Answer Key
Test name: chapter 8
1) TRUE
Controlling can raise the level of innovation in an organization. Successful innovation takes
place when managers create an organizational setting in which employees feel empowered to be
creative and in which authority is decentralized to employees so they feel free to experiment and
take control of their work activities.
2) TRUE
Managers use feed forward control to anticipate problems before they arise so problems do not
occur later during the conversion process.
3) FALSE
The first step in the control process is to establish the standards of performance, goals, or targets
against which performance is to be evaluated.
4) FALSE
Standard operating procedures are mechanisms for bureaucratic and behavior control.
5) TRUE
Activity ratios show how well managers are creating value from organizational assets. Inventory
turnover ratio is an example of the activity ratio that measures how efficiently managers are
turning inventory over so excess inventory is not carried.
6) TRUE
Output control is used at every level of the organization, and it is vital that the goals set at each
level harmonize with the goals set at other levels so managers and other employees throughout
the organization work together to attain the corporate goals that top managers have set.
7) TRUE
Bureaucratic control is control by means of a comprehensive system of rules and standard
operating procedures (SOPs) that shapes and regulates the behavior of divisions, functions, and
individuals.
8) FALSE
Organizational culture is not an externally imposed system of constraints, such as direct
supervision or rules and procedures. Rather, employees internalize organizational values and
norms and then let these values and norms guide their decisions and actions.
9) TRUE
An adaptive culture develops an emphasis on entrepreneurship and respect for the employee and
allows the use of organizational structures, such as the cross-functional team structure, that
empower employees to make decisions and motivate them to succeed.
10) FALSE
Benchmarking involves comparing an organization's productivity on specific dimensions to the
performance of a high-performing organization.
11) FALSE
Kurt Lewin’s Force-Field Theory of Change has three stages: unfreezing, changing, and
refreezing.
12) C
Controlling is the process whereby managers monitor and regulate how efficiently and
effectively an organization and its members are performing the activities necessary to achieve
organizational goals. Control does not mean just reacting to events after they have occurred. It
also means keeping an organization on track, anticipating events that might occur, and then
changing the organization to respond to whatever opportunities or threats have been identified.
13) C
Control systems are formal target-setting, monitoring, evaluation, and feedback systems that
provide managers with information about whether the organization's strategy and structure are
working efficiently and effectively. Effective control systems alert managers when something is
going wrong and give them time to respond to opportunities and threats.
14) A
At the input stage, managers use feedforward control to anticipate problems before they arise so
that problems do not occur later, during the conversion process.
15) B
Feedforward control is used to anticipate problems before they arise so problems do not occur
later during the conversion process.
16) B
Managers can use feedforward control while screening job applicants, often by viewing their
résumés electronically, and using several interviews to select the most highly skilled people,
which can lessen the chance that they will hire people who lack the necessary skills or
experience to perform effectively.
17) A
Managers use feedforward control to anticipate problems before they arise so that problems do
not occur later. The development of management information systems promotes feedforward
control that gives managers timely information about changes in the task and general
environments that may impact their organization later on.
18) C
At the conversion stage, concurrent control gives managers immediate feedback on how
efficiently inputs are being transformed into outputs so that managers can correct problems as
they arise.
19) D
At the conversion stage, concurrent control gives managers immediate feedback on how
efficiently inputs are being transformed into outputs so that managers can correct problems as
they arise, be it a defective batch of inputs, a machine that is out of alignment, or a worker who
lacks the skills necessary to perform a task efficiently.
20) D
At the output stage, managers use feedback control to provide information about customers'
reactions to goods and services so that corrective action can be taken if necessary.
21) D
At the output stage, managers use feedback control to provide information about customers'
reactions to goods and services so that corrective action can be taken if necessary. A feedback
control system that monitors the number of customer returns alerts managers when defective
products are being produced.
22) B
At the conversion stage, concurrent control gives managers immediate feedback on how
efficiently inputs are being transformed into outputs so managers can correct problems as they
arise.
23) B
Constantinople is attempting to learn about changes in customers' tastes so that it can increase or
decrease production of products as necessary. Thus, this is feedback control. Feedback control is
used to provide information about customers' reactions to goods and services so corrective action
can be taken if necessary.
24) A
At step 1 in the control process, managers decide on the standards of performance, goals, or
targets that they will use in the future to evaluate the performance of the entire organization or
part of it.
