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Risk Management In Outsourcing And Impacts

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A control system uses control loops to manage, command, direct and regulate the behavior of other devices. The operation of control systems used in management is based on the facts of the process variable being evaluated verses the desired set point (Neubert and Dyck 2016). The main feature of the control system is thereby, applying a control signal that returns the process output to the same value as the control signal. On the flipside, engineering control is explained as the psychology designs and modification to machines or plants to prevent hazards (Gooneratne and Hoque 2013. The processes that are involved in the engineering control processes are such as ventilation to reduce the risk of illness at the working place that is easier to manage. Control in management sense ismore difficult than engineering control because control in management incorporates numerous elements as compared to engineering control; the paper therefore, seeks to report on the reality of the this assertion.

A control system has various elements that play specific roles to achieve a good control system. These elements when incorporated wellare profitable to the management system of an organization. They provide a set of rules that monitor the behaviors of employees in a company and automation processes that minimize the risks in operations.These elements include problem avoidance, feasibility constraints on the control choice, control of personnel, control of results and feedback.


Effectiveness of control mechanism

In many scenarios, the establishment of rules by the managing authority does not ultimately increase problem avoidance. Many employees are subject to error at work either knowingly or unknowingly. According to Gooneratne & Hoque (2013), element of problem avoidance in the features of a managing control system is achievable by automation as one of the tactics. The use of computers and other means of automation machines for example robots aid in reducing the organization’s problems. The machines are set to exact preciseness and accuracy to limit the errors that might have been caused by humans.

The other alternative avoidance possibility is by centralization. This means that all the information processed by the managing authority is gathered and processed in one database. The information filed in a single database ensures fast and accurate retrieval of information in the organization. The existence of a database also reduces the tiresome workof information filling and additionally increases the accuracy of records keeping. Using a third-party company to manage the risks that might arise in the firm is also a way of problem avoidance (Hong et al. 2003). This mechanism uses insurance companies to cover the risks of accidents and perhaps employees’ behavior that might cause harm to the firm or to themselves. Finally, the other control mechanism in problem avoidance is elimination. This feature ensures that the manager or management of an organization can be advised to disinvest in a sector or subcontract a company that will manage a high prone risk sector in the organization.

Control of results

This type of control is mainly focused on results accountability. This control system holds employees responsible for the results retrieved. The use of the results accountability system requires that proper definitions of the dimensions of the expected results are set. These definitions include efficiency, quality, and service. The performance on these dimensions is also set to aid in the processes of the control of results (Viswanathan 2011). The control of result mechanism is set to reward and acknowledge the meeting of the required results and reparations are set on the results not meet to the set standard. Additionally, the result system is set based on future events and can work as a motivating factor to the employees.

Control of Personnel

Personnel control can be very effective in small organizations or even small family business. This type of control is effective in that it acknowledges the need of personnel in running of an organization and its processes. The running of personnel components is not difficult because there are minimal personal limitations with minimal task work whilst supporting even in lack of goal congruence (Schermann, Wiesche, and Helmut 2012). However, when the control problems are present, they can be curbed by altering the control of personnel by adjusting for example the hiring policy and initiating training programs to train employees.

Control of Specific Actions

This type of control is set to regulate people from doing specific actions. In most cases, the control type is set to prevent individuals from doing specific actions that might be termed as undesirable (Bembenek and Jankowska 2014). The management can therefore, use some behavioral constraints as a form of control to prevent and render some improper activities impossible. These constrains include the physical devices such as key-personnel identification systems, biometric locks and scanners and administrative constraints for example segregation of duties.

Tracking of the employees’ behaviors and their engagements is also another method of control of specific actions. Depending on the settings of the system’s limits, it can be set to reward or punish deviations from the specified limits. These action-accountability systems despite having been set to create consequences from unwanted behaviors and habits; they can also be used to motivate the employees to behave appropriately in the future (Daniel and Hiebl 2015). In addition, these systems can work if employees understand what is required of them and they have a drive that their individual actions will not go unnoticed and unrewarded.

Pre-action review is another method of specific action control. This involves the viewing the work of others before completion or submission. These reviews are done through forms planning reviews, direct supervision, and approvals on proposals for expenditures (Reddick 2003). Reviews are effective in pre-action decisions such as correcting a potential harmful before it could develop into a real problem. It also influences the human behavior by influencing an extra care in the preparation of a proposal.


