Question

What is the organizational control system? What is “organizational slack” and why is it important for supporting entrepreneurial initiatives? What does it involve to manage slack? Cite your sources.

Answer 1

Organizational control systems support all the top level managers or executives to keep an eye on organizational performance through continuous tracking, helps in determining the problem areas and provide support to take the appropriate actions towards the problems. Normally, mix of three types of control systems are used by the top management, such as output control (it focus towards on measurable outcomes within an organization), behavioral control (it focus towards controlling the action which will lead to outcomes) and clan control (it is more informal in nature and focus towards shared traditions, norms, values, expectations, etc.). Organizational slack is the excess capacity maintained by an organization. Generally, slack occurs when organizational resources are under-utilized (for example, employees are paid more as compared to their retention cost) and organization charges less for its offered products in order to not losing potential customer base. It is generally evaluated in financial resources term and it is the important source for innovation related findings. Hence, this becomes important for supporting entrepreneurial initiatives and helps organization to respond to the dynamic changes in the business environment. As due to the slack, most of the organizational resources are available and used effectively for innovative outcomes. Organizational slack is managed by managers , and mostly on their discretion which is legitimatized on the basis that organizational slack is not devoted to definite purpose of keeping current operations by managers.