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Growing Pains, 5th Edition by Yvonne Randle, Eric G. Flamholtz

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Chapter 8Organizational Control and Performance Management Systems

All organizations, no matter what their stage of development, require some form of control or performance management system to motivate, assess, evaluate, and reward employees. The concepts and methods discussed in this chapter can be applied in all types of organizations from entrepreneurial start-ups to large established companies and nonprofits as well. When an organization is very small, the leader can control what is happening through day-to-day involvement and observation alone. The required coordination and information needed for personnel evaluation and decision making occurs almost by osmosis. The owner has a feel for what is happening, what the problems are, and what needs to be done, and this is enough.

As the enterprise increases in size and gains additional people, however, the entrepreneur's ability to maintain control over all aspects of its operations begins to decrease. The organization begins to experience growing pains related to ineffective control (or performance management) systems. For example, people either deny responsibility for tasks or do everything themselves because there are no clearly defined roles and responsibilities. A company can find that its profits are low, even when sales are increasing; it has no way of knowing where it stands financially because formal performance monitoring systems are underdeveloped. A business can experience a high degree of duplication of effort and ...

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