Too management may take several steps, e.g., transfer price to resolve the conflict The conflict arises because each department tries to optimize its profits. The finance department advises to reduce advertising expenditure. For example, the marketing department wants to increase advertising expenditure whereas. Conflicts are more when there is a high degree of interdependence or the means for achieving the goals are contradictory, organizational conflicts are frequent. In actual practice, however, conflicts are common. When the differences in the goals of various units of the organization. Conflicts are more when there is high degree of interdependence between the responsibility centers or when their functions are highly specialized. In actual practice, however conflicts are common. A management control system can be more effective when there is mutual co-operation between different responsibility centers in the organization.
Organizational Conflict and Co-operation. Thus, goal congruence should be considered while designing and implementing a management control system.ģ. The control system should also reward and motivate employees when they contribute to organizational goals so that their personal goals are also served. For instance, quality should not be sacrificed for the sake of reducing costs. The control system should discourage employees from pursuing their own goals at the cost of the organization. It should ensure that the decisions and actions taken by employees are not against the interests of the organization. Goal congruence implies integrating the personal goals with organizational goals so as to achieve a balance.Ī sound control system monitors the goal congruence in the organization. Both personal goals and organizational goals can be achieved simultaneously through goal congruence. Similarly, an organization employs people to achieve its own goals, e.g., survival, profits, growth, etc. These goals include monetary rewards, job security, opportunities for advancement, status, recognition, etc. People join organizations to attain their persona] goals. To be effective, a management control system must contain the necessary means of motivation for satisfying the needs of managers.Ģ. Moreover, a control system involves interactions among managers at different performance, etc. For example, when a manager gets credit by manipulating performance, other managers may feel that the system is unjust and unfair. Managers judge a system by, how it is implemented. People may view the same world differently depending upon their needs, personalities, experience, status, etc. Perception is at the base of every individual behavior. Perception is the psychological process whereby people select, organize and interpret sensory stimulation’s into meaningful information about their work environment.
In other words, the viability of a control system depends upon the manager’s perception of the surrounding. It depends largely on how the members of the organization view the system. Whether a management control system is accepted and implemented successfully does not depend on the system. Some of these concepts at described below.ġ. Behavioral sciences have given several concepts that are relevant to management control. In order to make a control system successful, it is necessary to understand the factors that motivate, managers to achieve the results. That is why manager are afraid of a control system and, may resist it. Thus, a management control system acts as a double-edged sword. At the same time when the performance of a responsibility center is dismal, the manager in charge is punished.
The manager in charge of a responsible center is rewarded for good performance. A management control system seek to evaluate and regulate the performance of responsibility centers. There is a close relationship between organizational behavior and management control system. Organizational Behavior and Management Control
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