ADMINISTRATIVE CONTROL: CONTROL SYSTEMS, OBJECTIVES, EXAMPLES - DUDAS - 2024

The administrative control is defined as the process by which managers influence other members of the organization to implement strategies. It is executed based on the information received by the managers.

It deals with coordination, resource allocation, motivation, and performance measurement. The practice of management control and the design of management control systems is based on a number of academic disciplines.

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Administrative control involves extensive measurement. Therefore, it is related and requires input from accounting, especially management accounting. Second, it involves resource allocation decisions. Therefore, it is related and requires contribution from economics, especially from managerial economics.

Third, it involves communication and work motivation. This means that it is related and requires contribution from social psychology, especially from organizational behavior.

Poor controls within a company pose significant threats, such as inefficient use of resources, processing errors, reduced profitability, lack of regulatory compliance, and theft or misappropriation of assets by employees.

Planification and control

There is a close link between planning and control. Planning is a process by which the objectives of an organization and the methods to achieve the objectives are established. Control is a process that measures and directs actual performance against the planned objectives of the organization.

Once strategies are established and plans are made, the main task of management is to take steps to ensure that these plans are carried out or, if conditions require, that the plans are modified.

Administrative control is one of the managerial functions, as is planning, organization, supervision and direction.

It is an important function, because it helps to verify errors and take corrective action to minimize deviation from standards and achieve the stated objectives of the organization in the desired way.

Administrative control can be defined as the function of the system that adjusts operations as necessary to achieve the plan, or to keep variations in system objectives within allowable limits.

Administrative control systems

They are systems that collect and use information to evaluate the performance of different business resources, such as human, physical, financial and the organization in general, as a result of the management strategies pursued.

Therefore, they are the set of formal procedures necessary for administrative and economic efficiency. Managers use it to maintain or alter standards in the activities of the organization.

Being an integral part of the entire control system of a company, its objective is to guarantee the complete and timely implementation of management's plans and policies.

They can include everything from how supplies are ordered to how assets are scheduled to be used, jobs are assigned, or inventory is managed.

A management control system is the way that managers can document their organizational strategies or policies. Likewise, it is a way of evaluating the performance of internal corporate processes, comparing them with the declared objectives and policies.

Business tool

The management control system is a business tool that can give an indication of how well an organization is performing according to its objectives.

However, administrative controls are only one of the tools that managers use to implement the desired strategies.

Strategies are implemented not only through administrative controls, but also with organizational structure, human resource management, and organizational culture.

Components

The administrative control system is a tool to help management direct an organization towards its strategic objectives and its competitive advantage. It is generally understood to have three components:

- Establishment of standards.

- Measurement of actual performance against these standards.

- Taking corrective measures against deviations from the rules and plans.

Difficulties

There are two common difficulties that surround administrative control systems in companies.

- Be able to recognize the areas where greater control is needed.

- Being able to recognize when existing controls are inefficient or faulty.

goals

Administrative control objectives refer to the reliability of financial information, timely feedback on the achievement of operational or strategic objectives, and compliance with laws and regulations.

Error detection

An irregularity in the management of the company can jeopardize the achievement of the general objectives of a company, causing it to lose ground to the competition and until its own survival is compromised.

Therefore, it becomes important to detect abnormalities quickly. Similarly, different circuits and areas can be identified that, although not affected by anomalies or serious failures, could be optimized for the general welfare of the company.

Show that everything works correctly

Administrative control checks that everything is working well and that both the proposed objectives and the levels established at the administrative level with respect to profits, sales, security, etc., are met without significant modifications.

In this way, the company becomes more secure, its standards and operational decision-making processes being more solid.

Act when necessary

Detecting a situation is not very useful if specific actions are not taken to redirect a negative circumstance, thanks to the detailed and concrete information provided by the administrative control.

Communicate and motivate workers

Accurate knowledge of the state of the company, including its errors, problems and correctly handled aspects, promotes better communication with workers, motivating them to guarantee that the necessary aspects are improved, or that the correct line is followed.

Implement preventive measures

The premature diagnosis of specific problems that are detected by administrative control makes corrective actions unnecessary, as they are replaced by only preventive actions.

Advantage

The greatest advantage of managerial control is that it creates a cycle of direction and control for business leadership. Decision making is streamlined as fewer individuals are involved.

It helps managers to measure actual performance and as a guide towards the achievement of objectives.

Helps decentralization

The modern trend in business organizations is towards decentralization, which requires a system of control.

In decentralization, decision-making authority is dispersed throughout the organization.

Management must keep control in their hands to see if authority is being used correctly. Without proper administrative controls, decentralization cannot be successful.

Helps with coordination

The size of modern companies is increasing. A large amount of capital and a large number of people are employed in them.

This creates the problem of proper control, since there are many divisions that produce and distribute different products. To coordinate their activities, a control system is required.

Simplify supervision

Simplify monitoring by pointing out significant deviations. Keeps employees under control.

A good control system detects weak points very quickly. This helps expand the scope of control at all levels.

Increase motivation

Control techniques create an atmosphere of order and discipline in the organization, by finding deviations and identifying the factors responsible for them.

This increases employee motivation, because they know the job for which they are held responsible.

