Effective Management Control Systems in Organisations - Essay Example

THE CHALLENGES THAT TOP MANAGEMENT MAY FACE WHEN DESIGNING AND IMPLEMENTING EFFECTIVE MANAGEMENT CONTROL SYSTEMS IN ORGANISATIONS. : Management control systems are a crucial element in any modern organization that seeks to transform its structures to ensure effectiveness and profitability in its operations. Management control systems can be defined as all devices in an organization together with the systems that make up the organization that are utilized to ensure that the decisions and behaviour of their employees are in line with the objectives, strategies and behaviour of that organization. There are a number of controls in any ideal organization for instance; action control involves behavioural consistency of the employees as well as pre-action reviews that employees need to undergo before engaging in any serious operation. Personnel and cultural control, on the other hand, involves selection and placement of employees, training them as well as designing jobs for them within the organization’s structures. Results control deals with measuring of work efforts or results both qualitatively and quantitatively to determine how good an organization’s objectives have been met. Challenges in Designing and Implementing Management Control Systems in Organizations Lack of proper organizational structure is the initial challenge that hinders effective design and implementation of management control systems (Davila, Epstein & Manzoni, 2012). Most organizations do not have elaborate organizational structures in place hence it becomes very difficult to design and implement management control systems (Lewis, 2007). Successful implementation of management control systems is purely dependent of elaborate structures being in place thus a clear chain of command through which instructions and decisions can be passed from one level of management to the next if these structures are not in place the chain of command will not exist or will be distorted in a manner that information cannot be effectively passed to the next level without hindrance (Flamholtz, 1996). Management controls will not be implemented with ease if elaborate structures are not put in place thus it is the duty of the top management to ensure their organization have embraced correct organizational structures to ensure effective and timely implementation of management control systems to enhance efficiency and accountability in the organizations (Khosrowpour, 2000). The management styles that an organization also embrace form part of the factors that hinder the design and implementation of management control systems (Zhang, 2014). This is true because if the management of an organization decides to implement management styles which are incompatible with the employees or the organization’s systems it will be very difficult for the management style to embrace the implementation of management control systems as the control systems will be seeking to regulate and streamline the operations of the organization and thus the wrong style of management has to be overhauled for successful implementation of management control systems (Davila, Epstein & Manzoni, 2012). It is prudent for top management of any organization to embrace standardized management styles to ensure they are compatible with other organizational systems to ensure efficiency in the workplace especially in terms of accountability and decision making in a bid to transform organizations to profitability and success (Ghosh, 2005). Lack of proper personnel in organizational positions together with a mismatch between the employment positions that are held with their accompanying rewards is yet another factor that challenges effective design and implementation of management control systems. Most organizations do not undergo due diligence when selecting and recruiting employees to fill vacancies within the organization (Zhang, 2014). The result of this will be a mismatch between employees and their designation as they will not possess the prerequisite skills and knowledge required for that position. Those involved will be responsible of acting as obstacles to block effective implementation of control systems as they will be required to account for their actions yet they lack relevant skills (Hutt, 2013). Thus they will try their best to sabotage the process of designing and implementation of management control systems so as they will not be held responsible for the malpractices they have done within the organization (Seal, 2011). Deficiency in training and developing employees is another factor that acts against successful design and implementation of management control systems (Zhang, 2014). The employees since they have not been trained effectively will not have skills and knowledge concerning emerging issues in the business world and thus they will not embrace changes that may be introduced in the organization since they do not have knowledge about them. For instance, in the case of designing and implementing management control system they may be opposed to the idea since they may be thinking the top management is unfairly targeting them with accountability issues in a bid to oust them from their positions (Davila, Epstein & Manzoni, 2012). Thus, they may not be cooperative with the management in terms of presenting their ideas concerning the move hence will likely sabotage the process of implementation since the employees are the one that are mostly targeted in providing information to be used for accountability purposes. They will tend to be reluctant towards the implementation of the control system and in the long run hinder it from accomplishing its objectives (Lewis, 2007). Illegitimate use of management authority possesses a challenge to the successful implementation of management control systems. Some top management employees may use their positions of influence in the organization to advance their interests at the expense of achieving the objectives of the organization (Daft, 2011). They may use their management authority in an illegitimate manner to ensure their rogue actions are covered and thus jeopardize the objectives of control system from being achieved (Zhang, 2014).In most case they use proxies to block or sabotage the design and implementing of management control systems as the process will work against their selfish interest for the general wellbeing of the organization (Davila, Epstein & Manzoni, 2012). Effective measure to challenges in designing and implementing MCS Management of organizations needs to work out ways of dealing with the challenges that pose obstacles to the effective design and implementation of management control systems. If that can be achieved then organizations will be able to leverage from the returns that come along efficient implementation of management control systems (Zhang, 2014). For instance, management of organizations should adopt a contingency based design of management control system. This approach assumes that both external and internal controls of a system are important and thus have a strong impact on the overall performance of the organization. Thus, they need to be taken into serious consideration when formulating control systems to ensure the impact of these controls works to the advantage of the organization hence leading to effectiveness when implementing management control systems (Davila, Epstein & Manzoni, 2012). Increasing the utilization of organic management control systems is yet another aspect that will ensure effectiveness in the implementation of management control systems. This basically a social form of control management that entails training and interactions between top management officials and their subordinates in order to create a friendly working environment so as to ensure common values as well as objectives is spread across the organization’s hierarchy (Daft, 2011). This measure basically tries to instill control from a social perspective in order to ensure management control is achieved effectively from a more friendly approach to ensure positive results (Zhang, 2014). A well-defined hierarchy in any organization is imperative as it determines the path through which instructions and decisions have to go through to ensure there is no conflict of interest witnessed in the process. Organizations that have well defined hierarchies have an established chain of command whereby it is known where instructions comes from and to whom they are directed thus employees know beforehand where they expect instructions from and which channel they need to use to provide feedback (Drury, 2012). In designing and implementing management control system it is prudent for elaborate hierarchical system to be in place since the process of control involves analysing organizational systems to ensure they work in accordance to plans with the aim of achieving the set objectives. Thus, a well-defined hierarchical system can help an organization to implement a control system by avoiding instances of shifting blame when there is no a clear chain of command in place to ensure everyone is accountable to his/her actions (Khosrowpour, 2000). Conclusion Therefore, it is evident that despite an organization embracing management control system in a bid to ensure accountability and streamline operations some inherent factors work against this initiative and thus they jeopardize control systems from achieving their objectives. Thus to ensure management control systems are successfully implemented top management need to ensure that all the relevant frameworks are put in place to ensure the process is achieved effectively. Bibliography DAFT, R. L., 2011. Understanding management. Mason, OH, South-Western Cengage Learning. DÁVILA, A., EPSTEIN, M. J., & MANZONI, J. F., 2012. Performance measurement and management control: global issues. Bingley, UK, Emerald. DRURY, C., 2012. Management and cost accounting. Andover, Cengage Learning. FLAMHOLTZ, E., 1996. Effective management control: theory and practice. Boston, Kluwer Academic Publishers. GHOSH, N., 2005. Management control systems. New Delhi, Prentice-Hall of India. HUTT, M. D., & SPEH, T. W., 2013. Business marketing management: B2B. Australia, South-Western, Cengage Learning. KHOSROWPOUR, M., 2000. 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