Al Fiorini’s Mistakes

Among the management control methods that were used by Al Fiorini were the action Control and the results method. According to Merchant & Van der Stede (2007), action control is a device of control where the employees are allowed to execute particular actions and prohibited from performing specific actions especially that will cause harm to the organization or will only benefit the employee. Therefore, in this type of control, the manager is expected to understand the desirable and the undesirable actions. Thus, it was the responsibility of Al Fiorini to ensure that the desired actions occur and the undesirable actions do not occur. Action control comes in various forms which include the redundancy, behavioral constraint, pre-action review and action accountability.

However, in the case study, Al Fiorini executed administrative constraint under behavioral constraint where he refused Wilber to sign the cheques that were written against the main bank account of AHL. He also monitored the loan applications, payments after deals, credit inquiries and made several calls during the day. Moreover, Al Fiorini also implemented the results control method where the salary of the loan officers was determined by the number of closed deals which motivated them to work harder. Thus the employees knew what was expected of them, the control method gave the employees direction. Through the method, Al Fiorini was not forced to supervise them since the employees gained self-motivation (Macintosh & Quattrone, 2010). The Company was able to retain employees who were confident in their capabilities. Therefore, the results control can assist Al Fiorini to take another strategy once the performance is not taking the expected direction.

What Went Wrong

The first mistake that Al Fiorini did is that he was fast to judge the people he was giving the mandate to manage the company. However, he would also have executed better control methods and run them effectively. For instance, he would have put more control l on applications funded, the number of leads produced and all bank activities. Therefore, the Company had not effectively implemented the control methods since they lacked better devices for tracking records, for instance, accessing the files rather than checking only the number of credit inquiries made by the loan officers (Merchant & Van der Stede, 2007). Moreover, the control system executed was less on achieving the goals of the company. Through the ineffectiveness of the methods used by the Company Wilbur was able to steal from the company.

What to do

Al Fiorini is adviced to use all the means and get his Company back since he has the right documents t claim ownership of the Company. Then he should consider executing a physical constraint where he is supposed to enforce more restrictions in areas with sensitive information (Macintosh & Quattrone, 2010). Al Fiorini also should ensure that it is difficult for the employees to carry out some actions that should not be done. He can also consider cultural control where the individual employees are given the responsibility to monitor each other.

Al Fiorini also should execute action control effectively such that the manager he will hire will not be able to access money from the bank through behavioral control constraint tools which are complicated techniques such as magnetic identification card readers. Thus he will be able to monitor all the activities of his Company.

References

Macintosh, N. B., & Quattrone, P. (2010). Management accounting and control systems: An organizational and sociological approach. John Wiley & Sons.

Merchant, K. A., & Van der Stede, W. A. (2007). Management control systems: performance measurement, evaluation and incentives. Pearson Education.