The Control Function of Management Flashcards
Describe the two basic functions of control systems.
- Strategic Control: is our strategy valid?
- Management Control: are our employees likely to behave accordingly?
Describe the behavioral emphasis of management control.
Mangers taking steps to ensure employees are acting in accordance to organizational values. Guard organization from unable or unwilling employees.
When is management control “good”?
When major unpleasant surprises are unlikely to happen.
How can we assess if good control has been achieved?
assessing good control must be future-oriented and objectives driven
Name the different strategies to avoid control problems.
Avoidance
Automation
Risk Sharing
Centralization
What are the major control alternatives besides MCS?
- incentives that are highly leveraged
- subjective evaluation
- performance-based incentives
- internal audit staff
- policies and procedures
Name the steps to implement results controls.
- Define measurement dimensions
- Measure:
- Set Targets
- Provide Rewards
What is critical in choosing performance measures?
“what you measure is what you get”
balancing responsibilities to all stakeholders
What conditions have to be present to make results controls work best? Describe them.
- Knowledge of the desired results
- ability to influence desired results: in material way an in time
- ability to measure controllable results
Name and describe the characteristics results measures should have to evoke the right behaviors.
- congruent and controllable
- precise: actual (true) value
- understandable
- timely: motivational aspect, value of intervention is higher
- cost efficient
Name and describe the different forms of action controls.
- Behavioral constraints
- Pre-action reviews
- Redundancy
- Action accountability
What criteria should be employed to judge the effectiveness of action tracking?
- Precision
- Understandability
- Timeliness
- Objectivity
What are the three most common drivers to adopt codes of conduct?
- legal requirements
- firm reputation
- shared company culture
What do group-based incentive plans create?
culture of “ownership” and “engagement”
What are the factors that influence the achievement of tight result control?
- Definition of the desired Results Areas
- Performance Measures