25) B
Once managers have decided which standards or targets they will use to evaluate performance,
the next step in the control process is to measure actual performance. In practice, managers can
measure or evaluate two things: (1) the actual outputs that result from the behavior of their
members and (2) the behaviors themselves.
26) D
At the corporate level, a standard of performance that measures efficiency is operating costs, the
actual costs associated with producing goods and services, including all employee-related costs.
27) B
Step 3 of the control process compares actual performance against chosen standards of
performance. Managers evaluate whether, and to what extent, the performance of the
organization deviates from the set standards of performance.
28) C
After measuring the actual level of performance of employees, the next step of the control
process is to compare the actual performance against chosen standards of performance.
29) A
The final step in the control process is to evaluate the results and bring about change as
appropriate.
30) D
If managers find out that the level of performance is unacceptable, they must try to change how
work activities are performed to solve the problem.
31) B
When an organization and its members perform complex, nonroutine activities that are
intrinsically hard to measure, it is more challenging for managers to measure outputs or behavior.
It is impossible for a manager to measure how creative a graphic designer is by watching their
actions.
32) A
The final step in the control process is to evaluate the results and bring about change as
appropriate. If managers decide the level of performance is unacceptable, they must try to change
how work activities are performed to solve the problem.
33) A
At step 1 in the control process, managers decide on the standards of performance, goals, or
targets that they will use in the future to evaluate the performance of the entire organization or
part of it (such as a division, a function, or an individual). The standards of performance that
managers select measure efficiency, quality, responsiveness to customers, and innovation.
34) A
Coldrock Ice Cream is tracking an output (number of customers served) and will adjust its
production process to try to match demand. This is a form of output control.
35) B
The convenience store is tracking an output (sales per customer) and will alter its product mix
accordingly. This is a form of output control.
36) C
Profit ratios measure how efficiently managers are using the organization's resources to generate
profits.
37) D
Return on investment (ROI) is the most commonly used financial performance measure because
it allows managers of one organization to compare performance with that of other organizations.
ROI lets managers assess an organization's competitive advantage.
38) B
Return on investment = net income before taxes/total assets.
39) B
Liquidity ratios measure how well managers have protected organizational resources to be able
to meet short-term obligations. The current ratio (current assets divided by current liabilities)
tells managers whether they have the resources available to meet the claims of short-term
creditors.
40) C
The quick ratio = (current assets - inventory)/current liabilities.
41) A
The quick ratio = (current assets - inventory)/current liabilities. Therefore, the quick ratio = (25 1)/6 = 24/6 = 4.
42) B
The quick ratio shows whether managers can pay these claims without selling inventory.
43) A
The quick ratio tells whether managers have the resources available to meet the claims of shortterm creditors without selling inventory.
44) B
ROI = net profit before taxes/total assets = $30,000/$600,000 = .05 = 5 percent.
45) D
ROI = net profit before taxes + taxes paid/total assets = ($18,000 + $2,000)/$160,000 = .125 =
12.5 percent.
46) D
Current ratio = current assets/current liabilities = $250,000/$300,000 = .83.
47) D
Current ratio = current assets/current liabilities = $180,000/$240,000 = .75.
48) A
Leverage ratios, such as the debt-to-assets ratio and the times-covered ratio, measure the degree
to which managers use debt (borrow money) or equity (issue new shares) to finance ongoing
operations.
49) D
Activity ratios provide measures of how well managers are creating value from organizational
assets.
50) D
Days sales outstanding provides information on how efficiently managers are collecting revenue
from customers to pay expenses.
51) A
Managers of a division may be given a fixed budget for resources and be evaluated on the
amount of goods or services they can produce using those resources. This is a cost or expense
budget approach.
52) C
In a revenue budget approach, managers are asked to maximize the revenues from the sales of
goods and services produced. Managers are then remunerated on the basis of the net sales
generated by the division.
53) B
With a revenue budget, managers are asked to maximize the revenues from the sales of goods
and services produced.
54) D
Managers may be evaluated on the difference between the revenues generated by the sales of
goods and services and the budgeted cost of making those goods and services. This is called a
profit budget approach.
55) A
In a profit budget approach, managers are evaluated on the difference between the revenues
generated by the sales of goods and services and the budgeted cost of making those goods and
services.
56) C
Mechanisms of control for organizational culture include values, norms, and socialization.
57) D
Management by objectives is a mechanism of control for behavior control.
58) A
The most immediate and potent form of behavior control is direct supervision by managers who
actively monitor and observe the behavior of their subordinates, teach subordinates the behaviors
that are appropriate and inappropriate, and intervene to take corrective action as needed.
