Effect of monitoring mechanisms on organizations

It has been a long time for people trying to archive their goals in organisations. Beside invention in production, market research, marketing, etc, organisation management is a key to reach the goal. Different sorts of mechanisms are constructed to control and coordination human activities in organisation in order to achieve certain objectives. It is supported by lots of theories and studies which have been developing since and before the birth of scientific management. Monitoring mechanism is one way of analyzing an organisation. In this essay, we are going to look at some definition of monitoring mechanism and theories to analyse the extent which monitoring mechanism control and coordinated.

Literature Review:

To begin with, we first look at the definition of monitoring mechanism. The Hierarchical division of labour is considered as complex monitoring structure (Nisar, 2009). In Principal (P) Agent (A) relationship, P can monitor A by either observing A’s output or A’s input (Douma & Schreuder, 2008). Thus, in practice, organisational monitoring is a mixture of observing inputs and outputs. Taylorism and Fordism are the two theories which had a “profound impact upon the study of direction and monitoring” (Nisar, 2009). Taylorism which is known as scientific management is a job design theory and practice which emphasised on short, repetitive work cycles; detailed, given tasks sequences, a separation of task conception from task execution; and economic rewards motivation (Buchanan and Huczynski, 2004, p.429). In the same view, Nisar (2009) suggested that activities are decomposed into simpler components in the idea of Taylorism. Moreover, Taylorism focused on the transformation of the work piece (Gill, 1985, via Buchanan & Huczynski, 2004). Turning to Fordism, Buchanan and Huczynski (2004, p.439) defined Fordism as the use of scientific management principals to workers’ tasks; the setting up of single-purpose machine tools to manufacture standardized parts; and the introduction of assembly line. “Fordism may be defined as Taylorism, developed as the production line, along with a strong emphasis on economies of scale and mass consumption” (Nisar, 2009). In addition, Time-and-motion studies (developed by the Gilbreth) which make the organisation more efficient by measuring and recording work activities are also useful tools for analyzing of jobs. Monitoring have been linked with incentives in PA theory from economists’ perspective, the use of monitor activities in theory only is needed if the incentive mechanism fails to coordinate activities with objectives. The more effective of incentive mechanism, the less of monitoring mechanism needs. In the study of Beatty and Zajac (1994), the primacy of incentive is a first-best solution for problems and the level of monitoring would be based on the magnitude of incentive gap between principal and agent. However, a control mode which depends heavily upon monitoring and correcting in a clear manner is likely to offend people’s sense of independence and of self-control and, as a result, will probably result in an unenthusiastic, purely compliant response (Ouchi, W. G., 1979).

The extent to which organisation controlled and coordinated by monitoring mechanism:

First of all, we are going to look at how monitoring mechanism manage the activities of members. The effective hierarchy for control and coordination of the activities of members indicates that the activities of ‘production line’ members should contribute to the objective of the first line supervisor which then contributes the objectives of the second line and so on up to the peak coordinator; otherwise, there will be ‘control loss’ (Nisar, 2009). In addition, through the Taylor’s objectives to be achieve which are the efficiency by increasing the output and reducing intentional ‘underworking’ by employees; the predictability of job performance by dividing, standardized and specifying tasks; and the control of organisation by discipline through hierarchical authority and a system whereby all policy decisions could be put into action (Buchanan & Huczynski, 2004), we can see monitoring mechanism can also direct these factors.

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By decomposing tasks into smaller ones, the transparency between inputs and outputs increases, therefore increases the capacity of control and coordination of labour. It also helps organisation to gather the benefit of mass production, economies of scale and increases use of plant (Nisar, 2009). In addition, monitoring mechanism can typically take in a heterogeneous assortment of people and effectively control them (Ouchi, 1979). Ouchi (1979) proposed that monitoring mechanism also reduces rate of turnover, thus, reduces cost. In the same opinion, Buchanan and Huczynski (2004) mentioned about the Ford’s success in reducing turnover, absenteeism fell from 10 percent to 0.5 percent by double pay the minimum wage going with monitoring.

Moreover, monitoring mechanism also control and coordinate individual workers, groups and unions in organisation. It is possible for Taylor to observe how individual behave when part of a group. Ouchi (1979) indicated that Monitoring can control the performance of individual workers. It also controls the bargaining power of labour as well as the bargaining power of management and the owners of organisation (Nisar, 2009). In addition, monitoring performance and directing activities can help a bureaucratic control mechanism to operate successfully in a organisation (Ouchi, 1979).

Furthermore, monitoring help organisation to control waste and redundancy, thus, improve efficiency. Using Time-and-Motion studies to eliminate unnecessary and wasteful actions in order to reduce fatigue experienced by workers and maximise productivity. In term of Fordism, jobs which learned from different industry so far were carefully designed by Motion Picture Department and were tried and modified many times until it was right to ensure maximise efficiency. The division of labour also help organisation control and increase certainty. Ford broadly achieved the control of the production process from the workers in the hands of managers. Through task specialization and assembly-line working, control over worker was applied, and this control was both invisible and non-confrontational (Buchanan & Huczynski, 2004). Consequently, workers were no longer known that they were being directed.

