Question

Question 6 [20] Organisations use the control procedures to ensure that they are progressing towards their goals and that their resources are being used properly and productively. 6.1 Explain what is meant by: • Control of physical resources. (4) • Control of information resources. (3) Control of human resources. (8) 6.2 Case study In 1993, Louise Gerstner engaged in strategies to turn IBM around when IBM was in freefall (financial difficulty). IBM lost half of its market share as competitors offered alternative computer products at lower prices. He consolidates the bookkeeping system, 128 chief information officers, and 139 surveys to measure customer satisfaction. Gerstner transformed the company into an integrator that would build, run and house systems for customers using own components as well as those of competitors. Employees returned to basics talking to customers and selling products. He rebuilt company culture to focus on performance. He introduced new system for compensation, promotion and training programmes. What he in essence did was to change the conditions for transformation and provide incentives to change attitude and behaviour of employees. The result was a successful turnaround of IBM. Identify and explain which of the three control procedures as indicated in 6.1 Gerstner used to turn IBM around. Motivate your answer from the information provided in the case study. (5)

NB: only answer 6.2

Answer 1

Answer

The control procedure used by Louise Gerstner is Control of Human Resources.

Human resources controls are controls that focus on employee behavior, employee performance and developing and upholding policies and procedures. There are several human resource controls used by the organisations such as;

• Performance appraisals
• Discipline policies
• Employee observations
• Employee training.

In this case Gerstner introduced new system for compensation, promotion, and training programmes which will improve the efficiency of the employees. He also provided incentives to change attitude and behavior of the employees. This resulted in the successful turnaround of IBM.