Management Control, Definition, Briefly Described its Control with in the organization, also defined types of Organizational controls

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Management Control
Mohsin Aslam
The meaning of control
‘Control is a primary management task and is the process of ensuring the operations proceed according to
plan. Control is necessary because unpredictable disturbances occur and cause actual results to deviate from
the expected or planned results’
Types of organizational control
1. Personal centralized control
This approach is likely to be found in small owner-managed organizations where there is centralized
decision-making by the owner. Reward and punishment will reinforce conformity to personal authority.
Control is carried out by the owner through personal super- vision.
2. Bureaucratic control
Controls will be based on formalized rules, procedures, standardization and hierarchy. This is achieved
through specifications of how employees should behave and carry out their work using formal job
descriptions and specification of standard methods for performance of tasks. Reward and punishment
systems can be used to reinforce this control strategy. Managers will typically use budgets and standard cost
accounting systems.
3. Output control
This approach is a form of control that is based on the measurement of outputs and the results achieved. It
is most appropriate where there is a need for quantifiable and simple measures of organizational
performance since it requires a specification of output standards and targets to be achieved. This approach
facilitates delegation without the need for bureaucratic controls, because once output standards have been
agreed, employees can work semi-autonomously to carry out tasks.
4. Clan or Cultural control
This form of control requires the development of employees’ strong identification with management goals,
for example through professional identification and acceptance of the values and beliefs of the organization.
If employees have the necessary skills, experience and ability, they can be given freedom in deciding how to
undertake their tasks. This leads to semi-autonomous working with few formal controls. This approach
depends on the com- mon agreement of objectives and shared cultural values. It will require careful
selection, socialization and development of employees.

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Levels of Control
1. Strategic control
 Strategic planning, determining the course the organization will take.
 Board procedures governing, for example decisions to be reserved for the full board, appointment of
directors, segregation of duties between the chief executive and the chair of the board, and so on.
 Setting and review of organizational structure.
 Codes of conduct.
 Policies
2. Tactical control
This is control at the middle management level of the organization. As an example, strategic control is the
responsibility of the production director, tactical control is the responsibility of the production manager, the
purchasing manager, and so on who report to the production director. At this level, controls should be in
place to implement the decisions and policies of the board.
3. Operational control
This occurs at the lower levels of the organization. Operational controls are designed to control structured
and repetitive activities according to preset rules. These control systems are often financial or quantitative
in nature. A typical example of an organizational operational control system is a computerized stock control
system, where stock levels per component, reorder levels and reorder quantities are calculated and
operated automatically according to predetermined, precise rules. Operational control systems should
require minimal management intervention and often operate as a closed loop automatic feedback control
system.
Effective Control System – the 6 A’s
1. Acceptability to the people who will operate it; a fit with their needs and expectations, and the culture of
the unit.
2. Accessibility, in terms of its ease of understanding and operation.
3. Adaptability to changing conditions and demands.
4. Action orientation, so that deviations trigger corrective action or improvements.
5. Appropriateness to the circumstances and skills and needs of the people operating it.
6. Affordability or cost effectiveness: the cost of operating controls must be less than the costs associated with
deviation or falure.
Difficulties with Control
 Many systems are based on forecasting the future, the information is not available or too expensive or time
consuming to collect.
 It is not easy to set the standard to be achieved.
 It is not easy to persuade the people of the need for action.
 It is difficult to provide everyone with the information they need.

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Control system in practice
In today’s organizations, one of the most important systems to control is the human resource system.
The quality of an organization’s employees is fundamental to its success. It is essential for the organization to get its
people system right.
1. Strategic level
2. Tactical level
1. Strategic level
The board sets out its policy on human resources. It will, of course, be guided by the organization's human
resource experts and should include:
 Training and development
 Recruitment
 Contracts
 Code of conduct
 Appraisal system
2. Tactical level
The HR or personnel department is responsible for the implementation of the board policy. It will devise the
detailed procedures to control the implementation of, for example, the performance appraisal system.
 Appraisal system
 Contracts of employment
 Mentoring
 Stress management
 Health and safety
 Discipline and grievance
 Dismissal and redundancy
 Working time and childcare
 Equal opportunities
Performance Appraisal- Controlling the Individual
The regular and systematic review of performance and assessment of potential, with the aim of producing
action programs to develop both work and individuals.
Effective appraisal
 Fair and consistent
 Commitment and support from senior
managers
 Serious intention
 Relates to main objectives of organization
 Purpose should be clearly understood by all
parties
 Cost effective
Benefits to Organization
 Provides a system for assessing competence of employees and identifies areas for improvement.
 Provides a fair process for reward decisions.
 Identifies candidates for promotion, early retirement etc
 Helps identify and formulate training needs.
 Improves communication between managers and subordinates.
 Provide clear targets linked to corporate objectives.

