Designing and Evaluating MCS

Question 1

Which controls solve lack of direction?

Answer 1

• Results/Action accountability
• Pre-action reviews
• Selection
• Training
• Strong culture
• Group-based rewards

Question 2

What controls solve motivation problems?

Answer 2

• Results and action accountability
• Behavioural constraints, pre-action reviews
• Selection, strong culture, group based rewards.

Question 3

What solves personal limitations?

Answer 3

• Selection
• Training
• Provision of necessary resources

Question 4

Which to choose?

Answer 4

Objective of control framework says there should be a net benefit
trade off between benefit and costs

Question 5

What are the benefits and drawbacks of personnel/ cultural controls?

Answer 5

• Management should start by assessing the adequacy of personnel and cultural controls. The reason for this is their low harmful side effects and out-of-pocket costs.
• However they are difficult to change, require significant trust and are insufficient alone.

Question 6

What are the benefits and drawbacks of action controls?

Answer 6

• Direct link to actions – reduces need for monitoring
• Documentation and learning – organizational memory (if a key employee leaves)
• Key element of bureaucratic forms of organisations where standardization and routinization are desirable attributes (McDonald’s).
• Ritualistic compliance – lack of adaptation, creativity and innovation (not required in some jobs). Opportunity cost in innovative markets.
• Sloppiness – cutting corners, check the box type
• Negative attitudes
• Operating delays

Question 7

What are the benefits and drawbacks of results controls?

Answer 7

• Results controls can provide effective controls where knowledge as to what actions are desirable is lacking.
• Enhance autonomy, creativity
• Relatively low direct costs
• Imperfect links to actions
• Behavioural displacement “is what measures all that counts”
• Gamesmanship – budgetary slack and falsification and data management.