Essay on management and control

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Slide 3.1

Chapter 3:
Action, Personnel, and Cultural
Controls

Merchant, Management Control Systems PowerPoints on the Web, 3rd edition, © Pearson Education Limited 2012

Slide 3.2

Action controls


Ensure that employees perform (or do not perform) certain actions known to be beneficial (or harmful) to the organization



Prevention / detection
– Most action controls are aimed at preventing undesirable behaviors

Merchant, Management Control Systems PowerPoints on the Web, 3rd edition, © Pearson Education Limited 2012

Slide 3.3

Effectiveness of action controls


They are usable and effective only when managers:
– Know what actions are desirable
» Difficult in highly complex and uncertain task environments
(e.g., research engineers or top-level managers)
– Have the ability to make sure that the desirable actions occur » For example, effectiveness of organizational procedures?

Merchant, Management Control Systems PowerPoints on the Web, 3rd edition, © Pearson Education Limited 2012

Slide 3.4

Behavioral constraints


Physical
– Locks, passwords, limited access, etc.



Administrative
– Restriction of decision-making authority
– Separation of duties, etc.

Merchant, Management Control Systems PowerPoints on the Web, 3rd edition, © Pearson Education Limited 2012

Slide 3.5

Preaction reviews


Scrutiny of action plans, investment proposals, budgets – Review and approval
– Part and parcel in (capital) budgeting processes, which are otherwise mainly a results control mechanism

Merchant, Management Control Systems PowerPoints on the Web, 3rd edition, © Pearson Education Limited 2012

Slide 3.6

Action accountability


Holding employees accountable for the actions they take



It requires:
» Defining what actions are (un)acceptable
» Communicating these definitions to employees


For example, work rules, policies and procedures, codes of conduct » Observing or otherwise tracking what happens




Direct observation/supervision
Periodic tracking (e.g., mystery shoppers)
Evidence of actions taken (e.g., activity reports)

» [Rewarding good actions, or] punishing actions that deviate
Merchant, Management Control Systems PowerPoints on the Web, 3rd edition, © Pearson Education Limited 2012

Slide 3.7

Redundancy


Assigning more people (or machines) to a task than necessary
– For example, “backup” people or facilities

Merchant, Management Control Systems PowerPoints on the Web, 3rd edition, © Pearson Education Limited 2012

Slide 3.8

Pros and cons of action controls
PRO

CON



The most direct form of control



Only for ‘routine’ jobs



Tend to lead to documentation of the accumulation of knowledge as to what works best



May discourage creativity, innovation and adaptation



May cause sloppiness



May cause negative attitudes

– Organizational memory


An efficient way of coordination

– For example, little opportunity
– That is, they increase the for creativity and selfpredictability of actions and reduce actualization the amount of inter-organizational information flows to achieve a
 Sometimes very costly coordinated effort

Merchant, Management Control Systems PowerPoints on the Web, 3rd edition, © Pearson Education Limited 2012

Slide 3.9

Personnel/cultural controls


“People controls” (for short) ensure that employees:
» Will control their own behaviors
– Personnel control
– Self monitoring

» Will control each other
– Cultural controls
– Mutual monitoring


People controls are part of virtually every management control system, and indispensable in … “flatter and leaner organizations with empowered employees”
Merchant, Management Control Systems PowerPoints on the Web, 3rd edition, © Pearson Education Limited 2012

Slide 3.10

Personnel controls


Personnel controls build on employees’ natural tendencies to control themselves, because most people …
– have a conscience that leads them to do what is right
– find self-satisfaction when they do a good job and see their organization
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