-
8/19/2019 f 09420010120134016 Pp t 03
1/9
Control System Tightness
Course : F0942 – Management Control System
Year : 2013-2014
-
8/19/2019 f 09420010120134016 Pp t 03
2/9
Kenneth A. Merchant and Wim A. Van der Stede, Management Control
Systems , 2 nd Edition © Pearson Education Limited 2007
Slide 4.2
ha!ter 4"ontrol S#stem $i%htness
-
8/19/2019 f 09420010120134016 Pp t 03
3/9
Kenneth A. Merchant and Wim A. Van der Stede, Management Control
Systems , 2 nd Edition © Pearson Education Limited 2007
Slide 4.&
ontrol and '%ood( control
'' Good control (( is said to ta)e !lace *hen there is
+ a 'hi%h( !ro a ilit# that the -irm s o /ecti es *ill e achie
ed1
+ a 'lo*( !ro a ilit# that ma/or un!leasant sur!rises *ill
occur.
n this res!ect, tight control is '%ood( ecause it!ro ides a high
degree of certainty that people will act as the organization wishes
3assumin% a*a# harm-ulside e--ects5.
-
8/19/2019 f 09420010120134016 Pp t 03
4/9
Kenneth A. Merchant and Wim A. Van der Stede, Management Control
Systems , 2 nd Edition © Pearson Education Limited 2007
Slide 4.4
$i%ht action controls
Behavioral constraints + Physical
6 E tra !rotection usuall# costs more.
+ Administrative
6 8estrictin% decision ma)in% to hi%her or%ani9ationalle els !ro
ides ti%hter controls i-"
:i%her le el !ersonnel can e e !ected to ma)emore relia le
decisions1$hose *ho do not ha e authorit# cannot iolatethe
constraints.
Preaction reviews + ;ecome ti%hter i- the re ie*s are -re
-
8/19/2019 f 09420010120134016 Pp t 03
5/9
Kenneth A. Merchant and Wim A. Van der Stede, Management Control
Systems , 2 nd Edition © Pearson Education Limited 2007
Slide 4.=
Action Accountability + $he amount o- ti%htness o- control
%enerated # action
accounta ilit# de!ends on"
6 The definition of (un)desirable actions
>e-initions must e s!eci-ic, #et com!lete1 + e.%., 'act
!ro-essionall#( s. 'o tain three com!etin%
ids e-ore releasin% a !urchase order(
>e-initions must e understood and acce!ted.
6 The effectiveness of the action-tracking system
Em!lo#ees should -eel that their actions are noticed,and noticed
relati el#
-
8/19/2019 f 09420010120134016 Pp t 03
6/9
Kenneth A. Merchant and Wim A. Van der Stede, Management Control
Systems , 2 nd Edition © Pearson Education Limited 2007
Slide 4.?
$he achie ement o- ti%ht results controls de!ends on"
+ The definitions of the desired results areas
6 ongruence and completenesshoosin% measura le !er-ormance
dimensions that
re-lect an or%ani9ation s 'true( o /ecti es1
e.%., Number of visitors -or the success o- a museum @ Number of
patents -or the success o- 8 > de!artments @
Annual profits -or a -irm *ith si%ni-icant %ro*th !ros!ects
@
6 !pecificity>isa%%re%ation and
-
8/19/2019 f 09420010120134016 Pp t 03
7/9Kenneth A. Merchant and Wim A. Van der Stede, Management
Control Systems , 2 nd Edition © Pearson Education Limited 2007
Slide 4.7
+ The performance measuresprecision 3amount o-
'noise(5ob"ectivity 3-reedom o- ' ias(5timeliness 3'la%( et*een
occurrence and measurement5
understandability
+ The reinforcements provided6 Are the lin)s et*een results and
re*ards"
#irect 3no am i%uit#5#efinite 3no e cuses5
$i%ht results controls 3 ontinued 5
-
8/19/2019 f 09420010120134016 Pp t 03
8/9Kenneth A. Merchant and Wim A. Van der Stede, Management
Control Systems , 2 nd Edition © Pearson Education Limited 2007
Slide 4.B
$he ti%htness o- personnel controls de!ends a %reatdeal on the
overlap between individual andorganizational ob ectives .
6 Selection and trainin% @
ultural controls are o-ten more !o*er-ul and sta le6
Stron% com!an# cultures.
$i%ht !eo!le controls
-
8/19/2019 f 09420010120134016 Pp t 03
9/9Kenneth A. Merchant and Wim A. Van der Stede, Management
Control Systems , 2 nd Edition © Pearson Education Limited 2007
Slide 4.C
ontrol com inations
n order to achie e ti%hter control, mana%ers o-tenuse multiple
forms of controls *hich can eitherreinforce each other or overlap
.
$he aim is"
+ to achie e 3ti%hter5 control o er all the factors critical
tothe entit# s success1 or,
+ to o tain a high degree of assurance that em!lo#ees *illeha e
as the or%ani9ation *ishes.
