Managerial controls

Any company that lacks effective managerial and operational control is courting financial ruin. Even managers who ‘see and touch’ day-to-day activities sometimes know too little about what is going on in the operations for which they are responsible.

Tracking trends in a few vital indices paints a much fuller picture and creates the opportunity to intervene before it is too late. On top of that, there needs to be a logical hierarchy of measures that cross-refer to, help quantify, or reconcile with the financial reporting of the business, and are free from ambiguity.

A structure is only in balance and fit for purpose when it is anchoring the controls that sustain every healthy business. And the essence of control is accountability.

We design managerial controls whose aims are:

• to hold managers to account for profit, costs, or specific operational outputs
• to measure performance for each job
• to measure economy, efficiency and effectiveness and provide timely, accurate information to enhance decision-making.

In the United States, we implemented transfer costing arrangements in two large businesses, helping to reinforce managerial accountability and give better visibility of profit. In Europe we designed an entirely new matrix structure to allow a British industrial materials group to integrate two subsidiaries in Belgium and The Netherlands.

Our experience of reviewing and improving managerial controls is derived from work in many sectors: chemicals, defence, distribution, engineering, food, healthcare, printing and publishing, and transport.