Management Control System Design | Free Essay Example

Management Control System Design

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Topic: Business & Economics
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Management control system refers to the initiatives launched and implemented to ensure that human resources produce the best outcome for any given organization (Merchant 2012).

Operational and Strategic Activities of Macquarie University

Macquarie University operation and strategy can be evaluated by examining the motivation of the employees, the culture, training on every aspect of new technology, the evaluation of employee performances, and the personal limitations hindering employee’s performance. The University carried out various measures to ensure that its employees meet the targets set forth. A series of developments and modification of these events have occurred all through from 2010 to 2013.

In 2010, the University launched an assessment strategy for employees’ proficiency and professionalism that aimed at establishing the needs of the university and the staff. Its implementation involved carrying out a sequence of projects targeting to improve expertise in organizational development, strategic sourcing, and process and systems.

It was followed by the review of the enrollment and hiring processes by introducing Taleo into the institution. The introduction of Taleo meant automation of the recruitment process. The return to work program was revised, and new induction to the program began with the orientation of the personnel. Automation in the offices followed. The terms for the human resource renewal also focused on enhancing the Human Resources skills and competencies through training (Kenneth 2003, p. 53).

The employees covered by Macquarie University Enterprise Agreement of 2006-2009 got a salary rise of 4% for the whole year that aimed at motivating them for their continuous service. On ensuring the health and safety of the employees, the University has a Health and Safety unit. The University has further moved to start a retro paid loss (workers compensation premium) model that calculates the workers compensation premium.

Employment in the institution occurs across the diversity of the country’s population. On 2010, the institution had 24% women employed, 1.3% Indigenous Australians, 4% disabled people, and 25.6% people from CALD backgrounds in human resources. The school implemented the Indigenous population cadetship for the native students graduating from the institution to join the labor force; a measure was that intended to increase their number in the university’s human resources (Macquarie University 2010, p.25).

In 2011, the University launched the ‘HR Renewal,’ that led to the introduction and implementation of many policies and new technologies. The institution adopted the policy of people management system to enhance its technical and management capability. The policy aimed at monitoring and tracking the performance, the ability, and potential of the personnel. The University initiated an online performance management system and a management and leadership development review.

It also adopted Talent At Macquarie system (TAM); a paper-based staff performance development for online evaluation. The staff received 4% increase in their salaries. Health and safety statistics remained constant in 2010 and 2011. The compensation cost was lowered following the good performance of the health and safety unit.

The percentage of women employed by the institution rose by 1% to 55%, 4% disabled people and 28% people from CALD backgrounds. There were also1.9% indigenous people who secured employed in the university. Cadetship that aimed at increasing the indigenous Australians in employment experienced a rise of 50% (Macquarie University 2011, p.36).

In 2012, the University launched an online performance development review that replaced the old paper-based system. The new system had a journaling function that allowed recording of the employee’s performance throughout the year while facilitating annual reviews. The system also recorded and tracked the employee’s development needs, which aided in the selection criteria for determining enrollment for the training session.

The employees received a 4% increase in their income throughout the whole year effected twice: on March and September, with both months receiving a 2% salary increase. The full-time employees who worked for more hours had the extra hours converted to casual FTE. The retro paid loss premium model covered by NSW provided incentives to the employees with good performance in workplace health and safety, injury management and return to work. Social inclusion was marked by introducing many policies for the marginalized groups in the University (Macquarie University 2012, p.36).

In 2013, the online performance development and review system underwent refinements. It further introduced new technologies to ease pressure on the different staff allocated tasks. The staff received a 2% salary increase in the month of March and June. A decrease of 18% in the number of workers claiming compensation was recorded.

The Health and safety unit recorded a decline in the number of reported incidents. The university had 55% women, 4.1% people with disabilities, and 34 % CALD people in the workforce. It proceeded with its policy of improving education and employment for the indigenous population. The university has different kinds of employees including the LGBT. The institution received an acclamation from ‘Pride in Diversity’ for its support to the LGBT group in human resources. Macquarie also launched the Anti-age discrimination initiative that advocated for the employment of people with disabilities (Macquarie University 2013, p.17).

Potential management control for Macquarie University Incorporating the Challenges

The salary increment being one of the management control packages, aims at motivating the employees in the institution. The organization should first establish many parameters so as to come up with an increment in salary especially the Macquarie University’s case. The institution gives a two 2% increase in the wages of its employees.

