Behavioral aspects of control

1. THEORY OF BEHAVIOURAL ASPECTS OF CONTROL Nimisha S Williams

2. TYPES OF ORGANISATIONAL CONTROL PERSONAL CENTRALISED CONTROL This approach is likely to be found in small owner managed organisations where there is centralised decision making by the owner. BUREAUCRATIC CONTROL Here controls will be based on formalised rules, procedures, standardisation and hierarchy.

3. OUTPUT CONTROL This approach is a form of control that is based on the measurement of outputs and the results achieved. CLAN OR CULTURAL CONTROL This form of control requires the development of employees’ strong identification with management goals.

4. EMPLOYEE PERFORMANCE APPRAISAL An important management control system used in most organisations is the employee performance appraisal system. A performance appraisal system involves the regular and systematic review of performance and assessment of potential, with the aim of producing action programmes to develop both work and individuals.

5. BENEFITS OF EMPLOYEE PERFORMANCE APPRAISAL BENEFITS TO INDIVIDUALS BENEFITS TO ORGANISATION Provides a system for assessing competence and identifies areas for improvement Provides a fair process for reward decisions Helps identify and formulate training needs Improves communication between managers and subordinates Provides clear targets linked to corporate objectives Provides a basis for HR planning Monitors recruitment and induction process against results • Feedback about performance at work and an assessment of competence • Identifies work of particular merit done during the review period • Provides a basis for remuneration • Used as an opportunity to discuss future prospects and ambitions • Identifies training and development needs

6. PERFORMANCE APPRAISAL PROCESS • Setting targets • Communicating the targets • Monitoring actual results • Comparing with targets • Providing feedback • Taking corrective actions

7. APPROACHES TO PERFORMANCE APPRAISAL Ranking system In this approach individuals are assessed and analysed in terms of objectives tasks, workflows and results achieved. These are then compared with predetermined results. For each of set targets, the manager will provide a ranking as to the individual’s performance. Unstructured format In this approach evaluators use an essay or short answer to grade employees. This approach tries to capture all aspects of employee performance rather than being restricted to the pre-agreed targets used in the more structured approach.

8. Self rating This approach is where the individual rates themselves on certain agreed criteria. This is then fed back to the manager who can review the individual’s assessment and make their own assessment. 360 approach The 360 approach allows more participation by the individual. While the manager will appraise the individual, the individual is also given the opportunity to appraise the manager.

9. REWARD SYSTEM A reward is something given, to an individual or group, in recognition of their services, efforts or achievements. The rewards that an organisation offers to its employees can either be intrinsic or extrinsic. Intrinsic rewards These arise from the performance of the job itself. Intrinsic rewards include job satisfaction, being allowed to make higher level decisions, sense of achievement. Extrinsic rewards These are separate from the job itself and are dependent on the decisions of others. Pay, working conditions and benefits are all examples of extrinsic rewards.

10. TYPES OF INCENTIVE SCHEMES Performance related pay Piecework Points system Commission Bonus schemes Profit sharing

11. PERFORMANCE MANAGEMENT AND MEASUREMENT SYSTEMS TARGET SETTING In order to measure performance, a target must be set to measure performance against. To be acceptable a target must be viewed as fair, measurable, achievable and controllable by the person or people being measured. Targets may include the following Volume of work produced Knowledge of work Quality of work Management skills Personal skills

12. DRUCKER’S MANAGEMENT BY OBJECTIVES Management by objectives can be defined as a type of control strategy which focuses on controlling outputs. This is a process whereby individual goals are integrated with the corporate plan, as part of an ongoing programme of goal setting and performance review involving all levels of management. Drucker suggested 8 key objectives to cover every area where performance and results affect the business. They are: Profitability Innovation Market standing Productivity Financial and physical resources Managerial performance and development Worker performance and attitude Public responsibility

13. THE BALANCED SCORECARD It was first introduced in 1992 by David Norton and Robert Kaplan. The balanced scorecard provides a framework which can be utilised to develop a multidimensional set of performance measures for strategic control of the overall organisation. These measures should be in line with the overall strategic objectives and vision of the organisation. This is a powerful tool that assists in the running of an organisation. Gains in one area need to be considered with the losses that may arise in any other areas and vice versa. Thus the manager’s view is broadened and the tendency to concentrate on one measure is reduced. Once the balanced scorecard has been set at an organisational level, it can be cascaded down to departmental and individual levels setting appropriate targets for each depending on their role.

15. Mentoring Mentoring is quite simply a relationship where one person helps another to improve their knowledge, work or thinking. It is a very valuable development tool for both the person seeking support and the person giving the support. For a mentoring system to be successful, relationships should not be based on authority. Mentoring works alongside more formal control mechanisms, such as appraisal, and is intended to provide the employee with a forum to discuss development issues which is relaxed and supportive. The role of a mentor is to encourage and assist junior members of staff to analyse their performance in order to identify their strengths and weaknesses.

16. COACHING Coaching is another method which can be used to enhance performance. Unlike mentoring, coaching focuses on achieving specific objectives, usually within a defined time period. It is more about improving the performance of someone that is already competent, rather than establishing competency in the first place.

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