MANAGEMENT CONTROLJESSSICA

P.

GUTIERREZ

Prepared by:

Control Management Control System

Managerial Function

CONTROL-is the process of guiding a set of

variables to attain a preconceived goal or objectives. It is a broad concept applicable to people, things, situations, and organizations.

-“to determine the behaviour or supervise the running of, to maintain, influence or authority over...to regulate...”

MANAGEMENT CONTROL

-the actions used by the management to guide people, machines, and functions to attain organizational goals and objectives.

MANAGEMENT CONTROL SYSTEM

-an organized systematic process and structure that management uses in management control.

The Nature of Control

An organization of managers and workers must be motivated and guided to do things its leaders want it to do and must be corrected when it departs from the pursuit of management goals. If management loses control and the organization goes out of control, undesirable things happen to many people.

DEFINITIONS OF MANAGEMENT CONTROL

-is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of organization are achieved in desired manner.(Wikipedia)

-Control of an undertaking consists of seeing that everything is being carried out in accordance with the plan which has been adopted, the orders which have been given, and the principles which have been laid down. Its object is to point out mistakes in order that they may be rectified and prevented from recurring(Henry Fayol,1916)

- Control is checking current performance against pre-determined standards contained in the plans, with a view to ensure adequate progress and satisfactory performance.(Edward Francis Leopold Brech)

- Management Control is the process by which managers influence other members of the organization to implement the organization’s strategies.(Robert N. Anthony,2007)

Management control is concerned with coordination, resource allocation, motivation, and performance measurement. The practice of management control and the design of management control systems draws upon a number of academic disciplines.

1. Management control involves extensive measurement and it is therefore related to and requires contributions from accounting especially management accounting.

2. It involves resource allocation decisions and is therefore related to and requires contribution from economics especially managerial economics.

3. It involves communication, and motivation which means it is related to and must draw contributions from social psychology especially organizational behavior.

According to Maciariello et al. (1994),

Management Control Principles1. Principle of Assurance of Objective- The

basic purpose of management control is the attainment of objectives does this by detecting failures, in plans

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. Principle of Organizational Suitability. A management control system fit the manage authority area and it should reflect the organization structure.

8. Principe of Individuality of Controls. Controls become effective when they are consistent with the position, operational responsibility, competence, and needs of the individual concerned.

9. Principle of Critical Point Controls. While exercising control, a manager should focus attention on the factors, which are critical to appraising performance.

10. 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.