Management Control Systems
.Concept of Management Control
Ensure that Resources are mobilised and deployed efficiently and effectively. Management control covers the administrative. mismanagement and frauds. Methods and procedures adopted by management to provide reasonable assurance that available resources and assets are properly deployed and safe guarded against waste. accounting and financial management areas.
Control is an integral and essential art of the management process and all the managerial efforts of an organization. organizing and leading.
. along with planning. William Newman: According to him-control one of the basic phases of managing.MANAGEMENT CONTROL DEFINED
Robert Anthony and Vijay Govindrajan: Management control is a process by which managers influence other members of the organization to implement the organization strategy.
CHARACTERISTICS OF MANAGEMENT CONTROL
Focuses on programs and responsibility centers. Relies on two types of information viz. Built around financial structures Follows a definite pattern and time schedule Co-coordinated and integrated to other sub systems
. planned data and actual data. Aims at assuring that all aspects are in balance and are operating in close co-ordination.
PROCESS OF MANAGEMENT CONTROL
Organizing the process Segmenting the organization Risk assessments: Planning further activities Management control evaluations: Corrective actions Reporting:
FACTORS AFFECTING MANAGEMENT CONTROL
Identify the key factors in the business operations Basis for establishing standards of performance such as budgets. standard cost Define the information required for measuring the performance Establishing a reporting system process of measuring may lack objectivity Management control specialists
It facilitates target fixation.MANAGEMENT CONTROL SYSTEMS
It system refers to a framework by which the manager controls the actions of his subordinates and the entire operation of an organization. identifying and reporting variations and initiating suitable action to ensure attainment of objectives.
. collection of information. comparison of actual with targets.
planned data and actual data.NATURE OF MANAGEMENT CONTROLS
Focuses on those activities that facilitate attainment of targets of responsibilities centres.
. Management Control System covers all functional aspects of a company¶s operation. functions on the basis of two sets of information viz.
Management Control System is a coordinated and integrated system. It follows a definite pattern and sequence of activities.
. although non-monetary variables are also taken in to consideration.
It is built around financial variables.
SCOPE OF MANAGEMENT CONTROL SYSTEM
Management control system process involves communications and interactions in the form of memoranda meetings and conversations In addition it also includes the following Programs/Goals Budgeting Operating and Accounting Reporting and Analysis
ESSENTIALS OF A GOOD MANAGEMENT CONTROL SYSTEM
Effective Planning Involvement of Top Management: Motivation of Employees: Establish proper communication mechanism:
Evaluating information and deciding the action to be taken.
. Planning-decides what the organization should do ii. v. Influencing people to change their behavior.Importance of a well structured control system
Control systems in an organization involve the following activities: i. Communicating information to different levels of the hierarchical structure iv. Coordinating the activities of the organization iii.
Significance of human behaviour pattern in Management control.
Perception Attitudes and Beliefs Motivation Goal Congruence Inter-unit Conflict and Cooperation Managerial Styles Force Field Analysis Resistance to Change Entrapment Compromising and Sacrificing Socio-Cultural Influences
STRATEGIC PLANNING. MANAGEMENT CONTROL AND OPERATIONAL CONTROL
a) Level b) Focus c) Complexity d) Element of Judgement e) Information f) Purpose of Estimates g) Persons involved h) Source discipline i) Time Horizon j) Nature of activity