Exploring the Essentials of Management Control

Management control is an essential process that enables organizations to reach their goals by guiding teams and individuals to take specific actions while avoiding others.

Meaning of management control

Management control is a crucial process that aims to achieve specific goals within a given timeframe. It involves three key components: taking corrective action, measuring actual performance, and setting standards. This process entails comparing planned and actual performance, identifying the gaps, determining the root causes, and implementing corrective measures to minimize or eliminate the deviations.

The act of influencing members within an organization to execute the company's strategies is known as management control. This can take the form of tools, processes, policies, practices, or systems that enable management to guide the allocation of resources towards achieving specific objectives.

Features of management control

The features of management control include-

#1. Behavioral consideration

The management strives to exert a direct influence on the organization's workforce by implementing effective strategies that shape their mindset and behavior, ultimately aligning their personal and professional objectives with those of the company. This approach enables employees to perceive their personal achievements as integral to the organization's success, thereby reinforcing a sense of purpose and motivation.

The managers need to promote goal congruence by offering due incentives as it will result in the betterment of the company.

#2. Financial and non-financial performance

customer satisfaction, employee engagement, and innovation. Therefore, it is crucial for management to establish key performance indicators (KPIs) that reflect these non-financial aspects of the business. By using KPIs, management can evaluate the company’s performance on a regular basis and make informed decisions to improve overall performance.

Task control to bring forth the most effective and efficient performance of groups as well as individuals.

Management control includes the implementation of strategies

Strategic formulations include policies, strategies, and goals of the company

#3. Management control activities

One of the key ways that management functions is through a series of managerial activities. Among these activities is the task of influencing individuals or groups to adjust their behavior in order to facilitate the attainment of specific goals.

Controlling the actions which need to be taken by deciding on what and when it should be taken

Evaluation of activities

Coordinating the activities to make it a synchronized effort

Communicating the plan and objectives to the individuals and groups in a clear and precise manner

Types of management control

Effective management control involves devising a strategic plan to ensure the company reaches its desired outcome. This process includes analyzing whether the focus should be on short-term or long-term goals based on the current situation and objectives.

Organizations typically implement two types of management control: regulative and normative, which are further categorized into different groups. While both types of controls are present in most organizations, the level of emphasis placed on each can vary.

The types of management control are described below-

#1. Regulative controls –

Aligning organizational goals, such as customer satisfaction, with regulative control policies - derived from standard operating procedures - can facilitate goal attainment in management. However, it is crucial to find the optimal balance between excessive and insufficient management control.

Bureaucratic controls are a form of management control that derives its power from the individual's position within the company hierarchy. The greater the individual's position within the company, the more authority they have over the organization's policies and procedures.

One effective way to maintain bureaucratic control is through financial controls. This involves setting up a system of checks and balances to ensure that all financial transactions are properly authorized and recorded. By delegating financial responsibility to different levels of management, a company can maintain accountability and prevent fraud or misuse of funds. Additionally, implementing financial controls can help streamline processes and reduce waste, ultimately leading to cost savings for the organization.

Managers are tasked with maintaining cost efficiency and meeting financial objectives that ultimately impact a company's overall profitability. This form of managerial control is particularly prevalent among strategic business units (SBUs) with multiple targets related to finance that hold management accountable for their outcomes.

Ensure that the quality control measures in place have a balance between maintaining standardization and allowing for creative input, ultimately impacting the end result of the product or service provided to customers.

#2. Normative controls

In order to govern managerial and employee behavior, accepted patterns of action are utilized in this form of managerial control. This approach enables an understanding of which behaviors are deemed acceptable and which are not.

Team norms are the unwritten rules that govern how members interact with one another, and they help establish clear expectations for each person's role and responsibilities. As the team evolves and grows, these norms can shift and change, reflecting the group's dynamic and unique culture.

It is a powerful influence over behavior and proves an integral part of management control.

#1.2 Organizational Cultural Norms –

Organizational culture serves as the foundation for this form of management control, emphasizing the significance of shared values, customs, and beliefs. In order to harmonize norms and objectives, teamwork and collaboration are crucial elements.