Do I Need a Management Control System in My Small Business?

Management control in a company, or in any organization, is about ensuring that all activities that are being carried out are contributing to the achievement of strategic objectives. A management control system is a formal, defined, disciplined, and structured process, with a quantitative orientation based on performance standards, designed to monitor behaviors. It can be applied in any company, regardless of its size or line of business.

Model for Designing a Management Control System

The model used to design a management control system should consider the company's strategy and organizational structure. The company's strategy determines people's behavior, oriented toward achieving the company's goals and objectives. The organizational structure reflects the responsibilities of the people and/or units of the company in carrying out the strategy.

The methodology for designing a management control system should include the following stages: (1) determination and segmentation of the principal units, (2) determination of success factors and management indicators, (3) definition of monitoring procedures, and (4) evaluation of the impact the system has or could have on people's behavior.

How to Develop a Strategy

The purpose of a management control system is to monitor the fulfillment of responsibilities in each unit within the company. It is therefore necessary to structure the organization in such a way that these units are established according to their defined responsibilities. Only when responsibilities have been clearly defined, and the corresponding organizational units have been established, can management indicators to monitor them be defined.

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