MANAGEMENT CONTROL FRAMEWORK

i) Introduction to the major functions of Top Management

Top management is the head of an organization. It consists of the Board of Directors and its
Chairman, the Chief Executive (Ex., Managing Director or General Manager) and the Senior
Executive (Deputy General Manager) which is the ultimate level of authority. They are primarily
involved in board organizational matters such as policy formulation and long range planning. In
general, the top management effectively deals with all elements and forces that affect the survival,
stability and growth of an organization. In other words, the top management duty is to protect the
integrity of the organization, so that it can survive for its own employees, the shareholders,
suppliers and the customer`s interests and for the general good of the social and economic system
within which it operates.

The Functions of top level management are:

(a) Determine the objectives for the organization which may relate to profit, business growth,
survival, and prestige, competitive pricing, marketing method, widening the area of sales, relations
with workers, customers, public and others.

(b) Framing the policy and chalk out the plans to carry out the objectives and policies. The policies
may relate to different aspects of the organization such as quality, product variety, scheduling of
production to meet the market demand and others. Market policy deals with matters such as
advertising and sales promotion techniques, pricing product, channel of distribution, commission,
discount, placements, training, remuneration promotion, appraisal of performance etc. of the
personnel. Financial policy on the other hand relates to the procurement of funds, source of finance
and management of earning.

(c) Determine the organizational structure for the purpose of executing the plans that have been
laid down. Execution of plans is necessary to carry out the objectives and policies.

(d) Assemble the resources of men, machines, materials and money for the purpose of executing
the plans which one of the tasks of top management.

(e) Control the operations through organization through budgets, cost and statistics quality control
and accounting devices.

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This follows the principles of management which is the POLC (Planning, Organizing, Leading
and Controlling) framework as stated below:

Figure 1 POLC Framework in Top Management Principle

ii) Major Functions of Top Management

Business Planning

Business planning is used by successful organizations to identify activities and initiatives that will
contribute to the achievement of stated objectives. It is also the process by which managers identify
priorities as an important aspect of managerial responsibilities, especially in situations where
resources are scarce.

The strategic planning is the key responsibility of the Top Management of the organizations,
Companies & Groups. Most of the strategic plans and amendments are set from the top Managers
after discussion and listening to opinions of the Line managers and other subordinates to know
ongoing challenges and problems in the market to adopt the optimal treatments and solutions and
go forwarded to improve the products and services granted to all customers. The Strategic Planning
and its amendments are workable plans placed from Top Management as per real information and
data received from the Market, Line Managers and Sales-force of organization, Company &
Group. These Strategic plans will guide and monitor all company staff to realize further success
& progress.

A good starting point for strategizing is an assessment of SWOT (Strengths, Weaknesses,

Opportunities and Threats) such as what an organization does well and what it does less well. For
example, good strategies take advantage of strengths and minimize the disadvantages posed by

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any weaknesses. On the other hand opportunities assess the external attractive factors that
represent the reason for a business to exist and prosper. These are external to the business. What
opportunities exist in its market, or in the environment, from which managers might hope the
organization will benefit. Threats include factors beyond control that could place the strategy, or
the business, at risk. These are also external where top management typically has no control over
them, but may benefit by having contingency plans to address them if they should occur.

In developing IS, KUMB top management must establish their objectives on what to be
achieved. The top management of KUMB must also identify various IS for achieving the
objectives and make an evaluation. Once the evaluation has been done, the top management of
KUMB must decide on the best IS to achieve the objective and finally formulate necessary steps
and ensure effective implementations of the plan. The success of the plan must constantly be
evaluated and take measure when necessary.

Each KUMB section develops an integrated business plan as part of the Department of KUMB’s
integrated business planning cycle given that:

1) The office’s organization and structure, including the number of CEOs and managers, the
number of employees, and the annual budget;
2) The results of an environmental scan that identifies new initiatives, key issues, and risks
that affect the sales, including key client initiatives that might bring major impact on the
strategy organized;
3) Business and management priorities, including human resources, finance, and information
management/information technology priorities.
4) Risks (Both corporate and portfolio level risks are documented and is described; the risk
level is assessed; and contingency plans are documented.);

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Observation:

1) We found that the integrated business plans produced by the sections in KUMB Top
Management Office are consistent with the Management Sector’s requirements.
2) We found that the planning process examined is appropriate.
3) The business plans document the alignment of their strategic directions and priorities with
government, departmental, and client priorities.
4) The KUMB annual planning cycle requires each Section to align its planned activities with
government, ministerial, departmental, and client priorities, as well as with the
Department’s strategic outcomes.
5) All the section of KUMB Offices examined identify risks to the achievement of their
priorities and develop strategies for the risks.
6) Risks to the achievement of objectives and priorities should be identified and assessed,
with explicit strategies for each significant risk.

