Perception of Informal and Formal Control Mechanisms - Essay Example

SURVEY OF MIDDLE MANAGERS AND LOW-LEVEL EMPLOYEES’ PERCEPTION OF INFORMAL AND FORMAL CONTROL MECHANISMS IN MULTI-NATIONAL CORPORATIONS BY ALI A. GARBA Abstract Child (2005) argues that in our fast-changing world, formal control mechanisms are associated with the “problem of rapid obsolescence” and interest is increasingly shifted to the flexible and informal control mechanism in organizations, which is considered more compatible with dynamics of new organizations. This study surveyed the perception of middle managers and low-level employees regarding acceptability of informal control mechanisms in comparison with formal mechanisms used in their organizations. This research relies on workplace experience of 448 employees in 28 Multi National Corporations (MNC) in service industry located in 7 states. Two middle managers, a labour union leader and thirteen low-level permanent employees were selected using two-stage random sampling technique. Two standardize and validated instruments (questionnaires and interview guides) were used to generate background information and data for analysis. The result of the survey indicates 68.5% believe informal mechanism is more effective in improving individual performance while 54.3% believe it is most appropriate for teamwork. In contrast, 51% low-level employees believe formal mechanisms improve individual performance while 30.1% believe it improves teamwork. Both middle managers and low-level employees believe that a combination of informal and formal control mechanisms is most effective in enhancing employee performance and productivity. However, 79.5% of the middle managers believe a combination that emphasizes formal mechanism is more effective. This is in contrast to low-level employees’ perception (93.4%) that a combination of informal and formal strategies that gives prominence to informal interactions among employees is more effective in enhancing employee performance. This contradictory perception of the combination of mechanisms suggests the need for further research into the relations between different combinations of mechanisms and employee performance at individual and team levels. Table of Content Abstract ...............................................................................................2 Introduction ...............................................................................................4 Theoretical Background ................................................................................4 Methods and Procedures ………………………………………………….6 Data and Data Analysis……………………………………………………9 Results and Discussion……………………………………………………9 Conclusion ………………………………………………………………..13 References………………………………………………………………. Bibliography ………………………………………………………….. Introduction The environment organizations operate is fast changing politically, economically, socially and technologically. These changes are impacting on the way organizations are designed to accommodate resultant changes in relationships among employees. It is the responsibility of management of organizations to continuously respond to these changes in environment and relationship among employees. Traditional rigid methods of dealing with employee relations vis-à-vis performance and productivity are giving way for newer flexible methods. The inevitability of change is very manifest in the control systems. Managers are compelled to be dexterous in their approach to control of employees work. This survey will investigate acceptability of informal control mechanism in comparison with formal mechanism using employees’ (middle managers and low-level employees). More specifically, the study will 1) determine the perception of middle managers and low-level employees regarding informal control mechanism, 2) compare perceptions of middle managers and low-level employees, and 3) examine preferential combination of strategies/mechanisms with respect to individual and team performances. The result of the survey will potentially provided insight into the necessity of a compatible control mechanism in contemporary organizations. It will provide a starting point for further research in this theoretically illusive and practically not-too-well researched aspect of management, control. Theoretical Framework Child (2005) defined control system as a “mechanism that is designed to convey information to assist initiation and regulation of activities”. The essence of this system is to ensure that a predictable level of performance is achieved and maintained. Control can be achieved through attributes such as power, authority, expertise and reward. Child further identified six control strategies used in organizations. These are personalized centralized, bureaucratic, human resource management, output, cultural control and control through electronic surveillance. Control mechanisms used in organizations can also be distinguished in terms of the direction of impact of action on outcome (negative or positive), the nature of control with respect to interaction between managers and employees (formal and informal), how the control strategy works and predictability of the strategy using combination of feedback and feedforward information. Of interest in this study is the distinction between formal and informal control mechanisms. Formal organizational control can be distinguished from informal. Formal controls include rules and regulations that are established and implemented based on formal positions of employees in the organization. They are simply the dos and don’ts of organization enforceable by managerial employees (Linstead et al. 2004). Informal controls, on the other hand, are those “unwritten rules and norms that form part of an organization’s culture” (Deftereos 2009). Within the context of organizational politics, control (a function of power and influence), managerial employees use a number of strategies to influence other employees under them. Robbins (2004) identified some strategies such as: 1) Reasoning, presenting ideas to subordinate employees in rational and logical manner by using facts and data; 2) friendliness, establishing personal rapport by relating humbly with subordinate employees, flattering subordinate employees, using goodwill to get subordinate employees to comply; 3) coalition, utilizing informal networks to back up request from subordinate