Professional Documents
Culture Documents
Merchant and Van der Stede: Management Control Systems Pearson Education Limited 2003
Recall that ...
Management Control is about taking steps to help
ensure that the employees do what is best for the
organization.
Three issues:
Do they understand what we expect of them ...
Lack of direction
Merchant and Van der Stede: Management Control Systems Pearson Education Limited 2003
Control alternatives
Controls can focus on:
Merchant and Van der Stede: Management Control Systems Pearson Education Limited 2003
Elements ...
Defining the performance dimensions
What you measure is what you get; hence,
If not congruent with the organizations objectives, the controls
will actually encourage employees to do the wrong things!
Merchant and Van der Stede: Management Control Systems Pearson Education Limited 2003
Conditions ...
Results controls work best only when all of
the following three conditions are present:
Superiors / managers must know what results are
desired in the areas being controlled;
Merchant and Van der Stede: Management Control Systems Pearson Education Limited 2003
Ability to influence results ...
The person whose behaviors are controlled must be
able to affect the results in a material way in a given
time span.
Controllability principle
Merchant and Van der Stede: Management Control Systems Pearson Education Limited 2003
Ability to measure results effectively ...
Merchant and Van der Stede: Management Control Systems Pearson Education Limited 2003
Pros and cons of results controls ...
PRO CON
Behavior can be influenced Often less than perfect indicators of
while allowing significant whether good actions have been taken.
autonomy. They shift risk to employees (because
They yield greater employee of uncontrollable factors). Hence, they
commitment and motivation. often require a risk premium for risk
averse employees.
They are often inexpensive.
Sometimes conflicting functions:
e.g. performance measures
Motivation to achieve
are often collected for
reasons not directly targets should be challenging
related to management Communication among entities
control. targets should be slightly conservative
Merchant and Van der Stede: Management Control Systems Pearson Education Limited 2003