Definition of Process of Designing Controlling System

The Twelve Step Process of Designing Control System

The ultimate idea of the control system would be to enable one to perform the steps is shown as the DMAIC process in diagram.

The DMAIC Process

Step 1

The first step in the process of designing control systems is to attentively hear the client’s needs. Active listening, effective questioning, conceptualization of vague situations, and clarifying are first necessary steps in any type of consultancy task and any consultancy style. Also suspend your judgment so that you can take in the views freely without your own personal bias. Make notes carefully.

Step 2

The next step is to attempt to mentally it the whole project in a holistic framework or sectional framework or with a zero based approach,as if what currently exists either needs to be ignored, or it should improve the present situation.

While it would be useful to mentally size up the holistic goals of the organization, it may make the project more tractable if only a pragmatic partial issue is tackled right way. As Martin Kenneth Starr, the systems theorist mentions, it would be quite legitimate for parts of the system to be taken up for independent study and design as together they make the problem too complex.

At this stage, we need to decide the style we would like to adopt:

That of an expert, used specially by IT consultants who tell what to do based on their experience

The helping model, to develop alternate approaches for the consideration of the organization

The choice of the model depends on the status, knowledge, and reputation of the consultant and the attitude of the client, as well as on whether it is an operational consultancy, process consultancy or a financial consultancy, any of which a consultancy can be. Tom Lambert asks somewhat analogously for an early decision as to whether one will be an advocate, an expert, a trainer or an educator.

A student doing a summer project would function more effectively if he were deliberately more modest and chose to adopt the helping model. Those who took a more aggressive stance have most often fallen foul of the organisations.

Step 3

The next step is to clearly frame the objectives of the exercise. There should not be any commitment on the means to achieve the objectives. This is the stage at which one should have an understanding of the formal as well as the implied ‘strategy’ of the organisation, which is often hiddenfrom the consciousness of its members and has to be ferreted out and clarified.

Step 4

Step 4 should be a workshop in which a conversational style should be encouraged and the persons at all hierarchical levels are encouraged to speak out on the objectives and the means to achieve them. Do not express your own views too soon as it inhibits free thinking by others and will further have your own bias in it.

Step 5

Form the database and make a chart of flow of transactions. Suitable computer software for this is available and should be used profitably.

Step 6

Identify critical indicators and compare it with the advice obtained earlier at step four.

Step 7

Decide on the measurement and, or observational methods of inputs and outputs.

Step 8

Analyse the data with reference to these measurements and observations.

Step 9

Discuss the findings.

Step 10

Prepare a draft report with alternative remedies and discuss.

Step 11

Redraft the report.

Step 12

Submit final report to the management.

Future of Management Control Systems

As organizations mature and as environments change, managers must expand and refine their management control tools. The management control techniques that were quite satisfactory 10 or 20 years ago may not be adequate for many organizations today.

A changing environment often means that organizations must set different goals or key success factors. Different goals create different actions and related targets as well as different benchmarks for evaluating performance. Obviously, the management control system must evolve, too, or the organization may not manage its resources effectively of efficiently. Certain management control principles that will always be important or that can guide the redesign of systems to meet new management needs follows.

Always expect that individuals will be pulled in the direction of their own self-interest. You may be pleasantly surprised that some individuals will act selflessly, but management control systems should be designed to take advantage of more typical human behaviour. Be aware that self-interest may be perceived differently in different cultures.

Design incentives so that individuals who pursue their own self-interest are also achieving the organization’s objectives. If there are multiple objectives as in usually the case), then multiple incentives are appropriate. Do not underestimate the difficulty of balancing these incentives-some experimentation may be necessary to achieve multiple objectives.

Evaluate  actual  performance  based  on  expected  or  plannedperformance, revised, if possible, for actual output achieved. The concept of flexible budgeting can be applied to most goals and actions, both financial and non financial.

Consider non financial performance to be just as important as financial performance. In the short run the manager may be able to generate good financial performance while neglecting non financial performance, but it is not likely over a longer haul.

Array performance measures across the entire value chain of the company. This ensures that all activities that are critical to the long run success of the company are integrated into the management control system.

Periodically review the success of the management control system. Are goals being met? Does success in accomplishing an action mean that goals are being met, too? Do individuals have, understood, and use the management control information effectively?