behavioural cons..ppsx

7/29/2019 behavioural cons..ppsx

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MOTIVATING BEHAVIORIN

MANAGEMENT CONTROL SYSTEMS


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1 Embedding the organizations ethical code of

conduct into MCS design

2 Using a mix of short-term and long-term qualitative

and quantitative performance measures (or the

balance scorecard approach)

3 Empowering employees to be involved in decision

making and MCS design


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4 Developing an appropriate incentive system to

reward performance

Companies whose MCS display these fourcharacteristics subscribe to a world view of the role

of management labeled the Human Resource

Management Model.


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HUMAN RESOURCE MANAGEMENT MODELOF

MOTIVATION

The Human Resource Model is used as the basis

for presenting the four behavioral considerations in

MCS design.

Mix of performance

measures

Empowering

employees

Incentive system

Ethical code of

conduct


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ETHICAL CODEOF CONDUCT

AND MCS DESIGN

First, a well-designed MCS should incorporate the

principles of an organizations code of ethical conduct

to guide and influence behavior and decision making.

Ethics is a discipline that focuses on the investigationof standards of conduct and moral judgment.

Ethical code of

conduct


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AND MCS DESIGN

Hierarchy of Ethical Principles

Organizational or Group Norms

Personal Norms

Legal Rules

Societal Norms

Professional Memberships


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AND MCS DESIGN

How can organizations reduce ethical conflicts?

by maintaining a hierarchical order of authority

by the way the chief executive and other senior

managers behave and conduct business


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AND MCS DESIGN

What are some common ethical conflicts?

between the law and the organizations code of

ethics

between the organizations practiced code of ethicsand common societal expectations

between the individuals set of personal and

professional ethics and the organizations code of

ethics


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AND MCS DESIGN

between the organizations stated and practiced

values

Faced with a true conflict, the individual has several

choices.

What are some of these choices?

1 Point out discrepancies to a superior and refuse to

act unethically.


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AND MCS DESIGN

2 Point out discrepancies to a superior and

act unethically.

3 Take the discrepancy to a mediator in the

organization, if one exists.4 Work with respected leaders in the

organization to change the discrepancy.

5 Go outside the organization to publiclyresolve the issue.


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AND MCS DESIGN

6 Go outside the organization anonymously to

resolve the issue.

7 Resign and go public to resolve the issue.

8 Resign and remain silent.9 Do nothing, and hope that the problem will go away.


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Apply the ethical control

framework to decisions


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ELEMENTSOFAN EFFECTIVE

ETHICAL CONTROL SYSTEM

What are the elements of an effective ethical control

system?

A statement of the organizations values

A clear statement of the employees ethicalresponsibilities

Training to help employees identify and deal with

ethical dilemmas


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Gather Facts

EvaluateAlternatives

MakeDecision

STEPSIN MAKINGAN ETHICAL DECISION


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DECISION MODELFOR RESOLVING ETHICAL ISSUES

Determine the Facts:

What, Who, Where

When, How

Define the Ethical

Issue

Identify MajorPrinciples, Rules,

Values


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DECISION MODELFOR RESOLVING ETHICAL ISSUES

Specify the

Alternatives

Compare Values

and Alternatives

Assess the

ConsequencesMake Your

Decision


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Discuss Task and Results

Control Systems


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MOTIVATIONAND GOAL CONGRUENCE

When designing jobs and specific tasks, system

designers should consider three dimensions of

motivation.

What are these three dimensions?

1 Direction

2 Intensity

3 Persistence


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MOTIVATIONAND GOAL CONGRUENCE

Goal congruence is present when the

actions that employees take and their

personal goals are consistent with those

of the organization. In a perfect world employers could rely on

employees self control to monitor their

own behavior.


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TYPESOF CONTROL SYSTEMS

In the real world management often relies on

different forms of behavioral control.

What are the two most commonly used types of

control?

1 Task control

2 Results control


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TASK CONTROL

What is task control?

It is the process of finding ways to control human

behavior so that a job is completed in a pre-

specified manner.

There are two categories of task control:

1 Preventive control

2 Monitoring


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TASK CONTROL

Inpreventive controlmuch, if not all, of the

discretion is taken out of performing a task.

Monitoringmeans inspecting the work or behavior

of employees while they are performing a task.


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RESULTS CONTROL

What is results control?

