We explain what management control is and its advantages. In addition, we explore its general characteristics, its importance and more.
What is management control?
Business management control is the set of processes, methods and the use of technologies that link accounting to operational and strategic performance.
It allows for monitoring, analyzing, and controlling the economic costs that work processes represent for a company. It uses various indicators depending on the functional area to gather data for further analysis. The purpose of management control is to guide the different tasks and identify areas of improvement.
Several control methods are part of a business management control system, including quality control, resource planning and customer satisfaction. Each system provides data that is useful to link to the accounting and financial information of the company, with the aim of obtaining a comprehensive view that may contribute to the decision-making process of the organization's management.
- Management control is a process that involves comprehensively monitoring the economic costs of a company's performance.
- It allows identifying problems, needs and potential areas of improvement in work processes.
- A management control system may vary in its methodology, but it is always necessary for any type of company.
- See also: Intelligent organization
Characteristics of management control
The business management control system varies depending on the type of business. However, all management control systems usually have the following common features:
- There is a person responsible for its development.
- Budgets are drawn up and allocated to each specific area or project.
- Management software tools are implemented, which allow for managing resources and tasks based on budgets allocated to each business unit.
- Advises and applies accounting, tax, and fiscal planning.
- Implements market research, assessment, and benchmarking processes.
- Determines measurement indicators through the use of information technology and data management.
Importance of management control
Control and analysis of an organization's performance ensures that objectives are met and makes improvement possible.
Management control provides a comprehensive view of resources, expenses, possible fund deviation, and the needs to be addressed in order to achieve the company's goals.
To implement management control, it is necessary to access the entire accounting and financial data of the company to obtain information on the performance of each area, identify areas of further improvement, and influence both operational and strategic future steps and decisions.
Advantages of management control
Management control is useful and necessary for any type of business regardless of the size of its structure as it offers the following advantages:
- Optimizing material and human resources.
- Effectively directing efforts towards objectives.
- Identifying potential problems or areas of improvement in processes.
- Identifying possible fund deviation or accounting errors.
- Applying multiple indicators that provide useful data for future analysis and comparison.
- Providing concrete data to be used by a company's board of directors in the decision-making process.
- Cuevas Moreno, Ricardo & Rodriguez Minor, R. (2010). El control de gestión. Responsabilidad social y ética profesional en la gestión de la administración pública y empresarial. ULPGC.
- Atencio, J., & Sánchez, G. (2009). El control de gestión estratégica en las organizaciones. CICAG: Revista del centro de Investigación de Ciencias Administrativas y Gerenciales.
- UNIR Revista (2022). Control de gestión: qué es y cuál es su importancia. Unir.