Management Control Systems

The throughout the world has caused great concern among businesses and managers. The drive to remain viable in a volatile marketplace has brought about strategies to cut costs and increase controls, with emphasis on improving productivity. While this is a successful approach in the short-term, some authors warn that there are long-term dangers in terms of waning productivity and profits (Accel-Team 2009). At the basis of this danger is the implication that the human factor may be lost by emphasizing accounting performance measures to determine the level of managerial performance.

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According to the Accel-Team Website (2009), there are two types of control systems; those that are past-action-oriented on the one hand, and those known as steering controls, which are future-oriented. The first , because of its focus on actions and strategies completed in the past, with little possibility of improvement. Employees are made aware of the results of past mistakes without the possibility of correcting these mistakes. At best, employees and managers can learn from their previous mistakes and apply these lessons to future actions. This type of control system tends to be demoralizing and demotivating.

The steering control system on the other hand provides a climate that is motivating, as adjustments are allowed before the end of the control period. This is a more efficient system, because adjustments are immediate and applicable to the project at hand. Both managers and employees are then able to work more efficiently and effectively.

Control is a vital function of management planning. It provides information regarding the efficiency and effectiveness of the company. In order to benefit from a management control system, a company needs to integrate its planning strategies with such a system. Another important consideration is the human factor in terms of the management accounting function. Employees are more motivated by evaluation, coaching, and rewarding than only quantitative functions such as measuring, comparing and penalizing. These strategies can be used in combination to extract the highest level of productivity from employees.

Johanna Hyvonen (2008) reiterates that management accounting systems operate as a link between strategy and performance. She also notes that organic, flexible performance systems are more effective in terms of product differentiation. There is also a positive relationship between customer accounting and market orientation. The premise of Hyvonen’s study is that different management accounting systems are required for different types of companies in order to create the best management effect. This indicates that the strategy and management accounting system should operate on the basis of an organic and flexible relationship. In other words, strategy and planning should dictate the accounting measures implemented, while the results of management accounting should also indicate the necessary changes to the planning strategy.

In today’s business world, it is recognized that no single system or strategy is universally applicable. Human resources are the lifeblood of a company. This should be taken into account during the management accounting process, as well as in the implementation of control systems. Once inefficiencies are revealed, these can be handled by changing the strategic planning process, or the control measure itself. This should also be done with motivating factors in mind. Control systems should therefore include the possibility of correcting actions during the control process itself in order to create a more efficient management system.

The implication of management accounting therefore need not be negative. It is negative only when implemented with short-term results in mind. Employees and managers alike should work together to ensure the success of the management accounting system. Because it is a necessary part of a company’s operating procedure, to ensure that coordination occurs among employees and departments, it should be implemented with best practice in mind.


Accel-Team. 2009. Management Planning and Control Systems. Accel Team Development.

Hyvonen, Johanna. 2008. Linking Management account and control systems, strategy, information technology, manufacturing technology and organizational performance of the firm in contingency framework. University of Oulu, Feb 8.