The Effects of Management Controls on Productivity

Management controls include a variety of tools used by both managers and employees to ensure work may proceed as necessary. While management controls are a useful and often essential part of doing business, it is important to ensure that these controls do not interfere with workers’ ability to get the job done.

Management controls should always comply with all applicable state, local and federal laws. They should also provide a reasonable amount of assurance that assets are protected from waste, fraud and abuse. Management controls should not be implemented without proper forethought and planning, but should have specific goals which may be realistically met. Finally, standards for management controls should require the encouragement of both managers and employees to act in an ethical manner which maintains a certain level of competence for all workers.

The purpose of preventive controls is to attempt to prevent workers at all levels from making errors or defrauding the organization. Preventive controls may include such items as requiring workers to enter a password to sign onto a computer or a pass key to gain access to a particular area of the workplace. These controls are essential in a variety of work situations. However, they may sometimes affect productivity if not implemented properly. For example, if a payroll clerk needs to print paychecks, but the supervisor with access to the locked room where check stock is kept is unavailable, productivity may be lost.

Detective controls are designed to ‘detect’ errors and/or fraudulent activity after they have already occurred. Exception reports are one example of a detective control. These are reports which list items such as incomplete transactions or transactions that equal an amount which is greater or less than what is expected in day-to-day business. Detective controls are very effective at discovering costly accounting errors. However, they can impact productivity when carried to the extreme. For example, when an entire department is forced to spend hours searching for a five cent error, not only is productivity lost, but the time spent looking for those few pennies will cost the organization more money than if it were to simply write off the difference.

While management controls may have a negative impact on productivity when implemented incorrectly, they may also be used to increase productivity. When management controls are in place to measure and analyze day-to-day productivity, managers may use the resulting data to investigate more efficient ways to do business. These controls may also help managers determine more effective ways to delegate authority within the organization.

Always remember that your workers are human. Do not underestimate the affect of management controls on employee engagement and productivity. The human aspect of management controls should be considered when designing and implementing these controls. Human behavior should be considered to ensure workers are properly motivated to complete the desired tasks. For example, employees should not be made to feel as though controls have been put in place because managers believe workers cannot be trusted. In such a case, workers will likely be demotivated, which will then decrease productivity.