employees, 4) bargaining, negotiating with subordinate employee through exchange of benefits or favours, 5) assertiveness, using direct force to demand compliance; 6) higher authority, cashing in on authority of higher employees to direct subordinate actions or inactions; and 7) sanctions, using rewards and punishments approved by organization to get things in a prescribed manner (Deftereos 2009). In a more concise way, Furst and Cable (2008) categorized ways managers effectively get subordinate employees compliance under i) Sanctions, “administering punishments for not cooperating”, ii) legitimization, involves explaining the congruence of change with organization’s needs and practices, iii) ingratiation, which involves managers’ praising employees for cooperation in the change process, iv) consultation, requesting inputs of employees in the change process. This background reflects the complexity and dynamism of the work environment in our contemporary world. The necessity of management of organizations to respond to realities of the changing environment has compelled them to search for more effective strategies of achieving control in their organizations. Therefore, there is a growing interest in the potentials of flexible and informal control strategies, argues Child (2005). These strategies are argued to be compatible with new organizations in which there is “devolved initiative among employees and teams (117). Methods and Procedures A pilot (N=25) was conducted to field test research tools and protocols. The pilot provided an opportunity familiarize research assistants with research design, test logistics of collecting data and get inputs from research assistants based on their individual field experiences. The pilot result indicated 78% questionnaires were well completed manually and 62% electronically. The section on respondents’ perception of comparative impact of informal and formal control strategies on employee performance recorded the highest (33.4%) number of unanswered and wrongly answered questions. Also, the average duration of interview was 53 minutes for interviews with middle managers and 1 hour 12 minutes for leaders of labour unions. The result of the pilot was used to readjust questions for easy elicitation of answers. The organizations selected for this study all fall within Burns and Stalker’s (1996) organic model. This model has the following features in its design: prominence of informality or ‘looseness’; “emphasis on knowledge and experience rather than on position in hierarchy”; decision making is decentralized; and there is lateral line of communication.This model best accommodates the dynamism of organizations in our contemporary world (cited in Deftereos 2009). All organizations will be public liability companies with top management controlling less than 25% of shares of the company. Also all organizations will have more than 1000 employees and have a hierarchical organizational structure with a human resource and general administration departments. Notices of request for interview would be sent to organizations and this would be followed up with phone calls and physical visitation. Once interview arrangements are concluded, the researcher will proceed with interviews. A middle manager in human resource department and another in general administration would be selected for key-informant interview. Both mangers must have at least 3 years experience in their respective offices. An interview guide containing 18 questions will be used to elicit background information on control system of organizations and perceptions of respondents about system in operation. Additional information in document format will be collected for review. Another interview will be conducted with labour union leaders in the organization. A total of 25 questions will be asked on employees’ general shared perception of control system operated in respondents’ organizations and their perceptions of the management implementation of the system including managers’ idiosyncrasies. All interviews would be conducted by the researcher. All interviews would be taped and transcribed to serve as back-up. Two transcription experts would be hired and another seven assistants for retrieval of printed questionnaires in the seven states. Four hundred and fifty standardized questionnaires would, depending on respondents’ choices, be distributed electronically and manually to sampled employees and interviewed managers. All responses in the printed and electronic questionnaires would be checked. The questionnaires will contain 38 open- and close-ended questions under three sections. The first section covers respondent’s demographic data such as sex, race, age, religion, marital status and number of children and/or dependants. The second section contains questions on respondent’s work history with information on issues such as length of service, salary/wages, etc. The third section contains questions that try to get respondent’s understanding of control system and its operationalization in the organization. This section will contain 8 questions. The last section will get respondents’ perception of informal control mechanism used in his/her organization. The relevance of informal control mechanism, the forms of informal strategies, the frequency of usage of these strategies, their effect on individual and team performance, and the impact of informal strategies on manager-employee relations would be understood from responses to questions in this section. All respondents are required to rate their perception of the possible impact of common informal strategies used in large organizations on their performance with formal strategies used in the same type of organizations to achieve similar outcome from employees. Respondents would be given the choice of crossing out non-applicable columns where they are unable to rate their perception due to limited understanding of the control strategies. The questionnaires for middle managers will contain fewer questions with the section on comparison of perception of effectiveness of formal and informal mechanisms in improving individual and team performance omitted. Informal and formal strategies used in organizations were categorized by streamlining Furst and Cable (2008) and Robbins’ (2004) forms of interaction between managers and employees under them. The formal strategies used in the questionnaire