Dwitya Aribawa / MM 61 Int /343554 CHAPTER 3 BEHAVIOR IN ORGANIZATIONS Management control system influence human behavior.

. Proper management control system will influence behavior of elements in organization in achieve a sustainable goal congruence of organization. In the process personal goal of members in organization will be derive to achieve organizational goal. Goal Congruence Concept Goal congruence can be defined as the integration of multiple goals, either within an organization or between multiple groups. Congruence is a result of the alignment of goals to achieve an overarching mission. In evaluating any management control practice, there are two most important issues to address in order to achieve the Goal Congruence in Organization: 1) What action does it motivate people to take in their own self-interest? 2) Are these actions in the best interest of organization? Goal congruence can be influence by informal and formal factors, there are: 1) Informal factors, there are the factors from inner of organization that influence the elements of organization behavior and affect the degree which goal congruence can be achieve. Informal factor can be determine as two main factors, there are external factors (related to norm, work ethics, loyalty to organization and spirit and pride to make a positive contribution to organization) and internal factors (related to inner value or culture, environment in work place, relation between internal and the management leadership style). 2) Formal factors, there are the factors that acceptable by whole of organization to be the term of condition in order to run organization well being to achieve a goal. Rule (consist of some formal instruction, job description, SOP, manual and system to maintain the organization elements as an ethical person) and management control system itself are the influence in formal factors to achieve goal congruence. Organizations Structure Approach Organization strategy (derive from mission, value and vision) has a major influence on its structure. The MCS also influence much more related to design of organizational structure. There are three approach of structures in general: 1) Functional structure, each manager is responsible for specified function such as marketing or finance. 2) A business unit structure, each business unit managers are responsible for most of the activities of their particular unit and the business units function as a semi- independent part of corporate (for instance ice cream business unit and cosmetics business unit in Unilever). 3) A matrix structure, a project approach structure, which makes functional manager have a two main responsibility, there are for their function itself and for project manager.

1st MCS Assignment: Behavior in Organizations Summary and Rendel Company Case Analysis

The Controller in Organization Controller is a person (s) in organization that responsible for designing, operating and recommending issues related to the management control system area in order to achieve goal congruence in organization. In many organizations the term of controller titled as Chief Financial Officer (CFO). There are tasks that should be fulfilled as a good Controller: 1) Designing and operating information and control system. 2) Preparing financial statements and complete financial reports for shareholders and stakeholders. 3) Preparing and analyzing performance report, interpret the report for managers, analyzing programs and budget from proposals and consolidating annual budget report. 4) Supervising internal audit and accounting control procedures. 5) Developing education of personnel in the controller organization as a future controller for organization. Business unit controller is the issue that arise when business have a non relevant area in some business (usually called conglomerate integration). The role of business unit controller is to make sure the business unit running operation well with the appropriate budget and allocation of programs to achieve not only business unit goal but also the corporate level goal. Relation of corporate controller and business unit controller in the practice are dotted line or solid line. The kind of problem faced when controller failed to align the interest of business unit as a part of mission of Corporate.

RENDELL COMPANY Introduction Rendell Company is facing some problem in implement its new control techniques due to the irritating relationship between the divisional controller and the corporate controller, this problem increasing an added fat to the organization budgets. Now, with these problems, Mr. Bevins (Corporate Controller) is interested to implement organizational structure of Martex and see this will be the solution for the current problem. Basic responsibility of the corporate controller: (1) Establish the management control system, strategic plans and budgets (2) Preparing financial statements and financial reports (3) Evaluate the performance per division (4) Developing personnel in the controller organization Basic responsibility of the divisional controller: (1) Implement the strategy setup by the corporate controller (2) Evaluate the performance of the department within division

1st MCS Assignment: Behavior in Organizations Summary and Rendel Company Case Analysis

Its a business unit structure that is being used in which business unit managers are responsible for most of the activities of their particular unit and the business unit functions as a semi independent part of the company. Problem Insight from Case 1) How is Rendell Company solution to resolve the actual reporting relationship problem of corporate controller and divisional controller to achieve main objective of Rendell Company (which are to achieve sustainable profitability and growth)? 2) What if Rendell implement controller relationship from Martex? Is it will better than Rendell current organizational relationship? Analysis and Recommendation The organizational approach of Martex is focus to the controller function into divisional controller report to the corporate controller for transparency of information on budget issues. Based on my opinion, there are the advantages and disadvantages of implementing Martex Structure for Rendell Company. Advantages of implement Martex structure: Unbiased information is provided by the division controllers to the corporate controller. Corporate controller is more confident in reports given by the divisional controller. Easier to implement new control programs. Minimized major expense budget. Disadvantage of implement Martex structure: Delay in decision making in the organization. Difficult to implement change in organizational structure. Some division may issue the division egoism controllers from management team. Change may lead to conflict between division mangers and division controllers.

To achieve sustainable profitability and growth, Rendell Co. should be maintaining its current organizational structure, but needed additional control systems to address the budget issues. The other recommendation is aimed to the divisional controllers report to divisional general manager in Rendell Company. Analysis on control system. This setup resolves tactical issues much easily because of better relationship between division mangers and divisional controllers.

1st MCS Assignment: Behavior in Organizations Summary and Rendel Company Case Analysis