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MANAGEMENT CONTROL

Managerial
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Control

Management Control
System

CONTROL
-is the process of guiding a set of
variables to attain a preconceived
goal or objectives. It is a broad
concept applicable to people,
things, situations, and
organizations.
-to determine the behaviour or
supervise the running of, to
maintain, influence or authority
over...to regulate...

MANAGEMENT
CONTROL
-the actions used by the
management to guide people,
machines, and functions to attain
organizational goals and
objectives.

MANAGEMENT
CONTROL SYSTEM
-an organized systematic process
and structure that management
uses in management control.

The Nature of Control

An organization of managers and
workers must be motivated and
guided to do things its leaders
want it to do and must be
corrected when it departs from
the pursuit of management goals.
If management loses control and
the organization goes out of
control, undesirable things
happen to many people.

DEFINITIONS OF MANAGEMENT
CONTROL
-is one of the managerial functions
like planning, organizing, staffing
and directing. It is an important
function because it helps to
check the errors and to take the
corrective action so that
deviation from standards are
minimized and stated goals of
organization are achieved in
desired manner.(Wikipedia)

-Control of an undertaking consists

of seeing that everything is being
carried out in accordance with
the plan which has been adopted,
the orders which have been
given, and the principles which
have been laid down. Its object is
to point out mistakes in order
that they may be rectified and
prevented from recurring
(Henry Fayol,1916)

Control is checking current

performance against predetermined standards contained
in the plans, with a view to
ensure adequate progress and
satisfactory performance.
(Edward Francis Leopold Brech)

- Management Control is the

process by which managers
influence other members of the
organization to implement the
organizations strategies.
(Robert N. Anthony,2007)

Management control is concerned with coordination,

resource allocation, motivation, and performance
measurement. The practice of management control
and the design of management control systems
draws upon a number of academic disciplines.
1. Management control involves extensive
measurement and it is therefore related to and
requires contributions from accounting especially
management accounting.
2. It involves resource allocation decisions and is
therefore related to and requires contribution from
economics especially managerial economics.
3. It involves communication, and motivation which
means it is related to and must draw contributions
from social psychology especially organizational
behavior.
According to Maciariello et al. (1994),

Management Control Principles

1. Principle of Assurance of Objective- The
basicpurpose of management controlis the
attainment of objectives does this by
detecting failures, in plans
2. Principle of Efficiency of Controls.A
management control system should detect
and highlight the causes of deviations from
plans with minimum possible costs and
unwanted consequences.
3. Principle of Control Responsibility.The
primary responsibility for the exercise of
control lies with the manager charged with
the execution of plans. His responsibly
cannot be waived or rescinded without
changing theorganization structure.

4. Principle of Forward Looking.Control, like planning

should be forward looking. The principle is often
disregarded largely because control has been depend
up accounting and statistical data instead of upon
forecasts and projections.
5. Principle of Direct Control.Most, controls used today
are based on the fact that human being make
mistakes. They are often used as indirect controls
aimed at catching errors, often after the fact. Where
ever is possible, direct controls aimed at preventing
errors should be used.
6. Principle of Reflection of Plans.Controlling is the task
of making sure that plans are carried out effectively.
Therefore, control techniques must reflect the specific
nature and structure of plans.
7. Principle of Organizational Suitability.Amanagement
control systemfit the manage authority area and it
should reflect theorganization structure.

8. Principe of Individuality of Controls.Controls

become effective when they are consistent
with the position, operational responsibility,
competence, and needs of the individual
concerned.
9. Principle of Critical Point Controls.While
exercising control, a manager should focus
attention on the factors, which are critical to
appraising performance.
10. Principle of Action.Control is a waste of
time unless the corrective action is taken.
Corrective action may involve redrawing
plans, reorganization, replacement or training
of a subordinate, motivation of staff, etc.