Designing Management

Control System
-By
Prof. GURU PRASAD
FACULTY MEMBER
INC GUNTUR
pgp4149@gmail.com
 Index
• The control process hierarchy
• Decentralization
• Organizational slack
• Stakeholder controls
• Communication structure
• Designing control for managerial styles &
corporate culture
• Establishing a customer focused total
quality culture
 INTRODUCTION
A management control system is a set of
interrelated communication structures that
facilitate processing of information and
coordination between different parts of an
organization. Control systems help in the
effective implementation of an
organization
 THE CONTROL PROCESS
HIERARCHY
• The control process in an organization
involves the relationship between the
superior and the subordinates.
• In a hierarchical organization with
decentralized decision-making and authority,
the control process begins with the superior
meeting the subordinates and negotiating
goals, objectives and targets for the next
year.
 Contd…….
• The targets should cover qualitative
variables (employee training and
development, and new product
development) as well as quantitative
variables.
 DECENTRALIZATION
• It is necessary for every organization to
decentralize the decision-making
authority, so that sub-goals can be set.
• Decentralization ensures that the decision-
maker arrives at the right decision by
making use of sufficient information.
• However, decision-makers should find
ways to deal with the complexity.
 ORGANIZATIONAL SLACK
• Cyert and March define organizational slack
as “the disparity between the resources
available to the organization and the
payments required to maintain the coalition.”
• Organizational slack occurs when an
organization under-exploits its environment.
• But, in terms of management control
systems, slack acts as a cushion against
changing the business environment and
provides resources for innovation and
adaptation in various areas.
STAKE HOLDER CONTROLS
• The stakeholders of an organization
include investors, customers, employees,
suppliers and the public.
• It is necessary for the organization to
determine the goals.
• Based on the relationships and the goals
organizations exercise control over
stakeholders.
• The above steps help the company in
identifying crucial stakeholder variables
that help in monitoring and influencing the
control process.
 COMMUNICATION STRUCTURES

• The formal and informal communication within

an organization include meetings, day-to-day
contacts among managers, body language etc.
• The planning stage is the most crucial of all, as
it involves four sub-processes namely strategic
planning, business planning, long range
planning and operations planning.
• The feedback is compiled in the form of a
report.
COMMUNICATION STRUCTURES
It consists of two parts
2. Impact of technology on control system
bringing unity out of diversity.
3. Providing information for operational and
strategic decision making.
 Impact of technology on control system
bringing unity out of diversity.

Information technology has benefited

traditional control systems in many ways.
• Data can be managed more easily, and at a
reasonable cost.
• The various departments of the organization
can work towards achieving the
organization’s goals and collaborate for fast
decision-making.
Data can be collected for strategic and
operating decisions.