The company needs to have a new management control system, developed and implemented. The organization does not have clear work policies. The employment manual is incomplete and ineffective. Most employees do not know their exact duties and responsibilities. Lei noted discrepancies in the time clocking sheet of one customer associate. The associate was fraudulently paid.
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The management team is not honest and trustworthy. They are not committed to the success of the company. They did not take action against the fraudulent employee. The performance of the workers is not effectively monitored. Without a clear job descriptions, the workers lack self-direction. The company does not have a clear job description. This affects their job performance.
The companies need to define their job duties and responsibilities. They should also pay employees according to their job performance. This can motivate them to work harder. It is evident that the company lacks effective management control systems. The senior managers have no regard for the controls set in the organization. Their appraisal of employee performance is flawed. The organization lacks effective work policies.
Most employees in the organization have no work ethics. The unit manager overlooked mandatory efficient recording and documentation of work hours. Employees took advantage of the weak control system and clocked in fraudulent work hours. They accepted payment from the company which is ethically wrong.
To develop an effective management control system, Lei needs to understand the work culture in the organization. The employees have a collectivism culture and hence are more concerned about the wellbeing of their collective groups rather than the company’s sucess. Lei needs to develop unit cohesiveness and team based reward and training program for the employees.
The management control systems need to be group based. The individual based controls will not work in the organization. Group based control systems will make all employees work harder to make their group succeed. With all employees working as a group, the company will have its objectives met. Collective responsibility will ensure that nobody disappoints other team members.
Ethical behavior will be developed in the company. Lei should institute an accounting control system to measure group performance. The management needs to develop group incentive and reward policies to build team spirit. The employee’s portray weak avoidance tendencies. Group based accounting control system will make them work efficiently.
The four steps of control systems
In developing a management control system, the performance standards need to be set. The system should measure the conformity to set standards. This allows the management team to determine the success or failure of the control system. The systems should be able to correct any shortcomings and reward success.
The role of Six Sigma
Six sigma increases the efficiency of the management system by increasing employee performance. It leads to higher profits because of lower production costs and higher levels of customer satisfaction.
Internal vs. external audits
Internal audits critically analyses the organization performance by assessing customer satisfaction and profits. Internal auditors detect bad practices and advice the company on better practices. This benefits the organization. Internal audits help the organization achieve its strategic objectives.
External audits examine the financial position of the organization. External audits give independent and unbiased financial reports of a company. Unbiased financial reports show the stability of a company. With good financial reports, a company can do business with other companies, with fear of failure.