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Chapter 3:
Behavior in Organizations From West Java
for Indonesia
to The World
through SDGs
UNPAD
Universitas
Padjadjaran

Part I Introduction
From West Java
for Indonesia
to The World
through SDGs
 MCS and Behavior in Organizations

• Management Control Systems influence

human behavior
• MCS ensure that individual action taken to
achieve personal goals help to achieve the
organization’s goals

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Part II Goal Congruence

From West Java
for Indonesia
to The World
through SDGs
 Goal Congruence
• In a goal congruent process, the action people are led to
take in accordance with their perceived self-interest are
also in best interest of the organization

• Management Control Practice Questions:

• What actions does it motivate people to take in their
own self-interest?
• Are these actions in the best interest of the
organization?

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Part III Informal Factors of Goal Congruence

From West Java
for Indonesia
to The World
through SDGs
 Informal Factors of Goal Congruence

External Factor Work Ethic : loyalty, diligence, spirit, pride

Internal Factors Culture, Management Style, The informal

Organization, Perception and Management

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Part IV The Formal Control Systems

From West Java
for Indonesia
to The World
through SDGs
 Types of Formal Control Systems

Management Control Systems

• Strategic planning, Budgeting, Responsibility
centers, Variance analysis

Rules
• Physical Controls, Manuals, System Safeguards, task
control systems

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 Formal Control Process

Goals and
Rules
Strategies

Yes
Responsibility Was
Strategic Report Actual
Budgeting Center Performance
Planning Versus Plan
Performance Satisfactory
No
Revise Revise Corrective
Action Measurement

feedback

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Part V Types of Organizations

From West Java
for Indonesia
to The World
through SDGs
 Types of organization’s Structure

Types of organization
A Functional Structure

structure
A Business Structure

A Matrix Structure

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 Functional Organization
CEO

Manufacturing Marketing
Manager Manager

Manager Manager Manager Manager Manager Manager

Plant 1 Plant 2 Plant 3 Region A Region B Region C

Characteristics: Disadvantages:
• Each manager is responsible for a specified function • Confusion to measure contribution’s profit
• Specialized knowledge to specific function • Inadequate for diversified product
• Preventing cross functional coordination

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 Business Unit Organization
CEO

Manager Manager Manager

Business Unit Business unit Business unit
X Y Z

Plant Marketing Plant Marketing Plant Marketing

Manager Manager Manager Manager Manager Manager

Characteristics:
• Business unit managers are responsible for most of the
activities of their particular unit
• Acting almost as if their units were separate companies
• Responsible for planning and coordinating the work of the
separate functions
Advantages:
• Providing training ground in general management
• Making sounder production and marketing
decision than headquarters
Disadvantages:
• Duplicating the same work both in BU and
Headquarter, BU manager is generalist, cost more

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 Matrix Organization

Characteristic:
• Functional Units have
dual responsibilities
• Interrelated
communication network
across organization
• No boundaries between
functional unit

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Part VI Function of the Controller

From West Java
for Indonesia
to The World
through SDGs
 Controller: Understanding

• The controller is the person who is

• The controller is the person who is
responsible for designing and operating
responsible for designing and operating
the management control system
the management control system
• Another name of controller is Financial
• Another name of controller is Financial
Officers, the head of controller is Chief
Officers, the head of controller is Chief
Financial Officer (CFO)
Financial Officer (CFO)

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 BU Controller & Corporate controller

BU Controller
• Controller who work on behalf of corporation located in business
unit or branch
• Hierarchy of reporting, can be both directly or indirectly to
corporate controller

Corporate Controller
• Controller who work mainly in corporate headquarter
• Receiving report both directly or indirectly from BU controller

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 Controller Relationships

Corporate Corporate
Corporate
Controller • Business unit controller have divided Corporate
Controller
Controller • Business unit controller have divided Controller
loyalty
loyalty
• BU controller who work primarily for
• BU controller who work primarily for
BU BU Manager, will not provide BU
Dotted BU BU Manager, will not provide Solid
Manager complete objective reports to BU
Lines Manager complete objective reports to Lines Manager
Corporate Controller Manager
Corporate Controller
• BU controller who work primarily for
• BU controller who work primarily for
BU corporate controller, may be treated
BU corporate controller, may be treated BU
Controller as “Spy” by BU manager BU
Controller as “Spy” by BU manager Controller
Controller

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End of Chapter
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