McClelland’s needs for achievement, affiliation, and power.

Need for achievement is the extent to which an individual has a strong desire to perform challenging tasks well and to meet personal standards for excellence.

Need for affiliation is the extent to which an individual is concerned about establishing and maintaining good interpersonal relations, being liked, and having other people around them get along with each other.

Need for power is the extent to which an individual desires to control or influence others.

3.

Expectancy theory is the theory that motivation will be high when workers believe that high levels of effort lead to high performance, and the high performance leads to the attainment of desired outcomes.

Expectancy is a perception about the extent to which effort results in a certain level of performance.

Instrumentality is a perception about the extent to which performance results in the attainment of outcomes.

Valence - how desirable each of the outcomes available from a job or organization is to a person.

4.

Equity theory is a theory of motivation that focuses on people’s perceptions of the fairness of their work outcomes relative to their work inputs. Motivation is influenced by the comparison of one’s own outcome/input ratio with the outcome/input ratio of a referent.

Equity is the justice, impartiality, and fairness to which all organizational members are entitled.

Inequity is the lack of fairness.

Underpayment inequity is the inequity that exists when a person perceives that his or her own outcome/input ratio is less than the ratio of a referent.

Overpayment inequity is the inequity that exists when a person perceives that his or her own outcome/input ratio is grater than the ratio of a referent.

Topic 9. Organizational Control.

1. Controlling is the process whereby managers monitor and regulate how effectively and efficiently an organization and its members are performing the activities necessary to achieve organizational goals.

The types of control:

Feedforward control is the control that allows managers to anticipate problems before they arise.

Concurrent control is the control that gives managers immediate feedback on how effectively and efficiently inputs are being transformed into outputs so that managers can correct problems as they arise.

Feedback control is the control that gives managers information about customers’ reactions to goods and services so that corrective action can be taken as necessary.

2.

Four steps in organizational control:

• Establish the standards of performance, goal, or targets against which performance is to be evaluated;

• Measure actual performance;

• Compare actual performance against chosen standards performance;

• Evaluate the result and initiate corrective action if the standard is not being achieved.

3.

Type of control	Mechanisms of control
Output Control	Financial measures of performance Organizational goals Operating budgets
Behavior Control	Direct supervision Management by objectives Rules and standard operating procedures
Organizational Culture/Clan Control	Values Norms Socialization

Four measures of financial performance:

Profit ratios
Return of investment	Net profit before taxes/total asset	Measures how well managers are using organization’s resources to generate profits.
Gross profit margin	(sales revenues – cost of goods sold)/ sales revenues	The differences between the amount of revenue generated from the product and the resources used to produce the product.
Liquidity ratios
Current ratio	Current assets/current liabilities	Do managers have resources available to meet claims of short-term creditors?
Quick ratio	(Current assets – inventory)/current liabilities	Can managers pay off claims of short-term creditors without selling inventory?
Leverage ratios
Debt-to-assets ratio	Total debt/total assets	To what extent have managers used borrowed funds to finance investments?
Times-covered ratio	EBIT/ total interest charges	Measures how far profits can decline before managers can not meet interest changes. If ratio declines to less than 1, the organization is technically insolvent.
Activity ratios
Inventory turnover	Cost of goods sold /inventory	Measures how efficiently managers are turning inventory over so excess inventory is not carried.
Days sales outstanding	Accounts receivable/total sales/300	Measures how efficiently managers are collecting revenues from customers to pay expenses.

Operating budget is a budget that states how managers intend to use organizational resources to achieve organizational goals.

Direct supervision – managers 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 is a goal setting process in which a manager and his or her subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodically evaluate the extent to which the subordinate is achieving those goals.