Page 46 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Unit 3: Behavioural Considerations

3.8.1 Characteristics of a Good Management Control System Notes

A good management control system ensures success for an organization. Good management
control here implies that the goals of the organization are clearly communicated to the employees,
and that the employee is confident about performing his tasks well.

Example: Good inventory control means that employees have information about the
quantity of inventory present and its availability at different locations.
An organization does not usually have perfect control. For perfect control all the employees
should be working in the best possible way. But this is not always possible as employee behavior
is not stable. Good control can be achieved in the following ways:

1. Future-oriented: Planning is always oriented to the future. The organization should be
focused on the future. Employees should be encouraged to be flexible so as to respond
effectively to change.
2. Clear objective: Good control cannot be established unless the multiple objectives of a
particular task are considered separately.

Example: To assess the control systems relating to production, all major performance
parameters like efficiency, quality and asset management, have to be measured.
3. Minimum control losses: Control devices are costly and not always economically feasible.
So, control devices should be put in place only when the economic benefits exceed the
costs.

Notes The difference between the performance that is theoretically possible and one that
can be reasonably expected is called “control loss.” An organization achieves optimal
performance when control losses are minimized.

Self Assessment

Multiple Choice Questions:
9. Which of the following does not apply to goals?

(a) They are broad statements that define what an organization wants to achieve in the
long run,
(b) They are time specific,

(c) External pressure may force an enterprise to alter its goals,
(d) They assist in measuring the performance of an organization.
10. In which of the following control styles is rewards strongly linked to formal measurement
systems?
(a) Mixed control style (b) External control style
(c) Internal control style (d) None of these

LOVELY PROFESSIONAL UNIVERSITY 41