Basic Concepts

Control
Like a car that must be controlled, an organization must also be controlled. But,
controlling the organization more complicated than a car.
Element of a Control System
Every control system has at least four elements:
1. A detector or sensor a device that measures what is actually happening in the process
being controlled.
2. An assessor a device that determines the significance of what is actually happening by
comparing it with some standard or expectation of what should happen.
3. An effector a device (feedback) that alters behavior if the assessor indicates the need to
do so.
4. A communications network devices that transmit information between the detector and

the assessor and between the assessor and the effector.

We should describe their functioning in three examples of increasing complexity :
Thermostat
The components of the thermostat are a thermometer ( the detector) , which measures the

current temperature of a room, an assessor, which compares the current temperature with the
accepted standard for what temperature should be, an effector, which prompts a furnace to
emit heat if the actual temperature is lower than the standard or activates an air conditioner if
the actual temperature is higher than the standard, and a communication network, which
transmits information from thermometer to the assessor and from the assessor to the heating
or cooling element.
Body Temperature
The elements of the control mechanism by which the body strives to maintain that
standard are the sensory nerves as detectors, the hypothalamus center in the brain as
assessor, the muscles and the organs as effectors, and the over all communications system

nerves.
Automobile Driver
The elements are the drivers eyes as sensors, the drivers brain as assessor, the drivers
foot as effector, and nerves from communication system as communication network.

Management
An organization consists of a group of people who work together to achieve certain
common goals. The complexity of the organization determines the number of layers in hierarchy.
The management control process is the process by which managers at all levels ensure
tha the people they supervise implement their intended strategies.
There are some differences between the management control process and the simpler
processes described earlier :
1. Unlike in the thermostat or body temperature systems, the standar is not preset. Rather, it
is a result of a conscious planning process. In this process, management decides what the
organization should be doing, and part of the control process is a comparison of actual
accomplishment with these plans.
2. Like controlling an automobile, management control is not automatic. Action intended to
alter an organizations behavior involve human beings, the manager must interact with
atleast one other person to effect change.
3. Unlike controlling an automobile, a function performed by a single individual,
management control requires coordination among individuals.
4. The connection from perceiving the need for action to determining the action required to
obtain the desired result may not be clear.
5. Much management control is self-control. It means control is maintained by manager
who are using their own judgment rather than following instructions from a superior.
System
A system is a prescribed and usually repetitious way of carrying out an activity or a set of
activities. System are characterizedby a more or less rhythmic, coordinated, and recurring series
of steps intended to accomplish a specified purpose.
Many management actions are unsystematic. Managers regulary encounter situations for
which the rules are not well defined and thus must use their best judgment in deciding what
actions to take. The effectiveness of their actions is determined by their skill in dealing with
people, not by rule specific to the system. If all system ensured the correct action for all
situations, there would be no need for human managers. Informal processes like the skills and

personalities of the people involved, their relationships with one another, and the environment.
Are strongly affected by the way the organizations formal control system are design and
operated.
Road Map for Reader
Our reference book is organized into three parts, each of which is described briefly here.
The Management Control Environment (Part 1)
Management control primarily involves the implementation of strategies. As background,
therefore, we describe generic types of organization strategies in Chapter 2.
In

chapter 3, we describe some of characteristics of organizations that affect the

management control process, focusing primarily on the behavior of individuals within an

organization.
In Chapter 4,5,6, and 7 we define and describe different types of responsibility centers,
and discuss the considerations involved in assigning financial responsibility to various
organizational subunits.
The Management Control Process ( Part 2)
In chapter 8, we discuss about strategic planning, which is the process of deciding on the
major programs that the organization will undertake to implement its strategies and the
approximate amount of resources that will be devoted to each.
In chapter 9, we discuss an operating budged is the organizations plan for a specified
time period, usually a year.
Inchapter 10,11,and 12 we discuss performance measurement, performance evaluation,
and management compensation.

Variations in Management Control (Part 3)

The chapter in Part 2 describe the typical management control process. In Part 3 we
describe several variations from this pattern : differentiated controls for differentiated strategies.
( Chapter 13), service organizations ( Chapter 14), and multinational organizations (Chapter 15).
The final chapter (Chapter 16) describes the management control of projects, This differs
somewhat from management control of ongoing operations, which has been our focus up to this
point.