Management as a control system
Planning, organizing, staffing, coordinating, directing and
controlling are the various steps in a management process. All the steps prior to a control are
necessary but are not necessarily self-assuring the results unless it is
followed by strong control mechanism. The management experts have viewed these
steps as `Management Control System'. They postulate the hypothesis that unless
a control is exercised on the process, the goals will not be achieved. They
advocate a system of effective control to ensure the achievement of the business
objectives.
A definition of control is the process through which managers
assure that actual activities conform to the planned activities, leading to the
achievement of the stated common goals.
The control process measures a progress towards those goals, and enables the
manager to detect the deviations from the original plan in time to take
corrective actions before it is too late. Rober J Mockler defines and points out
the essential elements of the control process.
The management is a systematic effort to set the performance
standards in line with the performance objectives, to design the information
feedback systems, to compare the actual performance with these predetermined
standards, to identify the deviations from the standards, to measure its
significance and to take corrective actions in case of significant deviations.
This systematic effort is undertaken through the management control system.
The control system is essential to meet the environmental
changes discussed earlier, to meet the complexity of today's business, to
correct this mistakes made by the people, and to effectively monitor the
delegation process. A reliable and effective control system has the following
features.
This is a mechanism of predicting the possibility of
achieving the goals and the standards before it is too late and allowing the
manager to take corrective actions.
The performance standard must be measurable and acceptable to
all the organization. The system should have meaningful standards relating to
the work areas, responsibility, and managerial functions and so on. For example, the top management would
have standards relating to the business performance, such as production, sales,
inventory, quality, etc. The operational management would have standard relating
to the shift production, rejection, down time, utilization of resources, and
sale in typical market segment and so on.
The chain of standards, when achieved, will ensure an achievement of the
goals of the organization.
In every business there are strategic areas of control known
as the critical success factors. The system should recognize them and have
controls instituted on them.
The control system would be effective, if it continuously
monitors the performance and send the information to the control centre for
action. It should not only highlight the progress but also the deviations.
The feedback should be accurate in terms of results and
should be communicated on time for corrective action.
The system should be realistic so that the cost of control is
far less than the benefits. The
standards are realistic and are believed as achievable. Sufficient incentive and rewards are to
be provided to motivate the people.
The system should have the information flow aligned with the
organization structure and the decision makers should ensure that the right
people get the right information for action and decision making.
The system should selectively approve some significant
deviations form the performance standards on the principle of management by
exception.
A standard is meaningful when it is achievable and provides a
challenge to the achiever. A management control system has a set of objectives,
standards to measure, a feedback mechanism and an action centre as elements of
the system. They need to be properly evolved and instituted in the organization
with due recognition to the internal and the external environment. The system as
a whole should be flexible to be changed with ease so that the impact of changed
environments is handled effectively.
