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1、,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,A.H. Lau (some slides taken from Pearson Education Limited),*,,,,Chapter,1,,,,,,,PMBA 2235,Accounting Control &,Management
2、Behavior,Management,and,Control,,,11/2/2024,1,A.H. Lau (some slides taken from Pearson Education Limited),Learning Objectives,Defining management control, its purpose and benefits,Discuss the relationship between objective setting, strategy formulation and management control,Identify the needs for m
3、anagement control,Lack of direction,Lack of motivation,Personal limitations,11/2/2024,2,A.H. Lau (some slides taken from Pearson Education Limited),Learning Objectives,Describe the characteristics of good management control,Understand the four strategies to reduce control,Identify various control al
4、ternatives,Activity elimination, automation, centralization, risk sharing,Present an overview of the course,11/2/2024,3,A.H. Lau (some slides taken from Pearson Education Limited),Management control …,The process by which management:,… ensures that people in the organization carry out organizational
5、 objectives and strategies;,… encourages, enables, or, sometimes “forces” employees to act in the organization’s best interest.,Management control includes all the devices / mechanisms managers use to ensure that the behavior of employees is consistent with the organization’s objectives and strateg
6、ies.,11/2/2024,4,A.H. Lau (some slides taken from Pearson Education Limited),Function and benefit ….,Purpose / function ...,get done what management wants done;,influence behavior in desirable ways.,Benefit …,,increased probability that the organization’s objectives will be achieved.,11/2/2024,5,A.H
7、. Lau (some slides taken from Pearson Education Limited),Management and its components,Management …,… the process of organizing resources and directing activities for the purpose of organizational objectives.,Process-breakdown …,Objective setting;,Strategy formulation;,Control.,11/2/2024,6,A.H. Lau
8、(some slides taken from Pearson Education Limited),Objective setting ...,Objectives are …,a necessary prerequisite for any purposeful activities.,,Without objectives, it is impossible …,to assess whether the employees’ actions are purposive;,to make claims about an organization’s success.,,Objective
9、s can be …,financial,versus,non-financial;,quantified, explicit,versus,implicit;,economic, social, environmental, societal.,11/2/2024,7,A.H. Lau (some slides taken from Pearson Education Limited),Strategy formulation ...,An organization must select any of innumerable ways of seeking to attain its ob
10、jectives.,Strategies define how organizations should use their resources to meet their objectives.,,Hence,,… strategies put constraints on employees to focus activities on what the organization does best or areas where it has an advantage over competitors.,11/2/2024,8,A.H. Lau (som
11、e slides taken from Pearson Education Limited),Control ...,Strategic control …,Is our strategy (still) valid?,Strategy revision,-- “intended” vs. “emergent” strategies.,Management Control …,Are our employees likely to behave appropriately?,Do they understand what we expect of them?,Will they work co
12、nsistently hard and try to do what is expected of them?,Are they capable of doing what is expected of them?,11/2/2024,9,A.H. Lau (some slides taken from Pearson Education Limited),Planning and control,CONTROL,Strategy Implementation,Management Control,,PLANNING,Strategy Formulation,Strategic Control
13、,,predominantly external focus;,predominantly top-management responsibility;,sometimes very unsystematic, implicit and/or emergent.,predominantly internal focus;,relevant for every superior- subordinate relationship;,more systematic and rhythmic.,OBJECTIVE SETTING,11/2/2024,10,A.H. Lau (som
14、e slides taken from Pearson Education Limited),The planning / control cycle,Strategy,,Formulation,,Strategy Implementation,,Goals,,Objective Setting,Strategic Control,Management Control,11/2/2024,11,A.H. Lau (some slides taken from Pearson Education Limited),The basic control problem,Management cont
15、rol is about encouraging,PEOPLE,,to take desirable actions,,i.e., it guards against the possibilities that employees will do something the organization does not want them to do, or, fail to do something they should do.,Hence, management control has a ... …,BEHAVIORAL ORIENTATION !,If all perso
16、nnel could always be relied on to do what is best for the organization, there would be no need for a management control system.,11/2/2024,12,A.H. Lau (some slides taken from Pearson Education Limited),Recall that ...,Management Control is about taking steps to help ensure that the employees do what
17、is best for the organization.,Three issues:,Do they understand what we expect of them ...,,Lack of direction,Will they work consistently hard and try to do what is expected of them ...,,Lack of motivation,Are they capable of doing what is expected of them ...,,Personal limitations,11/2/2024,13,A.H.
