Behavior versus Outcome Control
The balanced scorecardOpens in new window and strategy map are techniques used primarily by top and upper-level managers. Lower-level managers focus on the performance of people at the department level, who must meet goals and standards if the organization is to attain its overall goals.
There are two different approaches to evaluating and controlling team or individual performance and allocating rewards.
- One approach focuses primarily on how people do their jobs
- whereas the other focuses primarily on the outcomes people produce.
Behavior control is based on manager observation of employee actions to see whether the individual follows desired procedures and performs tasks as instructed.
- Do people get to work on time?
- Do they stay focused on their tasks or spend a lot of time socializing with colleagues?
- Do they dress appropriately for the job?
- Do they perform their jobs according to established methods or supervisor instructions?
With behavior control, managers provide heavy supervision and monitoring, pay attention to the methods people use to accomplish their jobs, and evaluate and reward people based on specific criteria, might include areas such as appearance, punctuality, skills, activities, and so forth.
Information technologyOpens in new window has increased the potential for managers to use behavior control. For example, GPS tracking devices installed on government-issued vehicles are helping many communities reduce waste and abuse, in part by catching employees shopping, working out at the gym, or otherwise loafingOpens in new window while on the clock.
In Denver, 76 vehicles equipped with GPS units were driven 5,000 fewer miles than the unequipped fleet during the same period the year before, indicating the value of this type of quantitative measure. Managers in many companies monitor employees’ e-mail and other online activities. Some retailers use cash-register management software that monitors cashier’s activities in real time.
A second approach to control is to pay less attention to what people do than to what they accomplish.
Outcome control is based on monitoring and rewarding results, and managers might pay little attention to how those results are obtained.
With outcome control, managers don’t supervise employees in the traditional sense. People have a great deal of autonomy in terms of how they do their jobs—and sometimes in terms of where and when they do their jobs—as long as they produce desired outcomes.
Rather than monitoring how many hours an employee works, for example, managers focus on how much work the employee accomplishes—a human resource management model known as ROWE (Results-Only Work Environment)Opens in new window.
As an organization manager, keep these guidelines in mind: Don’t overdo the use of behavior control. Set some reasonable guidelines for behavior and work activities, but emphasize outcome control by focusing on results and allowing employees some discretion and autonomy about how they accomplish outcomes.
Switching from behavior control to outcome control had significant positive effects at Best Buy headquarters, and managers are now implementing a form of the ROWE systemOpens in new window in the retail stores. The Results-Only Work Environment program at Best BuyOpens in new window provides an illustration of outcome control carried to the extreme.
With outcome control, ITOpens in new window is used not to monitor and control individual employee behavior but rather to assess performance outcomes.
For example, at Best BuyOpens in new window, the manager of the online orders department can use IT to measure how many orders per hour his team processes, even if one team member is working down the hall, one working from home, one taking the afternoon off, and another working from her vacation cabin 400 miles away. Good performance metrics are key to making an outcome control system work effectively.
|IN PRACTICE | Best Buy
|When Best Buy managers noticed an alarming increase in turnover of headquarters employees, they began looking for ways to reverse the trend. They realized that the Best Buy culture that emphasized long hours, mandatory procedures, and managers “acting like hall monitors” was no longer working. So, what was the best approach to keep talented people from reaching burnout?
The answer turned out to be an innovative initiative known as ROWE (Results-Only Work Environment), which lets people work when and where they want as long as they get the job done. The experiment started in one department, where morale had reached a dismal low. Under the ROWE system, claims processors and data entry clerks now focus on how many forms they can process in a week rather than how many hours they put in each day or how many keystrokes it takes to complete a form. The program worked so well that it quickly spread to other departments.
The results? From 2005 to 2007, the turnover rate in departments using ROWE decreased nearly 90 percent, while productivity shot up 41 percent. Managers have now implemented ROWE throughout corporate headquarters. There are no set working hours, no mandatory meetings, and no managers keeping tabs on employees’ activities. Senior vice president John Thompson, who was at first skeptical of ROWE, became a strong believer when he saw the results. “For years I had been focused on the wrong currency,” Thompson says. “I was always looking to see if people were here. I should have been looking at what they were getting done.”
However, outcome control is not necessarily the best for all situations. In some cases, behavior control is more appropriate and effective, but in general, managers in successful organizations are moving away from closely monitoring and controlling behavior toward allowing employees more discretion and autonomy in how they do their jobs.
Also in this series include:
- Daniel R. Denison and Aneil K. Mishra, “Toward a Theory of Organizational Culture and Effectiveness,” Organization Science 6, no. 2 (March–April 1995), 204-223.
- Robert E. Quinn, Beyond Rational Management: Mastering the Paradoxes and Competing Demands of High Performance (San Francisco: Jossey-Bass, 1988).
- Mohamed Hafar, Wafi Al-Karaghouli, and Ahmad Ghoneim, “An Empirical Investigation of the Influence of Organizational Culture on Individual Readiness for Change in Syrian Manufacturing Organizations,” Journal of Organizational Change Management 27, no 1 (2014) 5–22.
- Harrison, Michael I. 2005. Diagnosing Organizations: Methods, Models, and Processes. Thousand Oaks, CA: Sage Publications, 29
- Scott, W. Richard, and Gerald F. Davis. 2007. Organizations and Organizing: Rational, Natural, and Open Systems Perspectives. Upper Saddle River, NJ: Pearson-Prentice Hall, 78.
- Jr. 2002. Organization & Management Problem Solving: A Systems and Consulting Approach. Thousand Oaks, CA: Sage Publications, 20.