The increase is awarded two times annually; the firm needs first to establish the productivity of the employees before increasing their pay (Chenhall & Chenall RH 2003). It is an additional cost to the institution because employees’ performance can’t assume an inclining curve. Restructuring of the human resources and introducing the client service scheme and this can’t be a sufficient condition for ensuring good results are being produced on the part of the employees (Merchant 2012).

It has led to additional cost in the institution. Introduction and implementation of Taleo eased the assessment of workers competency (Macquarie University 2010, p.34). Despite human resources undergoing the transformation in the organization, there is an urge to access the incoming employees face to face through verbal communication (Chenhall & Chenall RH 2003). An online aptitude test is not enough to determine the experience, knowledge, and skills that an individual could be having. Mastering of the interview content is one of the factors that online hiring and placement are facing. The interviewee fills all the required information, and by that simple process he/she secures a chance.

The is the need for undertaking face to face psychometric analysis in order to establish whether the candidate has the desire credentials which the employer seeks (Auzair & Lanfield 2005). The university has accumulated much incompetent staff following the introduction of Taleo. It has negatively affected the achievement of the set goals via the set standards. It also explains the continuous training and assessments which the institution is currently carrying out. It leads to the accumulation of costs which the University could otherwise have controlled (Auzair & Lanfield 2005).

The institution has implemented the health and staff well-being through charity and social events; that invited the families of the personnel on the campus. It was meant to initiate a sense of belonging to the institution on the part of the personnel and their families. A measure intended to increase the productivity of the employees (Merchant 2012).

An extreme is a natural condition that exists in life; inviting the workers families into the campus resulted in an alignment of the employees in groups characterized by financial statuses. It had an adverse impact on the performance of the employees and for the institution in general. The implementation of TAM was another crucial strategy of identifying, hiring, and selection of the best employees regarding the experience and talents. It made the employees perform better for the institution (Langfield 1997).

There was the need of coming with another strategy that will ensure the continuous betterment of the personnel (Macquarie University 2011, p.24). Training on the usage of TAM was carried out using both online and face to face training. It made the organization incur more costs despite its effectiveness. The institution also reappointed the casuals; the move that cut the university costs since it maintained the number of full-time equivalence staff. Their reappointment discouraged them due the high expectations they had about being entirely absorbed in the institution’s full-time equivalence personnel. Their performance went down that adversely affected the system (Chenhall & Chenall RH 2003).

Macquarie University launched the assess strategy of investigating the employees competencies and professionalism. Implementing this strategy has caused uneasiness on the side of the employees (Langfield 1997). Eventually, the personnel performs poorly in their assigned tasks. The already employed staff have shaped up their skills fitting to what the organization required. Introducing Taleo, which is responsible for handling the recruitment and hiring of staff, has efficiently curbed the earlier problems that the Human Resources experienced.

Lack motivation is another area of the concern that has made the strategy to fail (Auzair & Lanfield 2005). The incoming employees took a lengthy time to train on the usage of the automated office systems adding to the time factor costs being incurred by the institution. Wrong attitude of the employees in the initial stages of the introduction of this strategy could predict its inappropriateness in the handling the human resources (Merchant 2012). The training that aimed at increasing the employees’ competency worked well, but this was costly to the institution.

Technology today is outdated tomorrow; the personnel were supposed to undergo training at all the times so as to keep on the same track with the changing technology (Auzair & Lanfield 2005). These training have turned to be the expensive project for the institution. The organization incorporation of social inclusion on employment has led to internal institutional pressure (Matthew 2008, p.82).

Despite the consequences of discrimination at the place of work, there are numerous of cases that have been reported. The perpetrators of such crime are punished, but this can’t heal completely on the side of the affected (Macquarie University 2013, p.22). Finally, it affects the productivity of the concerned organization (Langfield 1997). The tempering of the productivity of any individual in the firm could lead the system to an acute crisis especially if the two held the senior most or management levels.

Adoption of the online query system for the unit managers was another management control strategy. It handled all the questions of the unit managers concerning all the matters relating to their duties. It was established to familiarize the managers with the stipulated standards in relation to organization’s operations (Chenhall & Chenall RH 2003). It was employed because the institution was using action controls in ensuring the best performance on the side of the employees. The unit managers were not conversant enough with the activities of the employees he/she administered.

The exercise of this method failed, and the workers did give the best to their assigned tasks (Merchant 2012). The online performance Development Review is one of the key management control strategy implemented in the institution. Unlike the old paper-based system, the current development has journals which record the employees’ performance throughout the year, allow reviews at the end of the year, tracks the staff advancement needs, and it lays an efficient measure for selecting the training of the staff (Auzair & Lanfield 2005).