In term of technology, Ouchi (1979) suggested that we can achieve effective control mechanism by monitoring the behaviour of employees and the workings of the machines. Nevertheless, the technology developments can also strongly influence on patterns of monitoring and incentive systems, therefore, on the control and coordination and design of organisation (Nisar, 2009).

We have been looking how monitoring mechanism control and coordinate the lowest level of the hierarchical division of labour, we are now moving to higher level which is manager and CEO. Walsh & Seward (1990) pointed out that the board can control the activities of top manager by internal monitoring mechanism. By monitoring a manager’s response to an incentive plan, the board produce an opportunity to measure the manager’s ability (Walsh & Seward, 1990). According to the study of Huson, Parrino and Starks (2001), stockholders rely on internal and external monitoring mechanisms to solve agency problems that occur from the separation of ownership and control in modern organisation. External monitoring mechanism and market corporate control work in concert with internal monitoring mechanism to control agency costs which arise between shareholder and managers (Jensen, 1993, via Huson, Parrino & Starks, 2001). Moreover, the changes in monitoring mechanism also change the CEO turnover decision. The extension of outside director’s monitoring role may cause the negative relation between firm performance and CEO turnover and in the rate of outside succession. Huson, Parrino and Starks also proposed that the changes in corporate governance structures over period indicated that internal monitoring mechanisms may become more effective in disciplining management.

Conclusion:

As we can see, monitoring mechanism controls and coordinates almost every issue of the organisations. It has a strong influence in activities of the worker, control their inputs and out puts and makes them work as their abilities. It not only has a positive effect on the organisation efficiency but also increase certainty in organisations. The hierarchical division of labour also help organisations control their individual workers or even the unions, from their performance to their bargaining power. Moreover, monitoring mechanism is very useful in reducing waste and redundancy, thus, improve efficiency and productivity. Other aspect of organisations which is also controlled is technology. Beside the lowest level of the division of labour, monitoring mechanism can control and coordinate the activities and abilities of the top managers. The agency cost between managers and shareholders is also controlled due to monitoring mechanism and market corporate control.

References:

Buchanan, D. & Huczynski, A. (2004), Organisation Behaviour, An Introductory Text (5th ed.). Prentice Hall, London.

Douma, S. & Schreuder, H. (2008), Economic Approaches to Organisations (4th ed.). Prentice Hall, London.

Nisar, T. (2009), Notes – Coordination and control: monitoring. University of Southampton, Southampton.

Walsh, J. P. & Seward, J. K. (1990), On the Efficiency of Internal and External Corporate Control Mechanisms [Electronic Version], The Academy of Management Review, Vol. 15, No. 3, pp. 421-458.

Beatty, R. P. & Zajac, E. J. (1994), Managerial Incentives, Monitoring, and Risk Bearing: A Study of Executive Compensation, Ownership, and Board Structure in Initial Public Offerings [Electronic Version], Administrative Science Quarterly, Vol. 39, No. 2, pp. 313-335.

Ouchi, W. G. (1979), A Conceptual Framework for the Design of Organizational Control Mechanisms [Electronic Version], Management Science, Vol. 25, No. 9, pp. 833-848.

Huson, M. R., Parrino, R. & Starks, L. T. (2001), Internal Monitoring Mechanisms and CEO Turnover: A Long-Term Perspective [Electronic Version], The Journal of Finance, Vol. 56, No. 6, pp. 2265-2297.

Part B: the contribution which ‘role theories’ can play in organizational analysis.

Introduction:

We can often analyse organisation as a structure of groups which impact the performance of the organisation. Therefore, the role that individual play is important not only in a group but also in an organisation. There are many studies which are developed in order to understand the role in organisation. In this study, the contribution which ‘role theories’ can play in organisational analysis is going to be analysed.

Literature Review:

Robbins and Coulter (2005, p.374) defined a role as “a set of behaviour patterns expected of someone occupying a given position in a social unit”. According to Buchanan and Huczynski (2004, p.485), social role is “the pattern of behaviour expected by others from a person occupying a certain position in an organisation hierarchy”. Roles are a central attribute of every organisation structure, and are stated in the organisation hierarchy. Because organisation is considered as a structure of group, therefore, the group member roles and team role theory also contribute to the organisational analysis. It is supported by Likert (1961, via Buchanan & Huczynski, 2004) as he argued that an effective organisational structure consists of autonomous joined work group, each linked to the whole organization. As defined by Buchanan and Huczynski (2004, p.337), team role which was developed by Belbin and his colleagues in the late 1970s is an individual’s tendency to behave in specifically favoured ways which contribute to and correlate with other members within a team. Each individual in an organisation has a particular role set which is the set of persons who are mostly affected by the focal person’s role performance. Another concept about role theory is self-fulfilling prophecy which described as an expectation that leads to a certain types of behaviour (Buchanan & Huczynski, 2004). In the study of Robbins and Coulter, a role-conflict arise when individual face different role expectation. In the same view, Miles and Perreault (1976, via Parker & Wickham, 2005) proposed that role-conflict occur when role expectations set in one role conflict with the expectations associated with another role.