Feasibility Constraints on the Choice of Controls

The workability of the controls is determined by its design and how works. In most organizations, they depend on the employees to self-motivate themselves. This self-control and self-motivation can be achieved on most employees by the using of controls altered to suit hiring, training and screening (Tessier and Otley 2012). For control over specific actions, it might be difficult to provide the required set of requirements especially for behavioral aspects. This is because it is difficult to correctly define all the behavioral prospects unlike action-oriented aspects. To bridge these limitations, these behavioral actions are indirectly monitored using the number of working hours, sales made, or violations against proper procedure.

Feedback is important when it comes to control systems. Feedback is a necessary reinforcement to back up the accountability of the systems. Feedback is however not used to make input adjustments but it signals that results and output is being monitored. Feedbacks provide the awareness of supervision through the feedback method. Feedback is also crucial in repetitive situation. It can be used to show indications of failure in systems. The feedback control system is also used to show when the results are achieved (Daniel and Hiebl 2015). Additionally, it can be used to make crucial interventions whereby results can be altered at different section processes. With input adjustments complimented by the feedback mechanism, it makes control management a powerful tool in an organization.

The feedback mechanism can be manipulated to a powerful control loop switch. The feedback instead of now being result-oriented can be manipulated to specific-action oriented focus. For example, it can be set to away that after an action, when the feedback is positive the system automatically proceeds to the next step. On the other hand, when the results are not as intended the loop repeats itself until the desired results are acquired.

Several scenarios are supported by the feedback method of control system to support business operations. All these cicumstances makes feedback method excellent for control systems. The feedback mechanism can be used to keep a retailer on the loop of his stock level. When integrated with the financial records it can be a useful tool to quantify when the levels of sales are highest and when they are lowest.

Feedback control element is not always effective in all situations. For example, it is a useful tool when it comes to repetitive processes where the monitoring of situations is simple and after every stage. However, for the non-repetitive processes it is difficult to monitor the sources of errors and when feedback is given out it will be too late to reverse the process. There are various ways through which goals should be set in managerial control; his includes setting the performance standard, determining or measuring the actual performance, comparison of the actual performance,   assessing deviation and taking the corrective actions.

Setting the performance standard

In order for an organization to achieve its objectives, it needs to formulate strategic goals. As much as all these goals governing the workmanship of the various organizational departments are important, a standard goal is the most relevant of all of these goals (Bucher 2013). It dictates how an organization moves forward despite all the challenges that come in the organization’s way. Given the crucial significance of the standard goal, this section will come up with steps that can aid an organization in coming up with an effective and reliable standard goal.

Researchers aver that the steps of coming up with the most appropriate standard goal are largely related to the life coach teachings. The first step in setting a standard goal in the context of managerial control is to exercise belief. Organizations need to believe that they can actually do indulge in the standard goal setting process successfully (Wright 2012). They are required to have faith in the process. Given the complication and the tiresome nature of this process, the team members need to be motivated throughout the entire process. Having a strong belief about attaining success eventually will enable them to remain enthusiastic throughout the process. After this belief has been created, the organization’s team members can then move to the next step.

The next step entails applying the SMART technique. Setting a standard goal that is specific enables the employees and especially those in the management control department to know exactly what they working on (Niven and Healy 2016). This increases their chances of succeeding. In order to aid the employees in staying on the right track, there is the need to ensure that the goal is measurable. In most cases, organizations end up setting up goals that are very hard to attain. Team members are encouraged to inquire into the certainty levels of attaining the proposed goal (Stevens et al. 2017). Having this in mind, organizations should probably look at their past successes and failure and the size of their business before they can decide if the proposed goal is attainable or not. Then of course, the goal should be relevant and time-related.

The next step is to align the goals with the relevant department and in this case, management control. In the process of doing this, the organization needs to be aware that the employees could be having their own varied goals (Arraya, Pellissier, and Preto 2015). The organization should as such communicate its mandate to its employees in order to make sure that everyone is on the same page. The next step is to develop an action plan and finally, follow up on the execution of the standard goal and this constitutes the reward.  

