Promoting Integrity and Ethical Behavior 7 pages


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Over the last several decades, the issue of employee motivation has been increasingly brought to the forefront. Part of the reason for this is because globalization has made businesses more competitive. This has forced both large and small businesses, to utilize strategies that will increase the total amounts of productivity. Where, an organization must have various tactics and tools in place, to ensure that employees are motivated. At the same time, they must prevent their organization from taking unusual amounts of risk. As a result, various businesses have developed outcomes and control systems, to address these different issues. Simply put, a control system is when managers are collecting various pieces of data, to analyze and improve an organizations ability to achieve its objectives (high productivity / increasing revenues). A few of the most common ways that entity would use a control system would include: through various accounting systems, measuring the effectiveness of a division / team and employee incentives. (“What are Management Control Systems,” 2010) This is significant, because it shows how the use of such systems, are often used by a wide variety of business around the world to remain competitive, in an ever changing global marketplace. In the case of the American Automobile Industry, the management control systems have been contributing to the decline in market share, for all of the major manufacturers. This has caused many managers within the industry, to seek out those control systems that can be successfully be integrated into their organization. To fully understand how to implement an effective outcome / control systems requires: identifying functional / dysfunctional control systems, examining the various pieces of data for implementing / evaluating control systems, analyzing the essentials for quality management / techniques and the impact that this will have on the personal / professional life of an individual. Together, these different elements will provide the greatest insights, as to how the American Auto Industry can be able to implement and maintain an effective management control systems.

Identifying Functional / Dysfunctional Control Systems

The first step in successfully implementing and maintaining an effective management control systems requires: examining which systems are functioning most effectively and those that are dysfunctional. This means looking at specific characteristics within an organization that could help identify a dysfunctional control system. The most notable would include: a crisis atmosphere, organizational insanity, a sense of false beliefs by management, a lack of values and no effective decision making from various managers. (“Symptoms of a Dysfunctional Organization,” 2005) This is significant, because it highlights the most common characteristics that many managers will face when they have a dysfunctional control system in place.

In the case of the American Automobile manufacturers, they have been dealing with a dysfunctional control system that is slow to respond to changes in employee needs and demands from consumers. What happened was; the industry became a victim of its own success after the end of World War II. Where, the Big Three were the dominant manufacturers in the world. As Europe and Japan would rebuild, their management control system would ensure that a better product was delivered to consumers, at a lower price. This is significant, because these two factors are the biggest issues that face the Big Three, as they were slow to respond to changes in the marketplace. Over the course of time, this lack of focus combined with the inability to provide quality products and maintain competitive prices, meant that many consumers would begin to purchase automobiles from foreign competitors. During the 1980’s, there were brief changes to the management control systems (such as the new ones utilized at Chrysler). However, once key personalities would leave a company or the industry (such as Lee Iacocca), the Big Three would begin to use a dysfunctional system to address various issues surrounding management controls. Looking at the industry itself, during the 1980’s and early 1990’s, manufacturers began using a system that would focus on improving quality by: providing various warranties on the vehicles sold, improving communication between managers / staff and delivering the kind of vehicles that consumers were demanding (through just in time inventory). This would allow the industry to go through a period of revitalization for several years. After the merger between Chrysler and Daimler Mercedes was announced in 1998, it would mark a shift in the management controls of the industry. Where, managers would begin to collaborate less with employees and began to build / supply cars based upon speculation. This is significant, because it would show how the Big Three went from: a function to dysfunctional control system. In many ways, one could infer that when the industry begins to experience success (for extended amounts of time), is when a shift would occur in the organizational control system used. Where, a functional management control system was utilized, to improve the responsiveness of the industry to consumers. Once the company began to regain market share, is when managers would completely lose focus. At which point, it was only a matter of time, until the organizational control system will become dysfunctional. (Flamholtz, 1998, pp.81 — 90)

Developing / Evaluating Management Control Systems

To effectively develop / evaluate a management control system you must have a number of key elements in place. The most notable would include: effective communication, financial controls, strategic controls and the ability to monitor the management control system. Effective communication is when you are establishing various policies and procedures, to ensure improved communication within an organization. One way to achieve this objective is to have various managers required, to communicate on a regular basis, about how the underlying product can be improved. Financial controls are when you monitoring the various cost used, to create a product. This could include everything from: the labor costs to the raw materials costs of producing a particular product. Strategic controls are when managers will engage in tactics, to increase the long-term bottom line growth of company, while not taking excessive risks. The ability to monitor various management controls is when there is a procedure in place, to ensure that company and staff are: effectively responding to changes in the market. In the case of the Big Three, this will help to ensure that they have an effective management / control system in place. If managers begin to engage in excessive risks or revert back to the dysfunctional system of the past; the above system will allow the company to see what is happening in real time. At which point, they can correct these issues, so that the company can continue to adapt to changes within the industry. This is significant, because utilizing this kind of a system; can help American Automobile manufacturers, to adjust to changes that are occurring without taking large risks. Over the course of time, this will help them be more competitive against foreign manufacturers. (Flamholtz, 1998, pp.81 — 90)

Analyze / Illustrate the Essentials for Quality Management / Techniques

Within the auto industry there are a number of different techniques that are essential for top quality management. The most notable would include: collaboration, flexibility, the use of benchmarks and knowledge management. Collaboration would be necessary because the industry is consistently changing. This is based upon an increase in fuel prices, government regulations and changes from consumers. Where, management must be aware of these trends early, in order to adapt to the changes that are taking place in market. When management is collaborating with employees, they are adapting to these changes, by listening to their ideas about consumer tastes / trends. Over the course of time, this improves the overall quality of products that are being delivered. As everyone will take more pride in what is produced, by the company, because they played a part in process. At the same time, these collaborative efforts allow the company to adapt to changes in the industry before competitors, by identifying those models that the public is beginning to embrace. This will allow the company to develop and mass produce new models / products before competitors, helping them to gain market share over everyone else. (Flamholtz, 1998, pp.81 — 90)

