III. BEHAVIOR CONTROL SYSTEMS.

A. The Need for Behavior Control Systems

2. Organizational structure by itself does not provide any mechanism that motivates
managers and no managerial employees behavior.
3. An organization structure will work as designed only if managers also establish control
systems that allow them to shape employee behavior.
B. Direct Supervision
1. The most immediate and potent form of behavior control is direct supervision by
managers.
a. When managers personally supervise subordinates, they lead by example.
b. Control through personal supervision can be a very effective way of motivating
employees.
2. Certain problems are associated with direct supervision.
a. It is very expensive in that many managers will be needed and the costs will increase.
b. Therefore, output control tends to be the first type of control that managers use to
evaluate performance over behavior control.
c. Direct supervision can demotivate subordinates if they feel that they are not free to make
their own decisions.
d. For many jobs direct supervision is not feasible.
C. Management by Objectives
1. To provide a framework within which to evaluate subordinates behavior, many
organizations implement some version of management by objectives (MBO).
a. Management by objectives is a system of evaluating subordinates for their ability to
achieve specific organizational goals or performance standards and to meet operating
budgets.
b. Most organizations use MBO because it is pointless to establish goals and then fail to
evaluate whether they are being achieved.
2. Steps in Management by Objectives
a. Step 1: Specific goals and objectives are established at each level of the organization.
i. MBO starts when top managers establish overall organizational objectives.
ii. Then objective setting cascades down throughout the organization.
b. Step 2: Managers and their subordinates together determine the subordinates goals.
i. An important characteristic of management by objectives is its participatory nature.
ii. The participation of subordinates in the objective-setting process is a way of
strengthening their commitment to achieve their goals and meet their budgets.
iii. Subordinates can also tell managers what they think they can realistically achieve.
c. Step 3: Managers and their subordinates periodically review the subordinates progress
toward meeting goals.

ii. Once specific objectives have been agreed upon, managers are accountable for meeting
those objectives.
iii. Normally, salary raises and promotions are linked to the goal-setting process.
3. In companies that decentralize responsibility to empowered teams, MBO works
somewhat differently.
a. Managers ask each team to develop a set of goals that the team hopes to achieve.
b. The reward system is linked to team performance, not to the performance of any one
team member.
Information Technology Byte: Cypress Semiconductors Online MBO System
With 1,500 employees and a growing company, Cypress CEO T.J. Rodgers wanted to
control without the trappings of bureaucracy because he believes that tall hierarchies hinder
the ability of organizations to adapt to changing conditions. To maintain a flat and
decentralized organizational structure with minimum management layers, he decided to
adopt a computerbased online information system through which he can manage what
every employee and team is doing in his fast-moving and decentralized organization. Each
employee states 10-15 goals and a chart of when they will be finished and then all of the
data is stored on a central computer.
Questions:
1. What do you think of Cypress high-tech MBO? Would you like to work in such as
system? Why or why not?
2. What might be some limitations of this approach?
D. Bureaucratic Control
1. When direct supervision is too expensive and MBO is inappropriate, managers may use
bureaucratic control.
2. Bureaucratic control is control of behavior by means of a comprehensive system of
rules and standard operating procedures (SOPs).
3. Rules and SOPs guide behavior and specify what employees are to do when they
confront a problem.
a. It is the responsibility of a manager to develop rules that allow employees to perform
their activities efficiently and effectively.
b. When employees follow the rules, their behavior is standardizedactions are
performed in the same way time and time again.
c. There is no need to monitor the outputs of behavior because standardized behavior leads
to standardized outputs.
3. Service organizations attempt to standardize the behavior of employees.
a. Employees are trained to follow the rules that have proved to be most effective.
b. The better trained the employees are, the more standardized is their behavior, and the
more trust managers can have that outputs will be consistent.

Information Technology Byte: SiteRocks Military Management Runs on Rules

SiteRocks business is hosting and managing other company websites and keeping them up
and running as well as error free. SiteRocks COO, Dave Lilly, is ex-military and drew
from this experience in creating multiple rules and regulations to maximize employee
performance.
The company now has over 30 thick binders listing all of its processes and checklists. They
also have a two-man rule that means that if one person has a problem then that person must
tell another and the two together should attempt to solve it. They also spend 90 minutes
doing paperwork that logs what they have done at the end of the day.
Questions:
1. Is this approach counter to the culture of high-tech?
2. How might this be a good approach in the high-tech business?
3. Would you like to work with so many rules and regulations?
E. Problems with Bureaucratic Control
1. With a bureaucratic control system in place, managers can manage by exception and
intervene only when necessary.
2. Problems associated with bureaucratic control can reduce organizational effectiveness.
a. Establishing rules is always easier than discarding them.
b. Because rules constrain and standardize behavior, there is a danger that people become
so used to automatically following rules that they stop thinking for themselves.
i. An organization thrives when its members are constantly thinking of new ways to
increase efficiency, quality, and customer responsiveness.
ii. Innovation is incompatible with the use of extensive bureaucratic control.
3. Bureaucratic control is most useful when organizational activities are routine and when
employees are making programmed decisions.
4. It is less useful where nonprogrammed decisions have to be made and managers have to
react quickly to changes.
F. To use output control and behavior control, managers must be able to identify the
outcomes they want to achieve and the behaviors they want to perform to achieve these
outcomes.
TIPS FOR NEW MANAGERS: CONTROL
1. Identify the source(s) of an organizations competitive advantage.
2. Involve employees in the goal-setting process.
3. Choose the right balance of direct supervision and bureaucratic controls.
4. Periodically evaluate the output and behavior control system to keep aligned with your
current strategy and structure.