Suggestion:

1) Strategic directions should be established and revisited through formal strategic planning
activities. Consideration should be given to government and departmental priorities and
client needs.
2) Succession planning, mentoring, enhancing the sales excellence program, active
management of individual learning plans should be done continuously;
3) Prepare detail human resources plans and setting up service level protocols with the human
resources sector;
4) Should provide a clear and transparent platform for discussions with client departments
and agencies (retail shops) and given services rates;

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Conclusion:

The Sections of Top Management Offices have appropriately identified the risks to the
achievement of their priorities and developed reasonable strategies for these risks.

Organizing

Organizing is the function of management that involves developing an organizational structure

and allocating human resources to ensure the accomplishment of company objectives. The
structure of the organization is the framework within which effort is coordinated. The structure is
usually represented by an organization chart, which provides a graphic representation of the chain
of command within an organization. Decisions made about the structure of an organization are
generally referred to as organizational design decisions. Organizing also involves the design of
individual jobs within the organization. Decisions must be made about the duties and
responsibilities of individual jobs, as well as the manner in which the duties should be carried out.

Organizing at the level of the organization involves deciding how best to departmentalize
jobs into departments to coordinate effort effectively by function, product, geography, or customer.
Many larger organizations use multiple methods of departmentalization. Organizing at the level of
a particular job involves how best to design individual jobs to most effectively use human
resources. Traditionally, job design was based on principles of division of labor and specialization,
which assumed that the more narrow the job content, the more proficient the individual performing
the job could become. However, experience has shown that it is possible for jobs to become too
narrow and specialized. When this happens, negative outcomes result, including decreased job
satisfaction and organizational commitment, increased absenteeism, and turnover.

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Observation:

1) The top management Offices of KUMB have established measures to promote a consistent
approach in facing their issues.
2) The KUMB Department documented the issue of not having accurate sales information in
timely manner from other retail shops. A few steps had been taken manually in order to
gain the related information, however the outcomes of the strategy didn’t turn out well.
3) The respective staffs being interviewed from each section indicated that no changes were
actually required. The heads were in agreement that the frequency of direction they
received from their top management Office on the related issues were sufficient.

Suggestions:

1) The chief strategic officer needs to make direct contact with each organizational level
where strategic choices are being considered.
2) To prevent such suppression, the strategic officer must work directly at the level where
alternatives are first considered so that he can understand the situational analysis and
identify the choices that he would like to make.

Conclusion:

We found that the current span of control in each section of the top management office is quite
appropriate.

Leading and Communicating

Leadership in management is defined as the social and informal sources of influence that is used
to inspire action taken by others which means mobilizing others to want to struggle toward a
common goal. Great leaders help to build an organization’s human capital to take concerted action.
Leadership also includes an understanding of when, where, and how to use more formal sources
of authority and power, such as position or ownership. If managers are effective leaders, their
subordinates will be enthusiastic about exerting effort to attain organizational objectives.

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Observation:

1) The KUMB top management Offices communicate their plans and priorities to their staffs
as communication is an important step in ensuring that each department understand
expectations and objectives being aimed.
2) Integrated business plan are circulated among the managers for review, comment, and input
before they are finalized. The heads of each department are kept up-to-date about changes
in priorities through email messages and during meetings that take place throughout the
year.
3) The top management Offices use a variety of communication mechanisms to strengthen
links with each departments.
4) All of the top management Officers use email to communicate with their staffs and with
personnel in the Department related offices who provide services to the client departments
that have a regional presence. The email communications include directives, advisories,
and other information on legal matter regarding business and sales, management, financial,
human resources, social, and training matters.
5) The top management officers visited each KUMB branches in each region annually to gain
feedbacks on issues related to sales and retails.

