LECTURE 2 Flashcards

Question

Personnel/cultural controls

Answer 1

Ensure that employees control their own behaviours (personnel control and self-mintoring) and will control each others behaviours (cultural controls and mutual-monitoring)

Answer 2

Build on employees’ natural tendencies to control themselves, because most people: 1. have a conscience that leads them to do what is right; 2. find self-satisfaction when they do a good job and see their organization succeed.

Answer 3

Self-control Intrinsic motivation Ethics and morality Trust and atmosphere Loyalty

Answer 4

1. Selection and placement: finding the right people for a particular job 2. Training: Give employees a greater sense of professionalism; Create interest in the job by helping employees tounderstand their job better. 3. Job design and provision of necessary resources: So that motivated and qualified employees have a high probability of success (eg equipment, staff support, freedom from interruption)

Answer 5

“finding the right people, giving them a good work environment and the necessary resources”

Answer 6

Tap into social pressure and group norms and values. Effective because members of a group have emotional ties to one another.

Answer 7

traditions norms beliefs ideologies attitudes ways of behaving

Answer 8

1. Codes of Conduct 2. Group-Based Rewards 3. Intra-organizational transfers 4. Physical and social arrangements 5. Tone at the top

Answer 9

Codes of ethics, corporate credos, mission statements, etc. Formal written documents with broad statements of corporatevalues, commitments to stakeholders, and the ways in which top management would like the firm to function. Fundamental guiding principles of the company.

Answer 10

e.g., bonus, profit-sharing, employee ownership of company stock; Cultural controls rather than results controls because the link between individual performance and rewards is weak.

Answer 11

Improve the socialization of individuals in an organization andinhibit the formation of incompatible goals and perspectives; Improve identification with the organization as a whole asopposed to subunit identification.

Answer 12

e.g., office plans, interior decor, dress codes and vocabulary, etc.

Answer 13

Top management statements must be consistent with the culture they are trying to create, and importantly, their behaviors should be consistent with their statements.

Answer 14

We rely on people to a certain extent Have relatively few harmful side-effects Involve relatively low out-of-pocket costs Necessary to supplement with action controls and results controls

Answer 15

Takes place when "high" probability objectives achieved and "low" probability of bad surprises Tight Control - is "good" because it provides high degree of certainty that people act as organization wishes

Answer 16

1. precision (amount of “noise”): Repeated measurement produce similar results (profit vs leadership capability) 2. objectivity (freedom of “bias”): Not influenced by feelings, mental states, emotions, tastes, interpretations. 3. Timeliness: “lag” between occurrence and measurement 4.Understandability: Understand what employees are accountable for and actions to influence the measure.

Answer 17

Are the links between results and rewards: a) Direct (no ambiguity): Bonus based on revenue target. b) Definite (no excuses): Meet the profit target, 10 % cash bonus

Answer 18

In order to achieve tighter control, managers often use multiple forms of controls which can either reinforce each other or overlap. Goal is for tighter control over all factors critical for success and high probability that employees behave as intented

Answer 19

A higher probability that people will both work hard and direct their energies to serve the organization’s interests.

Answer 20

Direct out-of-pocket costs and Adaptation Costs Harmful Side Effects: Behavioral displacement, Gamesmanship, Operating delays , Negative attitudes

Answer 21

Easy to quantify: cost of cash bonuses, internal audit staff Difficult to quantify: time spent on planning and budgeting activities, on pre-action reviews, etc.

Answer 22

Multinational, diversified strategies

Answer 23

Occurs when the control system produces/encourages behaviors that are not consistentwith the organization’s objectives.

Answer 24

it occurs when the results measures are incongruent with the organization’s true objectives; because Poor understanding of the desired results Over-quantification “Intangibles” are often overlooked.

Answer 25

Means-ends inversion: Employees are induced to pay more attention to whatthey do and lose sight of what they try to accomplish. Rigid, non-adaptive, bureaucratic behavior: Universal approach, lack of discretions on particular conditions/circumstances

Answer 26

Refers to the actions managers take to improve their performance indicators without producing any positive economic effects. Elements: Creation of slack resources and data manipulation)

Answer 27

Consumption of assets in excess of what is required. Slack can reduce manager tension and stimulate innovation; However, it causes inefficient resource allocation.

Answer 28

Trying to “look good” by fudging the control indicators. Falsification, i.e., reporting erroneous data. Data management, i.e., any action to change the reported result: Through accounting methods (e.g. reserves, write-offs); Through operating methods (e.g. delaying expenses).

Answer 29

Mostly associated with action controls notably delays caused by: Lengthy review processes, Cumbersome authorization layers, and Bureaucratic organizations. When fast action is important, operationaldelays can be quite costly

Answer 30

1. Job tension, conflict, frustration, resistance: Often coincident with many harmful behaviors suchas, gaming, lack of effort, absenteeism, and turnover. 2. Action controls often “annoy” employees: It is difficult for people to enjoy following a strict set of procedures for a long period of time. 3. Results controls: a) Lack of employee commitment to the performance targets: targets are too difficult, not meaningful, not controllable. b) Performance evaluations are perceived as being unfair.

Answer 31

There is no one best form of control: What works best in one company (or area withina company), may not work in another. e.g., accounting personnel vs. design engineers Focus onthe people involved, because It is their responses that will determine the successor failure of the control system. The benefits of controls are derived only from their impacts on behaviors!

Answer 32

Designing control systems -> Two basic questions: 1. What is desired ? 2. What is likely to happen ? If what is likely is different from what is desired, then two basic MCS-design questions must be addressed: 1. What controls should be used ? 2. How tightly should each be applied ?

Answer 33

1. Start from objectives and strategies: They should be important guides to the actions that are expected, especially if they are specific. e.g., “Become a leader in the industry ” vs “15% ROI and 20% sales growth.” 2. Identify the key actions (KA) (i.e., actions that must be performed to provide the greatest probability of success.) 3. Identify the key results (KR) (i.e., the few key areas where things must go right for the business to flourish)

Answer 34

1. Do employees understand what they are expected to do (key actions) or to accomplish (key results)? ----> lack of direction 2. Are they properly motivated? -----> lack of motivation 3. Are they able to fulfil their desired roles? ----> personal limitations The discrepancy between what is desired and what is likely will determine the choice and the tightness of the management control systems.

Answer 35

As firms grow, control evolves: 1. Increased formalization of procedures: for action accountability purposes 2. Development of more elaborate information systems: for control purposes

LECTURE 2 Flashcards

yes (59 cards)