Importance of management control

Management control should contribute in the company to the achievement of goals and secure the adaptation potential, which is the result of positive balance of resources exchange with the environment. Financial resources are an essential element for company functioning. The proper flow of relevant information is essential for the effective resources use and proper correlation of this process with the plans execution. Management control generates steering interactions, creates norms and determines the rationalized selection criteria for the decision-making. It means creating the necessary influence within company to achieve a required certainty of results. Companies operate on the basis of organizational culture defining routines, schemes and operational goals of organizational units. However, businesses unable to adjust flexibly the operational routines will not survive. Crucial conditions for an organization's survival in the volatile environment is its ability to adapt to changing operating conditions. It is always connected to funds spending. Company should ensure constant inflow of funds exceeding the reduction of resources, if it wants to avoid divestment of its strategic resources on the basis, of which it carries out its core activity. The positive balance of resource exchange with the environment creates the necessary flexibility of the operations of the company and creates conditions for generating added value. Properly functioning management control is a source of benefits for the company both in terms of internal efficiency improvement and market dominance. This scheme increases following market development complexity in order to secure the ability to analyze increasing volume of data. Management control should be future-oriented, focusing the attention of managers on the main areas and main factors for generating economic profits and creating criteria for assessment of the company's success. A properly designed management control provides the company management with access to information indicating, which areas of the company are profitable, create value at risk and should be optimized in order to achieve planned targets.

The main objective of management control is securing the execution of the company's goals. Hence, two above-presented complementary and properly functioning areas of management control allow to introduce the mechanism of efficient adaptation in the company to business environment’s volatility and to ensure the consistency of strategy goals and decisions at risk of individual managers. There is necessary to ensure the integration of management control with elements of risk management and adjusting its structure to the specific needs of entities.

Management control should equip decision-makers with tools to control the stability of economic results based on the introduction of new elements to the management process, adapting this process to the usage of the risk-taking in order to create a competitive advantage. Management control creates potential to improve management towards quick adaptation to market changes. That is why economic profit should be the result of consistent execution of plans and right decisions, programming the positive impact of randomness and not the result of randomness itself. Management focused on creating conditions for a stable improvement of economic profits should be developed by identification of risk factors influencing the operational activity of companies, risk analyses, limitation of risk exposure and measurement of the efficiency of risk-taking. Hence, tasks of management control should be presented in following way:

● support for managers that take risk;

● monitoring the efficiency of risk taking;

● risk adjusted performance masurement;

● risk reporting developed by risk impact on economic performance.

Management control equipped by above-presented tools contributes to the stabile control of economic results, linking profit improvement to the rationalization of the capital costs of the company activity.

Management control creates an information system that processes economic data concerning the company's activity. The value of information is generated only when it secures efficient use of resources. As underlined by C. Drury information gets value only when it creates the potential to make effective decisions. Decision-makers are able to assess the results of different options of activity based on access to relevant information. The company’s success is determined by the ability to create and deliver the timely and right managerial information. Management control should ensure that appropriate data and information is correctly reported, analyzed and clearly presents cause-and-effect relationships. The prerequisite is the consistency of reported data. Decision-makers creating the structure of managerial information should define, which drivers are important to the success of the enterprise and how many measures should be observed. The method of preparation of managerial information should reflect the way of the resource consumption in the organization. Effective management requires following elements in place:

● access to precise information on costs,

● monitoring of factors having a significant impact on the execution of objectives,

● reporting system of measures providing feedback interactions concerning the effectiveness of actions towards compliance with the goals.

Such an information system provides support for management decisions, based on both quantitative data and descriptive information.