All alert administrators want to have an adequate and effective control system that allows them to make sure that things happen according to plan. If the controls are really intended to work, they should be created to fit. Effective control systems usually have certain characteristics in common. The importance of these characteristics varies according to the situation, but we can generalize that the following characteristics should make an effective control system:
Accuracy An accurate control system is trustworthy and provides valid data. All control techniques and systems should be a reflection of the plans for which they were designed. Each plan, as well as each type and phase of an operation, have characteristics that are theirs. What administrators need is information that tells them how the plans for which they are responsible are progressing.
The controls must be adjusted to the extent of the positions, the appropriate for a vice president in charge of a manufacturing, it will not be convenient for a factory supervisor, they must also be adjusted to each individual administrator. The purpose of control systems and information is, of course, to help each manager exercise his control function.
Opportunity The controls should attract the attention of the managers in a timely manner when variations occur, in order to prevent serious effects to the detriment of the performance of a unit. Even the best information has little value when it is obsolete. Therefore, an effective control system should provide timely information.
Economy. The operation of a control system must be economical. Any control system will have to justify the benefits it provides in relation to the costs it causes. To minimize these costs, managers should try to impose the least amount of control necessary to obtain the desired results. One of the limiting factors of control systems is their cost; This will depend in large part on the fact that managers select for control purposes only the critical factors of areas important to them.
If it fits the position and the size of the company, the control is most likely to be economical. The control techniques and methods are efficient when they reveal real or potential deviations from the plans with minimal cost.
Flexibility Effective controls must be flexible enough to adjust to adverse changes or take advantage of new opportunities. Few organizations operate in stable environments that do not need any flexibility. Even highly mechanistic structures require controls that can be adjusted as times and conditions change.
The need for flexible controls can be easily illustrated. A budgeting system can project a certain level of expenditures and entail authorization for managers to hire employees and acquire materials and services at that level. If, as is often the case, this budget is based on a forecast of a certain level of sales, it may be meaningless as a control system if the actual volume of sales turns out to be considerably higher or lower than forecast. What is needed, of course, is a system that reflects sales variations, as well as other deviations from the plans.
Comprehensibility. Controls that are not understandable to users lack value. Therefore, it is sometimes necessary to replace sophisticated systems with less complex controls. A control system that is difficult to understand can cause unnecessary mistakes, frustrate employees and, in the long run, be ignored. If they are not of a type that are understandable to an administrator, they will not be of any use. What is not trusted, is not used, therefore, what matters is that people get the information they need in a way that understands and uses.
Reasonable criteria. The control standards must be reasonable and capable of being achieved. If they are too high or are not reasonable, their possible motivating action disappears. Since most employees do not want to risk being considered incompetent for blaming their superiors or asking too many questions, they may resort to illegal or unethical shortcuts just to meet the standards. The controls should exalt standards that are a challenge for people and force them to “excel” to reach higher performance levels, but that are not discouraging or inciting deception.
Strategic location. Managers cannot control everything that happens in an organization. However, even if they could do it, the benefits would not justify the costs. Consequently, managers should establish controls on the factors that are strategic to the performance of the organization. The controls should cover the activities, operations and critical events within the organization. They will have to be focused in places where the discrepancies of the standards are more likely to occur or where a variation could cause more damage.
Emphasis on exceptions. Due to the fact that managers cannot control all activities, they must establish their strategic control devices where they can get their attention only when exceptions are presented. This type of “exception system” ensures that the manager does not receive an overwhelming volume of information about discrepancies with respect to the standard.
However, it is not enough to just notice exceptions. Some breaches of rules have little meaning, while others are very considerable. Small deviations in certain areas may be more significant than large exceptions in others.
Multiple criteria. Managers and employees alike will want to produce a “good impression” on the selected criteria for control purposes. If management exercises control through a single measurement, such as unit earnings, work efforts will focus solely on projecting a good image in light of that standard. Multiple measures of performance make that approach less narrow. Multiple criteria produce a positive double effect.
Because they are more difficult to manipulate than when a single measurement is used, they can discourage efforts aimed only at presenting a good image. In addition, because performance can rarely be objectively evaluated from a single indicator, multiple criteria make it possible to obtain more accurate evaluations of work performance.
Corrective action. An effective control system not only indicates when there are significant deviations from the standard, but also suggests what steps to take to correct the discrepancy. That is, you must point out the problem and specify a solution. This is often achieved by establishing guidelines with a structure of “if such a thing is presented, then such another.”