It is the process of measuring employee

performance against stated objectives.

For results control to be effective, the organizationmust ...

clearly define objectives which are then

communicated, and

design consistent performance measures.


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RESULTS CONTROL

When is results control most effective?

Organization members understand the

organizations objectives and their contribution to

those objectives.

They have the knowledge and skill to respond to

changing situations.

The performance measurement system is designed

to assess individual contributions.


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Understand the Balanced

Scorecard and its

applications


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USINGA MIXOF PERFORMANCE MEASURES

What is the second major behavioral characteristic of

a well designed MCS?

Using a mix of short-term and long-term qualitative

and quantitative performance measures (or the

balance scorecard approach)

Mix of performancemeasures


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USINGA MIXOFPERFORMANCE MEASURES

Occasionally, employees are so motivated to

achieve a single goal that they engage in

dysfunctional behavior.

What are some examples of dysfunctional

behavior?

gaming

data falsification


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The traditional focus of performance

measures has been on quantitative financial

measures.

What are some quantitative non-financialmeasures?

Cycle

TimeYield ScheduleAdherence

MarketShare

CustomerRetention


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Organizations can design performance

measurement systems that encourage a desired

behavior.

Multiple performance measures should reflect the

complexities of the work environment and the

variety of contributions that employees make.


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THE BALANCED SCORECARD

Financial perspectiveHow do we look toour stakeholders?

Customer PerspectiveHow do we look to

our customers?

Organization LearningAre we able to sustain

innovation?

Business ProcessesWhat processes arethe value drivers??


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EMPOWERING EMPLOYEESTOBE INVOLVED

IN MCS DESIGN

What is the third major behavioral characteristic of


It is empowering employees to be involved in

decision making and MCS design.

Empoweringemployees


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EMPOWERING EMPLOYEESTOBE INVOLVED

IN MCS DESIGN

Empowering employees requires two essential

elements:

1 Allowing employees to participate in decision

making

2 Ensuring that they understand the information they

are using and generating


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DEVELOPING APPROPRIATE INCENTIVE

SYSTEMS

What is the fourth major behavioral characteristic of


Developing an appropriate incentive system to

reward performance.

Incentive system


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DEVELOPING APPROPRIATE INCENTIVE

SYSTEMS

What are intrinsic rewards?

They are those rewards that come from within an

individual.

They reflect satisfaction from doing the job.

What are extrinsic rewards?

They are rewards that one person provides to

another to recognize a job well done.


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PERFORMANCE MEASUREMENT AND

REWARD SYSTEM

There are six attributes of a measurement system

that must be in place to motivate desired

performance.

1 Employees must understand their job.

2 Designers of the performance measurement

system must make a careful choice about whether

it measures employees inputs or outputs.


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REWARD SYSTEM

3 The elements of performance that the performance

measurement system monitors and rewards should

reflect the organizations critical success factors.

4 The reward system must set clear standards for

performance that employees accept.


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REWARD SYSTEM

5 The measurement system must be calibrated so

that it can accurately assess performance.

6 In certain situations the reward system should

reward group rather than individual performance.


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REWARD SYSTEM

What is incentive compensation?

It is a reward system that provides monetary

(extrinsic) rewards based on measured results.

It is a pay-for-performance system that bases

rewards on achieving or exceeding some measured

performance.


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TYPESOF INCENTIVE COMPENSATION

Cash bonus

Profit sharing

Gainsharing

Stock Options


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What is a cash bonus?

It is a payment of cash based on some measured

performance.

It is also called a lump-sum reward, pay for

performance, and merit pay.

What is profit sharing?

It is a cash bonus that reflects the organizations, or

an organization units, reported profit.


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What is Gainsharing?

It is a system for distributing cash bonuses from a

pool when the total amount available is a function of

performance relative to some target.

What are the three most widely used Gainsharing

programs?


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1 Improshare (Improved Productivity Sharing)

2 Scalon plan: Base Ratio = Payroll costs Value of

goods or service

3 Rucker Standard = Payroll costs Production value


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What is a stock option?

It is a right to purchase a stated number of the

organizations shares at a stipulated price (the

option price).


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CONCLUSION

Four key behavioral characteristics comprise a well-

designed MCS.

As a result, manager has to be careful to involve

employees in designing a MCS for the organization.

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behavioural cons..ppsx