Management control: What it is and the most common types of control

Within the organization, management control enables an understanding of the development of all processes and systems. This ranges from employee performance to… Profit margins, from the optimization of materials to the optimization of all production processes related to the provision of services or the manufacture of products.

In this publication, we will discuss in more detail the concept of management control and the types of management control that you can use in your company.

Management control is what it is in the company.

Management control within a company can be defined as the company’s efforts to follow the established guidelines for achieving its objectives. It is one of the fundamental tools of any company that wants to improve its performance and efficiency.

To achieve this, all of the organization’s resources must be used as efficiently as possible.

It is important that management control is not seen as the sole responsibility of the management department. It is also a process that encompasses all functions of the organization at the relevant levels of responsibility.

Accounting and control essentially consist of three phases:

Planning, implementation of the plans and analysis of the results.

• Planning: Planning encompasses all the measures and tasks necessary to achieve the expected results. These results must be understandable to the entire organization. They must also be agreed upon across different levels of the organization, be coherent, and achievable with available resources, taking into account the organization’s internal and external constraints.
• Implementation of the plans It consists of allocating the necessary resources and monitoring them to check whether the resources are being used effectively.
• Review of the results: By reviewing the results, management measures whether the organization is achieving its goals or not. Corrective actions are then taken to achieve these goals.

Types of management control

There are several systems for controlling corporate governance. They depend on the management school of thought and the business area in which we want to exercise control, as in the… Financial administrationThese are some of the most well-known types of controls:

Feedback control

Feedback control focuses on the organization’s results once the process is complete.

It fulfills a number of important functions. It is frequently used when previous checks are not feasible or too expensive.

Sometimes feedback is the only practical form of control. It has two advantages:

• Firstly, it provides management with important information about the effectiveness of the planning. If it shows a small deviation between standard and actual performance, the planning was adequate.
• The second advantage of this type of feedback control is that it can improve employee motivation. The biggest disadvantage is that if there is a significant delay, the damage has already occurred. However, for many tasks, feedback control alone may be sufficient.

Simultaneous control

Simultaneous monitoring is carried out while an activity is being performed.

It includes the planning and control of ongoing activities to ensure they comply with the organization’s standards.

This type of control is intended to ensure that the activities lead to the right results.
Since simultaneous control involves the regulation of ongoing tasks, it requires a thorough understanding of the tasks involved and their relationship to the final product.

Simultaneous monitoring often includes checkpoints at which a decision is made whether to continue work, take corrective action, or stop work altogether.

Progress control

Progress control focuses on regulating the inputs (human, material, and financial resources flowing into the organization) to ensure they meet the required standards.

This type of control allows problems to be avoided rather than having to be fixed later. However, these controls require timely and accurate information, which is often difficult to obtain.

If you are looking for information on how to improve management control in your company using state-of-the-art tools, please contact us. We will be happy to provide you with expert advice. We are partners of industry leaders. SAP Business One software and can help you make the best decisions for your business.