CONTROL SYSTEMS

Introduction
A critical task of managers is to control the activities of their organization. Controls are necessary to make sure an organization is operating efficiently and in a manner consistent with its intended strategy.

Without adequate controls, control loss occurs and the organizations performance will suffer.

Control system
Management control is a systematic effort to set performance standards with planning objectives, to design information feedback systems, to compare actual performance with these predetermined standards, to determine whether there are any deviations and to measure their significance

Control system
And to take any action required to assure that all corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives.

Within organizations, control can be viewed as the process through which managers regulate the activities of individuals and units so they are consistent with the goals and standards of the organization. A key element in the control process is generating the right goals and standards.

Standard is defined as a performance requirement that the organization is meant to attain on an on going basis.

Types of organizational control

There are three primary types of organizational control: strategic control, management control, and operational control.

Strategic control, the process of evaluating strategy, is practiced both after the strategy is formulated and after it is implemented. Strategy is defined as long-term action plan for achieving a goal

Management control focuses on the accomplishment of the objectives of the various substrategies comprising the master strategy and the accomplishment of the objectives of the intermediate plans (for example, "are quality control objectives being met?").

Operational control is concerned individual and group performance as compared with the individual and group role as required by organizational plans ( for example, "are individual sales quota being met?").

Each of these types of control is not a separate and distinct entity and, in fact, may be indistinguishable from others. Moreover, similar measurement techniques may be used for each type of control.

Strategic control
Strategic control is concerned with tracking the strategy as it is being implemented, detecting any problems areas or potential problem areas, and making any necessary adjustments.

Steering control is to highlight some important characteristics of strategic control. Ordinarily, a significant time span occurs between initial implementation of a strategy and achievement of its intended results. During that time, numerous projects are undertaken, investments are made, and actions are undertaken to implement the new strategy.

Strategic controls are necessary to steer the firm through these events. They must provide some means of correcting the directions on the basis of intermediate performance and new information.

Operating Control
Operational control systems are designed to ensure that day-to-day actions are consistent with established plans and objectives. It focuses on events in a recent period. Operational control systems are derived from the requirements of the management control system.

Corrective action is taken where performance does not meet standards. This action may involve training, motivation, leadership, discipline, or termination.

Differences Between Strategic And Operational Control

The differences between strategic and operational control are highlighted by reference to a general definition of management control: "Management control is the set of measurement, analysis, and action decisions required for the timely management of the continuing operation of a process".

Differences Between Strategic And Operational Control: Measurement

Strategic control requires data from more sources. The typical operational control problem uses data from very few sources. Strategic control requires more data from external sources. Strategic decisions are normally taken with regard to the external environment as opposed to internal operating factors.

Strategic control are oriented to the future. This is in contrast to operational control decisions in which control data give rise to immediate decisions that have immediate impacts. Strategic control is more concerned with measuring the accuracy of the decision premise. Operating decisions tend to be concerned with the quantitative value of certain outcomes

Strategic control standards are based on external factors. Measurement standards for operating problems can be established fairly by past performance on similar products or by similar operations currently being performed. Strategic control relies on variable reporting interval. The typical operating measurement is concerned with operations over some period of time: pieces per week, profit per quarter, and the like.