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 Provides a basis for HR planning.
 Monitors recruitment and induction process against results.
Benefits to employees
 Feedback about performance at work and assessment of competence through comparison of performance
against established standards and agreed targets.
 Identifies work of particular merit done during review period.
 Provides a basis for remuneration.
 May be used as an opportunity to discuss future prospects and ambitions.
 Identifies training and developing needs.
Barriers to effective performance appraisal
Appraisal as;
 Confrontation - Disagreement
 Judgment- Findings
 Chat- Converse
 Bureaucracy – System of Administrative
 An annual event appraisal as unfinished
business
Mentoring
A mentor is essentially a guide, counselor, tutor or trainer. Mentoring works alongside more formal control
mechanisms, such as appraisal, and is intended to provide the employee with a forum to discuss development issues
that are relaxed and supportive. Mentors often discuss such issues as training, the choice of qualification,
interpersonal problems and career goals.
Who is Mentor?
A mentor should be someone who;
 Can give practical study support and advice.
 Can give technical, ethical and general business guidance.
 Can help with development of interpersonal and work skills.
 Is a role model who can help improve career goals.
Benefits of mentoring
 Faster career progress
 Excellent value for money for the organization
 Company image
 To preserve the well being of employees – trust and motivation
Health and Safety
A legal requirement which management must adhere to is health and safety legislation. Management have a
responsibility to manage the health and safety risks in their workplace.

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 Policy for health and safety.
 The organization to enforce it.
 The arrangement to implement it and bring it to the attention of employees.
Key areas of employer responsibility for Health and Safety
 Provision and maintenance of safe and risk-free plant and systems of work.
 Ensuring the safety, and so on, in use, handling, storage and transport of articles and substances.
 Provision of information, training, instruction and supervision.
 Maintenance of a safe workplace and the provision of means of entry and exit.
 Provision of a safe working environment and adequate facilities.
Safety Committee or Representatives
A safety committee is an organizational structure where members represent a group. This gives everyone a voice
but keeps the meeting size to an effective number of participants.
Safety meetings
A safety meeting includes all employees and a management person is there to ensure that issues are addressed.
Typically, the safety committee is an effective safety management tool for a larger employer and safety meetings
are more effective for a smaller employer.
Health and safety training
 New staff under induction
 Monitoring safety
 Prevention
Discipline
Maintaining discipline (learning) among employees is an integral part of the functions of management. Discipline is
present when the members of the enterprise follow goals or objectives sensibly without evident conflict and
conduct themselves according to the standards of acceptable behavior.
Prevention is better than cure
The main purpose of taking disciplinary action is to achieve a change in behavior of employees so that future action
is unnecessary.
Discipline and grievance procedures
Organizations should set standards of performance and conductor in forced by company rules.
Three principles
1. Rules and procedures provide a framework for behavior and performance.
2. Discipline and grievance are about people not processes.
3. In most cases employers should aim to improve and not to punish.

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The statutory procedures and the code of practice
Steps:
1. A statement in writing of what it is the employee is alleged to have done.
2. A meeting to discuss the situation.
3. The right of appeal.
Disciplinary Situations
 Leaving work early, lateness, absenteeism;
 Defective and/or inadequate work performance;
 Breaking safety or other rules, regulations and procedures;
 Refusing to carry out a legitimate work assignment;
 Poor attitudes which influence the work of others or which reflect on the public image of the firm, such as
improper personal appearance.
Taking disciplinary action
1. The informal talk
2. The oral warning
3. The written or official warning
4. Disciplinary layoffs, or suspension
5. Demotion or transfer
Handling discipline
 Encourage improvement
 Act promptly
 Gather the facts
Is disciplinary action necessary?
 Drop the matter
 Arrange counseling/take informal action
 Arrange a disciplinary meeting
 Stay calm
 Be consistent
 Consider each case on its merits
 Follow the disciplinary procedure
 Suspension with pay
 Self discipline
Grievance procedures
 The individual should discuss the grievance first with a staff/union representative
 If the immediate boss cannot resolve the matter, it should be referred to his or her own superior
 Cases referred to a higher manager should also be reported to the personnel department, line management
might decide at some stage to ask for the assistance/advice of a personnel manager in resolving the
problem.
 Distinguish between individual grievances and collective grievances. Collective grievances might occur when
a work group as a whole considers that it is being badly treated.
 The colleague, staff, or union representative should be permitted to be involved.
 Time frames and deadlines should be resolve the issue or submit an appeal.