59) B
Management by objective starts when top managers establish overall organizational objectives
such as specific financial performance targets.
60) A
Bureaucratic control is control by means of a comprehensive system of rules and standard
operating procedures (SOPs) that shapes and regulates the behavior of divisions, functions, and
individuals.
61) C
An organization thrives when its members are constantly thinking of new ways to increase
efficiency, quality, and customer responsiveness. By definition, new ideas do not come from
blindly following standardized procedures. Similarly, the pursuit of innovation implies a
commitment by managers to discover new ways of doing things; innovation, however, is
incompatible with the use of extensive bureaucratic control.
62) B
When employees follow the rules that managers have developed, their behavior is standardized—
actions are performed the same way time and time again—and the outcomes of their work are
predictable.
63) A
Bureaucratic control is control by means of a comprehensive system of rules and standard
operating procedures (SOPs) that shapes and regulates the behavior of divisions, functions, and
individuals. It is the responsibility of a manager to develop rules that allow employees to perform
their activities efficiently and effectively. When employees follow the rules that managers have
developed, their behavior is standardized—actions are performed the same way time and time
again—and the outcomes of their work are predictable.
64) C
Certain problems are associated with direct supervision. First, it is expensive because a manager
can personally manage only a relatively small number of subordinates effectively. Therefore, if
direct supervision is the main kind of control being used in an organization, a lot of managers
will be needed and costs will increase. For this reason, output control is usually preferred to
behavior control; indeed, output control tends to be the first type of control that managers at all
levels use to evaluate performance.
65) D
Managers need to be aware of a number of problems associated with bureaucratic control,
because such problems can reduce organizational effectiveness. Rules that constrain and
standardize behavior lead people to behave in predictable ways, but there is a danger that people
become so used to automatically following rules that they stop thinking for themselves. Too
much standardization can actually reduce the level of learning taking place in an organization.
66) A
To provide a framework within which to evaluate subordinates’ behavior and, in particular, to
allow managers to monitor progress toward achieving goals, many organizations implement
some version of management by objectives. Management by objectives (MBO) is a formal
system of evaluating subordinates on their ability to achieve specific organizational goals or
performance standards and to meet operating budgets. Most organizations use some form of
MBO system because it is pointless to establish goals and then fail to evaluate whether they are
being achieved. Management by objectives involves three specific steps. In the first step, specific
goals and objectives are established at each level of the organization. In the second step,
managers and their subordinates together determine the subordinates’ goals. In the third step,
managers and their subordinates periodically review the subordinates’ progress toward meeting
goals.
67) B
Organizational culture is the shared set of beliefs, expectations, values, norms, and work routines
that influences how members of an organization relate to one another and work together to
achieve organizational goals.
68) C
Clan control is the control exerted on individuals and groups in an organization by shared values,
norms, standards of behavior, and expectations.
69) C
An adaptive culture is a strong and cohesive organizational culture that controls employee
attitudes and behaviors.
70) A
In adaptive cultures employees often receive rewards linked directly to their performance and to
the performance of the company as a whole. Sometimes, employee stock ownership plans
(ESOPs) are developed in which workers as a group are allowed to buy a significant percentage
of their company's stock.
71) B
Inert cultures are those that lead to values and norms that fail to motivate or inspire employees;
they lead to stagnation and often failure over time.
72) A
In an inert culture, employees are content to be told what to do and have little incentive or
motivation to perform beyond minimum work requirements. As you might expect, the emphasis
is on close supervision and hierarchical authority, which results in a culture that makes it difficult
to adapt to a changing environment.
73) D
Companies with adaptive culture develop long-term career paths for their employees and invest
heavily in training and development to increase employees' value to the organization. In these
ways, terminal and instrumental values pertaining to the worth of human resources encourage the
development of supportive work attitudes and behaviors.
74) C
An adaptive culture develops an emphasis on entrepreneurship and respect for the employee and
allows the use of organizational structures, such as the cross-functional team structure, that
empower employees to make decisions and motivate them to succeed. By contrast, in an inert
culture, employees are content to be told what to do and have little incentive or motivation to
perform beyond minimum work requirements.
75) A
In adaptive cultures, employees often receive rewards linked directly to their performance and to
the performance of the company as a whole.
