Effective Management Control Systems

‭TARGETED INFORMATION‬ ‭ xecutive officers, hereinafter also referred to as managers, are responsible for‬ E ‭e nsuring that the goals set by the organization are achieved. The manager has a‬ ‭v ariety of tools at his disposal to shoulder that responsibility. All these instruments‬ ‭are aimed at influencing the behavior of organizational members in such a way that‬ ‭they do the right things, and do them well. Together, these instruments are‬ ‭incorporated into the internal control system or management control system.‬ ‭M anagement information is an important instrument in this regard. It is the most‬ ‭important raw material for decision-making in organizations. At least when the‬ ‭information offered to managers is targeted and relevant so that it is actually possible‬ ‭to manage based on this information. Determining the relevance of information needs‬ ‭is not an easy task. Where this is not done or is done poorly, the manager runs the risk‬ ‭o f being deprived of management information or being inundated with irrelevant‬ ‭information. This chapter discusses in more detail how the relevant information needs‬ ‭can be determined. Various strategies are conceivable for this.‬ ‭Introduction‬ ‭ dministrative information can be divided into management information and logistical‬ A ‭information, among other things. In this context, we define management information as‬ ‭information aimed at managingsentence. That is, information aimed at the 'planning' and 'control'‬ ‭of the overall state of affairs with regard to the organization. This relates to both the daily affairs‬ ‭and the dynamic developments of the organization. Management information supports‬ ‭management in making decisions to (adjust) processes. Management information therefore plays‬ ‭an important role‬‭control‬‭from the organization. On‬‭the other hand, this information is often also‬ ‭used at the same time to measure a manager's performance. Logistics information is required for‬ ‭it‬‭m ake it function‬‭of organizations. This concerns‬‭information that is needed to carry out‬ ‭chains of successive concrete actions relating to personnel, materials, services and facilities.‬ ‭Accounting and m anage m e nt inform ation‬ ‭ number of disciplines are concerned with the provision of information for managers. The‬ A ‭American field of Accounting plays an important role in this. This field, focused on administration‬ ‭and reporting, can be further divided into Management accounting and Financial accounting,‬ ‭considering the users of the field. Management accounting (internal reporting) is concerned with‬ ‭internal reporting within organizations. Financial accounting focuses on an organization's‬ ‭reporting to external stakeholders.‬ I‭nternal reporting (management accounting)‬ ‭A manager's task is to manage (part of an) organization. Cybernetics assumes (within rationally‬ ‭managed organizations) that information is necessary about the standards that the manager applies in‬ ‭controlling the processes for which he is responsible. Viewing the performance delivered from this‬ ‭cybernetic perspective is indicated by the term 'performance measurement'. The common thinking‬ ‭behind itperformance measurement is as follows: the management of an organization is expected to‬ ‭manage the organization. A large number of managers pursue formalized or otherwise goals. They can‬ ‭become alone assessed and 'settled' based on the degree of waThese goals are achieved if there is a‬ ‭formalized system of management and accountability information that shows the extent to which the set‬ ‭goals have actually been achieved.‬ I‭n the 1960s, management accounting was mainly supported by automated (cost) systems. However,‬ ‭these were often outdated and did not provide the desired information. Fixed costs were often‬ ‭insufficiently allocated to the activities that caused the costs. The periodic results shown did not provide‬ ‭an impression of the performance of an organizational unit. Management accounting had therefore lost‬ ‭its relevance. Therefore, new ones were requested‬ i‭deas to make the management information resulting from the management accounting systems better‬ ‭support operational, tactical and strategic activities. In line with previous conclusions by Johnson and‬ ‭Kaplan, Blommaert concludes on the basis of a survey among chartered accountants and controllers that‬ ‭'the aspect of relevance as well as the partaspects from which it is constructed, insufficient (this is not‬ ‭significant) in the perception of the officials who have a management accountingfulfilling a function is‬ ‭expressed'. It in the next chapters too dealing with the toll model therefore focuses on the relevance‬ ‭aspect.‬ I‭n response to the criticism regarding the financial nature of the information provision and the limited‬ ‭relevance from a management perspective, Kaplan and Norton have‬‭B alanced Scorecard‬‭(BSC)‬ ‭introduced. The four perspectives of this Balanced Scorecard reflect the measurement points of business‬ ‭operations. The exact implementation of the desired measuring points is the result of the (strategic)‬ ‭planning process. The results in the financial perspective are determined by the performance in the other,‬ ‭non-financial perspectives. This creates, as it were, a logical cause-and-effect model with which‬ ‭management will be better able to actually manage using the information it receives. The Balanced‬ ‭S corecard does not prescribe what is measured and must be reported. In that respect it is an 'empty‬ ‭model'. It in the next chapter too The toll model supports organizations in determining the relevant‬ ‭information and can therefore be used to actually give substance to the four perspectives of the Balanced‬ ‭S corecard.‬ ‭Innovation pe rs pe ctive ‬ ‭A re we capable of innovation,‬ ‭c hange and improvement?‬ ‭ xternal reporting (financial accounting)‬ E ‭External reporting consists of information that is provided for decision-making by bodies/ persons‬ ‭outside the organization. It arises as a result of a financial accounting system. The characteristic‬ ‭difference with management accounting is therefore the target group. In external reporting, this is‬ ‭– as the word says it all – outside the organization.‬ ‭Expansion of the management control concept‬ ‭ he primary task of managers is to ensure that the goals and objectives of their organization are‬ T ‭achieved (effectiveness) while sacrificing as few resources as possible (efficiency). Otherwise said‬ ‭„ doing the right things and doing the things right‟.They will only succeed in this if they prove to‬ ‭be able to influence the behavior of their employees in such a way that they also make a targeted‬ ‭contribution. Management has a wide range of instruments at its disposal to influence employee‬ ‭behavior. These instruments together form management control system.‬