Foundation of Control

Topics: Internal control, Process control, Control system Pages: 9 (2348 words) Published: December 15, 2010
Objective of Control
Organizational control is the process of assigning, evaluating, and regulating resources on an ongoing basis to accomplish an organization's goals. To successfully control an organization, managers need to not only know what the performance standards are, but also figure out how to share that information with employees. [pic][pic]Control can be defined narrowly as the process a manager takes to assure that actual performance conforms to the organization's plan, or more broadly as anything that regulates the process or activity of an organization. The following content follows the general interpretation by defining managerial control as monitoring performance against a plan and then making adjustments either in the plan or in operations as necessary. The six major purposes of controls are as follows:

• Controls make plans effective. Managers need to measure progress, offer feedback, and direct their teams if they want to succeed. • Controls make sure that organizational activities are consistent. Policies and procedures help ensure that efforts are integrated. • Controls make organizations effective. Organizations need controls in place if they want to achieve and accomplish their objectives. • Controls make organizations efficient. Efficiency probably depends more on controls than any other management function. • Controls provide feedback on project status. Not only do they measure progress, but controls also provide feedback to participants as well. Feedback influences behavior and is an essential ingredient in the control process. • Controls aid in decision making. The ultimate purpose of controls is to help managers make better decisions. Controls make managers aware of problems and give them information that is necessary for decision making. Many people assert that as the nature of organizations has changed, so must the nature of management controls. New forms of organizations, such as self-organizing organizations, self-managed teams, and network organizations, allow organizations to be more responsive and adaptable in today's rapidly changing world. These forms also cultivate empowerment among employees, much more so than the hierarchical organizations of the past. Some people even claim that management shouldn't exercise any form of control whatsoever, and should only support employee efforts to be fully productive members of organizations and communities. Along those same lines, some experts even use the word “coordinating” in place of “controlling” to avoid sounding coercive. However, some forms of controls must exist for an organization to exist. For an organization to exist, it needs some goal or purpose, or it isn't an organization at all. Individual behaviors, group behaviors, and all organizational performance must be in line with the strategic focus of the organization. Preventive control

An internal control that is used to prevent undesirable events, errors and other occurrences than an organization has determined could have a negative material effect on a process or end product Preventive Controls focus on preventing errors or exceptions. Here are a few examples of preventive controls: 1. Standards, policies and procedures are the most basic type of preventive control. 2. Segregation of duties also acts as a preventive control against fraud. 3. Authorization / Approval levels also prevent the risk of an illegal act and are thus preventive in nature. Corrective Controls

Mechanisms intended to reduce or eliminate unwanted behaviors or results and thereby return the situation to conformity with the organization’s regulations and standards

Example of corrective control measure taken by AEON CO (M) BHD (Better know as JUSCO)

1. Implemented internet based and established “AEON Code of Conduct” website so that international employee can more easily report misconduct without any prejudice. This enables higher level management from AEON JAPAN (HQ) to...
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