Management control is an essential function of management to ensure that the organization’s objectives and strategies are carried out effectively. Once organizations reach a certain size, it becomes difficult for senior staff and other leading managers to give detailed instructions on how to perform certain tasks. Management control mechanisms are then important to guide the managers in the company, so that they contribute in the best possible way to the total value creation of the company.
In this course, we will first discuss why and how firms grow, in order to understand why management control systems are required. We will then study different mechanisms to achieve control, i.e., people controls, action controls and results controls. We discuss, for example, what responsibilities each unit in the organization should have, what goals to set for the units, how to measure the value creation of the units, how to incentivize members of an organization, in particular, what are the difficulties and different tools to achieve the overall organizational goals. Additionally, the course also deals with control-related issues, e.g., the dysfunctional effects of control system tightness or using management control systems to spread good ethics within an organization.