Organizational control systems are essential for effectively executing strategies and achieving an organization's goals. There are three basic types of control systems:
Output Control: This type of control focuses on measurable results
within an organization. Executives set performance expectations, track
performance, and make necessary adjustments. Examples include website hits,
production output, and sales figures.
Behavioural Control: Behavioural control aims to regulate actions that
lead to results. It involves implementing rules and procedures to standardize
behaviour. Examples include dress codes, handwashing policies, and requirements
for dual signatures on checks.
Clan Control: Clan control relies on shared traditions, values, and
norms to encourage employees to work toward the organization's objectives. It
is informal and often used in creative settings where output control and strict
behavioural control may hinder innovation.
Management Fads:
Management fads refer to popular business ideas or practices that gain
temporary enthusiasm and then fade away. They can be both helpful and harmful
to organizations. Some well-known management fads include Management by
Objectives (MBO), Quality Circles, Sensitivity-Training Groups, and the
fascination with Organizational Culture.
Applying to the Banking Industry:
In the banking industry, a balanced approach to organizational control
systems is crucial. Each type of control system can be applicable in different
areas:
Output Control: Output control can be used to track key performance
indicators (KPIs) such as customer satisfaction scores, loan approval rates, or
revenue growth. It ensures that the bank is meeting its financial and
operational objectives.
Behavioural Control: In a heavily regulated industry like banking,
behavioural control is essential to ensure compliance with laws, regulations,
and ethical standards. It includes adherence to anti-money laundering policies,
customer data protection, and risk management protocols as SOX law.
Clan Control: Building a positive organizational culture is crucial in
the banking sector, where trust and integrity are essential. Encouraging
teamwork, communication, and a customer-centric approach can create a sense of
shared values and compliance.
Conclusion
While new management ideas and fads may emerge, banking executives
should approach them with caution. Instead of blindly following trends, they
should critically assess each idea's relevance to their organization and
industry. Ultimately, a combination of all three types of control systems can
help banks achieve long-term success and adapt to changing market conditions.
In addition, each of the control systems applies to different areas of the bank these can be in the front office or in the back office, this will always depend on the strategy and objectives of the term q can have the bank. all these indicators should be represented in a Balance scorecard.
Reference:
Edwards, J. (2014, September 12). Creating organizational control systems. Pressbooks. https://opentextbc.ca/strategicmanagement/chapter/creating-organizational-control-systems/
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