76) B
Strong adaptive cultures invest in their employees. These companies develop long-term career
paths for their employees and invest heavily in training and development to increase employees’
value to the organization. In these ways, terminal and instrumental values pertaining to the worth
of human resources encourage the development of supportive work attitudes and behaviors. They
empower employees to make decisions and motivate them to succeed. Hence, managers giving
their employees autonomy in decision making is the best answer.
77) A
Organizational change can affect practically all aspects of organizational functioning, including
organizational structure, culture, strategies, control systems, and groups and teams, as well as the
human resource management system and critical organizational processes such as
communication, motivation, and leadership.
78) D
During evaluation of change, managers also can use benchmarking, comparing their performance
on specific dimensions with the performance of high-performing organizations, to decide how
successful a change effort has been.
79) C
In the stage involving implementation of change, managers decide whether change will occur
from the top down or from the bottom up. Thereafter, they introduce and manage change
accordingly.
80) C
Organizational learning is the process through which managers try to increase organizational
members' abilities to understand and appropriately respond to changing conditions.
81) C
Assessing the need for change calls for managers to perform two important activities: (1)
recognizing that there is a problem and (2) identifying its source.
82) D
Benchmarking is comparing one company's performance on specific dimensions with the
performance of high-performing organizations to decide how successful a change effort has
been.
83) C
Top-down change is a fast, revolutionary approach to change in which top managers identify
what needs to be changed and then move quickly to implement the changes throughout the
organization.
84) D
Bottom-up change is a gradual or evolutionary approach to change in which managers at all
levels work together to develop a detailed plan for change.
85) B
Bottom-up change is a gradual or evolutionary approach to change in which managers at all
levels work together to develop a detailed plan for change.
86) A
Bottom-up change is typically more gradual or evolutionary. Top managers consult with middle
and first-line managers about the need for change. Then, over time, managers at all levels work
to develop a detailed plan for change. A major advantage of bottom-up change is that it can coopt resistance to change from employees. Because the emphasis in bottom-up change is on
participation and on keeping people informed about what is going on, uncertainty and resistance
are minimized.
87) D
The freestyle approach continues to use customers’ style profile information but allows shoppers
to curate their own personal online shopping experience.
88) A
According to Lewin’s force-field theory, a wide variety of forces arise from the way an
organization operates—from its structure, culture, and control systems—that make organizations
resistant to change.
89) B
Lewin’s three stages of change are commonly known today as unfreezing, changing, and
refreezing to achieve organizational change.
90) Essay
Control systems are formal target-setting, monitoring, evaluation, and feedback systems that
provide managers with information about whether the organization's strategy and structure are
working efficiently and effectively. Effective control systems alert managers when something is
going wrong and give them time to respond to opportunities and threats. An effective control
system has the following characteristics:
It is flexible enough to allow managers to respond as necessary to unexpected events.
It provides accurate information about organizational performance.
It gives managers information in a timely manner because making decisions on the basis
of outdated information is a recipe for failure.
91) Essay
At the input stage, managers use feedforward control to anticipate problems before they arise.
For example, by giving product specifications to suppliers in advance, an organization can
control the quality of the inputs it receives from its suppliers and thus avoid potential problems
during the conversion process. Also, technology can be used to keep in contact with suppliers
and to monitor their progress. Similarly, by screening job applicants, often by viewing their
résumés electronically and using several interviews to select the most highly skilled people,
managers can lessen the chance that they will hire people who lack the necessary skills or
experience to perform effectively. In general, the development of management information
systems promotes feedforward control that gives managers timely information about changes in
the task and general environments that may impact their organization later on.
92) Essay
Whether or not performance standards have been met, managers can learn a great deal during
this step. If managers decide the level of performance is unacceptable, they must try to change
how work activities are performed to solve the problem. Sometimes performance problems occur
because the work standard was too high—for example, a sales target was too optimistic and
impossible to achieve. In this case, adopting more realistic standards can reduce the gap between
actual performance and desired performance. However, if managers determine that something in
the situation is causing the problem, then to raise performance they will need to change how
resources are utilized or shared. Perhaps the latest technology is not being used; perhaps workers
lack the advanced training needed to perform at a higher level; perhaps the organization needs to
buy its inputs or assemble its products abroad to compete against low-cost rivals; perhaps it
needs to restructure itself or reengineer its work processes to increase efficiency.
93) Essay
The three main mechanisms that managers use to assess output or performance are financial
measures, organizational goals, and operating budgets.
Financial measures of performance: Top managers are most concerned with overall
organizational performance and use various financial measures to evaluate it. The most
common are profit ratios, liquidity ratios, leverage ratios, and activity ratios.
