Organizational behavior essay on: Impacts of Organisational Control on Organisations

Introduction

Organisational Control is the fourth facet of Planning , Organising, leading and Controlling, the process through which any organisation  influences its subunits and makes its members behave in the manner which leads to attaining  the organisational goals an objectives .If these organisational controls are designed in better manner it will lead to  enhanced performance of organisation and the organisation is able to execute its strategy in better manner (Kuratko, Ireland and Hornsby, 2001). Organisational or managerial controls are sequence of tasks or processes or systems where it is made sure that everything is right on place. Controls can be simply defined as checklists for any organisation. However organisations manage various levels, forms and types of controls through their systems which are called Balanced Scorecards. Organisational Controls involve mainly four steps:

• Establishing Standards
• Measurement of performance
•  Comparison of Performance with the Standards
•  Taking corrective actions if needed

Corrective actions involve making changes to the performance standards, which means changing the performance standards to either lower or higher or indentifying new or additional standards for organisational benefit (Kuratko, Ireland and Hornsby, 2001). Sometimes it has been noticed that we realise about the organisational controls when they become completely absent. Like this happened in the case of U.S. financial markets meltdown in the year 2008 or the crisis which occurred  in the U.S. auto industry or the early demise of the Enron and MCI/ WorldCom which occurred  due to fraud along with inadequate organisational controls. Thus it is evident that good controls are relevant to a huge and wide spectrum or companies which goes beyond the Wall Street as well as big corporate.

 Discussion on Control Systems

Effective Organisational Control

The best example which can be quoted related to the better organisational controls which have led to increased profits and lowered costs and increased market shares is Apple. In summer of 2008 Apple launched its first version of iPhone which operated on third generation mobile networks and along with iPhone it also made the debut of MobileMe, which is an email system which was supposed to provide seamless synchronisations features which corporate users would have loves on their Blackberry Smartphone (From Steve Jobs down to the janitor: How America’s most successful – and most secretive – big company really operates, 2011). But MobileMe proved to be a dud as users lost many emails and syncing was poor. But Steve Jobs never tolerated duds and just after the launch event he summoned the team of MobileMe and berated the team members about the bad work they had done. He named a new executive to run the MobileMe team on the spot itself. This shows an efficient example of organisational control. This action gives a glimpse of control being used by Steve Jobs in Apple (Lashinsky, 2011). Steve Jobs has emerged as corporate dictator who takes every critical decision about Apple which includes all non-critical tasks too including the designing of shuttle buses which ferry the Apple employees to and from San Francisco to the food which is served in Apple’s cafeteria. He believed in institutionalising the methods of doing business.

Jobs Mission was to capitalise on the traits to which people feel very closely associated like he believed in:

• giving more attention to detail,
• taking constant feedbacks, and
• maintaining the secrecy

He transformed all these traits into processes for excellent organisational control which ensures Apple’s excellence in future too. An organisational culture of responsibility is being incorporated in Apple through a series of weekly meetings by Steve Jobs which are metronome, that is it sets the beats for the whole company (Lashinsky, 2011). The organisational structure of Apple is also very simple where there is no existence of dotted-lines or matrix responsibilities, which are prevalent in other corporate cultures. There are no committees in Apple and only the Chief Financial Officer has the “P&L” or the responsibility for expenses or costs which result in Profits and; losses.

“Constant course Correction” Approach is being followed by Apple where the executive team if decides to change its direction it takes place instantaneously. The greatest strength possessed by such a big corporation worth $320 billion is its ability to just focus on few things at one time which an entrepreneurial trait is not found in many organisations. The organisational control is moreover made effective through Apple’s elite: The Top 100 which is gathered to undisclosed locations. It is still a start-up at heart as it puts small teams on very crucial projects (Lashinsky, 2011).Poor Organisational Control

 The organisational fraud which was a vicious triangle of Leadership, culture and control in Enron is an example of bad managerial controls. Enron was born in the middle of recession in 1985 when Kenneth Lay, CEO of Houston Gas Company did a merger with Internorth Inc. But by December 2, 2001 it became the largest case of bankruptcy in the history of U.S. business which opened a Pandora’s Box of various issues concerning corporate governance, regulations, organisational control and accounting (Free, Stein and Macintosh, 2007).

 The Enron example simply highlights the fraud which occurred at the organisational level, which was systemic organisation-wide fraud and corruption. The organisational fraud triangle at the organisational levels comprised of:

• Leadership
•  Management control systems
•  Organisational culture

The fraud at Enron presents an example of how corporate culture which was mastered by then CEO Skilling simple overcame sophisticated and a widely praised set of management controls. Organisation-wide fraud can tackle place only when these three variables get configured in such a manner that it fosters and also allows manipulations to happen and experiences total failure to prevent compliance failure at the same time (Free, Stein and Macintosh, 2007). Enron had to face a sudden demise due to action of unscrupulous rogues which became prevalent in the absence of management controls. Enron’s management control system consisting of risk assessment and control group, its performance review system and code of ethics of Enron acted as perfect entrapment for the company to get engulfed in fraud. Enron’s culture portrayed Skilling’s leadership style and vision where he exercised control over all the facets of Enron (Free, Stein and Macintosh, 2007). The Enron’s organisational culture was totally influenced by the leadership of Skilling’s which reflected  culture which valorised itself in taking risk, profit making approach which was totally mercenary and win-at-all costs approach which led to downfall of Enron.

 Conclusion

Thus from the above analysis of Enron and Apple it is quite evident that organisational control through managers is very vital for any organisations success. However the top management leadership plays a vital role in fostering the desire organisational culture (Schaad, 2003). Moreover within the organisations the impact of leadership and culture should not be minimized or overlooked even on the most sophisticated management control systems. Therefore managers need to exercise organisational control but should not demand unattainable level of performance rather it should be within professional integrity.

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