Advanced Planning Analysis Under Strategic Risk Management: An Emergency Of Goal Congruence Approach

Advanced Planning Analysis Under Strategic Risk Management: An Emergence Of Goal Congruence Approach

Prof. Sarbesh Mishra, PhD NICMAR, Hyderabad Campus, India

Tel - +91 – 40 – 64510 763 (Off) +91 – 93 968 44687 (Mob)

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About Myself Name

:

Sarbesh Mishra

Qualifications

I. II. III. IV.

B.Com (Hons) Post-graduate In Commerce M.Phil In Commerce Ph.D. (Commerce)

Experience

I. Lecturer in Commerce(2001–2005)–University of Delhi, Delhi. II. Lecturer in Senior Scale(2005–2007)–Army Institute of Management and Technology (AIMT), NOIDA. III. Assistant Professor(2007 Onwards)–National Institute of Construction Management and Research (NICMAR), Hyderabad

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Related thoughts 

The most successfully man in life is the man who has the best information. Benjamin Disraeli, Ex-PM, England

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He who controls the past controls the future. George Orwell, English Author A man should not be ashamed to own that he has been in the wrong, which is but saying in other words, that he is wiser today than yesterday. Jonathan Swift, Irish Author

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Styles of Management 

Fire fighting – This consists of reacting to the events and crises, after their occurrence.

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Tunnel Vision Approach - Tunnel

vision is a selective perception of what constitutes the organization’s concern

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Planning – as a tool 

Planning has been defined as a process

which begins with objectives; defines strategies, policies and detailed plan to achieve them; which establishes an organization to implement decisions and feedback to introduce new planning cycle.” 

Planning is vital to an organization’s future success.

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Planning function – A pilot study Stanley Thune and Robert House analyzed the planning function in 36 similar firms in six industries. This has led to the conclusion:  Those firms that rely on formal planning department were more successful than those rely on informal planning,  Those firms that rely on a formal planning department perform more successfully after the system is instituted than previously.

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Merits of Formal Planning 

Prepares firm to operate in dynamic world.

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Helps in adapting to the ensuing changes in the technology, finance, resource availability, economic conditions, etc.

In view of benefits of formal planning, most firms rely on formal planning system.

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Cost Accounting – A tool for decision making 

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Cost Accounting otherwise referred as Management Control System comprise of rules and procedures aimed accumulation and communication of relevant cost information for internal decision making. These control systems formalize the objective of the organization and express them operationally as performance criteria to be met by the individuals in the organization.

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Goal Congruence - Definition 

Central to the efficient working of the control systems is goal congruence.

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Goal Congruence is the harmonization of individual and group objectives within the organization and the objectives of the organization as a whole.

Robert N. Anthony was perhaps the first to stress the importance of goal congruence.

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Implementing Goal Congruence 

Goal congruence is achieved when individuals in the organization strive or are induced to strive towards the company goals.

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The essence of company’s goals is conveyed by planning process, which expresses these goals in terms of budgets, standards and other formal measures of performance.

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Contd…. To achieve goal congruence the following ideas are important –  The firm should be viewed as pluralist entity where coalitions of individual seek to express their own aspirations within the structure of the firm.  Personnel cannot be viewed as people sharing the same goal, but also as people striving for such rewards such as power, security, survival, and autonomy.

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Contd…. A firm may emphasize multiple goals by stressing that organizational performance be measured in the following areas: (i) Profitability, (ii) Market Position, (iii) Productivity, (iv) Product Leadership, (v) Personnel Development (vi) Employee Attitude, (vii) Public Responsibility, and (viii) A Balance between short-range and long-range goals.

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Contd…. 

Individuals work in different hierarchies and handle different responsibilities & may have different goals. But they must come together as far as Company’s Goal is concerned. This term is used when the same goals are shared by top managers and their subordinates.

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This is one of the many criteria used to judge the performance of an accounting system.

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Significance of Goal Congruence • •

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Ensures frictionless working. Ensures achievement of organization’s goal/strategic objective. Ensures coordination & motivation of all concerned Ensures consistency in the working of all concerned.

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Contd…. •

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Gives fair chance to its employees to achieve their personal goals. Enhances the loyalty towards the company. Satisfies prime requirement of Management Control System (MCS)

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Factors - Influence the Goal Congruence Informal Factors: 

External factors – set of attitudes of the society, work ethics of the society

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Internal factors (Factors within the organization) Culture- “Common beliefs, shared values, norms of behavior & assumptions” implicitly accepted and explicitly built into. Mgt. Style – Informal/Formal

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Contd…. 

The Communication Channels

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Perception and Communication – e.g. Budget (meaning): A strict profit control plan, Budget: A tentative guiding profit plan

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Formal Factors 

Management Strategy itself

Control

System

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A

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Rules – Instructions, manuals and circulars, Physical controls, system safeguards, task control system.

Everything percolates from the Company’s strategic goal. Anything loosing the sight of goal will be immediately taken note of and a corrective action is initiated to bring back the activity on the track.

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Schematic Representation of Goal Congruence in an Organisation Company’s Goals & Strategies

Revise the Goals /Policies (Interactive MCS)

Revise

Prepare Strategic Plans for Implementation

Revise

Prepare Annual Programs/ Budgets Measure Responsibility Center’s Performance

Reward Feedback

Report Actual & Budgeted Compare A V/s B

Corrective Action Satisfactory

Non-Satisfactory

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THANK YOU

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