BCom Notes Part II Management Effective Control System

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Effective Control System

Discuss the requirements of an effective control system. Requirements of Effective Control System

A control system is a deliberate creation, not an automatic phenomenon. Through different organizations may design their control systems according to their unique and special characteristics or conditions, yet in designing a good and effective control system the following basic requirements must be kept in mind:

1. Focus on Objectives and Needs

The effective control system should emphasis attainment of organizational objectives and therefore it should be designed in accordance with practical needs of the enterprise. For example, the marketing department may use pre-controls for introduction of new products into the market, and current control for specific advertisements. Similarly, more sophisticated and broad ranging controls may be developed for production managers than for a shop floor supervisor. Thus, controls should be tailored to plans and positions.

2. Prompt Indicator

An ideal control system could detect and report significant deviation as promptly as possible so that necessary corrective action may be taken adequately in time. This needs an efficient system of appraisal and flow of information. Rapid reporting of variations of the core of control.

3. Forward Looking

Control should be future-oriented, marketing valuable forecasts to the managers so that they become aware of the problems likely to confront them in the future.

4. Understandable and Economical

Control tools and techniques adopted should be such as are clearly understandable by the managers. They must know all the details and critical points in the control device as well as its usefulness. If developed and complex statistical and mathematical techniques are adopted, then proper training should be imparted to the persons who are supposed to execute such control system. Besides the control system should be worth its costs. Expensive and elaborate control system will not suit, for example to small enterprise.

5. Control by Functions and Factor

Control should emphasis function, such as production, marketing, finance, human resources, etc it should also focus on four factors, quality, quantity, time use and costs. Not one but multiple controls should be adopted.

6. Strategic Points Control

Every detail or thing is not be controlled in order to save time, cost and effort. Certain strategic or vital points in the functioning of an enterprise must be identified and appropriate control devices should be designed and imposed at those stages. Thus, only critical, major deviations should be attended to and control should concentrate on exceptional problems only. Control should be selective and concentrate on key result areas of the company.

7. Flexible

It means that the control system should be able to accommodate such modifications or revisions as are made necessary in the wake of rapidly changing and complex organizational environment. Control must not become ends in themselves. They must be suited to the environment in which an organization finds itself. Flexibility in control system is generally achieved by the use of alternative plans or flexible budgets.

8. Objective

To the maximum possible extent, controls, i.e., standards of performance should be objective (unbiased) and specific. For this purpose control measures should be verifiable or quantified. Standards should be determined based on facts and participation.

9. Indicative as well as Suggestive

Controls should not only be able to point to the deviations, but they should also suggest corrective action that is supposed to check the recurrence of variations or problems in future.

10. Correct Action at Correct Time

A significant test of the effectiveness of a control system is whether correct action is taken at correct time.

11. Attention to Human Factor or Emphasis on Self-Control Aspect

It is said that excess control causes corruption. Control system should be designed is such a way, as it does not arouse negative reactions among organizational people. Good controls are designed to develop positive feelings in the members by focusing on work and not on worker. It facilities creative action within properly laid down limits. The aim of control should be to create self-control among members. For this purpose, the tendency over the years has been toward such techniques as participative budgeting and human resources accounting.