Definition Purpose Strategies of Management Control Essay

What is the Management Control? Meaning, Definition, Purpose, and Strategies Essay; Controlling is one of the four main functions of management. Managers need to ensure all planning, organizing, and leading run as smoothly as desired. If managers can ensure that each plan made and every task given to the employees are carried out perfectly, and the results expected are what had existed planned, control stands not required.

Here is the article to explain, Management Control Meaning, Definition, Purpose, and Strategies Essay!

Unfortunately, managers are not able to ensure these conditions will run smoothly without the occurrence of any problems since most planning exists done by humans, and humans know to be diverse in terms of abilities, motivation, and others. In a rapidly changing business environment, not only the expected results must exist controlled; but planning must also exist monitored and controlled.

Definition of Control;

Management control is a systematic effort to fix or establish the standard of performance; through planning objectives, designing information feedback systems, comparing true performance with the fixed standard, determining whether; there are any disadvantages or weaknesses, and taking suitable actions to ensure all resources; within the organization can exist used most effectively and efficiently the objective of the organization.

Control is the process of ensuring that organizational activities are running according to plan. This process can exist carried out by comparing the true performance with the standard; that has stood established and taking corrective actions to rectify any distortion that does not comply with the standard.

The main purpose of control in management is to prepare managers to face future or existing problems before they turn critical. In general, an organization with a good control mechanism will have the advantage of competing strength compared to organizations without a good control system. The following are several examples of the importance of control for organizations:

Quality Assurance;

The smooth running of a particular process can monitor and problems can avoid by having control. Control can stimulate the organization to monitor and increase the quality of products and services offered. Through the activities related to the control process, members of the organization will always exist driven to act according to the plans that have stood established.

Preparation to Face Changes;

Change cannot exist avoided. Change in environmental factors such as markets, competitors, technology, and legislation makes the control process important for managers in responding to opportunities and threats. Control helps the organization to suit its products to the needs and wants of consumers in the market.

Steps in the Control Process;

A control process has three basic needs: fixing of standards to exist used in measuring the level of growth; monitoring decisions and comparing it to the standards, that is, the comparison of the organisation’s true performance with the planned performance; and finally, taking corrective actions in rectifying any disadvantages and weaknesses that occurred in achieving the performance that has already existed set.

Establishing Standards;

Standard is the base for comparison to measure the level of performance of a company to find out whether the company is compliant. Also, Standard is the point of reference in making comparisons to another value. Standard can exist defined as what requires out of a particular job or an individual. In management control, standards exist usually derived from the objectives. Standards should be easy to exist measured and interpreted. A specific objective that can exist measured makes it more suitable to exist used as a standard. If this standard is not clearly and specifically stated; it may exist interpreted differently and will then raise various difficulties that can affect the goals of the organization.

In general, there are three types of standards: physical standard such as the number of products and services, number of customers and quality of products and services; a financial standard which exists stated in the form of money; and this includes labor cost, sales cost, material cost, sales revenue, profit margin, and others; and lastly, time standard which includes the performance rate of a particular task or the period required to complete a particular task.

Measuring Performance and Making Comparisons;

Performance measurement is a type of control. Actual results need to exist monitored to ensure that the output produced is according to the specific standard. The main purpose of performance monitoring is to gather data and detect deviation and problem areas. Measurement has no meaning if it exists not compared to the standard. The next step is performing the comparison of standards. Comparison of the standard is a process where comparison stands made between the true performances with the standard set. This step is important because it allows any deviation or distortion to exist detected and corrective actions can exist taken to achieve the goals that have existed set.

Corrective Actions;

It is often found that managers establish standards and monitor decisions but do not take suitable actions. The first and second steps in control will be meaningless if corrective actions are not taken. Before taking any steps in correcting, a detailed analysis must be carried out to find out the factors that caused the particular deviation.

This corrective action may involve a change in one or more operation activities of the organization; such as modification, repairing of machines, preparation of certain courses, and others, or it might also involve a change in the fixed standard. Corrective action is a process of identifying the distorted performance, analyzing the distortion, and developing and implementing programs to rectify it.

THE MANAGEMENT CONTROL PROCESS;

The running of a management control process is a continuous act. This process cannot exist done only once to gain the achievement expected. This exists considered a dynamic process. This dynamic process begins with looking at the true performance and measuring the achievement level of that particular performance. Managers will then compare the performance achieved with the performance that has stood fixed. If there happens to be any difference, it must exist analyzed to identify the cause of the differences and this follows by the correcting act.

This process must exist done repeatedly and must exist given full attention by the manager to achieve the performance goals set.

Basic Methods of Control;

According to Williams (2000), a control process consists of three basic methods; which exist identified as future control, concurrent control, and feedback control.

Future Control;

This type of control exists also known as prevention control. This involves the use of information, including information from the latest results, is to forecast; what will happen in the future so that preventive measures can exist taken. It stands implemented to prevent the occurrence of deviation between what had happened with what exists expected to happen. Prevention exists carried out through detailed analysis of the input before it exists accepted into the process of organizational transformation.

Input stands ensured to comply with the quality standards established so that the results obtained are as expected. One example of the use of this control is when a manager ensures that the sample of raw material; that is going to exist used complies with the standard established by the organization or is based on certain specifications to avoid damage to the product in the future.

