Key Elements Influencing Management Control Systems

Factors Influencing Management Control Systems

Factors Influencing Management Control Systems

There are essentially the elements that make MCS work for your organization’s benefit and smoothen the process. There are four key factors to look out for:

  1. The size, the reach and the structure of the organization-

    Larger enterprises are naturally different to smaller organizations in terms of operations. The nature of control and the content specifics of the MCS. The larger the enterprise, the more complex the MCS will be. Each organization also has its own statutes and conventions, which need to be taken into account when implementing the system. The management philosophy of McDonald’s will be different to that of Apple. The difference might also be even steeped when you have a small family business or a large international corporation. The organization will also have its unique delegation and decentralization strategies in place, which must be considered as an influence on the MCS.

  2. The nature of the operations and their divisibility-

    Management is influenced by the nature of the operations it is supposed to manage and this will impact the implementation of MCS. Part of the nature of operations deals with their divisibility into sub-sections. Depending on the industry, you might not have a lot of division. For example, if you are working on a single product industry, such as oil, sub-units are relatively unimportant. The management of the production and the product cannot, therefore, be divided into a variety of sub-sections. The less divisibility there is, the different the MCS process will be.

  3. The variety of responsibilities within the organization-

    MCS is also driven by the different responsibility centres an organization might have. The more responsibilities, the more different control systems are needed to keep operations flowing. Control of different responsibilities in terms of results can vary. You might measure the success by expenses, profitability or return on investment. MCS need to be implemented with the specific criteria of performance in mind and therefore, the variety of these responsibilities will be a key determining factor.

  4. The people of the organization and their perceptions-

    The final factor influencing the implementation of MCS deals with the people with in the organization. People’s perceptions of the MCS need to be taken into account and considered before you implement the framework. Different people might have a varying view in terms of the effect the system has on their work, job satisfaction and security, and the general well-being and motivation to perform tasks. The perceptions might change from department to department, but understanding them will help ensure the system has the right impact. When you are designing MCS and implementing the system, consideration of these perceptions can help you monitor performance, implement the right type of system, and ensure people’s perceptions are either fulfilled, if positive, or changed around, if negative.

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