Integrated Performance Management Through Effective Management Control
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Integrated Performance Management through Effective Management Control
WERNER BRUGGEMAN
Performance measurement and performance management are vivid themes in the literature on management control. So, it is only natural that we investigate how this literature has contributed to the field of Integrated Performance Management. The purpose of this chapter is to describe how management control systems can be used to effectively manage company and business performance. First, we define the scope of management control and describe the link with organizational strategy. Then, we focus on the three elements of the management control system: (1) the management control structure; (2) the control process; and (3) the management control culture (beliefs systems). We will describe these three elements in greater detail and give an overview of the findings in mainstream contingency research studying the effectiveness of control systems in various environmental and organizational contexts.
Management control defined
Management control and the link with strategy Following Anthony and Govindarajan (1995), management control can be defined as a process of motivating managers to perform actions and activities in line with the goals and strategies of the organization. According to this definition, an organization is ‘under control’ when its members do what the management wants them to do. Management control comprises various tasks, among which are:
• • • • • •
Planning the future activities of the organization; Coordinating the activities of the various members of the organization; Communicating information; Evaluating this information; Deciding on the actions to be taken; and Influencing people to adapt their behaviour according to the company goals (Anthony and Govindarajan, 1995).
Integrated Performance Management through Effective Management Control
●
153
From the definition above, it follows that management control plays a central role in managing
Integrated Performance Management through Effective Management Control
WERNER BRUGGEMAN
Performance measurement and performance management are vivid themes in the literature on management control. So, it is only natural that we investigate how this literature has contributed to the field of Integrated Performance Management. The purpose of this chapter is to describe how management control systems can be used to effectively manage company and business performance. First, we define the scope of management control and describe the link with organizational strategy. Then, we focus on the three elements of the management control system: (1) the management control structure; (2) the control process; and (3) the management control culture (beliefs systems). We will describe these three elements in greater detail and give an overview of the findings in mainstream contingency research studying the effectiveness of control systems in various environmental and organizational contexts.
Management control defined
Management control and the link with strategy Following Anthony and Govindarajan (1995), management control can be defined as a process of motivating managers to perform actions and activities in line with the goals and strategies of the organization. According to this definition, an organization is ‘under control’ when its members do what the management wants them to do. Management control comprises various tasks, among which are:
• • • • • •
Planning the future activities of the organization; Coordinating the activities of the various members of the organization; Communicating information; Evaluating this information; Deciding on the actions to be taken; and Influencing people to adapt their behaviour according to the company goals (Anthony and Govindarajan, 1995).
Integrated Performance Management through Effective Management Control
●
153
From the definition above, it follows that management control plays a central role in managing