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CHAPTER NO-01
Characteristics of MCS
08/09/11
Objectives
Evolution of control systems in an organization Strategic planning Management Control and Operational Control Cybernetic Paradigm of Grissinger
Characteristics of MCS
08/09/11
Introduction
Companies like Tyco, Global Crossing, WorldCom and
Enron and Satyam collapse because of lapses in Controls. CEO and Top Management of these companies Focused on short term goals by compromising on long term plans. Companies like Emerson Electric, 3 M (Minnesota Mining and Manufacturing) corporation, Dell Computer, TATA Manufacturers, Infosys are having effective control systems.
Characteristics of MCS
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MCS
The MCS is a set of inter-related communication
structures that facilitates the processing of information for the purpose of assisting managers in coordinating the parts and attaining the purpose of an organisation on a continuous basis.
Characteristics of MCS
08/09/11
MCS
Control: A control system has at least four elements
1. Detector/Sensor: Identifies actual happening in the situation being controlled. 2.Assessor : Comparing actual situation with some standard or expectation. 3.Effector: which alters behaviour if the assessor indicates the need. 4.Communication Network: transmit information betn Detector & Assessor and Assessor & Effector.
Characteristics of MCS
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MCS
Management: Group of people in an organisation
who work together to accomplish certain goal (earning satisfactory profit). Management control Process is more complicated bcoz: 1. The standard is not present. (planning by management for the business activity). 2.Management control is not automatic. Action taken to change the organisations behaviour involve human being.
Characteristics of MCS
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MCS
3.An organisation consists of many separate parts and management control must ensure that these parts work in harmony with one another. 4.The connection between the observed need for action and the behaviour that is required to obtain the desired action is not be clear cut.
Characteristics of MCS
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MCS
System: A system is a prescribed way of carrying out
an activity or set of activities, usually the activities are repeated. A system is characterized by more or less rhythmic, recurring, coordinated series of steps that are intended to accomplish a specific purpose. User of the system must make judgments when certain eventualities occur with systems.
Characteristics of MCS
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Characteristics of MCS
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action should correspond to a plan, bcoz parameters are changing continuously. Management control should anticipate what situations are going to be in future and accordingly apply control measures. The purpose of management control is to ensure that strategies are carried out so that organizations goals are attained.
Characteristics of MCS
08/09/11
Activity
Strategic Planning
Management Control
Task/Operation Control
Characteristics of MCS
control: is the process by which managers influence other members of the organisation to implement the organisations strategies. Nature of Management control decisions: Management control decisions are made within the guidance established by strategic planning. Decisions are limited by nature and amount of available resources.
Characteristics of MCS
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encompass the whole organisations coordination and balancing. Management control system focuses on the monetary bottom line i.e. net income, return on equity. Management control process involves interaction between individuals, it goes towards reacting, somewhat goal congruence.
Characteristics of MCS
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deciding the goals of the organisation and the strategies for attaining these goals. Goals are timeless, they exist until they are changed and they are changed only rarely. Strategies are big important plans, which state the direction in which senior management want the organisation to be heading to. The need for reconsidering strategies arises either in response to a perceived threat(A change in customer test) or to take advantage of a perceived opportunities (technical innovation).
Characteristics of MCS
08/09/11
Strategic Planning
Management Control
1. Strategic planning is essentially unsystematic. 2.Strategic planning almost always involve only part of the organisation. It may result in a change in one or a few existing strategies.
1. Management control process take place according to a more or less fixed time table and step by step. 2.Management control process involves whole organisation & various parts coordinated with one another.
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Characteristics of MCS
Strategic Planning
Management Control
3.Analysis of proposed strategy usually involves relatively few people the sponsor of the idea, HQ staff and senior Management. 4.Very few peoples hence communication among them is relatively simple.
Characteristics of MCS
3.Management control process involves managers and their staff at all levels in the organisation. 4.Many more peoples are involved & communication therefore is much more complicated.
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Strategic Planning
Management Control
5.Managers interact with one another and behavioural considerations are very crucial.
Characteristics of MCS
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Management Control
1. Task control systems are scientific 2. Human beings are not involved at all or the interaction is between a manager and a non manager (Automation).
3.Different type of task control systems are required to control different activity.
Characteristics of MCS
1. Management control can never be reduced to scientific. 2.Managers interacts with other managers. 3.Management control system is basically similar throughout the organisation.
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Management Control
4.Focus is on specific task. 5.Relates to specified tasks and for most of these tasks little or no judgment is required as to what is to be done. 6.
4.Focus is on Organisation unit. 5.Relates to broad type of activities & managers decide what is to be done within the general constraints of the strategies.
Characteristics of MCS
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Maintaining Competitive edge over competitors. Meeting the growing demands of stakeholders.
management in formulating strategies, coordinating the activities of the organization, and in steering those activities toward the achievement of the overall goals and objectives
Characteristics of MCS
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Characteristics of MCS
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Characteristics of MCS
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Characteristics of MCS
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Determined based on the Organizational goals and objectives defined during the planning process Exercising control over critical areas helps manage a large number of subordinates effectively.
Characteristics of MCS
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Establishing standards
Standards state the criteria on the basis of which employee performance and related behavior can be evaluated. Standards are often incorporated into goals when the goals are established during the planning process. Helps employees understand what is expected of them and how their work will evaluated. Provides a basis for identifying job difficulties with reference to personal limitations of employees.
Characteristics of MCS
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Measuring performance
Once standards have been established, the actual performance must be measured. Performance standards are clearly established evaluating the expected or actual performance becomes fairly easy. Qualitative performance measures may include qualitative judgment by peers. Managers has to decide how frequently performance is measured.
Characteristics of MCS
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Performance measured in step 3 is compared with the standards established in step 2. Comparison enables managers to determine whether the actual performance meets the standards earlier. Computerized information systems give supervisors direct access to real time, unaltered data and information.
Characteristics of MCS
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Managers should recognize and acknowledge good or positive performance by their employees. When the negative discrepancy occurs between the actual output and predetermined performance standards, specific corrective actions must be taken to correct the situation. Managers redraw their plans or modify their goals to correct deviations. The control process fails when the recommended corrective actions are not implemented properly.
Characteristics of MCS
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Established standards may not be realistic. To ensure that standards and their associated performance measures meet future needs, managers must periodically review the standards.
Characteristics of MCS
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Formal Control Process & Role played by Accounting system and Information System
Goals & Strategies Rules Other Information Reward (Feed back) Yes
Responsibility Center Operations Was Performa nce satisfacto ry
Other Information
Strategic Plans
Budgets
Revise
Revise
Corrective Action
No
Characteristics of MCS
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systems that are designed to assists management in steering the organisation towards its goal achievement. 1. Formal Control System 2.Informal Control System
Characteristics of MCS
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mutually supportive management sub systems. 1. Management style and culture of the organisation. 2.Formal Control process. 3.Infrastructure. 4.Rewards. 5.Coordination & Integration of Mechanisms. 6. 7.
Characteristics of MCS
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organisations through: 1. Informal Control Process. 2.Informal Recognition & Rewards. 3.Informal Coordinating Mechanisms. 4. 5.
Characteristics of MCS
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End Points
Evolution of control systems in an organization Strategic planning Management Control and Operational Control Cybernetic Paradigm of Grissinger
Characteristics of MCS
08/09/11
Thank You!
Characteristics of MCS
08/09/11