Page 255 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Management Control Systems

Notes 10. Informal Control Process
Interpersonal relationship: Because of fewer hard measurements, informal communications,
networking and politics tend to be important processes for making resource allocation
decisions.
Informal control process: Medical managements of patients tend to be very adaptable to the
progression and resolution of diseases. Management flexibility, on the other hand, has
historically been much less demonstrable.
Informal rewards: The strong culture of concern and pride in patient care is rewarded with
a sense of accomplishment, providing strong information rewards. Many positions provide
a fair degree of status within a hospital. Certainly, the physicians and administrators are
in positions of high status.
Informal communications: Informal communications tend to be very prevalent and natural
among peers but more restricted laterally between departments.
Government organizations are service organisations and except for business like activities,
they are non-profit organizations. Thus, characteristics described above, apply to these
organizations. Their business-like activities such as electricity and water utilities operate
like their private sector counterparts.

13.6.2 Special Characteristics

1. Political influences: In government organizations, decisions result from multiple and
often conflicting pressures. Elected officials, to be re-elected, advocate the perceived needs
of their consistency even though they may not be in the best interests of society as a whole.
These conflicting pressures results in less than optimum decisions. The managers may be
prevented from making sound business decisions; they may be required to favour certain
suppliers or to hire political supporters. Strict procurement policies and civil service
regulations have lessened these pressures to some extent.

2. Public information: In a democratic society, the press and public believe that they have a
right to know everything about a government organization, because of freedom of
information statutes. Some media stories describe exaggerated mismanagement. Therefore,
to reduce opportunities for media gossip stories, government managers take steps to
limit the amount of sensitive, controversial information that flows through the formal
management control system. This lessens the effectiveness of the system.
3. Attitude towards clients: For profit, companies and many non-profit organizations obtain
their revenues from clients; hence these organizations welcome actual and potential clients
and treat them well. Most government organizations are public supported; they obtain
their revenues from the general public. To them, additional clients are a burden, because
they create an additional demand on the service capacity resulting in poor services and the
surly attitude of the bureaucrats. Managers recognize this and do their best to persuade
employees to provide satisfactory services.
4. Red tape: The government has promulgated huge and increasing number of rules and
regulations. Some of these are necessary; others are reactions to minor misdeeds that
become highly publicized.
5. Management compensation: Managers and other professionals in government
organizations tend to be less compensated than their counterparts in business.
Consequently, the best managers do not go into public service. There are exceptions to
certain types of scientists and engineers. Hence, there is a problem of rewarding good
performance.

250 LOVELY PROFESSIONAL UNIVERSITY