Discuss the management control systems of Woolworths Limited.
In most organizations, strategies and goals are set so to as to lead them into achieving success and growth. An organization usually consists of resources, human and non-human that help it in its production and rendering of services. Most organizations put in place a management control system that assesses the performances of the available resources in regards to the strategies and goals set by the organization []. Management control system majorly helps an organization achieve its objectives.
Woolworths is a retail organization that deals with selling food, liquor and petroleum. Also, Woolworths operates in home improvement. Woolworths Limited is considered to be among the largest retailers in Australia. The company’s organization structure consists of the following board of directors, management board and brands that it manages. The board of directors has the responsibility to evaluate and oversee the operations of the organization. Some of the major brands of Woolworths include; BIG W, home improvement, supermarket and petrol, hotels, and liquor group.
Woolworths’ management is, therefore, involved in the management control system. The management board consists of the various individuals such as the CEO, Managing Director, and Chief Financial Officer among others []. All of these managers work in their specialized areas to collect analyze and report information on the performance of these areas. It involves studying the strategies of the organization and comparing it to the performance of a specific unit of a group within an organization. This helps an organization achieve its set objectives.
A good example of performance measurement in Woolworths is the one done on the following; home improvements, hotels, and others. This performance measurement involves giving a detailed report on the units listed above. This is done to assist the board of directors on how to allocate resources for these units and evaluate their performances. The performance is usually evaluated and measured based on the income of the units before interest, tax and individually relevant items. During performance measurement, apart from just reviewing the report on segments of a group, the revenue, expenses and financial cost of the group are also reviewed and assessed.
The revenue should be based on the fact that is able to be recognized. Expenses involve depreciation and aromatization, employee benefits and leases. Depreciation and aromatization are done by estimating the useful life of an asset in the organization. This assessment determines by how much and after what period it should depreciate. The employee benefits will include establishing the benefits that will be a liability to the company. These factors help to measure the performance of a company.
Each and every organization always has a specific culture that it identifies itself with. This culture consists of values which govern how people in the organization should behave and carry out themselves. Another way of ensuring that organizational strategies are met is by using the management control system to ensure that the employees behave in accordance with the standards of an organization []. This section of management control system entails communication, coordination, and motivation. Management control system has the following components; action, result, and personnel controls. Action controls make sure that employees behave in a way that would benefit the organization. Results controls ensure that the outcomes of a particular performance in an organization are according to the strategies put in place. Personnel controls ensure that the type of employees that work in an organization are experienced and qualified for the work, more so educational qualifications. Personnel controls also ensure that loyal and hardworking.
In the management control system of Woolworths, the following elements make up the action controls; administration, separation of duties and definition of actions that are acceptable. The administration is the sole decision maker in an organization. The management board and its role form part of this element. It is quite evident that the decisions that the management board makes in one or another influence the actions of the employees. Woolworth is a big organization that involves different units that may not require same management hence for it to function effectively, duties have to separate. This is to help reduce the workload. It also helps to easily identify those who are accountable for particular actions. Definition of acceptable actions involves observing, tracking and rewarding good actions. One way in which Woolworths rewards it employees is through remuneration. The remuneration is purely based on performance. Rewarding of good performances is very important since it is a way of motivating employees to perform actions that aim in achieving the strategies put in place. Apart from keeping track of the good actions, the undesirable actions are also kept track of to ensure that they do not happen.
Woolworths usually ensures that whenever they are selecting employees for particular post or proportion, they set up conditions that would enable a qualified person to be selected. Woolworths also organizes training and seminars for their members so as to increase their knowledge on a particular job []. Resources should be enough to facilitate the tasks done. Hence, Woolworths allocates resources fairly. For example Director of human resource ensures good allocation of human resources to the jobs to be done. The action, result, and performance control ensure that the employees perform actions regarding the actions put in place.
A dimension defines the extent of a particular thing. Management control system has it dimensions. They usually differ from organization to organization. An example is the tight and loose controls. This dimension shows the extent at which a management control system has an impact on the employees. Tight controls have a greater influence on employees. For example, when looking at the tight action controls, it is quite evident that they have a very high impact on the employee. They require that the employees are accountable for each and every action they do. They involve a lot of constraints to the employees, for example constricting decision making to the higher authorities only. They also involve setting up rules, policies, procedures, and codes of conduct that the employee should adhere to. The unacceptable actions are communicated to the employees and there are always consequences for any such action. The controls can be even tighter if there are frequent and detailed reviews done on the performances of the employee.
When there is a lot of diversity in an organization, then the cultural control is usually loose or weak. Tight personnel control involves putting in place very high qualifications for a certain job. In contrast to tight controls, loose controls do not have much influence on employees. They have few conditions and constrictions. Loose controls have the limitation of not being specific on the regulations of the employees and thus may cause confusion and ambiguity.
Management control system is a very important aspect of an organization. More so, the large organizations that involve a lot of workers, it helps to structure the performance of an organization. Good management control system means a good performance by an organization and this means success and growth to the organization.
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