Are you looking for information about the history of managerial controls? Then, you’ve come to the right place. In this article, you’ll learn about their features, characteristics, techniques, and importance. You’ll also learn about the techniques and processes. Here are a few facts about managerial controls:
We can compare The Enron collapse to the Challenger disaster for the engineering profession and September 11 for political scientists. This section looks at how and why management controls failed at Enron, and what lessons managers can learn from it.
The Enron scandal is a good opportunity for reflection and analysis. It draws from a vast database of public records, testimony from Enron-related trials, and insider accounts to answer the question of why management controls failed in the first place. Although Enron was the victim of widespread fraud, management controls did not prevent Enron from rising to the top of the corporate ladder.
We can trace the history back to Robert Putnam, who first described the strategic aspects of the control process and introduced a sociological perspective to it. Putnam distinguished between four types of control. They are market, exploratory, and boundary.
In addition, Putnam noted the convergence of perceptions. During this time, various authors have studied different approaches to understanding control. But the main purpose of this section is to give a short history of the evolution of management controls.
What are Managerial Controls?
We can characterize management controls by three main types: yes-no and balance. Yes-no controls leave little room for doubt in actions and often generate negative or neutral reactions. These types of controls are especially problematic when standards are unclear or unpredictable.
By keeping measurements objective, the control process can reduce negative reactions. In this section, we will explore these three types of controls. We will also examine their importance. In addition, we will consider what they can do to improve the efficiency and effectiveness of an organization.
A basic control function is monitoring the progress of an organization’s goals. It implies a standard against which to measure progress. Moreover, it requires a specific process. These processes are the control procedures.
The process of measuring progress is important in any type of management process.
Let’s take an example. The standard for a new project is to improve sales by fourteen percent. In order to achieve the goal, the manager must set sales targets for every month.
For organizations that operate in ambidextrous environments, some level of management control is necessary. Administrative controls, on the other hand, can be loosely designed during periods of exploration while still ensuring alignment with the organization’s objectives.
These administrative controls can apply to groups as well as individuals. And they can influence the behavior of employees. But, when it comes to controlling organizational ambidexterity, we need to apply these three types of management controls.
Features & Characteristics
Managerial controls are continuous, forward-looking, action-oriented processes involving managers and their teams. In addition to affecting other functions, they also influence the entire organization.
Because each manager is responsible for the management of a certain function, they must exercise control. Listed below are some important characteristics of managers and their teams. Let us examine each of these features/characteristics in detail.
Planning and Controlling
Planning and controlling are interrelated, though the scope of each differs. Top managers exercise administrative control and focus on broad policies and plans. Middle-level managers exercise executor control or are responsible for executing plans, policies, and programs.
And supervisors exercise operational control or management of actual operations. In both instances, the results of the control are within the planning and used to prescribe new standards for controlling. In either case, the two are closely linked and must work hand in hand. One of the most challenging aspects of managing employees is identifying the behaviors of subordinates and comparing them with the standards and objectives of the organization.
It is also difficult to measure human behavior and set standards for competence and job satisfaction because it is difficult to quantify these variables. Moreover, the manager’s decision is final. However, this fact does not preclude the application of managerial and other types of control mechanisms.
Techniques & Processes
These techniques help the organization achieve the desired results while minimizing the costs associated with achieving them. The governmental agencies regulate many of these.
One technique is the analysis of statistical reports. This is a quantitative control method and is typically based on statistical reports. These reports can show factual data, and trends, and make inferences about whether we will implement those policies.
As such, statistical reports can be highly valuable in determining the effectiveness of a control system. However, this type of management control requires continual analysis and revision to ensure that standards are maintained.
The process also involves monitoring progress, which is one of the fundamental functions of the control process. Progress is measured against a standard, and the process must be specific.
A sales manager, for example, should commit resources to lead a sales team to achieve its goal. Once the process is in place, it will cycle back to the other managerial functions. However, the main difference between operational and organizational control lies in the level of detail and the scope of control.
Various types of control execution are useful to improve the performance of the organization. Corrective action may involve improvements in selection, training, and remuneration.
Sometimes, special measures are necessary for motivation. In such cases, managers should provide meaningful work, award bonuses based on performance, and involve employees in decision-making processes.
Feedback information includes information on the quality of performance and is provided to the manager-controller. These controls can help the management make more informed decisions, which will lead to better results and a more profitable company. Technically speaking, there are the basic three types.
Bureaucratic, scientific, and quality.
Bureaucratic control involves the formal procedures of an organization. These include daily reports on progress, inventory reconciliations, sales revenue projections, and reward systems. Safety processes are also included, including protocols for heavy equipment operations and floor manufacturing.
These controls are generally ongoing processes and managers have to continually compare the actual results to the objectives set by the organization. They also need to make appropriate changes according to the results. A middle-level manager will use various methods of control, such as observation, auditing, and internal control.
Importance of Managerial Controls
Managing people is not easy. Control over people is sometimes difficult because it involves providing consequences or rewards based on performance. Some types of control are purely related to the output, while others deal with the behavior of individual employees.
If the goal is to satisfy customers, for example, a salesman may not need close supervision. However, when the manager is concerned with maintaining customer satisfaction, he should monitor his behavior closely. In a firm, tight control of a process never happens by accident.
For example, the Space Shuttle Challenger explosion illustrated the importance of a process, which may seem simple but was responsible for the catastrophic events. The lack of processes in a firm can result in a similar corporate disaster. Control management is vital to a firm’s efficiency and effectiveness. A company that devotes significant resources to control management will have an efficient organization.
When we think of a management control system, we often envision a simple cybernetic system with a single feedback loop. This kind of control is proactive in nature, preventing adverse performance effects.
Unlike financial goals, these objectives do not need to be quantified. However, they must be understood by employees in order to prevent them from compromising the business. The purpose of management control is to ensure that the organization achieves its goals.
According to Breslin (2014), organizations that are ambidextrous need some degree of management control at all times to guide employee behavior. While administrative controls can be loosely implemented during exploration phases, they must still ensure that behavior is aligned with organization objectives.
These measures apply to individuals as well as groups.
They influence behavior and promote alignment with the organization’s goals. Management controls vary in their effectiveness, but the goal of every MCS is to make the company more profitable.
Some examples of control execution are rules, regulations, incentives, and culture. These measures are implemented by management to reduce the risk associated with the organization.
Moreover, regulations and frameworks reinforce IT policies. For example, different types of security assessments and penetration and vulnerability tests could be used to identify risks and improve IT security.
While these approaches are largely applicable to small and medium-sized businesses, they are not suitable for large enterprises. In such cases, managers should consider alternatives to apply managerial controls.