Management Control Types
There are three major types of management control over behavior in organizations. Each control has its own standards, its own monitoring system and its own system for corrective action when behavior does not meet standards. These three types of management controls are given below:
- Organizational Controls. The organizational controls refer to the formal rules and standard operating procedures that are communicated throughout the organization. Such controls are concerned with the total organization and may, therefore, be called administrative controls. The direction for organizational controls comes from the plans and purposes of the organization. In business organizations, this direction is often expressed in terms of market share, cost reduction, return on investment etc. These may be translated into specific performance measures such as sales quotation standard costs and budgets. Rewards for meeting standards, vary from a word of praise to salary increase and promotion.
- Social Controls. Social or group informal controls are based on the principle of mutuality which implies necks and balances on each others activities as a result of the mutual commitment of group members to each other. Such controls have neither explicit written standards nor formal authority behind them. But these are very real and powerful form of control over behavior in organizations. The direction for these controls comes from the mutual commitments of members to each other and the shared ideals of the group. These ideals are group norms about sharing, helping, work performance, etc. The members naturally and widely accept them. Therefore, compliance with these controls is easier. Rewards for compliance include approval, membership and even informal leadership.
- Self-control. Self-control or individual level control implies the control exercised by an individual on himself or herself with a view to achieve personal goals and aspirations. Individuals become committed to certain objectives and often work tirelessly to accomplish them. The direction for such controls comes from individual goals and aspirations. The standards become expectations about one’s performance. The rewards for compliance to these self-administered controls include satisfaction, elation and sense of self mastery. The sanctions for non-compliance may range from disappointment to a deep sense of failure and inadequacy. The popular term used for self-control is motivation. If someone is directing his energies towards certain accomplishments, we say he is highly motivated.
The three types of management controls given above are interdependent and mutually reinforce each other. If one type of control is working at counter-purposes with another the results will be inefficient. For example, if the organization introduces an incentive bonus to promote high productivity but the group norms of output are set at a moderate level, each type of control will is less effective. On the other hand, if all the three types of controls are working in the same direction the control system will be optimally effective. In fact, control is usually highest when it is least apparent.
These controls not only reinforce each other but also mutually determine each other. When an individual, who was regulating his own behavior towards a certain goal, is required by external controls to work toward that goal in a different way, he feels new personal concern for meeting the total objective. His energies are diverted into coping with the organizational controls in an effort to regain control over his own activities.
Another classification of management controls are as follows:
- Steering Controls. These are used while operations are in progress to keep activities on the right course. Results are predicted and corrective actions are taken before the total operation is completed. The most common example of a steering control occurs when a person is driving a car. The driver makes decisions during driving to keep the car on course, at the proper speed and out of danger. Operational procedures are steering controls used by organizations to guide employees. Steering controls are primarily feed forward controls designed to prevent mistakes. These controls provide mechanization for remedial action while the actual results are still being shaped. The great virtue of steering controls is that most people regard them as helpful rather than as pressure devices. If the good is accepted then the various feedback’s are treated as aids in achieving the desired results. Person involvement adds to the positive response, which can be enhanced by translating steering controls into action as close to the actual operations as possible. Steering controls stimulate a positive response only when the people on the giving and, receiving ends of the control effort are steering in the same direction.
- Yes-No Controls: Under such control, work is allowed to proceed to the next step only after screening at selected checkpoints in an operation. Corrective action required by this type of control is rather, obvious: either ‘go’ or stop’. Therefore, this control is also called go/no control. These controls are used as fail-safe standards in initial operation and can be incorporated into steering procedures at specific points to modify operations. Yes-No controls are essentially safety devices. Avoidable expenses or poor allocation of resources can also be checked by these controls. Yes-No controls would be unnecessary if steering controls were fully effective. But treeing controls may not be fully reliable or may be very expensive. So Yes-No controls are applied. These controls usually leave little scope for doubt about what, action managers should, take. Yes-No controls often generate, neutral and negative reactions particularly, when standards are vague and unpredictable. Such reactions can be reduced by making clear that control is necessary for the attainment of objectives and by keeping the measurements objective and consistent.
- Post-Action Controls. In this type of control, the operation is first completed. The results are measured and compared with a standard. Deviations from standards are analyzed and corrective action is taken to avoid similar, mistakes in the future. Quality control and budgetary control are popular examples of this approach. Most post-action controls are devised as periodic reports. For example, banks use monthly loan activity summaries to evaluate patterns of risk in the number and types of loans processed. If the resulting risk profile is higher than a bank wants to maintain fewer high, risk loans are made in the coming months. Thus, post-action controls are like, score cards. In post action controls, the work is already completed before it is measured. However, such controls serve two purposes. Firstly, where rewards are based on actual performance, results must be unmeasured to divide rewards. Secondly, such controls provide planning data for similar work in future. With improved methods of monitoring results can often be evaluated very rapidly. Some computer assisted quality control systems monitor operations as soon as they are completed. Consequently when post-action controls provide rapid feedback, they became very useful for enhancing steering controls.
All the three types of controls may be needed to control a major activity. For example, most of the instruments in the cockpit of an airplane are steering controls, for monitoring flight operations. Pre-flight checks are Yes-No controls employed before a commercial flight. Post-action controls after the flight include pilot debriefing sessions, evaluation of information from in-flight recorders, and reports on schedules, costs, maintenance, and other elements of airline operations.
Credit: Management Control Systems-MGU