9 Principles of Desiging an Effective Control System

Managers are responsible for controlling in organization and it is a manager’s duty to improve the effectiveness of organization’s control system; as can do a great deal to improve the effectiveness of their control systems.

Controlling is the last steps of management where how the implemented plan is working is assessed and evasive actions are take.

There are nine most important principles that managers can follow for improving the control system of organization are discussed below:

  1. Matching controls to plans and position

    Control techniques should reflect the plans they are designed to follow. Managers need the information that will tell them how the plans for which they are responsible are progressing.

    Controls should also be tailored to positions, i.e. they may differ in between positions.

    Some control techniques, such as those involving standard hours and costs, budgets, and various financial ratios, have general application in various situations.

    However, none of these techniques are completely applicable in any given situation. Managers should, therefore, be aware, of the critical factors in their plans requiring control, and they must use techniques and information suited to them.

    Controls should also reflect the place in the organization wherein responsibility for action lies, thereby enabling managers to correct deviations from plans.

  2. Ensuring flexibility to control

    Flexibility is another essential characteristic of an effective control system. This means that the control system itself must be flexible enough to accommodate change. In other words, controls should remain workable in the face of changed plans, unforeseen circumstances, or outright failures.

    The illustration may be of an organization whose diverse product lines require 101 different raw materials. The company’s inventory control system must be able to manage and monitor the current levels of inventory for all the 101 materials.

    When a change in the product line changes the number of raw materials needed, or when the required quantities of any of the existing materials change, the control system, should be able to accommodate the revised requirements.

    Another example of flexibility in control may be found in the computerized admission registration system of Bangladesh Open University (BOU). When a course’s enrolment reaches a specified upper limit, no additional students are allowed in.

    Yet the seniors and probably other students with certain problems may simply have to take the course and they will be accommodated in its flexible computerized admission registration system.

  3. Ensuring accuracy

    Control systems must also be accurate Managerial decisions based on inaccurate information may prove costly and harmful.

    If, for example, sales estimates are artificially high, a manager might either cut advertising on the assumption that it is no longer needed or increase advertising to enhance sale.

    In either case the action may not be appropriate. Similarly, a manager, unaware of the hidden production cost, may quote a sales price much lower than is desirable. The accuracy of control systems goes a long way in preventing such damaging upshots.

  4. Seeking objectivity of controls

    As far as possible the information provided by the control system should be objective. If, on the other hand, controls are subjective, a manager’s or an executive’s personality may influence judgments of performance and make them less accurate.

    Thus, the control system should ideally provide objective information to the manager for evaluation and action.

  5. Achieving economy of controls

    A limiting factor of control: systems are their cost. So in order to be effective, controls must be worth their cost.

    Although it sounds simple, it is very difficult to accomplish. If tailored to the job and to the size of the enterprise, control will probably be economical.

    To be precise, control techniques and approaches can be called efficient when they bring to light actual or potential deviations from plans with the minimum of cost.

  6. Tailoring control to individual managers

    Control systems and information are, of course, intended to help individual managers carry out their function of control. If they are not of a type that a manager can or will understand, they will not be useful.

    What managers cannot understand they will not be useful; what managers cannot understand they will not trust; and what they do not trust they will not use.

  7. Pointing up exceptions

    One of the best ways to make control effective is to make sure that it is designed to point up exceptions.

    In fact, controls that concentrate on exceptions from planned performance allow managers to benefit from the time-honored exception principle and detect those are as require their attention.

  8. Fitting the system of control to the organizational culture

    An effective control system must fit in with organizational culture. For example, if employees have been managed without allowing them any participation in decision making, the sudden introduction of a permissive control system will hardly succeed.

    On the other hand, in an organization where people have been allowed participation and freedom, tight control system may fail to produce positive results.

  9. Ensuring corrective action through control

    An effective control system will disclose where failures are occurring and who is/are responsible for the failures and it will ensure that some corrective action is taken.

    Control is justified only if deviations from plans are corrected by an appropriate authority.

As a matter of fact, taking the proper corrective action necessitates sufficient authority to accomplish this task.