Professional Documents
Culture Documents
Introduction
Goals: goals are targets pursued by organization. Defined as: broad statement of what the organization wants to achieve in the long run or on a permanent basis. Goals are timeless statement. They are the wheels that keep an organization going. In many corporations, the goals originally set by the founder persists for generations. E.g.. Ford, Walt Disney, Eastman Kodak, Sam Walton Wal-Mart
Organizational Goals
Profitability Maximizing Shareholders Value
Risk Management
Other Goals: by Posner & Schmidt
Organizational Effectiveness High Productivity Good Organization Leadership High Morale Good Organizational Reputation Organizational growth Organizational Stability Value to Local Community
Service to Public
Goal Congruence
Every individual has Personal Goals
goals so that goal congruence is achieved Goal congruence means the action people take in accordance with their perceived self-interest and also in the best interest of the organization. MCS should be designed and operated with the principle of goal congruence in mind.
Goal Congruence
Individuals work in different hierarchies and handles different responsibilities & may have different goals.
But they must come together as far as Companys Goal is concerned, its called Goal Congruence
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program to enhance the skills of its sales personnel, with an objective to enhance their productivity But if company is in strategic need of attaining a certain sales volume in a given quarter, it can not do so on account of non availability of personnel.
an impressive advertising campaign, which promises good returns, But say due to cash crunch Companys current financial position may not let to lose the strings Example 3 Production Manager may get a good applause for reducing cycle time; But at what cost? Building up the high inventory i.e. higher investment in current assets. While doing so he just overlooked the financial interest of the company.
External Factors
Internal Factors
Culture
Common beliefs, Shared Values, Norms of Behavior, Assumptions that are indirectly accepted and openly/directly manifested throughout Cultural norms are extremely important since they explain why two organizations with identical formal management control systems, may vary in terms of actual control. A company's culture usually exists unchanged for many years. Certain practices become rituals, carried on almost automatically because "this is the way things are done here. Organizational culture is also influenced strongly by the personality and policies of the CEO, and by those of lower-level managers with respect to the areas they control. Attempts to change practices almost always meet with resistance, and the larger and more mature the organization, the greater the resistance is.
Example
Reginald Jones 1970 More Discipline, Formal, dignified, refined, bright, willing to & able to delegate authority Jack Welch 1980 outspoken, impatient, informal, an entrepreneur. Growth 1981 -1999 through mega acquisition, shift from manufacturing to services, rapid globalization into Europe & Asia, Implementation Six Sigma Quality, Integration of Internet into All GEs Businesses. Result - Sales Increase Fourfold, from $27 Billion to $101 Billion , profits six folds, from $1.6 Billion to $9.2 Billion. GEs Stock price increased by 3100% from $4.2 to $133.75 Billion Jeff Immelt 2001 Confident, friendly, and likeable leader . Where Welch was feared within GE, Immelt is Adored. Immelt Focus Use of Technology, Customer Orientation, Business Mix, Management Diversity GE Well Deserved reputation for producing sterling Business Managers who had different styles but a common ability to lead successfully
Physical Control
Manuals
System Safeguards
Physical Control
Manuals
System Safeguards
Reward (Feedback
Strategic Planning
Budgeting
Performance Measurement
Measurement
Review
Corrective Action
Feedback Communication
Functional Structure
CEO
Staff
Production Manager
Staff
Manager
Manager
Manager
Plant 1
Plant 2
Plant 3
Manager Region A
Manager Region B
Manager Region C
Disadvantages: Advantages: No clear way of determining Specialized Knowledge effectiveness No way of measuring contribution Better Decisions towards profit Supervision Dispute grievance Efficiency Inadequate for diversified products & markets Tends to be silos24
Plant Manager
Marketing Manager
Plant Manager
Marketing Manager
Plant Manager
Marketing Manager
Responsible for all the function involved in producing & marketing a specified product line Based on Product range/specific market/geographical location, divisions are formed & they act as separate companies Responsible for planning & coordinating work of separate functions and for resolving disputes between them Performance measured on the basis of profit of BU. A valid criterion since it reflects the activities of both. BU Managers exercise broad authority but Headquarters reserves certain key prerogative. HQs may be responsible for obtaining & allocating funds Also approves budget, judges performance of BU manager, sets their compensation, and if situation warrants, remove them HQs establishes Charter for Product, territory.
HQs establishes Company wide policies may be codified in to few & general or in several thick volumes of manuals HQs staff may assist BU in specialized areas like Human Resource Legal Affairs Public Relation Controller & treasury matters HQs functions are crucial; without them the BU would be better off as a separate companies
Advantages: Provides a training ground for general management Imbibes entrepreneurship skills in BU manager Being nearer to market than HQs, Managers make sound decisions The unit as a whole can react to new threats or opportunities
Disadvantages: Possibility of work duplication Unit manager is presumably generalist whereas subordinates are functional specialists may lead to problems both within BU and with HQs Disputes between Business units Disputes between Business Units and HQs
Matrix Organization
Chief Executive Officer
Matrix Organization
Matrix Integrates desired features of Functional and Divisional structure Evaluation of performance of such organizational entities is very difficult This form of organization is very complex, from the point of view of management control system Along with hierarchy, there is some form of lateral authority, influence or communication Employee reports to two supervisors simultaneously Managers share the resources Firms that follow this structure are TCS, WIPRO, 30 Shell etc.
Advantages: Promotes interaction between functions and so useful where such interactions are necessary or desirable
Matrix structure offers advantages such as faster decision making process, efficiency and effectiveness Matrix organization has advantage of motivation and coordination
Disadvantages: it may pose problems such as added complexity in control function, assignment of responsibility and authority etc. Lot of time is consumed in conflict resolution The configuration dilutes priorities and creates conflicts product lines and functional lines over the allocation of resources.
Controllers involvement in managerial function depends upon Financial orientation of the company Importance of planning, budgeting and reporting in the organization The extent to which controller is involved in business decisions Characteristics of a good controller Personal integrity and professional commitment Accounting knowledge and analytical skills Understanding business problems and recommending actions Building effective interpersonal relationships Recognizing the responsibility towards the division as well as corporate management
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Controller
The Business Unit Controller He has divided loyalty between corporate controller & Unit Manager. If he reports to Corporate Controller, he is treated as spy rather than trusted aide by unit manager. And if he is reporting to unit manager, he may not give objective reports on Business Unit.
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