Next, managers must use flexibility when they are examining various issues in the management control system. This is because the auto industry is constantly changing. Where, those organizations that are the most flexible can be able to adapt to changes ranging from various internal issues (such as parts shortages etc.) to external issues (such as macro economic conditions). Those entities that incorporate this as a part of the process, improve their odds of being able to protect the company against sudden shocks that could occur. At which point, they can be able to overcome the various challenges that are being faced, by adapting to them when these changes are first occurring. (Ireland, 2008, pp. 33 — 39)

The use of benchmarks would be effective at providing a way for managers and employees, to see how the management control system is working, in achieving the company’s goals. Where, the benchmarks will show if the system is helping or hindering the company from achieving its objectives. This is significant, because when it is used in conjunction with flexibility, you can be able to effectively adapt to changes in the markets. With flexibility providing the necessary ingredients to implement such changes, while the use of benchmarks will identify when a management system is becoming unproductive. (Ireland, 2008, pp. 33 — 39)

The use of knowledge management is when an organization is collecting and analyzing the total amounts of knowledge at their disposal. This would include analyzing all available: resources, employee / managerial skills and documents. This is significant, because it provides a way for an organization to quickly collect and analyze a wide variety of information. At which point, managers can be able to effectively place the different resources and personnel of the company, in those areas where they will have the greatest impact. Over the course of time, this will help ensure that the company is utilizing its different resources. In the case of the auto industry, this helps to provide a foundation for increasing productivity, while reducing costs as much as possible. (Ireland, 2008, pp. 33 — 39)

Impact on the Personal / Professional Life of an Individual

The impact of an effective management control system within the auto industry; has had a dramatic effect upon the personal and professional life of the individual. Where, functional systems that can quickly respond to changes in the market or in the company itself; will help ensure the long-term stability of an organization. Once this takes place, it is important that managers do not become a victim of their own success. This usually occurs during times when sales are strong and it appears as if the industry learned from the mistakes of the past. It is at this point; that managers will become very short sided and will build those models that the general public is no longer demanding. The problem is: that no one is concentrating on creating new makes / models that could be in demand at some point during the future. This leaves the company and the industry at the mercy of the market and changes in the tastes of consumers. Where, a company can assume that they are maintaining their dominate market share, yet the actions that management is engaging in is slowly eating away at the financial foundation of the company. At which point, it is only a matter of time until another competitor will develop some new innovation that will revolutionize the industry (leaving the Big Three unprepared for changes in the market / industry).

For the individual, it is important that they learn from these lessons and push the company to eliminate unproductive control systems. This is because the individual’s views, about the markets and what direction they see the company going will affect their families and career. Those managers / employees who are willing to tell the top management what is wrong with company will slowly earn the respect of the top managers, while ensuring that the organization is embracing change. A good example of this can be seen at Ford Motor Company during the 1970’s. The President of the company, (Lee Iacocca) determined that small cars were becoming very popular within the industry. To prepare for these changes, he signed an agreement with Honda to provide the engine for the Festiva. Once he returned to Detroit, Henry Ford II (the CEO) killed the deal. This is significant, because the vision of Iacocca shows how the ideas of an individual can have a dramatic impact upon the future of the company. Where, the idea and the deal that were created by Iacocca; could have meant that the industry would go through a revitalization. As the new ideas, would create a new management and control system that would quickly adapt to changes within the market place. (Johnson, 2005, pp. 85 — 107) For the individual, this would have meant that they would have more financial stability from a personal standpoint. While professionally, they would be figuring out ways to provide the vehicles that the general public was demanding (before competitors). As a result, when an effective management / control system is in place, it will ensure that everyone has a rewarding career. This is because the system ensures the stability of the company.

Clearly, the American Auto Industry has faced a number of challenges in implementing and maintaining an effective management / control system. Where, the Big Three would implement changes to the system, yet they became victims of their own success. It is at this point, that it would evolve into one that would take large amounts of risk, while becoming more dysfunctional. Over the course of time, this would ensure that the industry was unresponsive to changes from consumers. At which point, it was only a matter of time until they would face declining market share and falling sales. To mitigate these effects, a system must be utilized that will embrace the ideas of: effective communication, financial controls, strategic controls, the ability to monitor the management control system, collaboration, flexibility, the use of benchmarks and knowledge management. Together, these different elements, will ensure that they industry is able to adapt to changes that are occurring both internally and externally. If this kind of management / control system is embraced by the Big Three, it will ensure that they can respond quickly to various changes. As a result, they would be able, to within stand the constant up and down swings of the industry; by having a management / control system that will respond to what is occurring quickly.


Symptoms of a Dysfunctional Organization. (2005). Retrieved July 9, 2010 from Copper Comm website:

What are Management Control Systems. (2010). Retrieved July 9, 2010 from Wisegeek website:

Flamholtz, E. (1998). Case Studies in Changing the Game. Changing the Game. (pp.81 — 90). New York, NY: Oxford University Press.

Ireland, D. (2008). Promoting Integrity and Ethical Behavior. Understanding Business Strategy. (pp. 33 — 39). Mason, OH: South Western.

Johnson, R. (2005). Lee Iacocca Confronts the Ford Family. Six Men Who Built the Modern Auto Industry. (pp. 85 -107). St. Paul, MN: Mountainbrooks.

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