MANAGEMENT CONTROL, MANAGEMENT ACCOUNTING 41
Acybernetic controlprocess involves four conditions (Berryet al., 1995, originally
published in Otley and Berry, 1980):
1 The existence of an objective that is desired.
2 A means of measuring process outputs in terms of this objective.
3 The ability to predict the effect of potential control actions.
4 The ability to take actions to reduce deviations from the objective.
However, Otley and Berry (1980) recognized that:
organizational objectives are often vague, ambiguous and change with time
...measures of achievement are possible only in correspondingly vague and
often subjective terms...predictive models of organizational behaviour are
partial and unreliable, and...different models may be held by different
participants...the ability to act is highly constrained for most groups of
participants, including the so-called ‘controllers’. (p. 241)Based on work by Berryet al.(1995), Emmanuelet al.(1990) presented a simplified
diagram of the control process as a regulator. This is contained in Figure 4.4.
This model differs from that by Anthony as it emphasizes the importance for
control of a predictive model, which is necessary for both feedback (reactive)
and feedforward (anticipatory) modes of control. The difficulty with each form
of control is the reliability of the predictive model. A standard, such as a budget,
requires a predictive model of the organization and how it interacts with its
environment.
Otley and Berry (1980) defined four types of control:
1 First-order control adjusts system inputs and causes behaviour to alter.
2 Second-order control alters system objectives or the standards to be attained.
Figure4.4Necessaryconditionsforcontrol
Reprinted from Emmanuel, C.,Otley, D. and Merchant, K. (1990).Accounting for Management Control.
(2nd edn). London: Chapman & Hall.
[Image not available in this electronic edtion.]