Informal and Informal Organization

Many writers on management distinguish between formal and informal organization. Both types are found in organization. Let us look at them in more detail.
Formal Organization
Generally, formal organization means the intentional structure of roles in a formally organized enterprise. Describing an formal, however, does not mean there is anything inherently inflexible or unduly confining about it. If a manager is to organize well, the structure must furnish an environment in which individual performance, both present and future, contributes most effectively to group details.
A formal organization must be flexible. There should be room for discretion, for beneficial utilization of creative talents, and for recognition of individual likes and capacities in the most formal of organization. Yet individual effort in a group situation must be channeled toward group and organizational goals.
Informal Organization: Cheques Barnard, author of the management classic The functions of the executive, described an informal organization as any joint personal activity without conscious joint purpose, although contributing to joint results. It is much easier to ask for help on an organizational problem from someone you know personally, even if he or she may be in a different department, than from someone you know only as a name on an organization chart. The informal organization is a network of interpersonal relationships that arise when people associate with each other. Thus, informal organizations-relationships not appearing on an organization chart-might include the machine shop group, the sixth floor crowd, the Friday evening bowling gang, and the morning coffee "regulars."
--------------------------------------------------------------------
Fundamentals of Management : Staffing [BBA 2305]

Traditional Non-Budgetary Control Device

● There are of course many traditional control devices not connected with budgets, although some may be related to, and used with, budgetary controls. Among the more important of them are the use of statistical data of many aspects of the operation, special reports and analyzes of specific areas, the operational audit and independent appraisal by a staff of internal or external auditors, and personal observation star as managing by walking around.
___________________________________
Fundamentals of Management : Controlling [BBA 2305]
______________________________________________________________________

Controlling, The Basic Control Process

● Controlling: The measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are being accomplished is called as controlling.
● The Basic Control Process: Control techniques and systems are essentially the same for controlling cash, office procedures, morale, product quality, and anything else. The basic control process, wherever it is found and whatever is being controlled, involves three steps:
• Establishing standards
• Measuring performance against these standards, and
• Correcting variations from standards and plans.
• Establishment of Standards: Because plans are the yardsticks against which managers devise controls, the first step in the control process logically would be to establish plans. However, since plans vary in detail and complexity, and since managers cannot usually watch everything, special standards are established. Standards are simply criteria of performance. They are the selected points in an entire planning program at which measures of performance are made so that managers can receive signals about how things are going and thus do not have to watch every step in the execution of plans.
There are many kinds of standards. Among the best are verifiable goals or objectives, as suggested in the discussion of managing by objectives. You will learn more about standards later, especially those that point out deviations at critical points.
• Measurement of Performance: Although such measurement is not always practicable, the measurement of performance against standards should ideally be done on a forward-looking basis so that deviations may be detected in advance of their occurrence and avoided by appropriate actions. The alert, forward-looking manager can sometimes predict departures from standards. In the absence of such ability, however, deviations should be disclosed as early as possible.
• Correction of Deviations: Standards should reflect the various positions in an organization structure. If performance is measured accordingly, it is easier to correct deviations. Managers know exactly where, in the assignment of individual or groups duties, the corrective measures must be applied.
Correction of deviations is the point at which control can be seen as a part of whole system of management and can be related to the other managerial functions. Managers may correct deviations by redrawing their plans or by modifying their goals. (This is an exercise of the principle of navigational change.) Or they may correct deviations by exercising their organzing function through reassignment or clarification of duties. They may correct, also, by additional staffing, by better selection and training of subordinates, or by that ultimate restaffing measure-firing. Another way is to correct through better leading-fuller explanation of the job or more effective leadership.
___________________________________
Fundamentals of Management : Controlling

Control as a Feedback System

● Managerial control is essentially the same basic control process as that found in physical, biological, and social systems. Many systems control themselves though information feedback, which shows deviations from standards and initiates changes. In other words, systems use some of their energy to feedback information that compares performance with a standard and initiates corrective action. A simple feedback systems was shown in Figure 4.1
_______ New Plans________________
[Planning]-> Implementation of plans-> Controlling: comparing plans with results -> No undesirable deviation from plans
^
| Undesirable deviation
|
____|___[Corrective action]

Management control is usually perceived as a feedback system similar to that clearly which operators in the common household thermostat. This can be seen clearly in Figure 18-1, which shows the feedback process in management control. This system control in a more complex and realistic light than if it is regarded merely as a matter of establishing standards, measuring, performance and correcting for deviations. Managers do measure actual performance, compare this measurement against standards, and identify and analyze deviations. But then, to make the necessary corrections, they must develop a program for corrective active and implement this program in order to arrive at the performance desired.
Figure 18-1 Feedback loop of management control
>[Desired performance]>[Actual performance]>[Measurement of actual performance]>[Comparison of actual performance against standards]
|
~
^[Implementation of corrections]<[Program of corrective action]<[Analysis of causes of deviations]<[Identification of deviations]
_____________________________________________
Fundamentals of Management : Controlling [BBA 2305]
_____________________________________________

