Essentials Of Effective Control System

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Essentials of Effective Control System

An effective control system has the following features:

1.    Future-oriented:

The control system ensures that mistakes made in the past are not repeated in future. It is a future-oriented process that focuses plans.

2.    Multiple control system:

No control system can be effective if it aims to control only one activity. The effective control system simultaneously controls production, inventory, sales, cost and quality.

3.    Economical:

It is costly to institute a control system. It is ensured that costs to the control system are less than its benefits. This is possible by applying corrective measures only on significant deviations (management by exception).

4.    Timeliness:

Deviations must be reported as frequently as possible to the management so that timely remedial action can be taken. Late actions may be as good as no actions.

5.    Flexible:

 Business operates in the turbulent and dynamic environment; Control system should be flexible to adjust business operations to environmental changes. Impact of changes on planned performance (or standards) must be incorporated from time to time. There should be alternative plans to meet unexpected situations.

6.    Control of critical points:

Rather than controlling every activity, control system should focus on critical points only where deviations affect the organizational goals. Poor performance in these areas indicates deviations from the standards and requires corrective action. Critical points determine areas where actions should be monitored. “Effective control requires attention to those factors critical to evaluating performance against plans.”

7.    Operational:

The control system should not only find deviations but also correct the deviations. Managers can artificially create a deviation and see how effectively the control system works in such conditions.

8.    Organizational climate:

In organizations where freedom is not given to workers (autocratic style of management), a tight control system will be successful and organizations where participative or democratic style of management prevails, a lenient control system should be adopted.

9.    Objective standards:

A control system will be effective if standards of performance are framed objectively. Standards should be specific, quantified and attainable. Poor or non-measurable standards will violate the purpose of control system. It may result in short-term gains at the cost of long-term profits.

10. Control by exception:

Managers should control only exceptional deviations as they have serious impact on organizational efficiency.

11. Positive environment:

Control system should not be viewed as a negative force that restricts workers’ innovative and creativity. It should create positive organizational climate. It should allow freedom of actions rather than punishing undesirable  action. The focus should be on work (ends) and not workers (means.).

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