were sanction, incentives, legitimization, assertiveness, performance evaluation and use of higher authority. The informal strategies were categorized as ingratiation, friendliness, consultation and coalition. Each strategy is to be rated based on 1) its frequency of usage by management, 2) its effectiveness on individual performance and 3) effectiveness on team performance. For the frequency of use, respondents are to rate each category as very often used, often used, seldom used or not used at all. For effectiveness of strategies on individual and team performance, respondents are to rate each strategy as very effective, effective, no impact, negative impact or can’t tell. Respondents will separately rate effectiveness of each strategy on, first, individual, and, second, team performance. To correctly respond questions, all the strategies were well explained in a separate page with ample examples to help respondents streamline their experiences according to the adopted categories. Data collected will be coded and analyzed using SPSS package. Data analysis will essentially report descriptive statistics. Percentages and measures of central tendencies will be used in presenting results. Effect size will be used to investigate statistically significant differences in middle managers and low-level employees. Data and Data Analysis Data used for analysis will be coded for statistical analysis using SPSS package. Essentially percentages and measures of central tendencies will be used to give descriptive statistics. Effect size (ES) will be used to investigate statistically significant differences in middle managers (n=56) and employees’ (n=392) perception of informal control mechanism. Thomas and Nelson (2001) recommended pooled standard deviation will be used to measure ES. Results and Discussion Perception of effectiveness of control mechanisms on individual and team performance The results of the survey indicate low-level employees’ differential perception of the impact of informal control mechanism on employees individual and team performance. The most effective informal strategy in enhancing individual performance was ingratiation (79.7%) and the least was consultation coalition (12.5%). Conversely, the most effective formal strategy on individual performance was legitimization (64.2%) and the least was assertiveness (11%). For team performance, consultation was rated most effective (61.7%) while friendliness was rated least effective (47.2%) informal strategy. Again, legitimization and assertiveness were rated most (61.2%) and least (14.7%) effective informal strategies respectively. Whereas the survey stops at getting perception without probing why this perception is held, the perceived more effectiveness of informal control mechanisms on individual performance (average rating 68.5%) can be explained by some of the reasons advanced by Towsend (2003). Towsend observed in his study of employee resistance in leisure industry the preference of employees to be individualistic rather than to teamwork. Employees see the disposition of management to promote teamwork as a manipulative façade. This is also deduced from a common view held by labour leaders, who frowned at organization disposition to teamwork as an advanced strategy for exploiting surplus labour. Certainly, there is a need to investigate this differential perception. Perception of the most effective combination of strategies There is a convergence of perception of middle managers and low-level employees regarding a combination of formal and informal control mechanisms as against strictly formal mechanisms. There was 100% agreement with such combination as all respondents rated checked the effectiveness of usage of all strategies differently. However, there was a divergent perception as to the nature of combination of mechanisms between the two categories of employees. 79.5% of middle managers believe a combination that emphasizes formal mechanisms is most effective. There perception can be tied to centrality of power and authority in organizational control systems. Power usually resides with top management, who delegate it to middle managers as it concerns the operations of employees under them. Since power over the day-to-day activities of low-levels employees reside in the middle managers, middle managers would naturally want to optimize the use of this power. They can do this more directly by using formal strategies. The perception among middle managers that a combination that emphasizes formal strategies is most effective was common in all 28 MNCs just like the low-level employees held the believed that combinations that emphasize informal strategies are more effective. However, the perception of effectiveness of formal and informal strategies varies across the 28 MNCs studied. Timetable Activity Duration Completion of comprehensive literature review 3 weeks Development of research tools 2 weeks Pilot 1 weeks Field research (Interviews, distribution and retrieval of questionnaires) 10 weeks Data analysis and draft of work 3 weeks Review of draft work 2 weeks Conclusion This study gives an insight into the differential effectiveness of informal and formal control mechanisms in large organizations. Low-level employees believe informal control mechanisms as more effective in improving individual performance. The study also indicates contradictory perceptions of middle managers and low-level employees regarding the combinations of formal and informal mechanisms that best enhance employee performance and productivity. This study highlights a number of open questions for future researches. Of particular theoretical relevance will be an investigation into the differential impact of control strategies on individual and team performances, and the most effective combination of mechanisms. References Child, J (2005) Organization: Contemporary Principles and Practice, London: Blackwell. Deftereos, C. (2009), Working in Organizations, East Lismonre: Southern Cross University. Furst, S. A. and Cable, D. M. (2008), “Employee Resistance to Organizational Change: Managerial Influence Technique and Leader-Member Exchange”, Journal of Applied Psychology, Vol. 93, pp. 453-462. Towsend, K. (2003), “Leisure at work, who can resist it? An investigation into workplace resistance by leisure service employees”, Journal of Industrial Relations, Vol. 45, No. 4. Read More