Feedforward versus Feedback Systems

• Simple feedback systems measure outputs of a process and feedback system or the inputs of the system corrective actions to obtain desired outputs. For most management problems, because of time lags in the correction process, this is not good enough. Feedforward systems means inputs into a process to ascertain whether the inputs are as planned, if they sad not, the inputs, or perhaps the process, are changes in order to obtain the desired results. A comparison of feedforward and feedback systems is depicted in Figure 18-2.
Figure 18-2 Comparison of simple feedback and feedforward systems
........Information [Desired values of outputs (standards)]=^
----Corrective action
[Inputs]=^>[Process]>[Outputs]=^
[Feedforward] [Simple feedback]
• In a sense, a feedforward control system is really a kind of feedback system. However, the information feedback is at ve input side of the system so that corrections can be made before the system output is affected. Also that corrects can be made before the system output is affected. Also, even with a feedforward system, since noting can be expected to work perfectly enough to ensure that the final output will always be exactly as desired.
___________________________________
Fundamentals of Management : Controlling

Feedforward Control

• The time lag in the management control process shows that controls must be directed toward the future if it is to be effective. It illustrates the problem of only using feedback from the output of a system and measuring this output as a means of control. It shows the efficiency of historical data, such as those received from accounting reports. One of the difficulties with such historical data is that they tell business managers in November that they lost money in October (or even September) because of something that was food in July. At this late time, such information is only a distressingly interesting historical fact.
• What managers need for effective control is a system that will tell them, in time to take corrective action, that certain problems will occur if they do not do something now. Feedback from the output of a system is not good enough for control. It is little more than a postmortem, and no one has found a way to change the past.
• Future-directed control is largely disregarded in practice, mainly because managers have been so dependent for purposes of control on accounting and statistical data. To be sure, in the absence of any means of looking forward, reference to history-on the questionable assumption that is past is prologue-is admittedly better than no reference at all.
_________________________________
Feedforward in Human Systems
• There are many examples of feedforward control in human systems. A motorist, for example, who wishes to maintain a constant speed in going up a hill would not usually wait for the speedometer to signal a drop in speed before depressing the accelerator. Instead, knowing that the hill represents a disturbing variable in the system, the driver would probably correct for this by pressing the accelerator before speed falls. Likewise, a hunter will always aim ahead of a duck's flight to correct for the time lag between a shot and a hoped-for hit.
___________________________________
Requirements for Feedforward Control
• The requirements for a workable feedforward control system may be summarized as follows:
● Make a through and careful analysis of the planning and control system, and identify the more important input variables.
● Develop a model of the system.
● Take care to keep the model up to date; in other words, the model should be reviewed regularly to see whether the input variables identified and their interrelationships continue to represent realities.
● Collect data on input variables regularly, and put them into the system.
● Regular asses variations of actual input data from planned-for inputs, and evaluate the impact on the expected end result.
● Take action. Like any other technique of planning and control, all that the system can do is indicate problems; people must obviously take action to solve them.
___________________________________
Fundamentals of Management : Controlling [BBA 2305]

Real-Time Information and Control

• One of the interesting advances arising from the use of the computer and from electronic gathering, transmission, and storage of data is the development of systems of real-time information. This is information about what is happening while it is happening. It is technically possible through various means to obtain real-time data on many operations. For years, airlines have obtained information about seat availability simply by entering a flight number, trip segment (e.g. London to New York), and date into a memory system, which immediately responds with the information. Supermarkets and department stores have electronic cash registers in operation that immediately transmit data on every sale to a central data storage facility, where inventory, sales, gross, profit, and other data can be obtained as sales occur. A factory manager can have a system that report things as the production point reached, labor-hours accumulated, and even whether the project is late or on time in the manufacturing process.
• Some people see real-time as a means of getting real-time control in areas of importance to managers-in other words, control defeated at the very information shows a deviation from plans. But reference to the management control feedback loop in Figure 18-1 shows that real-time information does not, except possibly in the simplest and most unusual cases, make possible real-time control. It is possible in many areas to collect real-time data that measure performance. It may also be possible in many of these bases to compare these data with standards and even to identify deviations. But the analysis of causes of deviations, the developement of programs of correction, and the implementation of these programs are likely to be time-consuming tasks.
• In case of quality control, for example, it may take considerable time to discover what is causing factory rejects and more time to put corrective measures into effects. In the more complex case of inventory control, particularly in a manufacturing company, which has many items-raw materials, component parts, good in process, and finished goods-the correction time may be very long. Once it is learned that an inventory is too high, the steps involved in getting it back to the desired level may take a number of months. And so it goes with most other instances of management control problems: time lags are unavoidable.
• This does not mean that prompt measurement of performance is unimportant. The sooner managers know that activities for which they are responsible are not proceeding in accordance with plans, the faster they can take action to make corrections. Even so, there is always the question of whether the cost of gathering real-time data is worth the few days saved. Often it is, as in the case of the airline business, in which ready information on seat availability is likely to be crucial to serving customers and filing airplanes. But in a major defense company producing one of the highest-priority defense equipment items, there was little real-time information in an otherwise highly sophisticated information control system. Even for this programi it was thought that the benefit of gathering real-time data was not worth the expense because the correction process took so long.
_________
Fundamentals of Management : Controlling [BBA 2305]