The application of this method in the institution has made the employees have low esteem all through in their allocated tasks. It has hindered the employees’ production yield in the system (Merchant 2012, p.23). Tracking down staff’s development needs is a measure aimed at establishing the employees’ incompetency. The majority of the employees in the organization are afraid of the consequences that may arise as a result (Langfield 1997).

Developing the staff capability and rewarding excellence is another management control strategy that has been put forth by Macquarie University. It has been achieved through holding many training seminars and implementing a succession planning process. Following this move, the management took actions for the concerns made by the staff. However, holding these seminars has reduced the manpower performance due to the feeling of the institution failing to address their concerns (Macquarie University 2013, p. 21).

Despite the many management control strategies, the University hoping to come up with the best ways of ensuring that the employees give their very best to the institution. Many of the strategies which the university has employed have failed in ensuring that employees perform best for the institution. An effective management plan is desirable for the organization.

Effective management control package

In the case of Macquarie University, all the three methods of management control should be exercised. The institution should carry out action controls, results controls, and the people controls.

Action Controls

The action controls will involve monitoring of the employees ensuring that they perform only the actions that are beneficial to the institution (Chenhall & Chenall RH 2003). The institution should first introduce regulations outlining what the employees are supposed to do and what not to. The employees who act as required should be proportionately rewarded while those deviating from the stipulated action should be punished. It will help in ensuring that employees follow due diligence when undertaking their assigned tasks (Auzair & Lanfield 2005). The personnel will thus perform to the best as the institutions require. It can be carried out in the system because there are many workers who are under the casual scheme. There are various pros and cons associated with outlining the rules in an organization regarding what to do or not (Merchant 2012):

Pros

  • It is a direct control of an institution’s manpower- the immediate manager ensures the employees do the actions they are supposed in the outline.
  • Due to the concentration of many actions the institution will enjoy an opportunity of deciding the action working best in the institution.
  • There is a high degree of coordination- the employees in the organization will centralize their activities leading to a natural method of achieving the institution’s goals.

Cons

  • It will only be applicable to low profile jobs institution.
  • Due to laid down actions of the members it will be hard to come up with new methods/inventions.
  • It will lead to carelessness in undertaking the assigned roles.
  • It will lead to negative feelings on the side of the institution.

Advantages

  • It will lead to increased productivity of the employees.
  • Supervision is easy since the actions of the employees are clearly written.
  • It leads to a pool of actions that can be employed in future.
  • It leads to the homogeneity of the employees within the same section.

Disadvantages

  • It is not applicable to all jobs within the institution. There is a tendency of undermining a particular group of people.
  • It hinders the creativity of the junior staff in an institution.
  • The employees are at times negligent in carrying out particular tasks provide the follow the assigned way of acting.
  • The group that feels undermined may cause pressure on the institution’s human resources.

People Controls

People controls is a management control strategy that aims at ensuring that the employees control their own manners and each others’ behavior. Controlling of one’s behavior is personnel control while controlling of each others’ behavior is cultural controls. The controlling of one’s own behavior is can be done through self-monitoring. The control of each others’ behavior can be achieved through mutual monitoring (Langfield 1997).

Self-monitoring controls rely on the natural gift of a person’s psychology that defines person ability to control to control themselves. Each person has self-control in the events of undertaking something bad that could cost the institution. The loyalty of employees to the system can also define the deeds they will take in the organization (Auzair & Lanfield 2005). The employees have the in heart drive that positively leads them to take some events. The employees’ abilities will lead them to do good things for the university (Chenhall & Chenall RH 2003).

If the school stops supervising the employees; trust will build up making the employees do the best for the institution. The system needs to review its Human resources and come up with the best method of selection and hiring of the staff to ensure that those securing the positions have the best qualifications regarding it. The institution also needs to give adequate training to the employees. It will lead to the increase in the professionalism and interest in a particular job. Various departments in the institution should equip their offices with the necessary resources for carrying out the allocate tasks efficiently. It can be employed by the university following the presence of manpower (Langfield 1997).

Mutual monitoring revolves around the group’s collective values, customs, and social pressure. They are most effective because the members have emotional ties to each other. Groups are formed out of the shared cultural perspectives. In Macquarie University, there are many groups that if employed can ease the organization’s control of labor. The LGBT group in the university comprise of the people guided by a common behavior. The Human Resources should concentrate more on employing the members of this group (Auzair & Lanfield 2005).

