Effective system of control
From CEOpedia | Management online
|Effective system of control|
|Methods and techniques|
Effective system of control is necessary to perform all functions of modern manager. It is source of managerial information, and is necessary for planning, motivating and organizing. Qualities of an effective system of control, are:
- Accuracy - Inaccurate data can lead to wrong decisions
- Timeliness - Delays in information flow, lead to low effectiveness of corrective actions
- Objectivity and rationality - for employees and managers using control information. Incomprehensible control system generates confusion and frustration of workers
- Focus on strategic points - Managers should not focus monitoring of activities with minor importance or low importance for the efficiency of the organization. In particular, he should control areas, where the deviation from the norm can cause a lot of damage to the company.
- Economic Realism - The cost of implementing the control system should be less than the benefits that are achieved thanks to it.
- Organizational realism - Employees need to see the relationship between labour productivity and received rewards. Standards must be realistic.
- Coordination - Information about results should be coordinated with the course of the work process. It must be delivered to all involved employees. It is essential for complex processes and teamwork
- Flexibility - change of control instruments should follow the development of the company, changes in the environment or internal situation.
- Normativity and operability - The control system should include a set of proposals for corrective actions for the most common deviations. This information should be usable in practice.
- Approval by members of the organization - Control system must be consistent with the objectives of the organization, and the aspirations of manage employees. Its design has to be adapted to different levels of management.
- Anthony, R. N., Govindarajan, V., & Dearden, J. (1998). Management control systems (Vol. 9). Boston, MA: Irwin McGraw-Hill.
- Evans, J. R., & Lindsay, W. M. (1999). The management and control of quality.
- Feng, M., Li, C., & McVay, S. (2009). Internal control and management guidance. Journal of Accounting and Economics, 48(2), 190-209.
- Langfield-Smith, K. (1997). Management control systems and strategy: a critical review. Accounting, organizations and society, 22(2), 207-232.