Digital Garden of Paul

🏛ïļ About design and control of organisations

A great part of my interest lies with the design and control of organisations. An area that consists from a large body of knowledge. During my Master Management Sciences the body of knowledge was categorised around the topics of strategy, organisational design & change, management control & human capital, and financial controls. The structure of this note matches that categorisation.

🏛ïļ Design of organisations

Various organisational paradigms can be found in designing and managing organisations. A technical and clinical approach can be found in Scientific Management. Market thinking is found in Economical organisational thinking and Business processes and chains. Self organisation and chaos thrives on positive feedback as control mechanism. Lastly Organising as meaning production orients around interpretation of people regarding the goal of the organisation. These paradigms relate to the different Perspectives on rationalities.

Sociologist Dr. Ron Westrum offers a Typology of organisational cultures. These cultures are a predictor of performance of an organisation. Another perspective is offered by the Competing Values Framework. This framework offers a view on internal versus external views & flexibility versus control. These axes inherently hold a tension in them. You can't be dominantly internally and externally focussed. The same goes for the paradox of exploration and exploitation. Hybrid Ambidexterity captures this tension and how to deal with it when designing an organisation.

When designing an organisation designers need to think about coordination versus integration. Where coordination typically means more hierarchy does integration strive for more collaboration and co-creation. As such it is important to think about Integration in organisation. An elaborate way of handling integration can be found in Matrix organisations.

🔭 Management control and human capital

Control of an organisation is about leading the organisation towards the set goals in the best way possible. Management control focusses on the design of Management Control Systems, administrative systems, gathering and distribution of information and a set of methods & tools for management of risks, costs and investments.

Different forms of control exists. One can exert control on financial perspective, setting boundaries to behaviour (boundary control), or design behaviour (behavioural control).

Management control

Management control is the process by which managers influence other members of the organisation to implement the organisation's strategies. As such it is one of the available implementation strategy tools. Other being organisation structure, culture, human resource management. Activities of management control can include:

  • Planning what the organisation should do.
  • Coordinating the activities of several parts of the organisation.
  • Communicating information.
  • Evaluating information.
  • Deciding what, if any, action should be taken.
  • Influencing people to change their behaviour.

Many different perspectives on Management Control exists. A range of these perspectives are described in Diving into the different views of management control.

Central problem of management control is about Goal Congruence. It concerns the problem of ensuring individual goals are pursuit in line with the goals of the organisation.

Human Capital

Human Resource Management is a broad field of expertise. Lots of research, practices and methodologies exists. A proven bundle of high-performance working practices can be found in High-performance Work Systems.

Firefighting in organisations

ðŸ’ē Financial management, financial accounting & governance

Finance, or more often used financial management, is not an ubiquitous term, at least Three meanings of finance can be recognised. In general financial management is concerned with raising and using capital. Financial accounting is about the provided information regarding the position and results of business operations in a certain timeframe. Different Theories of financial accounting exist. Governance is concerned with all processes of control. Broadly defined it is about the design, structure and control of organisations.

These elements are related on different levels. First of all, financial management sets financial targets that directly impact the governance of the organisation. Whether it is by the targets that are set, they way they should be achieved or the monitoring of those targets are met. At the end of the year the performance of the operation has to be shown via end of year reports. A process managed by financial accounting. Reporting on the operation and design of an organisation (governance) has grown to be part of the annual report.

Within accounting Measurements can be approached subjectively. Various measurement bases applies, leading to wildly different measurements. As such it is important to understand what approach is used in the financial statements. Fair values gives a different impression then historical cost.

Strategy

Porters Value Chain
Testing the strategy

🏛ïļ About design and control of organisations