Basics of Management Control System
The Basics of Management Control Systems
Chapter 1: Management and Control
The Basics of Management Control Systems
Management control u The process by which management: – ensures that people in the organization carry out organizational objectives and strategies; (Reactive: measure performance and compare it with pre-set standards, take corrective actions, etc.) – encourages, enables, or, sometimes “forces” forces” employees to act in the organization ’s best interest. organization’ (Proactive: direct supervision, hiring standards, planning, etc.) – Management control includes all the devices/mechanisms managers use to ensure that the behavior of employees is consistent with the organization’s objectives and strategies.
The Basics of Management Control Systems
Function and benefit u Purpose/function
– get done what management wants done; – influence behavior in desirable ways.
– Benefit
– increased probability that the organization’s objectives will be achieved.
The Basics of Management Control Systems
Management and its components
Objective Setting
Strategy Formulation
Management Control
The Basics of Management Control Systems
Objective setting u Objectives are
» a necessary prerequisite for any purposeful activities.
» Without objectives, it is impossible
» to assess whether the employees’ actions are purposive; » to make claims about an organization’s success.
» Objectives can be
» financial versus non-financial; » quantified, explicit versus implicit; » economic, social, environmental, societal.
The Basics of Management Control Systems
Strategy formulation u An organization must select any of innumerable ways of seeking to attain its objectives.
u
Strategies define how organizations should use their resources to meet their objectives.
Hence,
strategies put constraints on employees to focus activities on what the organization does best or areas where it has an advantage over
Chapter 1: Management and Control
The Basics of Management Control Systems
Management control u The process by which management: – ensures that people in the organization carry out organizational objectives and strategies; (Reactive: measure performance and compare it with pre-set standards, take corrective actions, etc.) – encourages, enables, or, sometimes “forces” forces” employees to act in the organization ’s best interest. organization’ (Proactive: direct supervision, hiring standards, planning, etc.) – Management control includes all the devices/mechanisms managers use to ensure that the behavior of employees is consistent with the organization’s objectives and strategies.
The Basics of Management Control Systems
Function and benefit u Purpose/function
– get done what management wants done; – influence behavior in desirable ways.
– Benefit
– increased probability that the organization’s objectives will be achieved.
The Basics of Management Control Systems
Management and its components
Objective Setting
Strategy Formulation
Management Control
The Basics of Management Control Systems
Objective setting u Objectives are
» a necessary prerequisite for any purposeful activities.
» Without objectives, it is impossible
» to assess whether the employees’ actions are purposive; » to make claims about an organization’s success.
» Objectives can be
» financial versus non-financial; » quantified, explicit versus implicit; » economic, social, environmental, societal.
The Basics of Management Control Systems
Strategy formulation u An organization must select any of innumerable ways of seeking to attain its objectives.
u
Strategies define how organizations should use their resources to meet their objectives.
Hence,
strategies put constraints on employees to focus activities on what the organization does best or areas where it has an advantage over