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Mcs2 Result Control

Result control involves rewarding employees for good results or punishing them for poor results. It influences employee actions by causing them to consider the consequences of their actions. For result control to be effective, managers must know the desired results, employees must be able to meaningfully impact those results, and results must be measurable in an objective, timely, and understandable manner. While result control can motivate employees and be inexpensive, it also shifts risk to employees and may incentivize focusing only on measured targets rather than broader goals.

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105 views

Mcs2 Result Control

Result control involves rewarding employees for good results or punishing them for poor results. It influences employee actions by causing them to consider the consequences of their actions. For result control to be effective, managers must know the desired results, employees must be able to meaningfully impact those results, and results must be measurable in an objective, timely, and understandable manner. While result control can motivate employees and be inexpensive, it also shifts risk to employees and may incentivize focusing only on measured targets rather than broader goals.

Uploaded by

Sarah Fauzia
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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RESULT CONTROL

SESSION 2

Results controls

It involves rewarding individuals for generating good results, or punishing them for poor results.
Results

accountability

It influences actions because it causes employees to be concerned about the consequences of the actions they take.

However, the employees actions are not constrained;

On

the contrary, employees are empowered to take whatever actions they believe will best produce the desired results.

Result Control

Pay-for-performance (not pay for position)

Rewarding employees for generating good result


Rewards are given to the most talented and hardest working employees rather than those with the longest tenure or the right social connection

Meritocracies

Who is a professional?

A professional is someone who is responsible for achieving a result rather than [for] performing a task [ Michael Hammer, Re-engineering guru]

Management by Objective (MBO)


Result control are often implemented under the framework of MBO A process whereby the superior and subordinate managers of an organization jointly identify common goals, define each employees major areas of responsibilities in terms of the results expected of them, and use these measures as guides for operating the unit and assessing the contribution of each of its members Suatu proses dimana atasan dan bawahannya pada suatu organisasi bersama-sama mengidentifikasi tujuan bersama, kemudian tanggungjawab dan hasil yang ingin dicapai dirinci untuk setiap karyawan, kemudian menggunakan ukuran tersebut sebagai dasar untuk menjalankan unit organisasi dan untuk mengukur kontribusi tiap-tiap anggota organisasi.

Elements of Result Controls

Defining the performance dimensions Example: profitability, customer satisfaction, product defect What you measure is what you get; hence, If not congruent with the organizations objectives, the controls will actually encourage employees to do the wrong things!
Measuring performance on these dimensions Objective > financial > market-based: e.g., stock price; > accounting-based: e.g., return on assets; > non-financial: e.g., market share, cycle-time, waste; Subjective: e.g., managerial characteristics (being a team player).

Elements of Result Controls

Setting performance targets Motivational effects [stimulate action and improve motivation] Specific target, not vague statement like do the best you can or work at a reasonable pace Performance targets allow to interpret (own) performance. Providing rewards or punishments Salary increases, bonuses, promotions, job security, recognition, training opportunities, freedom, power, etc.

Expectancy theory

Individuals motivational force, or effort, is a function of:


(1). Their expectancies: their belief that certain outcomes will result from their behavior (example: bonus for increased effort) (2). The valences of (the strength of their preference for) those outcome

Conditions determining the effectiveness of result control

Results controls work best only when all of the following three conditions are present:

Superiors / managers must know what results are desired in the areas being controlled; The individuals whose behaviors are being controlled must have significant influence on the results in the desired performance dimensions; Superiors / managers must be able results effectively.

to measure the

Knowledge of desired result


For result control to work managers must know what results are desired in the areas they wish to control They must communicate those desires effectively to the employees working in those areas. Ex: Purchasing managers??? Result areas quality, cost, schedule

Ability to influence results

The person whose behaviors are controlled must be able to affect the results in a material way in a given time span.
Controllability

principle

Results controls are useful only to the extent that they provide information about the desirability of the actions that were taken.
If

the results are totally uncontrollable, the controls tell us nothing about the actions that were taken:

Good actions will not necessarily produce good results; Bad actions may similarly be obscured.

Ability to measure results effectively

The effectiveness of results measures must be judged by their ...


Ability

to evoke the desired behaviors

Results measures should be:


Precise; Objective; Timely; Understandable.

Precision
Measurement precision refers to the amount of randomness in the measure. Precision is an important quality because without it the measure loses much of its information value. Ex. 120,3 = between 100-130

Objectivity
Freedom from bias Measurement of quality Managers have two main alternatives for increasing measurement objectivity 1. The actual measuring done by independent of the process. Ex. IC 2. Independent person. Ex. Auditor

Timelines
The lag between the employees performance and the measurement of results. Employee need consistent

Understandability
The employees whose behaviors are being controlled must understand what are being held accountable for. The employees involved must understand what they must do to influence the measure.

Pros and cons of results controls


PRO

CON

Behavior can be influenced while allowing significant autonomy. They yield greater employee commitment and motivation.

Often less than perfect indicators of whether good actions have been taken. They shift risk to employees (because of uncontrollable factors). Hence, they often require a risk premium for risk averse employees. Sometimes conflicting functions: Motivation to achieve targets should be challenging Communication among entities targets should be slightly conservative

They are often inexpensive.

e.g. performance measures are often collected for reasons not directly related to management control.

Exercise
Result control; 1.Defining performance dimensions 2.Measuring performance 3.Setting performance targets 4.Providing rewards and punishment

New Open Customer/outlet Daily sales Item product Growth product Pareto Return Discount rate

Tele selling

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