Indicating the performance standard is considered, as the first step is management control. These standards are often considered by Iles and KaurHayers (2014) as the basis for determining the actual performance. Moreover, Mthieu (2013) argue that standards are the benchmarks through which the efforts of the whole organization are directed to. Such standards could be dieted both through qualitative and quantitative terms. There are various examples of the qualitative data including, the cost that is to be incurred, the revenue earned as well as the units to be produced and sold, time to be spent, the level of inventories to be maintained etc. On the contrary, Von Glinow (2016) argues that the quantitative standards include improving the good will, improving the quality of products, and enhancing labor relations. To facilitate easy comparison of actual performance with standards, the managers should attempt to set such standards in qualitative forms.


Measuring the actual performance

After determining the standards, it is significant to measure the actual performance. There significant levels of measuring performance including using performance report, sample checking, personal observation among others. Arguably, Mthieu (2013) provides that in order to facilitate easy comparison, performance should be measured in on a similar basis that the standards have.

Comparing the standards with the actual performance

This often involves the actual performance with the standards that are laid down to determine the deviations. For instance, the performance of a sales man in terms of units that are sold in a week could easily get measured against the standard output for each week.

Assessing the deviations

A number of deviations are often possible in every activity. On the contrary, deviations in significant areas of business should be corrected much urgently when compared to deviations in significant areas. Management should therefore use vital point control as well as management by exception in such areas.

As far as critical control is concerned, it is important to focus on key areas that behave as critical points. As asserted by Lagerstroem (2014), the KRA is crucial for an organization success. Therefore the whole organization has to suffer if at all something goes wrong at this point. For instance, while analyzing the manufacturing organization, cost is considered as being much troublesome relative to 18 percent increases in the stationary expenses. While focusing on management by expectation, Kozlowski (2013) provides that only the significant deviations would exceed the limits that have been prescribed.

Taking corrective action

The last step when it comes to setting standards in management control entails taking the corrective actions. If deviations are considered to be within the acceptable limits, it is worth noting that no corrective actions are required. Contrary, if deviations tend to exceed the acceptable limits, they should be brought immediately to the notice of the management in order to undertake corrective measures in significant areas.

Proactive and reactive control            

Proactive and reactive control plans are both strategies of dealing with problems affecting business organizations and organizations as a whole. These two methods are the exact opposite of each other. They cancel out on each other. Management control largely involves dealing with problems affecting organizations. Proactive control on its own largely applies the ideologies of preventive measures (Duthooet al. 2014). This plan constitutes finding the identifying the source of the problem and as the initial strategy. After the problem has been identified, the next step is to identify the various ways in which this problem can be tackled.

Proactive control is not exactly the best strategy to deploy in dealing with managerial problems. To begin with, it is more complicated than its sister did strategy, reactive control. On top of this, if say an organization was facing negative media publicity or unfair competition, employing proactive, employing proactive methods will give the opponents the advantage of predicting the organization’s next move. Proactive methods involve down strategies even before the problem actually occurs (Xuet al. 2016). If the opponents were to take advantage of this, they would just come up with ways of going back on these strategies. This implies that deployment of proactive methods will still result to the organization suffering the consequences of harm.

Reactive methods on the other hand as the name suggest, involve countering problems immediately they arise. This is a good strategy especially in the case when the organization is going through new problems that it has never encountered before. By giving the opponents a chance to attack and execute their strategies against the organization, the organization has the advantage of uncertainty on the side of the opponents (Gonthier, Braver, and Bugg 2016). The attackers will not have any glimpse of what the organization is planning to do as its counter attack measure. This will in turn give the organization the opportunity to identify the feints and bluffs in the attack strategies executed by the opponents. As compared to proactive methods, reactive control techniques are easier to execute and they bring out better results.

Requisite Variety

Requisite variety involves coming up with numerous solution plans for a single problem immediately it manifests itself. For instance, the management control of an organization can apply both proactive and reactive methods in dealing with the identified problem. The concept of requisite variety can perhaps be considered as the best way to deal with the problems that affect an organization (Martineau, Johnson, and Pauchant 2017). Modern trends in effective organization management and control require that organizations have numerous solutions to the problems affecting their various departments. It is not always a guarantee that a given method will work out perfectly well in dealing with a problem. As such, organizations may find it necessary to have some sort of a backup plan. The backup plan in this case involves having a variety of solutions. If one solution fails, the organization will go ahead and apply the next one. Alternatively, the organization can just go ahead and apply multiply solutions at once.