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Tribunal applications
A company may find that the individual employee is not happy with the outcome of the grievance procedure and
that the individual wants to make a claim to an employment tribunal. Industrial tribunals are independent judicial
bodies, less formal than a court, established to hear and determine claims to do with employment matters. Their
aim is to resolve disputes between employers and employees over employment rights.
 unfair dismissal
 breach of conduct
 Discrimination
 Equal pay.
Resolving disputes without a tribunal hearing
Arbitration can be used to decide cases of alleged unfair dismissal or claims under flexible working legislation. An
independent arbitrator hears the case and delivers a legally binding decision in favor of one party. Arbitration is a
voluntary process available where both parties agree to sign up to the scheme.
Benefits include:
 a speedy private informal hearing
 no cross-examination
 Limited grounds for review of the arbitrator’s decision.
Conciliation can be used to settle a dispute before it gets to a tribunal hearing.
Benefits include:
 confidentiality
 avoiding the time, effort, cost of preparation and stress of attending a tribunal hearing
 lessening damage to the employment relationship
 reaching an agreement that satisfies both parties rather than having a tribunal impose a decision that favors
only one party.
What is dismissal?
Dismissal is described as termination of employment with or without notice by the employer, or in the case of
constructive dismissal, resignation by the employee because the conduct of the employer was sufficient to be
deemed to have terminated the contract by the employer’s actions.
Dismissal without notice is usually wrongful dismissal that is breach of the contract of employment; it may or may
not also be unfair dismissal.
Reasons for dismissal
The reasons for dismissal that is acceptable under;
 Conduct: A well-documented and fair disciplinary procedure is the best way of hand- ling conduct problems.
Again, though, large firms especially, need to demonstrate sufficiency and why they did not transfer the
employee or counsel them.

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 Capability: Normally, an employer would have to demonstrate what standards there were, how the
employee failed to meet them, detail the informal/formal warnings and any remedial action it tried to take,
for example extra training and job transfer. It is dif- fi cult to show that loss of efficiency has had an effect on
the business.
 Breach of statutory duty: Continuing the employment might place the employer in breach of a statutory
duty, for example under health and safety legislation. In such cases, there may be a valid ground for
dismissal.
 Some other substantial reason: Possibilities include dishonesty, refusal to transfer overseas and loss of
trust.
 Redundancy: A dismissal on the grounds of redundancy may be justified on any of the following grounds: ●
cessation of business; ● cessation of business in the place where the employee was employed; ● cessation
of the type of work for which he or she was employed.
What is redundancy?
For the purposes of the right to be consulted, which applies when an employer proposes to make many employees
redundant over few days? “Dismissal for areas on not related to the individual concerned or for a number of reasons
all of which are not so related”.
Fairness and commitment in the work place
Globalization has changed the nature of companies in many ways. In terms of staff it has meant;
- Human capital
- A move from employee’s effort due to loyalty to the company towards effort expecting appropriate rewards
- Employees willing to look outside of the company for advancement opportunities.
Obtaining employee commitment is often seen as the key to competitive performance, but due to the above factors,
commitment from employees is becoming more difficult for companies to obtain.
The psychological contract
Roseau and Griller (1994) define the psychological contract as the actions employees believe are expected of them
and what response they expect in return of the employer.
1. Coercive: Employees feel forced to contribute and view rewards as inadequate.
2. Calculative: Employee acts voluntarily and works in exchange for an identifiable set of rewards.
3. Cooperative: Employees contribute more than would normally be expected from them. They actively seek
to contribute further to the achievement of company goals.
Adam’s equity theory
This provides a framework by focusing on employees’ feelings of how fairly they are treated, when compared with
how others are treated. There are two main aspects:
1. Individuals assess their social relationships as in process theories of motivation – that is they set against
what they receive by what they have to contribute.
2. Individuals always compare their situation with that of others.

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Solomon
 A living wage (Compare employee needs and their Income)
 Rate for the job (compare employee carrying out the same role)
 Output reward (compare the output of employees working in the same area)
 Responsibility (compare the responsibilities of employees at different levels of the organization)
 Differentials (compare employees carrying out different roles in different organization)
 Comparability ( compare employees carrying out the same roles in different organization)
 Status (compare employees carrying out different role in different organization)
 Contribution (compare the employee’s pay to the profitability of the organization)
 Supply and demand (Compare the organization’s ability to pay and its need for labor)
Diversity
It is unlawful to discriminate on the grounds of someone’s sex, sexual orientation, status as married person or a civil
partner, race, color, nationality, ethnic origin, religion, beliefs or because of a disability, pregnancy or child birth, or
subsequent maternity leave or because they are a member or non-member of a Trade Union. It is also unethical to
discriminate against part-time workers.
Equal Opportunities
An equal opportunities approach relies on an inadequate conceptualization of the problem and resistance is
generated. There is often little ‘change management’ concerning the structures, values and the nature of the
organization. This may in part be due to the legislative background.
Equal opportunities
Removing discrimination.
Issue for disadvantaged groups.
A personnel and development role.
Relies on proactive action.
Diversity
Maximizing potential.
Relevant to all employees.
A managerial role.
Does not rely on proactive role.