Summary Assignment
Management Control System
Muhammad Agung Zandra
1710533029
SUMMARY
Chapter 2 : Result Controls
1. Relevance of Result Controls
Results controls are commonly known as its usefulness in controlling the
behaviors of employees at many organizational levels. In another definition, result
controls means as controlling the behaviour of professional employees with their
decision authority. Many companies have found that their managers will act in the
entrepreneurial manner necessary to thrive in fast moving market only if they
promised with some rewards. Results controls can be emphasized down to the lowest
levels in an organization, as many have done by companies with positive effects.
2. Results Controls and The Controls Problems
Results controls are preventive-type controls that address each of major
categories of control problems. A well-defined results inform employees as to what is
expected of them and encourage them what they can do for desired results, results
controls also often effective in addressing motivational problems.
3. Elements of Result Controls
Defining performance dimensions
This element is critical because the goals are set and so the measurements are made to
shhape employee’s views of what is important. Or, shortly known as “What you
measure is what you get”. If the measurement dimensions is done incorrectly, it will
encourage employees to do the wrong things.
Measuring performance
This element involves the assignment of numbers to objects, and the object of
importance is the performance of an employee or group employee in the spesific time
period. The measures are used typically very across orgnizational levels.
Setting performance target
Performance targets or standards are another important results controls elements.
Targets should be specified for every performance dimension that is measured.
Performance target affects behavior in to basic ways. First,stimulating action by
providing conscious goals for employees to strive for. Second, performance targets
allow employees to interpret their own peofrmance.
Providing rewards
Rewards are the final important element of results controls. This includes in incentive
contracts can be in the form snything employees value, for example salary, bonuses,
security, opportunities, etc.
4. Conditions determining the effectiveness of result controls
Althought they are an important form of control in many organization, result
controls cant just be used effectively. It would works at its best when all of the
following conditions are present:
1. Organizations can determine what results is desired
2. Employees whose behaviors are being controlled have significant
influence on the resuls for which being held accountable
3. Organizations can measure the result effectively.
Measured results should be:
1. Precise
2. Objectivity
3. Timeliness
4. Understandability
Chapter 3 : Action, Personnel, and Cultural Controls
1. Action Controls
Action controls are the most direct form of management control since they
involve taking steps to ensure that all employees of an organization making their
actions focus of control. There are four basic forms of action controls:
a. Behavioral constraints
Behavioral constraints are the negative form of action control. They would
make it impossible or difficult for employees to do things that should not be done. The
constraints can be applied physically or administratively. Example; locks on desks,
computer passwords, and limits on access to areas where valuale inventories are kept.
b. Preaction reviews
Reviewers can approve or disapprove the proposed action, ask for
modifications, or ask for a more carefully plan before its getting final approval. A
common form of preaction review during planning and budgeting processes
characterized by multiple levels of reviews of planned actions.
c. Action Accountability
This form involves holding employees accountable for theactions they take.
The implementation of action accountability controls requires
- Defining what actions are acceptable or unaccaptable
- Communicating those definitions to employees
- Observing or tracking what happens
- Rewarding good actions or punishing actions that deviate from the
acceptable
d. Redundancy
Redundancy involves assigning more employees to a task than is stricly
necessary, or at least having backup employees available, also can be considered an
action control because it increases the task accomplished.
2. Action controls and the control problems.
This is the table for control problems addressed by each type of action control
Control problem
Type of action control Lack of direction Motivational problems Personal limitations
Behavioral x
constraints
Preaction review x x x
Action accountability x x x
redundancy x
3. Prevention VS Detection
Example of action controls classified by purpose
Control purpose
Type of action control prevention detection
Behavioral Locks on valuable asset N/A
Separation of duties
constraints
Preaction review Expenditure approvals N/A
Budget review
Action accountability Prespecified policies linked to Compliance-oriented internal audits
Cash reconciloations
expectations of rewards and
Peer reviews
punishment
redundancy Assigning multiple person for N/A
an important task
4. Conditions determining the effectiveness of action controls
Actions controls cannot be used effectively in all situations. Its only efective in
following conditions
1. Organizations can determine what actions are undesirable
2. Organizations are able to ensure that the undesirable actions are not occured
5. Personnel controls
Personnel controls can be implemnted by methods as follows:
1. Selection anf placement
Finding the right person to do a particular job is very important so all the jobs
given can be done properly. Employee selection often involves reference checks
on new employees.
2. Training
Training is one of the common way to ensuring all employees do the good job.
Training can provide usefull information to all employees what action to do and
what results are expected.
6. Cultural Controls
Cultural controls are designed to encourage mutual monitoring, a powerful
form of group pressure on individual who deviate from group norms and values.
