Levers of Control (Simons)

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Summary

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).


Levers of Control, Robert SimonsWhat 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

  1. 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.
  2. 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.
  3. 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.
  4. 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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Levers of Control Categorization

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Managing Risks Through Internal Controls

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