MCS
A management control systems (MCS) is a system
which gathers and uses information to evaluate the
performance of different organizational resources
like human, physical, financial and also the
organization as a whole considering the
organizational strategies....
Definition of MCS
According to Prof. John Dearden:
MCS is the process by which managers assure
that resources are obtained and used effectively
and efficiently in the accomplishment of the
organization goals.
According to Prof. Joseph A Maciariello &
Calvin J Kirby:
MCS is a set of interrelated communication
structures that facilitates the processing of
information for the purpose of assisting
managers in coordinating the parts and attaining
the purpose of an organization on a continuous
basis.
Elements of MCS
Strategic planning
Budgeting
Resource allocation
Performance measurement
Evaluation and reward
Responsibility centre allocation
Transfer pricing
Here we are concerned with 3 words:
Management
Control
System
Organization is a group of two or more people.
Organization consists of hierarchy of managers with
the CEO at the top.
Each Manager is superior and a subordinate.
The management control process is the process by
which managers at all levels ensures that people they
supervise implement their intended strategies
Control is a process of planning, implementing and
evaluating the results.
Control may be formal or informal.
Formal Control Systems make possible the delegation
of authority, in that, formal systems make explicit the
structure, policies and procedures to be followed by
members of the organization.
Formal documentation of these structure, policies and
procedures assist members of the organization in
performing their duties.
Informal systems require of the management, a mind set
that differs.
Formality in the system refers to the extent to which the
behavior is segregated from the ongoing activities and is
made explicit.
Informality refers to the relaxation of sharp
differentiation and explicit description of behavior
Control consists of the following elements:
A Detector
An Assessor
An Effecter
A Communications Network
Elements of control system
Control Assessor comparison with
device standard
Detector- information about Effectors- behavior, alteration,
What is happening if needed
Entity
Being
controlled
Elements of control system
Detector or sensor- a device that measures what is
actually happening in the process being controlled
Assessor - determine significance of what is actually
happening by comparing with some standard or
expectation of what should happen
Effector a device that alter behavior if the assessor
indicate the need to do so
Communication network- devices that transmit
information between the detector and assessor and
between the assessor and effector
e.g. Thermostat
Automobile Driver
Examples
Thermostat (A thermostat is a component of a
control system which senses the temperature of a
system)
Thermometer ( detector )
Assessor ( compare )
Effector ( emit heat )
Communication network ( thermometer to assessor
and assessor to heating element)
Body temperature
Detectors (Sensory nerves )
Assessor ( hypothalamus )
Effector ( muscles and organs )
Communication network ( system of nerves)
Automobile driver
Detectors ( eyes )
Assessor ( brain )
Effector ( directs your foot )
Communication network ( from eyes to brain and
brain to foot )
A system is a prescribed usually repetitious way of
carrying out an activity or a set of activities
Characteristics:
More or less rhythmic
Coordinated
Recurring series of steps intended to accomplish a specified
purpose
Boundaries of management control
Activity Nature of end product
Strategy Goals ,strategies, policies
formulation
Management
control Implementation of strategy
Task
control Efficient and effective performance
of individual work
Tools for implementing strategy
Framework for Strategy Implementation
Management
control
strategy Organization
HRM performance
structure
culture
Strategy formulation
Strategy formulation is the process of deciding on the
goals of the organization & the strategies for attaining
goals
Strategy Formulation v/s
Managerial control
Strategy formulation is the process of deciding on
new strategies; management control is the process of
implementing those strategies
Strategic analysis involves much judgment, & the
numbers used in the process are usually rough
estimates. By contrast, the management control
process involves a series of steps that occur in a
predictable sequence according to a more-or-less fixed
timetable & with reliable estimates
Strategy formulation involves the sponsor of the idea,
headquarters staff, & senior management. By contrast,
the management control process involves managers &
their staff at all levels in the organization
Management control
Management Control is the process by which
managers influence other members of the
Organization to implement the organizations
strategies.
Involves Planning, Coordinating, communicating,
Evaluating, Deciding & Influencing the people
Management control activity
Planning what organization should do
Coordinating the activities of several parts of
organization
Communicating information
Evaluating information
Deciding what, if any, action should be taken
Influencing people to change their behavior
Task control
It is the process of assuring that specified tasks are
carried out effectively and efficiently
Task control is transaction-oriented
Many task control activities are scientific i.e. using
management science and OR techniques
Most of the information in an organization is task
control information
Many activities performed by managers in the past
have been automated and are task control activities
Task control v/s managerial control
Task control is scientific but management control
Involves behavior of manager
Managers interact with other managers in
management control; in task control, either human
beings are not involved at all or the interaction is
between a manager and a non-manager
Management control focuses on organisational units
while task control focuses on specific tasks
performed by these organisational units
Boundaries of Management
Control
Strategy
formulation Manageme Task control
Least nt control Most
systematic Between systematic
Focuses on Between Focuses on
long run Between short run
activities Planning activities
Rough and Current
approximation controlling accurate data
of future are equal Emphasize
Emphasize on controlling
on planning
Impact of internet on
management control
Instant access
Multi targeted communication
Costless communication
Ability to display image
Shifting power and control to the individual
The internet facilitates coordinates & control through the
efficient & effective processing of information, But
Internet cannot substitute for the Fundamental processes
that are involved in Management Control.
The availability of electronic access to database
contributes little to the judgment calls required to design
& operate an optimal control systems. Such judgment
involve:
1. Understanding the relative importance of the various
& sometimes competing, goals that drives individual
to act
2. Aligning various individual goals with those of the
organization
3. Developing specific objectives by which business
units, functional areas & individual departments will
be judged
4. Communicating strategy & specific performance
objectives throughout the organization
5. Determining the key variables to be measured in
assessing an individuals contribution to strategic goals
6. Evaluating actual performance relative to the standard
& making inferences as to how well the manager has
performed
7. Conducting productive performance review meeting
8. Designing the right reward structure
9. Influencing individuals to change their behavior
