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Requirements of Adequate Controls

 

1. Controls must reflect the nature and needs of the activity.

All control systems should reflect the job they are to perform. Controls of the sales department will differ from those of the finance department and these from the controls of the purchasing department. And a small business will need different controls from a large business.

The manager must be aware of the strategic factors in his plans and operations calling for control and use techniques suited to them.

2. Controls should report deviations promptly.

The ideal control system detects deviations before they actually occur. In any case, the information must reach the manager as soon as possible.

3. Controls should be forward looking.

Although ideal control is instantaneous, as in certain electronic controls, the facts of managerial life include a time lag between the deviation and corrective action. Therefore, the manager should strive for a control technique which will forecast deviations in time for him to make corrections before the problem occurs.

That this is possible is illustrated by such forward-looking devices as cash control. A company manager cannot very well find in April that he ran out of cash in March. Properly, he forecasts his cash requirements to handle his payroll and other cash needs as they arise. This approach to control can surely be applied on a much broader front than is now the case.

4. Controls should point up ( ) exceptions as strategic points.

The time-honored exception principle, that the manager should only watch for and deal with exceptions, is not enough for effective control. Some deviations from standards have little meaning and others have a great deal. Small exceptions in certain areas have greater significance than larger deviations in other areas. A manager, for example, might be concerned if the cost of office labor deviated from standard by 5 per cent, but unworried if the cost of postage stamps deviated from budget by 20 per cent.

Therefore, controls should not only point up deviations but should pinpoint ( ) them where they are important or strategic to his operations.

5. Controls should be objective.

Management necessarily has many subjective elements in it, but whether a subordinate is doing a good job should not be the matter for subjective determination. Where controls are subjective, a managers or subordinates personality may influence judgments of performance inaccurately; but people have difficulty in explaining away ( ) objective control of their performance, particularly if the standards and measurements are kept up to date through periodic review.

Objective control should be definite and determinable in a clear and positive way. Objective standards can be quantitative, such as costs or man-hours per unit, or date of job completion; they can also be qualitative, such as a better budget program or accomplishing an upgrading of the quality of personnel. The point is that, in either case, the standard is determinable and verifiable.



6. Controls should be flexible.

Controls must remain workable in the face of changed plans, unforeseen circumstances, or outright failures. A complex program of managerial plans may fail in some particulars. The control system should report such failures, and should contain sufficient elements of flexibility to maintain managerial control of operations despite such failures.

7. Controls should reflect the organization pattern.

Organization, being the principle vehicle for coordinating the work of people with assigned duties and delegated authority, is also the means of maintaining control; and the manager is the focal point of control, just as he is the focal point for assignment of tasks and the delegation of authority.

8. Controls should be economical.

Control must be worth its cost. Although this requirement is simple, its practice is often complex, for a manager may find it difficult to know what a particular control system is worth, nor may he know what it costs. Economy is relative, since the benefits vary with the importance of the activity, the size of the business, the expense that might be incurred in the absence of control, and the contribution the system can make.

Since a limiting factor of control systems is relative economy, this, in turn, will depend a great deal on the managers selecting for control only strategic factors in areas important to him. If tailored to the job and the size of the enterprise, control will probably be economical. On the other hand, one of the economies of large-scale enterprise results from being able to afford expensive and elaborate control systems.

9. Controls should be understandable.

Sometimes the manager could understand controls if he would take the time to learn the techniques, but whether his lack of understanding results from complex techniques or impatience in learning them, the effect is the same: The control system will not function well.

Many so-called experts in graphs, charts, advanced statistical methods, or exhaustive analyses fail to communicate the meaning of their control data to the manager who should use it. Control staffs and departments in business often develop needed information that cannot or will not be used by managers, because it is not simple enough or adopted to the managers understanding. What may be valuable and comprehensible to one manager may not be to another, and it is up to the manager (or his staff assistant) to make sure that he has an adequate control system that he understands.

10. Controls should indicate corrective action.

A control system that detects deviations from plans will be little more than an interesting exercise if it does not show the way to corrective action. An adequate system should disclose where failures are occurring, who is responsible for them, and what should be done about them.

 

(from the book by Koontz H., ODonnell C. Principles of Management. An Analysis of Managerial Functions. Third Edition. New York: McGraw-Hill Book Company, 1964.)


Date: 2015-02-16; view: 3134


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