Concurrent Control;

Concurrent control exists carried out during the process of transformation. When this control exists carried out, restoration actions, corrective actions, or modifications exist done after distortion exists detected. For a production-oriented organization, this controlling action is taken; while input is being processed while for service-oriented organizations, it is taken while service is being provided. Through this method of control, organizations will monitor; their operations and simultaneously take the necessary corrective actions before the transformation process is completed. This will help to reduce mistakes in the outputs being produced. Examples of this method of control are mid-term examinations, control of accounts, control of inventories, and others.

Feedback Control;

Feedback control involves gathering information related to the weaknesses of controlling measures after an incident takes place. This type of control exists implemented after the transformation process has existed completed to find out whether the whole activity ran properly with results as expected. This control is also able to determine whether the plan that is going to exist carried out has continuity with the previous program.

It is also able to evaluate the effectiveness and efficiency of the involved parties in performing the activities of the organization. An example of this method of control is the use of low-quality raw materials that resulted in the production of low-quality products. The act of changing the raw materials used is one of the examples of feedback control.

Types of Control;

According to Williams (2000), five forms of control can exist used by managers in implementing the process of control — bureaucratic, objective, normative, conservative, and self. Illustrates these five forms of control.

Bureaucratic Control;

This method uses hierarchy authority to influence employees. Rewards exist given to employees who obey and punishment exists meted out to employees; who do not obey the policies, regulations, and procedures of the organization.

Objective Control;

This method uses the measurement of observation towards the behavior of employees or output produced to evaluate work performance. Managers are more focused on the observation or measurement of the behavior of employees or outputs rather than the policies or rules. Objective control consists of two forms of control, behavior control, and output control.

Behavior control;

Behavior control is the rule of behavior and actions that controls the behavior of employees in their tasks.

Output control;

Output control in the form of control that controls the output of employees by granting rewards and incentives. Important features in the implementation of output control are reliability, fairness, and accuracy, convincing employees and managers to achieve the expected results; while rewards and incentives depend on the performance standard that has stood established.

Normative Control;

Normative control is a method that arranges the behavior of employees and results through norms and beliefs shared among all the members of the organization. There are two main substances in this type of control; which are, sensitivity towards the selection of employees based on their attitude and norms, and obtaining inspiration based on experience and observation of employees.

Conservative Control;

This is a method that uses the norms and behavior discussed, formed, and agreed upon by the workgroup. This form of control plays a role in an autonomous workgroup. An autonomous workgroup is a workgroup that operates without the presence of a manager and is fully responsible for the control of the process, task group, output, and behavior. Autonomous work groups gradually grow through two stages of conservative control. First, members work and learn from each other, supervising the work of each member and developing norms and beliefs that guide and control them. Secondly, the appearance and acceptance of objectives as a guide and control of behavior.

Self Control;

It is a system where managers and employees control their behavior by establishing their own goals; monitoring their progress and their achievements of goals, and rewarding themselves when goals have stood achieved.

FACTORS THAT NEED TO BE CONTROLLED;

Determining the matters to exist controlled is as important as making decisions on whether to control or in what method should control exist done. Several perspectives need to exist controlled by a manager for the organization to be able to achieve the goals expected.

Financial Perspective;

One of the important areas that need to exist controlled is finance. There are times when the financial performance does not reach the expected standard. If this condition remains undetected and relevant actions exist not taken, the existence of the company might be in jeopardy. The financial perspective is generally related to activities such as sales, purchases, and others. Financial statements are important sources of financial information for an organization. A balance sheet shows how strong the financial position, assets, liabilities, and the position of the equity holder for a certain financial period is.

A profit-loss statement or income statement shows the summary of the operational activities; and the relationship between expenditure and revenue for a particular financial year. There is a new approach in the financial perspective known as economic value added. Economic value added is the total profit of a company that exceeds the capital cost in a particular year. In this perspective, a manager must impose control so that the total profit of a company always exceeds the capital cost for the company to continuously gain economic value added.

Human Resource Perspective;

The control of human resources is vital for organizations. If an organization is unable to control its human resources properly such as losing an expert workforce; hence, it will jeopardize the performance and achievement of the company.

Organizations need to have planning that can motivate the employees. For example, organizations need to be concerned regarding the problems faced by the employees by creating harmonious discussions between the management and the employees union.

Quality Perspective;

Internal operations of organizations exist usually measured through quality. Operations control is very important for every organization, especially for manufacturing firms. This is because the efficiency and effectiveness of operations control will determine the level of production and organizational performance as fixed by the standard.

The quality value of products and services produced based on the standard will be able to strengthen the perception of the customers towards the quality of goods that they had purchased. For example, the control of product quality can reduce waste and product defects and this will further save cost. Inventory control is also effective in reducing the costs of investments related to inventory

Consumer Perspective;

To measure the performance of customers, an organization needs to impose control on customers; who leave the organization and not based on the survey of customer satisfaction. In this perspective, the manager will evaluate by measuring the percentage rate of customers who left the organization. By controlling customers from leaving the organization, a company will be able to increase profits. For example, the cost of obtaining a new customer is five times more compared to the cost of retaining an existing customer.

Overview;

The main purpose of management control is to prepare managers to face existing or future problems before it becomes critical. Management control has three basic needs: establishing standards; monitoring decision and comparing it to the standard, and making corrections on any distortion that occurred between the true decision and the standard.

Control is a dynamic process because it is a continuous process. The control process consists of three basic methods; future control which stands also known as prevention control; concurrent or present control; and feedback control.

Five forms of control can exist used by managers in implementing the control process: bureaucratic, objective, normative, conservative, and self. To ensure that the organization can achieve its goals, several important perspectives must exist controlled — finance, human resource, quality, and customers.