The contribution which ‘role theories’ can play in organisational analysis:

According to Buchanan and Huczynski, when all members of the group interact with one another, the occupants of every position of group are expected to have specific functions. The expected functions are created the social role of the member. Bales (1953, via Buchanan & Huczynski, 2004) suggested that individual play different roles in their groups and when the group cope with particular problems, this member begin to specialize in certain role (which taken from different role within a group). Consequently, individuals adopt specific roles within their group. This can be understood further as the member of an organisation. As a result, this is very useful for organisation analysis if we can do the role analysis of individuals within organisation. Benne and Sheats (via Buchanan & Huczynski, 2004) divided the roles of individual into 3 groups which were group task roles which are mainly directed to achieve the group’s task, group building and maintenance roles which emphasize how to make good relations between individual members so that the whole group can work together, and Individual roles which prevent the group’s effort from its goals. It is the foundation to observe and analyse roles in variety teams in different organisation.

Belbin’s ideas about team role theory provide important contributions to organisation analysis and support the coordination mechanism. Firstly, he argued that within an organisation people are likely to address their functional role based on their ability or experience. Therefore, if employers can figure out the abilities of employees, they can then require them to play suitable role in organisation. Moreover, Belbin also found out that the personal characteristics of an individual fit them for some roles, but not guarantee that they will succeed. In this aspect, it is shown that knowing personal characteristics is also a solution for organisational analysis. It is because organisation structuring takes place through the specification of the roles that employees are expected to played. It also means patterning and predictability of behaviour is increase if individuals in different position in hierarchy have mutual expectations (Buchanan & Huczynski, 2004). In addition, Belbin suggested that individuals are able to adopt one or two roles quite consistently and the tendency of individuals’ roles can be predicted by personal assessments and the team role questionnaire. The assessment, selection, placement and guidance from manager play an important role in improving organisation efficiency. Finally, Belbin described an idea (‘dream’) team as a team with all important roles are represented and all preferred roles of members are adopted. It draws a picture how we can acquire an idea organisation with idea teams. These ideas above simply represent the benefit to organisational analysis.

The role set members of individuals mobilize instructions, encouragement, assistance, rewards and penalties to direct and elicit the role performance. Their roles are surrounded by the expectations of their role set and their desire for approval from role set encourages compliance to the expectations. This term can be used for managers as a role set of each individual employee in an organisation to encourage employees to achieve their expectations. The concept of role helps our understanding of this aspect of organisational life by stressing that employees monitor and direct their own work behaviour in the light of what they know is expected of them (Buchanan & Huczynski, 2004).

The research of Rosenthal (1973, via Buchanan & Huczynski, 2004) indicated if supervisor behaviour may increase employee output through expectations. It has four factors which are climate, feedback, input and output. Climate which represents that supervisors’ expectations lead them to treat workers differently, for example eye contact, smiling, etc. Feedback shows more detailed and accurate information which is given to workers about their performance, for example how workers can improve. In aspect of input, workers are given more demanding tasks to perform which stretches them. Finally, for output, developing workers are given cues to respond, for example asking questions.

Moving to role conflict, Wickham and Parker (2005) did a research about the impact of individuals’ non-work roles (Family-Based Roles, Sporting-Based Roles, Charity-Based Roles, Education-Based Roles and Socially-Based Roles) on their work roles and their working-life. They came up with a result which was that employees value their non-work role highly, and may seek to change their work role where conflict arise. Their non-work roles have a ‘nominal monetary value’ that at some point even exceeds the employee’s hourly wage. Therefore, understanding employees’ non-work roles is very important for managers and Human Resource. In addition, the employees who are assisted in managing their array of non-work roles reported more committed and loyal to their employer. This research also indicated sometimes role-conflicts can have a negative influent on employees’ working life and commitment to their work place.

Conclusion:

From the studies above, it can be seen that ‘role theories’ have a broad contribution on Organisational Analysis. By drawing and analysing the roles which individuals can play in an organisation, these studies and research above indicated how an organisation be coordinated and analysed. It helped the organisation to set up most suitable roles for employees when their abilities and non-work roles are known. Moreover, ‘role theories’ can help supervisors or managers to improve the output of employees through their expectations. The questionnaire and research about employees is proved very important for Human Resource.