Management Control

Systems
Instructor:
Prof. (Dr.) Paresh Shah
F.I.C.W.A., Ph.D. (Finance).,
F.D.P.(IIMA)
 Organizational Behaviour
• . . . a field of study that
investigates how individuals, groups
and structure affect and are affected
by behaviour within organizations,
for the purpose of applying such
knowledge toward improving an
organization’s effectiveness.
 Why Do We Study OB?

• To learn about yourself and others

• To understand how the many organizations
you encounter work.
• To become familiar with team work
• To help you think about the people issues
faced by managers and entrepreneurs
.
What is an Organization?
• A consciously coordinated social unit,
composed of two or more people,
that functions on a relatively
continuous basis to achieve a
common goal or set of goals
 Roles and Skills in the New
Workplace
Flexibility

Mentor Innovator

External Focus
Internal Focus

Facilitator Broker

Monitor Producer

Coordinator Director

Control
 How Companies are Changing
“Cool” Companies
• Believe casual days are
progressive
• Believe titles are obsolete
• Don't impose on employees'
personal time
• Allow staff to come and go as
they please   p.m.
• Offer all employees stock
options
• Let employees make decisions
that affect their work
• Offer assistance with childcare
• Have minimal bureaucracy
(red tape)
“Old” Companies
• Think casual Fridays are pitiful
• Charge employees for perks
and incentives
• Hold events on employee time
• Have flex time: but only
between 7:30 a.m. and 6:30
• Hide financial results from
their employees
• Encourage employee input --
but rarely act on it
• Employ rigid hierarchies
(chain of command)
• Stop at “open door” policies
Challenges Facing the
Workplace
Organizational Level
• Productivity
• Developing effective employees
• Global competition
• Managing in the global village

Group Level
• Working with others
• Workforce diversity Workplace

Individual Level
• Job satisfaction
• Empowerment
• Behaving ethically
 Developing Effective
Employees
Organizational Citizenship Behaviour
(OCB)
– Discretionary behaviour that is not part
of an employee’s formal job
requirements, but that nevertheless
promotes the effective functioning of
the organization.
 Putting People First
• committed workforce and positively
affects the bottom line.
• “more control and say in their
work.”
• How do you Put people first?
 Global Competition
• In recent years, Canadian
businesses have faced tough
international competition, as well as
from other companies within our
borders.
• Reduce costs, increase productivity,
and improve quality.
Managing and Working in a
Multicultural World
• Managers and employees must
become capable of working with
people from different cultures:
 The Layers of OB
The Organization

Change
Organizational culture
Decision making
The Group Leadership

Power and politics

Negotiation
Conflict
Communication
The Individual Groups and teams

Motivating self and others

Emotions
Values and attitudes
Perception
Personality
How Will Knowing OB Make
a Difference?
• For Managers
• For Individuals
 Exhibit 1-3
Toward an OB Discipline
Behavioural Contribution Unit of Output
science analysis
Learning
Motivation
Perception
Training
Leadership effectiveness
Job satisfaction
Psychology Individual decision making
Performance appraisal
Attitude measurement
Employee selection
Work design
Work stress
Individual

Group dynamics
Work teams
Communication
Power
Conflict
Intergroup behaviour
Sociology
Formal organization theory Study of
Organizational technology Group Organizational
Organizational change Behaviour
Organizational culture

Behavioural change
Attitude change
Social psychology Communication
Group processes
Group decision making
Organization
Comparative values system
Comparative attitudes
Cross-cultural analysis
Anthropology
Organizational culture
Organizational environment

Conflict
Political science Intraorganizational politics
Power
 The Rigour of OB
• OB looks at consistencies
• OB is more than common sense
• OB has few absolutes
• OB takes a contingency approach
Research Methods in OB
 Bottom Line: OB Is For
Everyone
• Organizational behaviour is not just for
managers.
• OB applies equally well to all situations in
which you interact with others: on the
basketball court, at the grocery store, in
school, or in church.
 The Nature of Management Control
Systems

• What are the elements of MCS?

• Which came first, the strategy
formulation or the management
control system?
– Why is this important to managerial
accountants (Can accountants have a
role, then, in strategy FORMULATION?)
– Review Exhibit 1-5 (What is the
accountant’s role in each?)
 The Nature of Management Control
Systems

• What are the elements of a control

system?
– Detector
– Assessor (Are positive variances good? Are
negative variances bad?)
– Effector
– Communications Network
• What should be the goal of every
profession?