Management Control Principles
The basic principles of management control can be grouped into three categories reflecting their purpose and nature, structure and process. These principles are given below.
- Principle of Assurance of Objective. The basic purpose of management control is the attainment of objectives does this by detecting failures, in plans. Potential or actual, deviations from plans should be detected enough to permit effective corrective action.
- Principle of Efficiency of Controls. A management control system should detect and highlight the causes of deviations from plans with minimum possible costs and unwanted consequences. The principle of efficiency is particularly important in control because techniques tend to become costly and burdensome. A manager may become so engrossed in control that he spends more than it is to detect a deviation. Controls which seriously interfere with authority of subordinates or morale of those who execute plans, is inefficient.
- Principle of Control Responsibility. The primary responsibility for the exercise of control lies with the manager charged with the execution of plans. His responsibly cannot be waived or rescinded without changing the organization structure. This simple principle clarifies the often misunderstood role of controllers and control units. These, agencies act in a service or staff provide control information. But they cannot exercise control unless given the managerial authority and responsibility for the things controlled.
- Principle of Forward Looking. Control, like planning should be forward looking. The principle is often disregarded largely because control has been depend up accounting and statistical data instead of upon forecasts and projections. Even though forecast are not accurate, they are better than historical records. Ideally, a control system should provide instantaneous feedback so that, deviations from desired performance is corrected as soon as they occur. If this is not possible control should be based on forecasts, so as to foresee deviations in time. For example, cash forecasts help in maintaining the solvency of business by anticipating cash shortages and preventing them.
- Principle of Direct Control. Most, controls used today are based on the fact that human being make mistakes. They are often used as indirect controls aimed at catching errors, often after the fact. Where ever is possible,direct controls aimed at preventing errors should be used. Improving the quality of managers can minimize the need for indirect controls. High quality managers make very few mistakes and carry out all their functions to the best advantage.
- Principle of Reflection of Plans. Controlling is the task of making sure that plans are carried out effectively. Therefore, control techniques must reflect the specific nature and structure of plans. For example, cost control, must be based on planned costs of a definite and specific type.
- Principle of Organizational Suitability. A management control system fit the manage authority area and it should reflect the organization structure. When the management control system is tailored to the structure of the organization, it pin points the responsibility for action and facilitates correction of deviation from the plans. Similarly, the information to appraise performance against plans must be suitable to the position of the manager who is to, use it. In other words, all figures and reports used for purposes of control must be in terms of the organization.
- Principe of Individuality of Controls. Controls become effective when they are consistent with the position, operational responsibility, competence, and needs of the individual concerned. The scope and detail information required vary with the level and function of management. Similarly, different managers prefer different forms and units of reporting information. Therefore, controls should meet the individual requirements of each manager.
- Principle of Critical Point Controls. While exercising control, a manager should focus attention on the factors, which are critical to appraising performance. It would he unnecessary and wasteful for a manager to check each and every detail of performance. Therefore, he should concentrate his attention on critical points of performance.
- Principle of Action. Control is a waste of time unless the corrective action is taken. Corrective action may involve redrawing plans, reorganization, replacement or training of a subordinate, motivation of staff, etc. Control is justified only when indicated or experienced deviations from plans are corrected through appropriate, planning, organizing, staffing and directing.
Credit: Management Control Systems-MGU