Management Control System (MCS) Package

Introduction

A multiple control system package, or MCS package, combines multiple control systems for managing an organization. Rather than relying on one system, an MCS package acknowledges that a mix of approaches must be combined, which includes traditional accounting, administrative rules, and cultural norms.

Generalities

The term "control package" gained significant traction since the 2010s with the work of Malmi and Brown, and the publication of their research. Rather than relying on only one management control system, a package combines multiple, interacting systems and mechanisms on different aspects of the business.

MCS Packages take advantage of the capabilities offered by Internet platforms and applications since the 2000s, and of new capabilities augmented by AI, since the 2020s, for gathering, analyzing, and presenting information with the same intent as Command-and-Control, Cybernetic, and Holistic models did but without those more recent technologies. Rather than replacing those models, MCS Packages help deploy those models, often with the intent of a Holistic approach better suited for the knowledge-workers' times than the Cybernetic and Command-and-Control approaches.

Key components

An MCS package typically includes the following five categories of systems:

• Culture: The shared values, beliefs, norms, and rituals of the organization, and how strong the culture is. How employees behave and perform in it, starting from hiring practices, and through management practices.

• Planning: The formal process of developing and reviewing business strategies, setting strategic goals, and long-range planning.

• Cybernetic: The systems that monitor organizational performance by comparing and revising actual results with predetermined targets, using first and second-order feedback loops, for both financial and non-financial performance indicators.

• Administrative: The structure and governance systems, including organizational charts, the delegation of responsibility and authority, and the implementation of operating procedures.

• Reward: The reward system, including compensation, pay, bonuses, promotions, and other forms of compensation.

The nature and elements of focus for the MCS package vary depending on the industry, the size of the organization, and the systems already implemented in the organization.

The complexity of the MCS package is dependent upon how the information is managed by the ERP (Enterprise Resource Planning), the HCM (Human Capital Management), and the budgeting and accounting systems. Additionally, the integration of those systems, how their architectures are designed, maintained, and AI-optimized, and how their user interface works, all those elements will have an impact on how the MCS package can deliver its promise over time.

Limiting Factors

The effectiveness of one element of the MCS package is heavily dependent on the presence and nature of the others. For instance, a budget will function differently in an organization with a rigid hierarchical structure and many rules and processes than in one with a strong collaborative culture and frequent and fluid informal communication.

The packages provide a better, comprehensive "holistic" perspective on management control than only a single solution. This is crucial for monitoring the complexity of an organization, especially when trying to balance competing demands in, for instance, finance, innovation, sustainability, and employee engagement.

How efficient an MCS Package function is dependent not only upon the technology and how the system is set and interacts with its users, but also on how human beings operate those systems, with increasing automation by bots and AI. The human factor is present in all its systems, and particularly in those of culture and reward.

Refined information about people, such as that from GRI’s adaptive profiles, can tell about how the information provided by the package is used. This information on how people perform should be part of the MCS package to benefit both the individuals and their organization. Over time, an organization can hardly perform without its people and management performing in one way or another. Having individual performance information in the system allows the system to perform with it in return.

Refined information about people, for people, becomes beneficial with interaction, contact, and attention by real people who are not bots nor AI. Those in leadership and management positions and their consultants can continue to tune MCF packages and optimize performance by considering how the information on people, including their adaptive profiles, can be better leveraged by them within the constraints of the MCS package.