Disadvantages

A disadvantage of administrative control is that it can discourage creativity and innovation, by making a company more standardized and less flexible.

Organizations with tight administrative control are often less able to adapt to changes in the market, their industry or the legal environment, having limited the scope of possible ideas and plans

Difficulty establishing quantitative standards

Administrative control loses its effectiveness when the performance standard cannot be defined in quantitative terms.

It is very difficult to establish a quantitative standard for human behavior, level of efficiency, job satisfaction, employee motivation, etc. In such cases, judgment is at the discretion of the manager.

There is no control over external factors

A company cannot control external factors such as government policy, technological change, change in fashion, change in competition policy, etc.

Employee resistance

Grassroots employees can feel underappreciated and dissatisfied because they are not allowed to present their ideas. Employees feel that control reduces their freedom of action. This can lead to heavy staff turnover.

Employees often resist control. As a result, its effectiveness is reduced.

Expensive affair

Organizations have to spend a great deal of time and money to install an administrative control system.

The benefits must be more than the cost involved, then only the control will be effective, otherwise it will lead to inefficiency.

Importance

Without administrative control, the management process is incomplete. In companies, the need for control arises due to several factors:

- It is difficult to establish completely precise performance standards in large organizations. On the other hand, a manager needs all kinds of timely information, which is not always available. Control is required to assess the accuracy of the standards.

- Employees are entrusted with large sums of money and valuable resources. However, in the absence of control, employees can give in to temptations. An efficient control system helps to minimize dishonest behavior on the part of employees.

- In the absence of control, employees can relax in their effort and their performance can fall below normal.

Through control, it is ensured that the resources of an organization are obtained and used effectively to achieve the desired objectives. Administrative control offers the following benefits:

Policy verification

It allows management to verify the quality of the different plans. Thus, it can reveal which plans need to be redesigned or which goals need to be modified.

Changes in the environment can make original plans unworkable or deficient. Control helps to review and update plans.

Managerial responsibility

Even when a manager assigns some activities and delegates authority to his subordinates, he is still responsible for the final performance.

Therefore, a manager must check the performance of his subordinates to ensure that they are using the delegated authority in the desired way.

Administrative control allows managers to fulfill their responsibilities and at the same time delegate authority.

Motivator

Inspire employees to work hard and perform better. When they know that their performance is being valued and their rewards are linked to that evaluation, they will try to contribute their best efforts.

Efficiency

Control contributes to the efficiency of operations, by focusing on the achievement of objectives. Therefore, it allows managers to detect and correct errors before they become serious, helping to minimize waste and losses.

Examples

An administrative control is any process, practice, policy, tool, measurement, or system that is implemented to allow management to direct the resources of an organization. The following are illustrative examples:

Requirements control

Formally document the plans as requirements and manage the change of these plans.

Financial controls

Financial controls such as the practice of developing, monitoring, and accounting for a budget.

Performance monitoring

The process of agreeing on a set of goals with employees and evaluating performance against those goals.

Supervision

Monitoring of employee performance to improve productivity, efficiency and quality of work.

Change control

The process of submitting, evaluating, approving, prioritizing, implementing, communicating, and reviewing changes in an organization.

Security controls

Implement safeguards and countermeasures to avoid risks to people, property and information.

Compliance checks

The implementation of processes, procedures, systems, controls, measurements and reports to comply with laws, regulations, standards and internal policies.

Benchmarking

It is the ongoing process of benchmarking company performance against current industry, competition, or best practices.

Continuous improvement

It's the repetitive process of taking measurements of things, improving them, and measuring them again.

QA

Ensure outputs are within specification. For example, implement a process to test products on a production line.

Quality guarantee

It is the process of preventing future quality failures. For example, the practice of investigating the root cause of all quality failures to identify improvements.

Automation

Improve productivity, efficiency, and quality too by replacing work with automation.

Data control

Data control in areas such as data quality, data ancestry, security, integration, and compliance.

Inventory control

Regulate and account for inventory to avoid a shortage or oversupply.

Asset control

Control of assets such as facilities, infrastructure, machines, software and intellectual property.

For example, an asset accounting system implements an appropriate separation of concern about assets.

References

1. All Business (2019). What is an Administrative Control System and why are they so important? Taken from: allbusinessadmin.com.au.
2. Wikipedia, the free encyclopedia (2019). Management control system. Taken from: en.wikipedia.org.
3. Wikipedia, the free encyclopedia (2019). Control (management). Taken from: en.wikipedia.org.
4. Kenneth A. Merchant (1982). The Control Function of Management. MIT Sloan. Taken from: sloanreview.mit.edu.
5. Business Dictionary (2019). Management control. Taken from: businessdictionary.com.
6. John Spacey (2015). 21 Examples of Management Control. Taken from: simplicable.com.
7. MBA Knowledge Base (2019). Importance of Management Control in an Organization. Taken from: mbaknol.com.
8. Smriti Chand (2019). 7 Advantages of Managerial Control for an Organization. Your Article Library. Taken from: yourarticlelibrary.com.
9. Samiksha S (2019). The Importance and Limitations of Controlling. Your Article Library. Taken from: yourarticlelibrary.com.