Informal Control System

These are unwritten, typically worker-initiated mechanisms that influence the behavior of
individuals or groups in business units. There are three types of informal controls. They are:
Self-control
It deals with the establishment of the personal objectives by the individual, monitoring their
attainment and adjusting the behavior in the organization to attain the goals. Self-control can be
beneficial to an organization if the organization’s goals are in congruence with the individual’s
goals. But if the goals do not match then the performance of the employee can suffer.
Social controls
Social control refers to the prevailing social perspectives and patterns of interpersonal interactions
within subgroups in the firm. In this type of control, an organization establishes certain standards,
monitors conformity with the standard and acts when deviations occur. Social control arises out
of the internalization of values and mutual commitment towards some common goals.
Cultural controls
According to William G Ouchi, culture is “the broader values and normative patterns that guide
worker behavior within the entire organization.” Cultural control can be realized by norms of social
interaction, and stories, rituals and legends relating to the organization.

SUBSYSTEMS AND COMPONENTS OF MANAGEMENT CONTROL SYSTEMS

The subsystems and components of control systems can be discussed on the basis of formal and
informal processes.
Informal Control Process
Management decisions are based upon experience, intuition and feeling. Informal control
processes are formed as a result of interaction between people. The informal control process
helps in the development of new goals and objectives. There are a number of mechanisms for
control through informal systems. One mechanism is the use of ad hoc teams to solve problems,
improve productivity and achieve organizational change. Informal teams usually consist of cross-
organizational groups which work in coordination to solve problems related to a particular client,
product or market. Informal communication systems evolve as people develop work relationships.
Informal communication is helpful in supporting the key values of the organization. Fostering
informal communication is critical to the development and maintenance of effective informal
controls.
Informal rewards and recognition are conferred upon the key team members within the informal
system. The respect an individual is shown is an informal reward for performance. Communication
systems are not highly guarded in informal systems.