PMBA2235AccountingControl&ManagementBehavior(1)

8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)1Chapter1PMBA2235AccountingControl&ManagementBehaviorManagementandControl8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)2LearningObjectivesDefiningmanagementcontrol,itspurposeandbenefitsDiscusstherelationshipbetweenobjectivesetting,strategyformulationandmanagementcontrolIdentifytheneedsformanagementcontrolLackofdirectionLackofmotivationPersonallimitations8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)3LearningObjectivesDescribethecharacteristicsofgoodmanagementcontrolUnderstandthefourstrategiestoreducecontrolIdentifyvariouscontrolalternativesActivityelimination,automation,centralization,risksharingPresentanoverviewofthecourse8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)4Managementcontrol…Theprocessbywhichmanagement:…ensuresthatpeopleintheorganizationcarryoutorganizationalobjectivesandstrategies;…encourages,enables,or,sometimes“forces”employeestoactintheorganization’sbestinterest.Managementcontrolincludesallthedevices/mechanismsmanagersusetoensurethatthebehaviorofemployeesisconsistentwiththeorganization’sobjectivesandstrategies.8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)5Functionandbenefit….Purpose/function...getdonewhatmanagementwantsdone;influencebehaviorindesirableways.Benefit…increasedprobabilitythattheorganization’sobjectiveswillbeachieved.8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)6ManagementanditscomponentsManagement……theprocessoforganizingresourcesanddirectingactivitiesforthepurposeoforganizationalobjectives.Process-breakdown…•Objectivesetting;•Strategyformulation;•Control.8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)7Objectivesetting...Objectivesare…•anecessaryprerequisiteforanypurposefulactivities.Withoutobjectives,itisimpossible…•toassesswhethertheemployees’actionsarepurposive;•tomakeclaimsaboutanorganization’ssuccess.Objectivescanbe…•financialversusnon-financial;•quantified,explicitversusimplicit;•economic,social,environmental,societal.8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)8Strategyformulation...Anorganizationmustselectanyofinnumerablewaysofseekingtoattainitsobjectives.Strategiesdefinehoworganizationsshouldusetheirresourcestomeettheirobjectives.Hence,…strategiesputconstraintsonemployeestofocusactivitiesonwhattheorganizationdoesbestorareaswhereithasanadvantageovercompetitors.8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)9Control...Strategiccontrol…•Isourstrategy(still)valid?•Strategyrevision--“intended”vs.“emergent”strategies.ManagementControl…Areouremployeeslikelytobehaveappropriately?•Dotheyunderstandwhatweexpectofthem?•Willtheyworkconsistentlyhardandtrytodowhatisexpectedofthem?•Aretheycapableofdoingwhatisexpectedofthem?8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)10PlanningandcontrolCONTROLStrategyImplementationManagementControlPLANNINGStrategyFormulationStrategicControlpredominantlyexternalfocus;predominantlytop-managementresponsibility;sometimesveryunsystematic,implicitand/oremergent.predominantlyinternalfocus;relevantforeverysuperior-subordinaterelationship;moresystematicandrhythmic.OBJECTIVESETTING8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)11Theplanning/controlcycleStrategyFormulationStrategyImplementationGoalsObjectiveSettingStrategicControlManagementControl8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)12ThebasiccontrolproblemManagementcontrolisaboutencouragingPEOPLEtotakedesirableactions,•i.e.,itguardsagainstthepossibilitiesthatemployeeswilldosomethingtheorganizationdoesnotwantthemtodo,or,failtodosomethingtheyshoulddo.Hence,managementcontrolhasa...…BEHAVIORALORIENTATION!Ifallpersonnelcouldalwaysbereliedontodowhatisbestfortheorganization,therewouldbenoneedforamanagementcontrolsystem.8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)13Recallthat...ManagementControlisabouttakingstepstohelpensurethattheemployeesdowhatisbestfortheorganization.Threeissues:•Dotheyunderstandwhatweexpectofthem...Lackofdirection•Willtheyworkconsistentlyhardandtrytodowhatisexpectedofthem...Lackofmotivation•Aretheycapableofdoingwhatisexpectedofthem...Personallimitations8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)14Lackofdirection...Employeesdonotknowwhattheorganizationwantsfromthem.Whenthislackofdirectionoccurs,thelikelihoodofthedesiredbehaviorsoccurringisobviouslysmall.COMMUNICATION+REINFORCEMENT!8/31/2019A.H.Lau(someslidestakenfromPearsonEducationLimited)15Motivationalproblems...Whenemployees‘choose’nottoperformastheirorganizationwouldhavethemperform.Because…Lackofgoalcongruence•Individualgoalsdonotcoincidewithorganizationalgoals.Self-interestedbehavior•Generally,individualsarepronetobeing“lazy”...e.g.,takelonglunches,overspendonthingsthatmakelifemorepleasant,useofsickleaveswhennotsick,etc.•Moreextremeexamplesofmotivationalproblems:Employeecrime(fraudandtheft).8/31/2019A.H.Lau(someslidestakenfromPearsonEducat