What is a Control System?
A control system is the one which manages, commands also directs, or regulates the behaviour of other departments or systems in a company.
For continuously devised control systems, a feedback control system is used to automatically control all the processes in an organization.
Control System in an organization is very essential, before hitting to the main elements to be present in a good controlling system, first let us know what actually this control system in an organization means? Popularly known as MCS.
Management Control System (MCS)
This is a system which gathers and also uses the gathered information to evaluate the performance of different resources of the organization like human resources, physical and financial resources and also the organization as a whole in light of the laid strategies which are attempted to be achieved by the company. Management control systems influence the behaviour of the organizational resources to implement the set organizational strategies. Management control systems might be formal or even informal.
Management control systems are tools to assist the management for an organization piloting toward its strategic objectives and it’s competitive advantage. Management controls are the only tool which managers use in implementing the desired strategies. However, the strategies get implemented with the help of management controls, organizational structure, human resources management and culture.
According to Simons, Management Control Systems are the formal system, information-based routine work and procedures which managers use to maintain or to alter the patterns in an organizational activity. Anthony & Young showed that management control system in an image of a ‘black box’. Black box is used to describe an operation whose exact nature cannot be observed by a layman.
Elements of a Good Control System Overview
In every organization it is mandatory to have a good control system. An assured control system only comes with good elements present in it, the selective elements are as follows –
1. Planning
Planning and control are closely connected to each other. Planning without controlling is meaningless and controlling without planning is acting blindly. Planning provides the base for control. Control brings focus to all bottlenecks related to work performance and this operates as a straight pin to the requirement of the situation. It is thus related to the planning function of the manager. Control is the result of all set plans, goals or policies. Thus, we see planning offers and affect control. Properly devised plans become important elements in bringing strong control.
2. Action
Control suggests what actions can be taken to correct the deviation that might occur between the standards and the actual results. Definitely, it should assume the role of an emergency handler who comes into action right when it is the urgency. But deviations do occur in spite of the best guiding from the manager. In such a situation, the manager should be vigilant in his act. He should be quick not only in identifying the deviations, but also in rectifying them with the correct ones. Thus, control means the required and quick action to correct differences or actions which at least try to prevent such variations in future.
3. Delegation of Authority
Delegation of authority only means to grant the authority or power to the subordinates to operate within the prescribed limits. Control means the authority to get the performance and detect it’s deviations and then to take the necessary corrective action. A manager cannot exercise control without the adequate authority. He also has a need to control the operations which are exercised by taking action which may be taken within the limits of his authority. The best policy of delegation is the matching of equitable responsibility and authority. It also suggests that a manager must have corresponding authority as compared to his own responsibility.
4. Information
For an effective control system, there must be a prompt flow of information to the manager. Managers in the organisation must have adequate information about the performance, standards, and resources being contributed to the achievement of the organizational objectives. The system of communicating back to the manager is called a “feedback” system. An effective feedback system helps the manager to know where and when the deviation from any plan took place. This can then initiate a prompt corrective action. Promptness in reporting and information is vital for quick remedial action.
Thus, we see there are these elements which form an effective control system. Every organization must make sure about this system of control in order to control all the resources in the department.
FAQs on Elements of a Good Control System
1. What are the essential elements of a good control system in management?
A good control system has several key elements to ensure it is effective. It should be forward-looking, flexible enough to adapt to changes, objective and measurable, economical to operate, and easy to understand. It must also provide prompt feedback for timely corrective action and focus on critical control points that have the biggest impact on performance.
2. What is the meaning of a 'control system' in the context of a business?
In a business context, a control system is a formal process that managers use to monitor and regulate organisational activities. Its primary purpose is to ensure that performance conforms to set standards and goals. This involves establishing standards, measuring actual performance, comparing it against the standards, and taking corrective action if there are any significant deviations.
3. Why is it important for a control system to be flexible?
A control system must be flexible because business environments are dynamic and constantly changing. If a system is too rigid, it cannot adapt to unforeseen events like new competition, changes in customer demand, or internal operational shifts. Flexibility allows the control system to be modified without losing its effectiveness, ensuring it remains relevant and useful for decision-making in a changing landscape.
4. What are the key features of an effective control system as per the CBSE syllabus?
An effective control system, as per the CBSE curriculum, should possess several key features. It must:
- Suit the Organisation: It should be tailored to the specific needs and nature of the business.
- Be Objective: The standards set must be clear, specific, and measurable, not based on subjective opinions.
- Ensure Promptness: It should report deviations quickly so that corrective action can be taken without delay.
- Be Economical: The cost of implementing the control system should not exceed the benefits derived from it.
- Focus on Critical Points: It should concentrate on Key Result Areas (KRAs) where deviations are most damaging to the business.
5. How can a company ensure its control system is forward-looking and not just focused on past mistakes?
To be forward-looking, a control system should not just document past errors but also anticipate and prevent future problems. This is achieved by setting standards based on future forecasts (like sales targets or production budgets) rather than only historical data. Using techniques like budgetary control and management audits helps in predicting potential deviations and taking pre-emptive corrective actions, thereby guiding future performance effectively.
6. What is the main difference between a simple and an effective control system?
The main difference lies in their impact and design. A simple control system might just track basic metrics and report deviations after they occur. In contrast, an effective control system is comprehensive and proactive. It is not only simple to understand but is also flexible, economical, forward-looking, and focuses on critical control points. It actively guides employee behaviour towards achieving organisational goals rather than just policing past performance.
7. Can you give a real-world example of an element of a good control system in action?
Certainly. Consider the element of 'Prompt Reporting' in a large e-commerce warehouse like Amazon's. They use a sophisticated inventory management system. When the stock of a popular item drops below a pre-set threshold, the system automatically triggers an alert for re-ordering. This is a perfect example of a control system providing timely information for swift corrective action, preventing stockouts and ensuring customer satisfaction, which is a key feature of its effectiveness.
