Of the four management principles (plan, organize, direct, control), business or management controls keep your organization on course. Controls provide a continuous loop to ensure everyone within the organization stays focused on strategic goals and operates within financial, operational and safety constraints. To establish business controls, you must set standards, measure performance against the benchmarks and adjust course as necessary.
Organizational controls provide a systems-wide review of the organization, indicating what part of the system suffers the most breakdowns, or even what causes the breakdown. Typical tools include the overall business plans and process maps, to discover what part of the corporate landscape presents the greatest obstacles to achieving objectives.
Financial controls help you follow the money trail. Including controls provide a complete view of your company’s health. Balance sheets provide a snapshot of your business at regular intervals. Include both fixed and variable total assets versus liabilities to get a view of what you can and can’t quickly adjust. P&L (profit & loss) statements subtract cost of goods and expenses from income (before taxes) to highlight whether you’re operating at a profit or loss. Similarly, cash flow statements show where your money is coming and going through the system. If the P&L statement gives you a snapshot of your finances, the cash flow sets the money in motion to check circulation.
Process controls let you monitor actual output to planned expectations. Various statistical models diagram how a process should work under optimum or customary conditions. Develop a "dashboard" using control charts and graphs that picture how the process should work, then record how the process actually performs to detect deviation and point to corrective measures, keeping your process on track.
Tips to Implement Controls
Work diligently and communicate continually to ensure employee participation in business controls. Emphasize the use of management controls as a tool that ensures corporate health rather than rules and regulations that restrict employee creativity. Emphasize the desire to control processes, not people. Encourage people to offer ideas and solutions that improve the controls. Demonstrate how improving business with management controls makes work easier and boosts the bottom line, benefiting their paychecks.
- business charts with us money image by Andrew Brown from Fotolia.com