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In his book "Levers of Control: How Managers Use Innovative Control Systems
to Drive Strategic Renewal" (1995), Robert Simons introduced the Levers of
Control framework, giving managers in large companies a framework to manage
the tension between (value) creation and control (managing and measuring value).
 What are the Levers of Control? Definition
Levers of Control are defined as any:
- Formal information-based routine or procedure
- that is used by management
- to maintain or alter patterns in organizational behavior.
Simons Levers of Control
- Belief Systems that an organization must put in place so that
it can control commitment to the organization's vision, core values, mission
statements, vision statements, credos and statements of purpose.
- Boundary Systems which an organization must have so that it can
stake out the territory for each participant: codes of conduct, predefined
strategic planning methods, asset acquisition regulations, operational guidelines.
- Diagnostic Control Systems. These must be put in place by a company
so that it can optimize outcomes, and get the work done: output measurement,
valuation standards, incentive systems and compensation systems.
- Interactive Control Systems. Smart organizations use these for
tracking new ideas, for triggering new learning, and for properly positioning
the organization for the future: incorporating process data into management
interaction, face-to-face meetings with employees, challenging data, assumptions
and action plans of subordinates.
Questions related to the levers of Simons
To get a better handle on understanding an organization, Simon recommends
the following questions.
- Have senior managers communicated the core values of the business in
a way that people understand and embrace?
- Have managers in your organization clearly identified the specific actions
and behaviors that are not allowed?
- Are diagnostic control systems adequate at monitoring critical performance
variables?
- Are the control systems interactive? And have they been designed to
stimulate learning?
- Are you paying enough for traditional internal controls?
Book: Robert Simons
- Levers of Control -
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Internal Corporate Governance
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