Problems with Management Control Systems

Despite of the benefits, there are some issues with the implementation of management control system in an organization.They are:

  1. Magnitude of Change. Management control system is designed to cope with changes of a limited magnitude. While designing the control system certain as assumptions are made concerning the variables expected to change and the degree of change. Corrective actions are decided on the basis of-these-assumptions. For example, overtime may be decided on the assumption that five per cent of the employees will on an average be absent. When the magnitude of change is too high, the corrective action cannot work. For example, if 90 per cent of the employees remain absent, on a particular day due to a strike, management can do little to correct the change. Thus, the control system fails when the variables go outside the range, which the system was designed to handle.
  2. Time Rate of Change. Control system in any organization depends upon accurate and timely feedback’s on actual performance. Such feedback largely comes through written reports. It takes time to write and transmit the control reports. When an activity is changing very fast, the feedback becomes outdated by the time reports reach the higher authorities. Such time lag in feedback slow downs the adaptive process. The control system takes greater time to respond.
  3. Faulty Standards. When the control standards are erroneous, it becomes difficult to discriminate between proper and improper performance be decision-maker is not certain whether the deviation in performance is due to the activity being out of control or due to the improperly set standards.
  4. Information Overload. Too much information is harmful for control, as incomplete information. When managers, at all levels receive identical information they may be overburdened and may suggest remedies before giving subordinates an opportunity to take action. Therefore, management must decide the quantity and type of information that should reach to every manager.
  5. Resistance. Employees often consider any control system as a tool to exert pressure on them. They complain that the targets, are non feasible, time Span of appraisal is too short to permit a fair assessment and control staff lacks objectivity. Employees may also resent the control department to sit in judgment. They may question the location of the decision level regarding corrective action. Therefore, a control system must first be ‘sold’ to employees before it is installed.

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