Command and Control Perspective: Difference between revisions
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Anthony's seminal work played a major role in the development of management control systems<ref>Anthony, R. N. (1965). Planning and control systems: A framework for analysis. Division of Research, Graduate School of Business Administration, Harvard University.</ref>. However, the definition he gave of control systems led to considering these systems as means of control by accounting measures of planning, steering, and integrating mechanisms<ref>Langfield-Smith, K. (1997). Management control systems and strategy: A critical review. Accounting, Organizations and Society, 22, 2, pp. 207-232.</ref>. The focus was on accounting measures, but the non-financial measures were neglected<ref>Otley, D. (1999). Performance management: a framework for management control systems research. Management Accounting Research, 10, pp. 363-382.</ref>. The initial objective of accounting management systems, to provide information to facilitate cost control and measure the performance of the organization, was transformed into that of compiling costs with a view to producing periodic financial statements<ref>Johnson, H. T., Kaplan, R. (1987). Relevance lost: The rise and fall of management accounting. Boston, Harvard Business School Press.</ref>. | Anthony's seminal work played a major role in the development of management control systems<ref>Anthony, R. N. (1965). Planning and control systems: A framework for analysis. Division of Research, Graduate School of Business Administration, Harvard University.</ref>. However, the definition he gave of control systems led to considering these systems as means of control by accounting measures of planning, steering, and integrating mechanisms<ref>Langfield-Smith, K. (1997). Management control systems and strategy: A critical review. Accounting, Organizations and Society, 22, 2, pp. 207-232.</ref>. The focus was on accounting measures, but the non-financial measures were neglected<ref>Otley, D. (1999). Performance management: a framework for management control systems research. Management Accounting Research, 10, pp. 363-382.</ref>. The initial objective of accounting management systems, to provide information to facilitate cost control and measure the performance of the organization, was transformed into that of compiling costs with a view to producing periodic financial statements<ref>Johnson, H. T., Kaplan, R. (1987). Relevance lost: The rise and fall of management accounting. Boston, Harvard Business School Press.</ref>. | ||
=Evolution= | |||
The role of short-term financial performance measures progressively became inappropriate for the new reality of organizations. The non-financial indicators based on the strategy of the organization were of crucial importance<ref>Kaplan, R. S. (1983). Measuring manufacturing performance: a new challenge for managerial accounting research. The Accounting Review LVIII(4), pp. 686-705.<br/>Eccles, R. G. (1991). The performance measurement manifesto. Harvard Business Review January-February, p. 131-137.</ref>. Gradually, the performance measurement framework began to reconcile the use of financial and non-financial measures. They evolved from a cybernetic vision where the measures are about costs, financial control, planning, and management control, towards a new era reflecting a holistic vision where the performance measures are focused on process efficiency and added value in management through non-financial measures<ref>Ittner, C. D., Larcker, D. F. (2001). Assessing empirical research in managerial accounting: a value-based management perspective. Journal of Accounting and Economics, 32, pp. 349-410.</ref>. | The role of short-term financial performance measures progressively became inappropriate for the new reality of organizations. The non-financial indicators based on the strategy of the organization were of crucial importance<ref>Kaplan, R. S. (1983). Measuring manufacturing performance: a new challenge for managerial accounting research. The Accounting Review LVIII(4), pp. 686-705.<br/>Eccles, R. G. (1991). The performance measurement manifesto. Harvard Business Review January-February, p. 131-137.</ref>. Gradually, the performance measurement framework began to reconcile the use of financial and non-financial measures. They evolved from a cybernetic vision where the measures are about costs, financial control, planning, and management control, towards a new era reflecting a holistic vision where the performance measures are focused on process efficiency and added value in management through non-financial measures<ref>Ittner, C. D., Larcker, D. F. (2001). Assessing empirical research in managerial accounting: a value-based management perspective. Journal of Accounting and Economics, 32, pp. 349-410.</ref>. | ||
Revision as of 00:56, 13 September 2025
INtroduction
The traditional, historical, and often implicit understanding of an organization’s performance is that the organization functions like a machine, with its performance measured by efficiency, predictability, and control. With this vision, the goal of the organization is to optimize individual parts and processes to produce a specific, measurable output. Management control, sometimes called "management audit," "management accounting," "managerial control," or simply “management,” depending on the context, has focused on [1]:
- Decision-making for improving the decision-making process through planning and coordination. Planning is about setting strategic and performance goals, monitoring the quality and variety of resources. Coordination is about integrating disparate elements to achieve goals.
- Control for providing feedback and ensuring that the input-output system is properly aligned, and to motivate or evaluate employees.
- Reporting information to managers throughout the organization that relates to their values, preferences, and what employees need to focus their attention and energy on.
- Learning and training for understanding changes in the internal and external environment, as well as the connections between their various components.
- External communication to disseminate information to constituents outside the organization: shareholders, analysts, suppliers, partners, customers, etc.
It’s only progressively that concerns for reporting, learning, and training have gradually emerged. Companies began to differentiate diagnostic from interactive control[2]. While the diagnostic refers to the piloting of routines and the implementation of strategy, interactive control relates to piloting by managers, the focusing of the attention of employees, learning, and the formulation of strategy.
Gradual Evolution
Anthony's seminal work played a major role in the development of management control systems[3]. However, the definition he gave of control systems led to considering these systems as means of control by accounting measures of planning, steering, and integrating mechanisms[4]. The focus was on accounting measures, but the non-financial measures were neglected[5]. The initial objective of accounting management systems, to provide information to facilitate cost control and measure the performance of the organization, was transformed into that of compiling costs with a view to producing periodic financial statements[6].
Evolution
The role of short-term financial performance measures progressively became inappropriate for the new reality of organizations. The non-financial indicators based on the strategy of the organization were of crucial importance[7]. Gradually, the performance measurement framework began to reconcile the use of financial and non-financial measures. They evolved from a cybernetic vision where the measures are about costs, financial control, planning, and management control, towards a new era reflecting a holistic vision where the performance measures are focused on process efficiency and added value in management through non-financial measures[8].
References
- ↑ Simon, H. A. (1954). A formal theory of the employment relationship. Econometrica, 22(3), 293–305.
Simons, R. (2000). Performance measurement and control systems for implementing strategy. Upper Saddle River, New Jersey, Prentice Hall. - ↑ Simons, R. (1990). The role of management control systems in creating competitive advantage: new perspectives. Accounting, Organizations and Society, 15 (1/2), pp. 127-143.
- ↑ Anthony, R. N. (1965). Planning and control systems: A framework for analysis. Division of Research, Graduate School of Business Administration, Harvard University.
- ↑ Langfield-Smith, K. (1997). Management control systems and strategy: A critical review. Accounting, Organizations and Society, 22, 2, pp. 207-232.
- ↑ Otley, D. (1999). Performance management: a framework for management control systems research. Management Accounting Research, 10, pp. 363-382.
- ↑ Johnson, H. T., Kaplan, R. (1987). Relevance lost: The rise and fall of management accounting. Boston, Harvard Business School Press.
- ↑ Kaplan, R. S. (1983). Measuring manufacturing performance: a new challenge for managerial accounting research. The Accounting Review LVIII(4), pp. 686-705.
Eccles, R. G. (1991). The performance measurement manifesto. Harvard Business Review January-February, p. 131-137. - ↑ Ittner, C. D., Larcker, D. F. (2001). Assessing empirical research in managerial accounting: a value-based management perspective. Journal of Accounting and Economics, 32, pp. 349-410.