Benefits of management control system (MCSs)
Benefits of management control system
The benefits of implementing the framework focus largely on different ways operational efficiency is enhanced and improved. These are as follows-
Implementation of an MCS can reduce risks-
The organization will remove non-conformity by ensuring the actual performance and results relate to the main objectives of the organization. The organization doesn’t just set goals and then pursue them blindly, but has systems in place to ensure the processes are moving the organization towards the objectives.
Since you are aware of the effectiveness of your systems, you can notice problems quicker. You reduce risk as you notice problems before they turn into a disaster. Consider you are aiming to boost sales to increase the organization’s bottom line. Due to having an Management Control System in place, you’ll be alerted if the cost of production goes up and the targets become harder to obtain.
Improves your organization’s ability to plan future actions-
The framework also improves your organization’s ability to plan future actions. The information flows faster under the MCS system, as each part of the organization’s process is being monitored and analyzed. The enhanced information flow makes it easier to plan and organize future processes and ensure objectives are set properly.
Without the kind of information MCS provides, you would find long-term planning difficult, as you wouldn’t have the right facts or the control to guarantee you are aware of the current situation and on top of future predictions. In the car example, knowing how much fuel you have in each moment and the distance you need to travel, will make it easier to plan when you need to stop to refuel.
Better facilitation of co-ordination-
Organizational efficiency also improves in the form of better facilitation of co-ordination. For any business to succeed, a good communication between the management and other parts of the business is the key. With MSC in place, the workers, their tasks and objectives are aligned with the management’s tasks and objectives.
The control systems in place create a middleman between the management and the employees and feeds information to both directions. As you, the manager, become more aware that sales numbers are increasing due to a specific result, you can use the information to tweak and perfect the system further. On the other hand, this also improves employee motivation and gives them feedback on the things they are doing right.
Managerial problems are much easier to notice-
MSC naturally provides benefits in a pure managerial point of view. The first is how managerial problems are much easier to notice. Each organization will face problems related to the other managerial functions of planning, staffing and organizing, but with a proper control system in place, the impact of these can be limited. You gain more information, you receive early notifications when the management is not working to its standard, and you are able to remedy the situation before it gets worse.
Furthermore, supervision becomes much easier under the systematic control system, since the deviations are easier to spot. The data and information you receive as a manager will make it easier to notice the issues, instead of having to monitor each employee constantly. Supervision is smoother and more focused on spotting the actual problems and deviations in the system.
Supports organizational decentralization-
Finally, MCS supports organizational decentralization, without the loss of control. The system creates an environment of knowledge and understanding of the objectives. A key part of the framework is the proper communication of the goals and policies in place to subordinates. Since the subordinates and lower level managers are on top of the current situation and are fully aware of the expectations, they can have more confidence in doing the right things.
Since the framework doesn’t require constant monitoring by the manager, the subordinates are able to make decisions and solve problems on their own. The motivation and the belief to know you can do it is much deeper under the system, since you know the MSC will pick up any key deviations and help you correct them.
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