Three Levels of Behavioral Control in Strategic Management

Introduction

This paper defines the three levels of behavioral control and explains why it is important to strike a balance among them. Those three levels, as presented in strategic management theory, are culture, rewards, and boundaries. Stressing only one — or even just two — of these three dimensions can yield decent to good results. However, engaging all three in a complementary fashion is the most effective approach, and the strategic management literature makes this case clearly (Dess, 2009).

Three Levels of Behavioral Control

The three dimensions of behavioral control are complemented by four characteristics of any good control system. First, there should be a focus on constantly changing information that has potential strategic significance. Second, the information in play must be important enough to demand frequent and regular attention from all levels of the organization. Third, the data and information generated are best interpreted and discussed in well-facilitated, face-to-face meetings. Fourth, and finally, the control system should serve as a key catalyst for ongoing debate about underlying data, assumptions, and action plans (Dess, 2009).

The triad of behavioral control dimensions — boundaries, culture, and rewards — can be visualized as a triangle in which all three components are connected to each other by bidirectional arrows. The first element of that triad is organizational culture. Having a strong and clearly defined organizational culture is essential. This culture must be actively fostered and must function effectively. A culture that is too malleable — one that is shifted by unproductive or unhelpful opinions — will ultimately harm a firm (Dess, 2009).

A major mechanism for keeping people moving in the right direction is the second element of the model: the reward system. A proper reward system clearly defines who gets rewarded and for what. The example firm noted in the selected text, Symantec, illustrates this well. At Symantec, rewards are based on measurable financial contribution rather than vague standards or inconsistent contribution-to-reward structures. The people and teams driving corporate values and results are the ones who receive rewards, and this is made visible to others throughout the organization. However, individual motivations and actions do not always benefit the broader group, so precision and consistent measurement are essential (Dess, 2009).

The third dimension is constraints, which refers to how organizations keep people focused on behaviors and activities that advance strategic goals. The four main aspects of constraints are: focusing individual efforts on strategic priorities, providing short-term objectives and action plans to channel efforts, improving efficiency and effectiveness, and minimizing improper and unethical conduct (Dess, 2009).

Conclusion

Good behavior is encouraged, bad behavior is discouraged, and the corporate culture should drive the motivations of everyone involved. If any of the three dimensions are not enforced, the company's initiatives will likely falter (Shefrin, 2010). If leadership becomes corrupted, an organization risks outcomes like those seen at Enron or Merrill Lynch before their respective collapse and acquisition (Lavelle, 2002).