Control implications for managers

Automotive safety testing develops new ways to protect individuals in the event of an accident. Marriott International implement its First Ten Program, setting a standard for hassle free guest check in (based on the belief that guests ideally should be in their rooms within the first 10 minutes of their arrival) Better financial and operational controls implemented by CEO improved the financial results of Indo Rama synthetics Ltd., India’s largest polyester manufacturer, and helped it to turn around. As these examples, illustrate controlling plays an important role in results and is an important functions of managing. Without controls, managers would have insufficient information to resolve problems, make decisions, or take appropriate actions. How can managers perform the control function effectively and efficiently? To answer this question, we’re going to look at the qualities of an effective control system the contingency factors that affect the design of control systems, and how controls need in be adjusted for national differences.

What are the qualities of an effective control system?

Effective control systems tend to have certain qualities in common. The importance of these qualities varies with the situation but we can generalize that the following characteristics should take control system effective.

Accuracy: A control system that generates inaccurate can result in management’s failing to take action when it should or responding to a problem that doesn’t exist. An accurate control systems is reliable and products valid data.

Timeliness: Controls should call management’s attention to variations in time to prevent serious infringement on a unit’s performance. The best information has little value if it is dated. Therefore an effective control system must provide timely information.

Economy: a control system must be economically reasonable. Any system of control has to justify the benefits that are given in relation to the costs it incurs. To minimize costs, management should try to impose the least amount of control necessary to produce the desired results.

Flexibility Controls must be flexible enough to adjust to problems or to take advantage of new opportunities. Few organizations ace environment so stable that they need no flexibility. Even highly mechanisms structures require controls that can be adjusted as times and conditions change.

Understandability: controls that cannot be understood have no value. It is sometimes necessary therefore to substitute less complex controls for sophisticated devices. A control system that is difficult to understand can cause unnecessary mistakes, frustrate employees and eventually be ignored.

Reasonable criteria: Control standards must be reasonable and attainable. If they are too high or unreasonable they no longer motivate. Because most employees don’t want to risk being labeled incompetent by accusing superiors of asking too much employees may resort to unethical or illegal shortcuts. Control should therefore enforce standards that challenge and stretch people to reach higher performance levels without de-motivating them or encouraging deception.

Strategic placement: Management can’t control everything that goes on in an organization. Even if it could, the benefits couldn’t justify the costs. As a result, managers should place controls on factors that are strategic to the organization’s performance. Controls should cover the critical activities, operations and events within the organization. That is, they should focus on places at which variations harm.

Emphasis on the exception: because managers can’t control all activities they should place their strategic control devices where those devices can call attention only to the exceptions. An exception system ensures that a manager is not overwhelmed by information on variations from standard.

Multiple criteria: managers and employees alike will try to look good on the criteria that are controlled. If management controls by using a single measure such as unit profit, effort will be focused only on looking good on that standard. Multiple measures of performance widen this narrow focus. Multiple criteria have a dual positive effect. Because they are more difficult to manipulate than a single measure, they can discourage employees’ efforts to merely look good. In addition, because performance can rarely b objectively evaluated from a single indicator multiple criteria make possible more accurate assessments of performance.

Corrective action: An effective control system not only indicates when a significant deviation from standard occurs but also suggests what action should be taken to correct deviation. That is, it ought to both point out the problem and specify the solution. This form of control is frequently accomplished by establishing if then guidelines for instance if unit revenues drop more than 5 percent then unit costs should be reduced by a similar amount.