M.

Farhan Thaib Rianto

1606899182
CTR Report
Week 9 – Levers of Control

Levers of Control

The case of this topic is about the Automation Consulting Services (ACS) and the problems
that arise in each of their branch offices. As stated in the case, ACS has expanded its
businesses by opening branch offices in San Jose, Boston, Seattle in Philadelphia. San Jose
office dealt with the problem of one of the employees using a cross-subsidizing method in
charging the customer. Seattle office faced a lack of demand on their services and the lack of
business development plan. Boston faced a lack of experience in service sector jobs.
Philadelphia’s problem arose from the greediness of manager to increase their compensation
by focusing more on the revenue instead of profit, and the expense of Philadelphia’s office
has been increasing uncontrollably. Each of these problems can be overcome with levers of
control from the top management, implementing boundary, belief, interactive control, and
diagnostic control system in each office deemed necessary

The important questions that arises from this is what the problems are faced by ACS in every
type of levers of control and how to overcome these problems. I think that these questions are
very interesting and crucial because managers, especially the top managers of ACS need to
understand what type of levels of control that the problems needed to be addressed in. If they
failed to identify it, it would likely not have any significant effect to the company. After
identifying the problems, then the appropriate step for the managers to do is find ways to
overcome it. Because if this situation does not being addressed properly, it would have a
serious consequences for the performance of the company.

The problems arose in San Jose office is the billing practices of cross subsidizing happened
because there are no specific guidelines on the business policies regarding terms and
conditions of client payments. In Boston office, employees have an issue of controlling bids
for one-time jobs and strategic direction with the respect of manufacturing and service
sectors. These problems in both offices can be overcome by implementing a proper
boundary system. The boundary system that San Jose office can be implemented is top
managers could create a set of rules to conduct a proper business policy, so the act of cross-
subsidizing will not be tolerated and anyone who violates it will receive a severe punishment.
For the Boston office, the boundary system that can be implemented is by identifying the
criteria that define strategic focus to help whether a job should be pursued or not. If it should
not, than it would be clearly stated in the boundary systems of the company.

Another problem in San Jose office is the employees are not given enough information about
the company guidelines, strategic and core values. Communication between the employees,
managers, as well as the founders are inadequate to properly conduct the business process. In
Seattle office, the problem that the company faces are the managing partner strongly opposed
the proposed system by the top managers because they believe that the new system would be
time-consuming. These problems above can be prevented and anticipated with a strong belief
system implemented by the company. The San Jose’s employee must learn more about the
business principles and core values of ACS. They must also be motivated to act in the
desirable way for the company to achieve their targets. One of the way to increase employees
motivation and satisfaction is a weekend retreat of fun learning. For the Seattle office, the
managing partners have to understand the important of the new system and must be
motivated by company’s goals and objectives and realize that ACS can still be a
decentralized business.

Besides the problem with the new system, Seattle office also have a problem with their lack
of demand for their services and their business development. Many of their employees have
no billable work, and therefore have zero utilization. in Boston office, a problem emerged
from a lack of experience in service sector jobs. When this office decided to undertake a job
for library, they ran away over budget and over time, and ended up having their work by
subcontracting some of the work to an outside specialist. These problems basically can be
overcome by a proper interactive control system. By having an interactive control system in
Seattle office, prospecting activity can be monitored as well as the probable for the volume of
work. Partners must be informed that financial is not enough, and interactive monitoring
system should be implemented gradually. For the Boston office, interactive control system
could manage the founders and partners to work together in a series of meetings to identify
the opportunities in the emerging service sector and formulate the best plan of action to cater
this market.
Philadelphia office also have several problems of their own. Managers at the Philadelphia
office are more focused on increasing their revenue instead of profit, Because of this
greediness, there are an uncontrollable amount of increase in expenses under the category of
of “other expense”. The problem in this office can be handled by implementing the diagnostic
control system that would address the increase in expense, as profit plans, budgets, goals and
objectives would be developed to assist the different offices in maximizing revenue and
controlling expenses. This would ultimately convert each office into a profit center rather
than the revenue center.

In conclusion, these problems that ACS have in each of their branch offices can be overcome
by implementing the proper levers of control. These levers of control are very crucial and
critical for the company, because as organizations become more complex, top managers will
inevitably deal with the increasing opportunity, unwanted actions, competitive forces, and
decreasing time and attention. By using the levers control effectively, the top managers can
be confident that the benefits of innovation and creativity are not achieved at the expense of
the control.
References:

Simons, Robert, and Hilary Weston. “Automation Consulting Services.” Automation

Consulting Services - Case - Harvard Business School, 9 Nov. 1989,
www.hbs.edu/faculty/Pages/item.aspx?num=3447.

Simons, Robert. “Control in an Age of Empowerment.” Harvard Business Review, 1 Aug.

2014, hbr.org/1995/03/control-in-an-age-of-empowerment.