Organizational goals: Once top managers consult with lower-level managers and set the
organization's overall goals, they establish performance standards for the divisions and
functions. These standards specify for divisional and functional managers the level at
which their units must perform if the organization is to achieve its overall goals.
Operating budgets: Once managers at each level have been given a target to achieve, the
next step in developing an output control system is to establish operating budgets that
regulate how managers and workers attain their goals. An operating budget is a blueprint
that states how managers intend to use organizational resources to achieve organizational
goals efficiently. Typically managers at one level allocate to subordinate managers a
specific amount of resources to produce goods and services. Once they have been given a
budget, these lower-level managers must decide how to allocate money for different
organizational activities. They are then evaluated for their ability to stay within the
budget and to make the best use of available resources.
94) Essay
Top managers are most concerned with overall organizational performance and use various
financial measures to evaluate it. The most common are profit ratios, liquidity ratios, leverage
ratios, and activity ratios.
Profit ratios measure how efficiently managers are using the organization's resources to
generate profits. Return on investment (ROI), an organization's net income before taxes
divided by its total assets, is the most commonly used financial performance measure
because it allows managers of one organization to compare performance with that of
other organizations. ROI lets managers assess an organization's competitive advantage.
Operating margin is calculated by dividing a company's operating profit (the amount it
has left after all the costs of making the product and running the business have been
deducted) by sales revenues. This measure tells managers how efficiently an organization
is using its resources.
Liquidity ratios measure how well managers have protected organizational resources to
be able to meet short-term obligations. The current ratio (current assets divided by current
liabilities) tells managers whether they have the resources available to meet the claims of
short-term creditors. The quick ratio shows whether they can pay these claims without
selling inventory.
Leverage ratios, such as the debt-to-assets ratio and the times-covered ratio, measure the
degree to which managers use debt (borrow money) or equity (issue new shares) to
finance ongoing operations. An organization is highly leveraged if it uses more debt than
equity. Debt can be risky when net income or profit fails to cover the interest on the debt.
Activity ratios show how well managers are creating value from organizational assets.
Inventory turnover measures how efficiently managers are turning inventory over so
excess inventory is not carried. Days sales outstanding reveals how efficiently managers
are collecting revenue from customers to pay expenses.
95) Essay
Managers can attempt to control the behavior of subordinates by direct supervision, by using
management by objectives (MBO), and by the use of rules and standard operating procedures.
Direct supervision: The most immediate and potent form of behavior control is direct
supervision by managers who actively monitor and observe the behavior of their
subordinates, teach subordinates the behaviors that are appropriate and inappropriate, and
intervene to take corrective action as needed.
Management by objectives: To provide a framework within which to evaluate
subordinates' behavior and, in particular, to allow managers to monitor progress toward
achieving goals, many organizations implement some version of management by
objectives. Management by objectives (MBO) is a formal system of evaluating
subordinates on their ability to achieve specific organizational goals or performance
standards and to meet operating budgets.
Specific goals and objectives are established at each level of the organization. Top
managers set overall organizational objectives, which then cascade down from divisional
and functional managers to first-level managers.
Managers and their employees together determine the employees' goals. Not only is it
important for employees to be involved in goal-setting to strengthen their commitment,
but also is a chance for them to share with managers realistic goals they can achieve.
Managers and their employees periodically review the employees' progress toward
meeting goals. In order to meet their goals, managers should sit down with their
employees periodically to evaluate their progress.
96) Essay
Some of the problems associated with direct supervision are the following:
Expenses increase because a manager can personally manage only a relatively small
number of subordinates effectively, so more managers need to be employed.
Direct supervision can demotivate subordinates. This occurs if employees feel they are
under such close scrutiny that they are not free to make their own decisions or if they feel
they are not being evaluated in an accurate and impartial way.
For many jobs, personal control through direct supervision is simply not feasible. The
more complex a job is, the more difficult it is for a manager to evaluate how well a
subordinate is performing.
97) Essay
Management by objectives (MBO) involves three specific steps:
Specific goals and objectives are established at each level of the organization: MBO starts when
top managers establish overall organizational objectives. Then objective setting cascades down
throughout the organization as managers at the divisional and functional levels set their goals to
achieve corporate objectives. Finally, first-level managers and employees jointly set goals that
will contribute to achieving functional objectives. Managers and their subordinates together
determine the subordinates' goals: An important characteristic of MBO is its participatory nature.