In summary, control systems are useful tools in management. With the various elements working together, controls are powerful to manipulate management to fewer errors with limitless number of other advantages. The control over results is faced with difficulty for pointing out the desired. For example, the customer service complaints might post a positive review for the target hotel. The feasibility of the controls allows the determination of the desired results with its set of programs set. Additionally, controls can be manipulated to integrate more elements within it thereby giving it unlimited access for more improvements on work efficiency.             


List of References

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Bembenek B. and Jankowska.2014, Strategic decision making within the cluster in the context of organizational entrepreneurship.Economic and social development: Book of proceedings; Varazdin 425-433.

Bucher, C.W. 2013, Measuring leader's goal setting operations, Marian University.        

Daniel S., and Hiebl M. 2015, Management accounting and management control in Family business: Past accomplishments and future opportunities. Journal of Accounting & Organizational Change; Bradford 11.4: 573-606

Duthoo, W., Abrahamse, E.L., Braem, S. &Notebaert, W. 2014, "Going, going, gone? Proactive control prevents the congruency sequence effect from rapid decay", Psychological research, vol. 78, no. 4, pp. 483-93.

Gonthier, C., Braver, T.S. &Bugg, J.M. 2016, "Dissociating proactive and reactive control in the

Stroop task", Memory & cognition, vol. 44, no. 5, pp. 778-788.

Gooneratne T. and Hoque Z. 2013, Management control research in the banking sector.Qualitative Research in Accounting and management; Bradford 10.2 pp 144-171.    

Graham, J.F. 2012, Same Goal, Different Day: The Moderating Effect of Experience on the Goal Difficulty - Performance Relationship in a Repetitive Goal Setting Environment, St. Ambrose University.

Hong, C., et al. 2003,An integrated system theory of nformation security management.Information Management &compoter security; Bradford 11.5.

Iles, P., &KaurHayers, P. 2014, Managing diversity in transnational project teams: A tentative model and case study. Journal of managerial Psychology, 12(2), pp.95-117.

Kozlowski, S.W.J. 2013. A typology of virtual teams: Implications for effective leadership. Group and Organization Management, 21(1), pp.14-49.

Lagerstroem, K. 2014,The development and sharing of knowledge by centres of excellence and transnational teams: A conceptual framework. Management International Review, 48(3), pp.319-338.

Martineau, J.T., Johnson, K.J. &Pauchant, T.C. 2017, "The Pluralist Theory of Ethics Programs

Orientations and Ideologies: An Empirical Study Anchored in Requisite Variety", Journal of Business Ethics, vol. 142, no. 4, pp. 791-815.

Mthieu, J. 2013,Leading parallel global virtual teams: Lessons from Alcoa. Organizational Dynamics, 38(3), pp.204–216.

Neubert M. and Dyck B. 2016, Developing sustainable management theory: goal-setting theory based in virtue. Management Decision; London 304-320.

Niven, K. & Healy, C. 2016, "Susceptibility to the 'Dark Side' of Goal-Setting: Does Moral Justification Influence the Effect of Goals on Unethical Behavior?"Journal of Business Ethics, vol. 137, no. 1, pp. 115-127.

Reddick C. 2003, Budgetary decision making in the twentieth century: Theories and evidence. Journal of Public budgeting, Accounting & Financial management Boca Raton pp251.

Schermann M., Wiesche M. and Helmut K. 2012,The role of Information Systems in supporting Exploitative and Explanatory Management Control Activities. Journal of management accounting research; Sarasota 31-59.

Stevens, A., Koke, A., Trudy van, d.W. &Beurskens, A. 2017, "Ready for goal setting? Process evaluation of a patient-specific goal-setting method in physiotherapy", BMC Health Services Research, vol. 17.

Tessier S. and Otley D. 2012,From management controls to the management of controls.Accounting, Auditing & accountability Journal; Bradford.

Wright, P.L. 2012, Goal setting theory: A macro study, Dallas Baptist University.

Viswanathan S. 2011, The practice of risk management in outsourcing and its impacts: An empirical investigation. Michigan state University publishing.

Von Glinow, M. 2002, ‘Transnational teams in the electronic age: are team identity and high performance at risk?’Journal of Organizational Behavior, 23; pp.455-467.

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and disgust in proactive and reactive inhibition", Motivation and Emotion, vol. 40, no. 2, pp. 334-342.


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