Suggestion:

1) Effective and appropriate communications are essential in any workplace. Information

needs to be shared on a timely basis so that actions can be taken based on current and
correct information.
2) Meetings between the top management officers and each of the Department head should
be done more frequent in order to resolve issues pertaining retails, sales and finance.

Conclusion:

We found that the communication mechanisms used by the KUMB Top Management Office serve
to strengthen the links with each department and branch offices in other regions.

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Controlling

Controlling is the ongoing, systematic process of collecting, analyzing, communicating, and using
performance information. It is an essential component of assessing an organization’s progress
toward meeting expected results. It supports decision making, accountability, and transparency.

Controlling involves ensuring that performance does not deviate from standards. Controlling
consists of three steps, which include

(1) Establishing performance standards,

(2) Comparing actual performance against standards, and

(3) Taking corrective action when necessary.

Performance standards are often stated in monetary terms such as revenue, costs, or profits
but may also be stated in other terms, such as units produced, number of defective products, or
levels of quality or customer service. The measurement of performance can be done in several
ways, depending on the performance standards, including financial statements, sales reports,
production results, customer satisfaction, and formal performance appraisals. Managers at all
levels engage in the managerial function of controlling to some degree. The managerial function
of controlling should not be confused with control in the behavioral or manipulative sense. This
function does not imply that managers should attempt to control or to manipulate the personalities,
values, attitudes, or emotions of their subordinates. Instead, this function of management concerns
the manager’s role in taking necessary actions to ensure that the work-related activities of
subordinates are consistent with and contributing toward the accomplishment of organizational
and departmental objectives.

Effective controlling requires the existence of plans, since planning provides the necessary
performance standards or objectives. Controlling also requires a clear understanding of where
responsibility for deviations from standards lies. Two traditional control techniques are budget and
performance audits. An audit involves an examination and verification of records and supporting
documents. A budget audit provides information about where the organization is with respect to
what was planned or budgeted for, whereas a performance audit might try to determine whether
the figures reported are a reflection of actual performance. Although controlling is often thought

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of in terms of financial criteria, managers must also control production and operations processes,
procedures for delivery of services, compliance with company policies, and many other activities
within the organization.

Observation:

1) Each KUMB integrated business plan includes lists of performance indicators that are
linked to the Department’s Sales Activity strategic outcomes. The performance indicator
for the Strategic Outcome is common to all trends in client perceptions of the usefulness,
responsiveness, and time of the services provided.
2) Performance is monitored by client feedback surveys conducted by the Management
Sector’s Office of Strategic Planning and Performance Management. Each survey provides
a specific measurement on the performance averages. The results from the survey are
provided to both the staffs and the Top Management Offices.
3) The Department did not take a horizontal approach to designing, approving or
implementing information system control frameworks.
4) The Department has made some progress in fulfilling requirements for issue related and
being included in the scope of the audit. However, the data collected from recipients were
not being used to its full potential to target attention at areas of greatest need.
5) Other retail shops under KUMB in other regions are proactively adjusting their
organizational structures and internal role to meet the challenge in information systems
(IS) requirements. An added complexity is that other retail shops has their own information
system on transfer payment resulting in varying degrees of information systems which are
not being standardized.

Suggestion:

1) KUMB top management officers should review and clarify options within existing
departmental processes, structures, accountabilities, responsibilities and authorities for
developing and approving IS control frameworks and establish a single window approach
to communicate the IS control frameworks to retail shops under KUMB in other regions.

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 2) KUMB top management should establish a function to provide IS program design and
program management expertise in developing and implementing new and amended
Information System. This function could include a blend of existing expertise in IS
program design.
3) KUMB top management officers should improve alignment of IS program in Data
Collection Instruments with Performance Measurement Strategies for their respective
information system to further streamline data being collected from other retail shops.
4) KUMB top management should review the key transfer payment management functions
to promote greater consistency with other retail shops in other regions.

Conclusion:

We found that the performance in Controlling of the Top Management Offices is satisfactory.

iii) Conclusion

The top management functions of planning, organizing, leading, and controlling are widely
considered to be the best means of describing the top management role, as well as the best way to
classify accumulated knowledge about the management of a business. Although there have been
tremendous changes in the environment faced by the top management and the tools used by them
to perform their roles, they still perform these essential functions. From the review, it is essential
for a company such as KUMB to establish an information system within the organization in order
to gain sales information from all of the retail shops registered under KUMB.

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