Managers at every level sit down with each of the subordinate managers who report directly to
them, and together they determine appropriate and feasible goals for the subordinate and bargain
over the budget that the subordinate will need to achieve his or her goals. The participation of
subordinates in the objective-setting process is a way of strengthening their commitment to
achieving their goals and meeting their budgets. Participating in goal setting enables
subordinates to tell managers what they think they can realistically achieve.
98) Essay
First, establishing rules is always easier than discarding them. Organizations tend to become
overly bureaucratic over time as managers do everything according to the rule book. If the
amount of red tape becomes too great, decision making slows and managers react slowly to
changing conditions. Second, because rules constrain and standardize behavior and lead people
to behave in predictable ways, there is a danger that people become so used to automatically
following rules that they stop thinking for themselves. Thus, too much standardization can
actually reduce the level of learning taking place in an organization and get the organization off
track if managers and workers focus on the wrong issues. An organization thrives when its
members are constantly thinking of new ways to increase efficiency, quality, and customer
responsiveness.
99) Essay
Organizational culture can help managers exert control in situations where output or behavior
control is not feasible, and a strong, positive set of organizational values and norms can cause
employees to focus on what is best for the company. Organizational culture is not an externally
imposed system of constraints, such as direct supervision or rules and procedures. Rather,
employees internalize organizational values and norms and then let these values and norms guide
their decisions and actions.
100)
Essay
Student answers and examples will vary but should demonstrate understanding of adaptive and
inert cultures.
An adaptive culture is one that controls employee attitudes and behavior. By contrast, an inert
culture is one that leads to values and norms that fail to inspire employees, and lead to stagnation
and often failure over time.
Adaptive cultures are better because they are not only able to motivate and control employees,
but they have values and norms that help an organization to build momentum and to grow and
change as needed to achieve their goals and be effective. Organizations with strong adaptive
cultures invest in their employees. They demonstrate their commitment to their members by
emphasizing the long-term nature of the employment relationship and trying to avoid layoffs.
These companies develop long-term career paths for their employees and invest heavily in
training and development to increase employees' value to the organization. In these ways,
terminal and instrumental values pertaining to the worth of human resources encourage the
development of supportive work attitudes and behaviors. In adaptive cultures, employees often
receive rewards linked directly to their performance and to the performance of the company as a
whole. Moreover, an adaptive culture develops an emphasis on entrepreneurship and respect for
the employee and allows the use of organizational structures that empower employees to make
decisions and motivate them to succeed. Many creative organizations, such as software
companies, are adaptive.
Some organizations, however, develop cultures with values that do not include protecting and
increasing the worth of their human resources as a major goal. Their employment practices are
based on short-term employment according to the needs of the organization and on minimal
investment in employees who perform simple, routine tasks. Moreover, employees are not often
rewarded based on their performance and thus have little incentive to improve their skills or
otherwise invest in the organization to help it to achieve goals. If a company has an inert culture,
poor working relationships frequently develop between the organization and its employees, and
instrumental values of noncooperation, laziness, and loafing and work norms of output restriction
are common. In an inert culture, employees are content to be told what to do and have little
incentive or motivation to perform beyond minimum work requirements. In these cultures, the
emphasis is on close supervision and hierarchical authority, which result in a culture that makes
it difficult to adapt to a changing environment. Fast food restaurants often have inert cultures.
101)
Essay
There is a fundamental tension or need to balance two opposing forces in the control process that
influences the way organizations change. Organizations and their managers need to be able to
control their activities and make their operations routine and predictable. At the same time,
however, organizations have to be responsive to the need to change, and managers and
employees have to “think on their feet” and realize when they need to depart from routines to be
responsive to unpredictable events. In other words, even though adopting the right set of output
and behavior controls is essential for improving efficiency, because the environment is dynamic
and uncertain, employees also need to feel that they have the autonomy to depart from routines
as necessary to increase effectiveness.
102)
Essay
Assessing the need for change calls for two important activities: recognizing that there is a
problem and identifying its source. Sometimes the need for change is obvious, such as when an
organization’s performance is suffering. Often, however, managers have trouble determining that
something is going wrong because problems develop gradually; organizational performance may
slip for a number of years before a problem becomes obvious. Thus, during the first step in the
change process, managers need to recognize that there is a problem that requires change. To
discover the source of the problem, managers need to look both inside and outside the
organization. Outside the organization, they must examine how changes in environmental forces
may be creating opportunities and threats that are affecting internal work relationships. Managers
also need to look within the organization to see whether its structure is causing problems
between departments.