2. Coordination - Control & Change Flashcards
Organizational Control (Why it is important, why they are utilized (3))
- Importance of Operational Control
= is important, as control systems help organizations to reach their goal
Control systems are utilized to
- try to generate the needed information
- coordinate the people and influence/steer their behavior in order to reach organizational goals
→ Challenge: generate the required information and coordinate the people without motivating the workers/employees → when people are feeling watched/observed/regulated, their motivation decreases and subsequently decreases performance
Types of Control (3) and its mechanisms
-
Output Control
Mechanism: Financial measures of performance & organizational goals -
Behavior Control
Mechanism: Direct Supervision -
Organizational Culture
Mechanism: Values, norms, and socialization
Output Control - Financial Measures of Performance (Definition, Financial Measures of Performance (4), 3 Pros & 4 Cons)
= for the control mechanism only the output matters, not the effort or the path of fulfilling the particular task
Financial Measures of Performance
- Profit Ratios = Measures of how efficiently managers convert resources into profits (= return on investment (ROI))
- Liquidity Ratios = Measures of how well managers protect resources to meet short term debt— current and quick ratios.
- Leverage Ratios = Measures of how much debt is used to finance operations—debt‐to‐asset and times‐covered ratios
- Activity Ratios = Measures of how efficiently managers are creating value from assets— inventory turnover, days sales outstanding ratios.
+ clearly/accurately measurable
+ objective measures
+ comparable measures within and between firms and units as well as over time - measures can be subject to manipulation
- affects the behavior of management → higher interest in short-term goals to increases financial measures (e.g. when bonus payments are tied to measures)
- measures are not balanced → only factor in financial aspects
- measures are related to the past, however, often one considers the future
Output Control - Organizational Goals (Definition of Goals, SMART-Goals, Precondition for Goals)
= not the goals per se, but rather the extent to which goals have been reached Preconditions:
S.M.A.R.T. goals
- S = Specific → it has to target a specific area of improvement
- M = Measurable → something that can be quantified precisely
- A = Attainable → they can’t be too easy/hard to reach
- R = Relevant → tasks need to be relevant to maintain motivation
- T = Time Bound → specify a deadline for the goal to be reached
Important: Goal congruence
→ Organizational goals, goals of managers as well as goals of subordinates have to be aligned
(For instance through incentivizing / bonus system)
Problems with Output Control (Characteristics (3), Example)
Managers must create output standards that motivate at all levels
- They must be careful not to create short-term goals that motivate managers to ignore the future
- If standards are set too high, workers may engage in unethical behaviors to attain them
Example: GAP switched from a process-driven to an outcome-driven culture
- Evaluation of performance, not presence; value, not effort
- Employees have complete autonomy over how they approach their work and focus on being accountable for results
Consequences:
- very competitive environment → lack of cooperation/team-effort
- ignoring ethical values to reach certain goals
- ability to work autonomous is prerequired
Behavior Control - Direct Supervision (Definition, Problems, 2 Pros & 2 Cons, 3 Problems, Example)
= Managers who directly manage can teach, reward, lead by example and take corrective actions as needed
+ very effective and benefiting, if people receive immediate feedback
+ can also be motivating if people learn and get the feeling of appreciation
- bad relationship between manager and subordinate counteract the advantages named above
- the manager requires special knowledge/expertise to give valid feedback
Problems with Direct Supervision
- Can be very expensive since only a few workers can be personally managed by one manager and many managers are needed.
- Close supervision demotivates workers who desire less scrutiny and more autonomy, causing them to avoid responsibility
- Direct supervision is difficult to do effectively in complex job setting
Example of Companies overdoing Behavior Control
- British Airways: which the phones and emails of its own cabin staff were allegedly improperly accessed during a bitter dispute with Britain’s largest union
- HP: using legally questionable methods to spy on one of its own directors, in a scandal that has prompted investigations by law enforcement authorities
Organizational Culture (Definition)
= a set of values or norms that rule the behavior of people within an organization
→ very complex mechanism
Schein’s Three Levels of Organizational Culture (3 Levels, Effect of Organizational Culture)
= analogy to an iceberg-structure:
- Surface Manifestations of organizational culture – e.g. artefacts (like wearing a suit), ceremonials, behaviors → known to externals and internals
- Values → no longer visible for externals, but for people within the organization
- Basic assumptions – e.g. relationship to the environment, to the nature of reality and truth, to human activity and to relationships → it affects employees, but they are no longer aware of it (Challenge: How do you change something that is mainly unconscious? → DNA analogy)
=> Organizational culture can act as a control measure, as it effects, incentivizes and instructs people and influences their behavior
Managing Organizational Change (Definition & how it is managed, 4 Steps)
= movement of an organization away from a current state to a future state → does not happen on a drawing board, but is rather a managed path with some detours within the process
4 Steps of Managing Organizational Change:
- Assess the need for change
- recognize that there is a problem
- identify the source of the problem - Decide on the change to make
- Decide what the organization’s ideal future state would be
- identify obstacles to change - Implement the change
- decide whether the change will occur from the top down or from the buttom up
- introduce and manage change - Evaluate the change
- compare pre-change performance with pist-change performance
- Use benchmarking
Get Safe: Objective and Key Results (OKR) Framework (Definition & Methodology, Planning)
= set boundaries for a company’s relevant topics and tasks
- There are company-wide qualitative objectives and underlying quantitative goals
- On each organizational level there are further OKRs
Planning:
- Quarterly planning, less top-down and rather bottom-up as executives are discussing possible OKRs with subordinates
- Weekly OKR meetings to recap how the process develop
- At the end of the quarter, there is a review (what was achieved? What not?) and a retrospective (what has to be considered in the future?)
Financial KPIs of GetSafe in Germany and UK
Germany:
- New Customer Premium
- Cross-Selling Premium
UK:
- Churned Premium
- Net Premium Growth UK
Types of Meetings at GetSafe (3)
1. Operational Meetings
= intended to get work done
- Team meetings / cross-area meetings
- 1on1 between a manager and a team member
2. Steering Meetings:
= Ensure that the company is going into the right direction;
- executive team weekly discusses strategic measures and long-term goals Monthly meetings where executives and area-leads discuss current topics and try to prevent silos
3. Cultural Meetings
= Provide information for the entire company
- Bonding within the team → increase teamwork
- Deep dives into certain topics
- CEO update or ask me anything session
Feedback & Growth Culture at GetSafe
Incentives:
- Every GetSafee is a shareholder of the company
- High performance = high bonus
- 1000€/Employee that can spend on personal growth annually
- A cool office in Heidelberg → openly spaced, food and drinks for employees
Feedback:
- 360 degree feedback → not simply top-down but rather exchanges