18、Lau (some slides taken from Pearson Education Limited),Lack of direction,,...,Employees do not know what the organization wants from them.,When this lack of direction occurs, the likelihood of the desired behaviors occurring is obviously small.,,COMMUNICATION + REINFORCEMENT,,!,11/2/2024,14,A.H. L
19、au (some slides taken from Pearson Education Limited),Motivational problems,,...,When employees ‘choose’ not to perform as their organization would have them perform.,Because …,Lack of goal congruence,Individual goals do not coincide with organizational goals.,Self-interested behavior,Generally, in
20、dividuals are prone to being “l(fā)azy” ...,e.g., take long lunches, overspend on things that make life more pleasant, use of sick leaves when not sick, etc.,More extreme examples of motivational problems:,Employee crime (fraud and theft).,11/2/2024,15,A.H. Lau (some slides taken from Pearson Education
21、 Limited),Personal limitations …,Sometimes, people are “unable” to do a good job because of certain personal limitations they have.,Some examples / causes:,lack of requisite knowledge, training, experience;,employees are promoted above their level of competence;,some jobs are not designed properly;,
22、etc.,TRAINING JOB ASSIGNMENT / PROMOTION JOB DESIGN,11/2/2024,16,A.H. Lau (some slides taken from Pearson Education Limited),Management control is more than …,A simple cybernetic control system involving a single feedback loop, like a thermostat …,Detector,,?,measure performance;,A
23、ssessor,,,?,compare with pre-set standard;,Effector,,?,take corrective action.,Many controls don’t focus on,measured performance,...,e.g., direct supervision, employee hiring standards, codes of conduct.,11/2/2024,17,A.H. Lau (some slides taken from Pearson Education Limited),Management cont
24、rol is more than …,Many controls are,proactive,rather than,reactive,…,i.e., they are designed to prevent control problems before the organization suffers any adverse effects on performance.,11/2/2024,18,A.H. Lau (some slides taken from Pearson Education Limited),Control...,Again, … management contr
25、ols include all the devices managers use to ensure that the behaviors and decisions of people are consistent with the organization’s objectives and strategies.,,11/2/2024,19,A.H. Lau (some slides taken from Pearson Education Limited),Control and “good” control ...,“GOOD CONTROL”,is said to take
26、place when,there is …,a “high” probability that the firm’s objectives will be achieved;,a “l(fā)ow” probability that major unpleasant surprises will occur.,Therefore, controls must be:,,,Future-oriented,,Objectives-driven,,Economically desirable,11/2/2024,20,A.H. Lau (some slides taken from Pearson Educ
27、ation Limited),Control can be achieved through,Control Problem Avoidance,,Management Control Systems,,Action Controls;,Results Controls;,People Controls.,11/2/2024,21,A.H. Lau (some slides taken from Pearson Education Limited),Four Control-problem avoidance Strategies,…,Activity elimination,e.g., su
28、bcontracts, licensing agreements, divestment.,Automation,Computers / robots eliminate the human problems of inaccuracy, inconsistency, and lack of motivation;,Only applicable to relatively easy decision situations;,Automation can be very costly.,11/2/2024,22,A.H. Lau (some slides taken from Pear
29、son Education Limited),Four Control-problem avoidance Strategies,…,Centralization,Superiors reserve for themselves the most critical decisions.,Risk Sharing,With outside entities to minimize the losses resulting from inappropriate employee behaviors,through contract or joint venture agreement,,11/2/
30、2024,23,A.H. Lau (some slides taken from Pearson Education Limited),Control alternatives …,Controls can focus on:,the actions taken,the results produced,,the types of people employed and their shared values and norms.,Or any combination of those ...,ACTION CONTROLS,RESULTS CONTROLS,PEOPLE CONTROLS,
31、11/2/2024,24,A.H. Lau (some slides taken from Pearson Education Limited),Depending on ...,Ability to measure results on important performance dimensions,Knowledge of which specific actions are desirable,,High,Low,Excellent,Poor,Action Control,and/or,Results Control,Action Control,(e.g., large projec
32、ts),Results Control,(e.g., movie director,,SBU,-manager),People Control,(e.g., research lab),11/2/2024,25,A.H. Lau (some slides taken from Pearson Education Limited),OVERVIEW of Management Control System,Can People be avoided?,(e.g., automation, centralization),,No,Can you rely on people involved?,N
33、o,No,Can you make people reliable,,Have knowledge about what specific,Actions are desirable,,No,Have knowledge about what results,Are desirable,?,?,Yes,Control-Problem,Avoidance,,Yes,Yes,Yes,Yes,People & Cultural,Control,Action Control,Results Control,Able to assess whether specific,Action was taken
34、?,Able to measure Result?,11/2/2024,26,A.H. Lau (some slides taken from Pearson Education Limited),Chapter Summary,What is Management Control,Difference between Strategic Control and Management Control,Control-Problem Avoidance strategies,Types of Management Control,Case discussion,Leo’s Four-Plex Theatre,11/2/2024,27,A.H. Lau (some slides taken from Pearson Education Limited),
PMBA2235AccountingControl&ManagementBehavior(1)
