The Control Function of Management Flashcards

1
Q

Describe the two basic functions of control systems.

A
  1. Strategic Control: is our strategy valid?
  2. Management Control: are our employees likely to behave accordingly?
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2
Q

Describe the behavioral emphasis of management control.

A

Mangers taking steps to ensure employees are acting in accordance to organizational values. Guard organization from unable or unwilling employees.

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3
Q

When is management control “good”?

A

When major unpleasant surprises are unlikely to happen.

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4
Q

How can we assess if good control has been achieved?

A

assessing good control must be future-oriented and objectives driven

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5
Q

Name the different strategies to avoid control problems.

A

Avoidance
Automation
Risk Sharing
Centralization

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6
Q

What are the major control alternatives besides MCS?

A
  • incentives that are highly leveraged
  • subjective evaluation
  • performance-based incentives
  • internal audit staff
  • policies and procedures
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7
Q

Name the steps to implement results controls.

A
  1. Define measurement dimensions
  2. Measure:
  3. Set Targets
  4. Provide Rewards
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8
Q

What is critical in choosing performance measures?

A

“what you measure is what you get”

balancing responsibilities to all stakeholders

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9
Q

What conditions have to be present to make results controls work best? Describe them.

A
  • Knowledge of the desired results
  • ability to influence desired results: in material way an in time
  • ability to measure controllable results
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10
Q

Name and describe the characteristics results measures should have to evoke the right behaviors.

A
  • congruent and controllable
  • precise: actual (true) value
  • understandable
  • timely: motivational aspect, value of intervention is higher
  • cost efficient
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11
Q

Name and describe the different forms of action controls.

A
  • Behavioral constraints
  • Pre-action reviews
  • Redundancy
  • Action accountability
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12
Q

What criteria should be employed to judge the effectiveness of action tracking?

A
  • Precision
  • Understandability
  • Timeliness
  • Objectivity
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13
Q

What are the three most common drivers to adopt codes of conduct?

A
  • legal requirements
  • firm reputation
  • shared company culture
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14
Q

What do group-based incentive plans create?

A

culture of “ownership” and “engagement”

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15
Q

What are the factors that influence the achievement of tight result control?

A
  • Definition of the desired Results Areas
  • Performance Measures
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16
Q

What makes results controls tight?

A
  • Definition of the desired Results Areas: Congruence, Specificity, Communication, Completeness
  • Performance Measures: rewards directly linked to results
17
Q

Name the different types of indirect costs and define them.

A
  • Behavioral Displacement: when MCS encourages non congruent behavior
  • Gamesmanship: creation of slack, data manipulation
  • Operating Delays: e.g. due to pre-action reviews
  • Negative attitudes
18
Q

When does behavioral displacement occur with action controls?

A
  • “means-end-inversion”: loosing sight of what to accomplish
  • passiveness due to high bureaucracy
18
Q

When does behavioral displacement occur with action controls?

A
  • “means-end-inversion”: loosing sight of what to accomplish
  • passiveness due to high bureaucracy
19
Q

Describe the term “gamesmanship”.

A

actions that employees take to improve their performance indicators

20
Q

In what ways can results controls produce negative attitudes?

A
  • lack of commitment to targets (too difficult, not controllable, …)
  • problems in the measurement system
  • punishment
  • evaluation process is insensitive
21
Q

How can action controls produce negative attitudes?

A

Pre-action reviews can be frustrating

22
Q

What are the two basic questions that should be addressed in designing and improving MCS?

A

What is Desired?

What is likely to happen?

(What type of controls should be applied?)
(How tight should those controls be applied?)

23
Q

Describe the advantages and disadvantages of action controls?

A
  • Advantages:
    • most direct form of control
    • lead to documentation and accumulation of knowledge
    • form of organizational memory
  • Disadvantages:
    • cost
    • feasibility
    • can cause sloppiness and negative attitudes
    • discourage creativity
24
Q

Describe the advantages and disadvantages/limitations of results controls?

A
  • Advantages:
    • cost
    • feasibility
    • employee autonomy
  • Disadvantages:
    • risk on employees
    • less than perfect indicator when measure fails to meet qualities: congruence, precision, understandability, timeliness, objectivity