ACC3602

Managerial Planning and Control

Semester II, AY 2014/15
Instructor:Dr.ZhuZinan
Email:bizzz@nus.edu.sg
Office:BIZ1#724

Lecture 1(1)
Introduction to management control system
RelevantChapters:

MerchantandVanderStede,ManagementControlSystems:
PerformanceMeasurement,Evaluation,andIncentives,
Chapters12
LearningObjectives:
1.
Whatismanagementcontrol?
2.
Causesofmanagementcontrolproblems
3.
Controlproblemavoidance
4.
Outlineofthismodule

1. What is management control?

Outofcontrol
Examples:thefts,frauds,unintentionalerrors,etc.
canleadtolargefinanciallosses,reputationdamage,and
possiblyeventoorganizationalfailure

Whatismanagementcontrol?
Managementcontrolincludesallthedevicesorsystems
managersusetoensurethatthebehaviorsanddecisions
oftheiremployeesareconsistentwiththeorganizations
objectivesandstrategies.
Thesystemsarecommonlyreferredtoasthemanagement
controlsystems(MCSs).
3

1. What is management control?

Focusonexecution
Goalcongruence
Thegoalsofanorganizationsindividualmembersshould
beconsistentwiththegoalsoftheorganizationitself.
(behavioralcongruence)

Behavioralemphasis
Thisisimportantbecauseitispeopleintheorganization
whomakethingshappen.
Managementcontrolinvolvesmanagerstakingstepsto
helpensurethattheemployeesdowhatisbestforthe
organization.
4

2. Causes of management control problems: DHL

Dlackofdirection
Employeessometimesdonotknowwhatthe
organizationwantsfromthem.

Hmotivationalproblems(Hard working)
Employeessometimesactintheirownpersonal
interestattheexpenseoftheirorganizationsinterest.
E.g.,beinglazy,theft

Lpersonallimitation
Employeessometimeslackoftraining,experience,or
knowledgeofthetasksathand.
5

3. Control problem avoidance: CARE

Ccentralization:superiorsreservethemostcritical
decisionsforthemselves

Aautomation:computerseliminatehumanproblems
ofinaccuracy,inconsistency,andlackofmotivation

Rrisksharing:sharingriskswithoutsideentities,e.g.,
buyinginsurance

Eactivityelimination:subcontracts,licensing
agreement

4. Outline of Managerial Planning and Control

Controls can focus on:

the actions taken

ACTION CONTROLS

the results produced

RESULTS CONTROLS

the types of people

employed and their
shared values and
norms

PEOPLE CONTROLS (PERSONNEL

& CULTURAL CONTROLS

Or any combination
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4. Outline of Managerial Planning and Control

Background
Introduction:Lecture1(1)
Alternativesandeffects:Lecture
1(2)
AssignmentofResponsibilities
Responsibilitycenters:Lecture
2(1)
Transferpricing:Lecture3(1)
PlanningandBudgeting
Capitalbudgeting:Lecture4(1)
Planningandbudgeting:Lecture
5(1)

IncentiveSystem
Incentives:Lecture7(1)

Perf.MeasurementandEvaluation
Perf.Measurement(1):Lecture8(1)
Perf.Measurement(2):Lecture9(1)
Perf.Evaluation(1):Lecture10(1)
Perf.Evaluation(2):Lecture11(1)

Othertopics
Controlsinserviceorganization:
Lecture12(1)
Ethicalissues:Lecture13(1)

EndofLecture1(1)