Control Systems: Action, Results, Personnel and Cultural

Control systems consist of Action, Results, Personnel and Cultural and these systems determine the success of an organization. AI before joining “The University of Southern California in Los Angeles” where he was admitted for the executive master’s degree; he was using results and action control systems in operating his company (Merchant & Van der Stede, 2017). The results control system was used to determine how much to compensate the AHL loan officers and telemarketers basing on the number of the deals they had closed. The manager gave autonomy to the loan officers and the telemarketers to work from home and since the compensation was commission based they were motivated to work hard and earn more. Action control systems, on the other hand, was employed in several situations such as close monitoring of the leads, loan applications, credit inquiry and receiving payments after closing deals. Since AI was ever present at the beginning, he could easily monitor the operations of his staff. The company lacked an electronic link that could enable access to the processor’s files and AI relied on tracking the number of credit inquiries each Loan officer made in monitoring their activities. Because of his availability, these two control systems propelled the company to greater heights.

When AI left for Los Angeles to pursue his master’s degree, he had no otherwise but to appoint someone else to manage AHL on his behalf for the period he was going to be away. However, the company failed to adopt new control systems that are proactive and continued relying on action and result control systems that are reactive and susceptible to failure since they are dependent on the observation and the company’s performance. Action control system is not goal oriented and only depends on managers’ close personal monitoring of the staffs’ actions. Result control though promotes employees’ autonomy and motivation, the connection between actions and results in some instances it is not perfect and therefore these strategies were not sufficient in providing the required managerial control for the company.

What Went Wrong at AHL

The failure to use an efficient control system that is proactive such as cultural and personnel controls to complement action and result controls led to deficiencies in the management. The control deficiencies encouraged Wilbur to utilize the privileges he had at his disposal for his selfish gain. AI left behind four signed blank checks, and in addition to this, he gave Wilber total authority over Human resource and put him in charge of payments for all expenses of the office. These deficiencies in control made it possible for the employees to engage in misappropriation. There was no electronic link with the processor’s files, and this made it impossible for AI to monitor the progress of loan application and the actions of loan officers (Merchant & Van der Stede, 2017). Similarly, the company never delegated duties to its employees nor did it have a functioning organizational structure or a clear mission to guide its workers as well. This failure in control systems was because of using wrong strategies and as a result, led to the collapse of the Atlanta Home Loan.

Recommendation

AI should fight back to regain control of AHL from the hands of the conmen since he has vast experience in the business. After implementing the right strategies it will be possible to reclaim back the reputation AHL had built previously. AI should strengthen his action control system by adopting electronic links that will provide him with access to the processor’s files a situation that will make it easy to keep track of loan application. The company should implement personnel and cultural controls to complement the control systems already in place (Finkel, 2015). Personnel control will help ensure AHL hires the right people for the job, and through delegation of duties, the past mistakes can be avoided. Cultural control, on the other hand, will be vital in promoting ethical values as well as setting employees code of conduct which will, in turn, help them be more socially responsible. The personnel control system is the best strategy to curb fraud and theft from occurring in the company.

References

Finkel, D (2015). The 3 Types of Business Controls. Available at: https://www.inc.com/david-finkel/the-3-types-of-business-controls.html. Accessed August 20, 2018

Merchant, K. A., & Van der Stede, W (2017). Management Control Systems: Performance Measurement, Evaluation and Incentives (4th ed.). Philadelphia, PA: Trans-Atlantic Publications.