How To Run An Effective Management Control System.

Effective management control process

Oftentimes, people plan to identify goals and ways to achieve them, organising groups of people and material resources into various departments.

People are influenced, coordinated and motivated to work effectively and efficiently.But, sometimes there is a possibility that organizational activities may not run smoothly. This possibility gives rise to the need for control.

Controlling assures that things work according to plan and intended goals are achieved. A formal control process is a system designed to monitor work progress to ensure that the actual performance conforms to predetermined standards. A typical control process is explained below in four major steps:

1. Setting Performance Standards: The setting of performance standards based on organizational goals, strategies, policies, tactics, and schedules. Performance standards are outcomes of effective planning. Standards are budgeted performance that serve as benchmark against which actual performance can be evaluated. Standards must be specific, measurable, achievable, realistic and time bound (SMART).

2. Performance Measurement: Measurement of actual performance refers to an on-going repetitive process of observing and monitoring activities, and measuring the actual performance. The frequency of measurement depends on the operations and policies of the organization. Performance data are usually obtained via three major sources: oral reports, written or statistical reports and personal observation.

3. Comparing of Actual Performance with the Performance Standard: This Step is taken to determine whether actual performance meets the standard. The manager evaluates the actual performance against the budgeted performance to know the level of deviation. A slight deviation is sometimes acceptable because standards are often stated in plus and minus range. To do a proper comparison, managers should adopt the principle of exception which states that control is enhanced by concentrating on the exceptions or significant deviations from the expected result or standard.

4. Taking Corrective Actions: This step deals with the taking of necessary actions to correct significant deviation. It is an urgent step that must be taken when necessary to adjust operation in order to attain predetermined results. The corrective action could involve the adjustment of one or more activities in a specific department. A corrective action could lead to a change in performance standard if the standard is wrongly set or the ever- changing business environment may dictate an upgrade to standard.

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