There are also groups of those with disabilities, the indigenous Australians, and the CALD group. The system should devise a strategy of employing individuals from these groups. The institution can also create its own group starting with the top management tone to the junior employee should reflect the behaviors of the group. People controls can be relied on to some degree. It is crucial to use people controls with other management controls i.e. results controls and action controls (Langfield 1997). The institution shouldn’t put all the trust on people and assume that all will be well. This strategy can be exercised in the institutions because there are very many groups.

Pros

  • Group formation in most cases is automatic.
  • There is the possibility of creativity and invention.
  • It gives a sense of satisfaction.
  • There is independence of the individual/group.
  • It gives a sense of responsibility.

Cons

  • It is only reliable to a certain degree.
  • People cannot always be trusted.
  • Group’s internal pressure can affect the productivity of the members.

Advantages

  • The cost of administering people control is relatively small.
  • It enhances creativity because the personnel/group makes his/her decision concerning an action alone.
  • There is no intense supervision of the employees, and this enhances self-esteem.
  • It makes the personnel or the group a chance to be solely independence in taking the decisions of the institution.

Disadvantages

  • There is a tendency of committing errors while carrying out the tasks in the institution.
  • People or groups can manipulate their roles, and that negatively affects the organization.
  • In the cases of groups, the internal pressure of the group can end up negatively affecting the system.
  • This strategy can only be reliable during the first phase of its application and during the subsequent periods may be ineffective.

Results Controls

In management control system results, controls are measures which taken to ensure that the employee produces the best results for the organization. The primary goal of most business entities is to generate profit. Results controls focus on ensuring that the organizations achieve its set goals (Merchant 2012). Various measures can be employed in the analysis of outcome controls. The employees in the case of Macquarie University need motivation for accomplishing success in a particular task. It will continuously drive the employee to perform the best he/she can.

Motivating the employees in the university will ensure the continuous betterment of the results (Auzair & Lanfield 2005). The institution also needs to evaluate the required versus achieved; it seeks to establish the institution’s outlined results and the accomplished results (Chenhall & Chenall RH 2003). The organization can apply this strategy because it has ready labor on the ground and effective record management that can be use for comparison purposes.

Pros

  • It calls for the real variable in labor.
  • The administration is easy.
  • It leads to internal competition among employees.
  • It is reliable.

Cons

  • It is cannot track the bad behavior of an employee.
  • Subject to human errors.

Advantages

  • It is an efficient way of determining the employee’s commitment.
  • Internal competition due to rewards for the best performing will lead to quality in the production.
  • It is cheap to exercise this method.
  • It’s the most efficient way of management control since it involves the results.

Disadvantages

  • It can lead to worsening of employee’s code of ethics because of focusing on the results only.
  • This method sometimes it can provide unreliable results following the execution by a human being.

Conclusion

Clearly, an effective management control system should incorporate three measures: result controls, action controls, and people controls. In order for an organization to achieve its goals, the actions of personnel need to be predetermined. This will be vital for the agency to be proactive as opposed to being reactive. The actions of the workers should be in line with the principles of the organization that guide efficient performance.

The manpower should be allowed to form groups. It is much easier to exercise control over a group than over separate individuals in an organization. The prime goal of an organization is to achieve its goals, which are positively related to the output of different workers. An Organization should exercise result controls in order to ensure continued productivity. It is crucial for organizations to combine the three methods of the ‘management control system.’

References

Auzair, Langfield-Smith, SM 2005, The effect of service process type, business strategy and life cycle stage on bureaucratic MCS in service organizations, Canadian Centre for Science and Education, Orleans.

Chenall, Chenhall, RH 2003, Management control system design within its organizational context: Findings from contingency-based research and directions for the future, Havard University Press, New York.

Kenneth, AM 2003, Management control systems: performance measurement, evaluation, and incentives, FT Prentice Hall, Harlow.

Langfield-Smith, LS 1997, Management control systems and strategy: A critical review, Oxford publishers, London.

Macquarie University 2010, Annual report, Macquarie University.

Macquarie University 2011, Annual report, Macquarie University.

Macquarie University 2012, Annual report, Macquarie University.

Macquarie University 2013, Annual report, Macquarie University.

Matthew, L 2008, Intelligent internal control and risk management designing high-performance risk control systems, Gower, Aldershot.

Merchant, VS 2012, Management Control Systems, Pearson Education Limited, New York.