of regulating organizational activities to ensure they align with established plans, targets, and performance standards.

What is the essence of control in an organization?

The essence of control is action that adjusts operations to predetermined standards, based on information in the hands of managers.

What are the four key steps in the control process?

The four key steps in the control process are: 1) Establishing standards, 2) Measuring performance, 3) Comparing performance to standards, and 4) Making corrections.

Why is it important for performance standards to be clearly defined?

Clearly defined standards ensure that employees understand what is expected of them and can assess whether their activities are on target.

How should performance measurements be aligned with the control process?

Performance measurements should be related to the standards set in the first step of the control process. Reports should help managers evaluate how well the organization is meeting its standards.

What should managers do if performance deviates from the standards?

Managers should interpret the deviation, investigate its cause, and take appropriate corrective actions. This process involves both objective analysis and subjective judgment.

What is the purpose of the balanced scorecard in organizational control?

The balanced scorecard is a comprehensive management control system that integrates financial measures with operational measures, focusing on critical success factors across four perspectives: financial, customer service, business processes, and organizational growth.

What are the four major perspectives of the balanced scorecard?

The four major perspectives of the balanced scorecard are: 1) Financial perspective, 2) Customer service perspective, 3) Internal business processes perspective, and 4) Organizational capacity for learning and growth perspective.

How does the financial perspective of the balanced scorecard help managers?

The financial perspective focuses on improving short and long-term financial performance, using traditional measures like net income and return on investment to guide decision-making.

Why is employee participation and empowerment affecting organizational control methods?

The shift towards employee participation and empowerment is leading many organizations to adopt decentralized control processes, which differ from traditional hierarchical control models.