In today’s complex environment, control systems have been found as requisite for a company to attain its goals and objectives. For many years, business plans have been taken into consideration while the main focus is how the control systems fit in to the organization’s strategy (Merchant & Stede 5).
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According to institute of internal auditors, a control system is referred to as any action taken by management to enhance the likelihood that the established objectives and goals are achieved. This paper gives a summary of various aspects that the manager needs to identify in a control system.
Control systems comprises of three components which includes, the control environment, individual control procedures and the accounting system. Starting with the control environment, it includes management operating styles, personnel practices used, criteria of assigning authority and responsibilities to employees, the organizational structure among others.
Managers should ensure that the control systems put in place in an organization matches the company’s specific needs. This facilitates realization of the company’s objectives since it ensures that the intended activities are done appropriately.
A company with strong controls usually has a competitive edge in the market, since its plans of realizing its goals can easily be met. It is also important to note that controls are well integrated in the already laid down processes. This will ensure that, they function in conjunction with the processes, but care should be taken not to affect the already established processes (Merchant & Stede 78).
Since the controls are established to facilitate realization of the organizational goals, managers should understand the level of involvement of the staff members in their development since they are meant to guide their efforts in attainment of the company’s objectives. Workers will easily adhere to controls which they have participated in formulation, and also the ones they understand better. Before putting in place controls in an organization, the management should put in to consideration costs involved in rolling out such controls.
Managers should carry out a cost benefit analysis before rolling to evaluate their net economic effect. Only controls that results in to a net benefit should be considered. In addition, the management should ensure that the controls provide factual information that is reliable, valid and consistent with the organizational needs (Sandino 48). Workers are likely to resist whenever new changes are introduced in an organization, particularly if they sound ambiguous.
Therefore, when formulating control systems, the manager should ensure that they are simple and easily understandable. This will ensure that management does not encounter any difficulty when rolling out such controls since workers can easily adapt to them. However, the management should ensure that adequate controls are put in place in all critical areas to help in curbing failure or overspending which might impede the attainment of the desired objectives (Flamholtz 23)
In summary, controls systems have proved to be one of the engines that facilitate companies to realize their goals in today’s competitive and dynamic business environment. They are important in coordination and planning. They make the decision processes to be simpler and help managers to focus on priorities. Therefore any company that has plans of a successful future should lay down workable controls which should be followed to the letter in order to realize the intended gains.
Flamholtz, Eric. Effective Organizational Control: Framework, Applications and Implications. European Management Journal, 14(2), pp.596-611, 1996. Print
Merchant, Kenneth and Van der Stede. Management Control Systems:
An Organization & Sociological Approach.2ed.Wiltshire: Antony Rowe, 2007. 45. Print
Sandino, Tatiana .Introducing the First Management Control Systems: Evidence from the Retail Sector. The Accounting Review, 20(3), pp.45-52, 2007. Print