Sources of tensions in the era of digital control system

The formal, information-based processes and routines managers employ to maintain or change patterns in organizational behavior are known as management control systems (MCS).

Finding a balance between managing and controlling an organization is crucial for many organizations. This is related to a management control system - MCS.

American economist and Harvard professor Robert Simons contributed to MCS by establishing the Levers of Control (LOC) in his 1995 book "Levers of Control."

Simon suggested 4 levers in MCS that can be used by the management to influence patterns of organizational activities. These 4 levers are divided into telling and asking systems.

The balance of the organization is maintained by all four levers. When one lever becomes heavier, the organization leans and loses balance in that way. Therefore, in order to maintain the strategic balance of the organization, all levers must deserve equal attention.

With the suggested levers of control, Simon's also mentioned the sources of tensions arising in the MCS. He listed five sources of tension in the Management Control System and grouped them into three categories. The sixth source was added later on to complete the picture.

Although the control system was well defined, with possible mentioning of sources of tensions in any organization, it was a different era. You can say it was an almost post-internet era.

Modern management is different. Businesses are facing different opportunities and different challenges. Technology is at the front with strategic management. Digital has changed the way global businesses have worked. It's been almost 30 years now since Simon emphasized this theory.?

The business owners, top management, HRs and Marketing heads should re-consider these sources of tension. Let us understand the sources segregated into 3 groups with the context of digital influence.

A. Tensions arising due to the need to make strategic choices

1. The tension between profit, growth and control: Businesses all over the world are spending a hefty budget on digital marketing. The growth of the business is very much dependent on how digital space is performing. There seems to be tremendous pressure on marketing people using the internet for conversions and brand upliftment. As they keep expanding in digital, data security and data control are becoming crucial too. The overall digital scenario for business development, conversions and data security is increasing the tension in the business.?

2. The tension between long-term and short-term needs: 2-3 decades ago, businesses used to plan for a long. 5 years plan was a very normal practice then. The short-term goal was to cover 1-year strategy. Technology is upgrading so fast now. Digital is adopted by small and mid-size businesses as well. The time required to achieve short-term and long-term goals has been reduced. Management does not have time to offer to the second and third-line executives. There is a lot to achieve in a short period before they move to the next strategy. Achieving tough goals within a short period puts much pressure all over the hierarchy.?

B. Tensions due to goal divergence among stakeholders and the efforts needed to imaginatively establish goal congruence

3. The tension between the several stakeholders all of whom want a bigger share of pie: Modern management speaks aloud of the importance of every stakeholder of the business. Focusing only on customers with digital content creation may not favour business growth. The employees' role has also become important, just like other vendors and agencies connected with the business. They all need an equal pie of share - in the growth of the business. All the stakeholders want to maintain the status quo through digital content. Maintaining the status quo of stakeholders is challenging for any business.???

4. The tension between the varying and often conflicting motivation of the employees: As avid users of LinkedIn, we all have observed that not every employee has the same motivational need. Money may top the list, but is that enough? Incrementing salary is not the only thing employees are looking for. They need attention, recognition and inclusiveness. Employees want to be everywhere. They are exposed to your competitors. Your employees closely observe your competitors through the internet. The role of HR is changing very fast. The GenZ group is looking for exposure on the organization's social media. They want to get recognized on the organization's website. Salary is important, but the management cannot overlook other factors that now motivate employees.??

5. The tension between different professional aspirations, propensities and functional skills of the different segments of an organization: How many organizations have an active and controlled social media use policy? The different propensities of the employees using social media can harm a company's brand value. The changing aspirations and required technical functional skills are not similar among the employees. The management may need to spend a good budget to fulfil every employee's needs. It is not easy, though!?

C. Tensions due to limited managerial cognitive powers?

6. The tension between the need and desire to seek opportunities and the constraints?due to limitation of the span of attention: Every employee wants new opportunities to grab and grow. Not every employee finds themselves lucky to get noticed. As the business grows, the management's span of attention may reduce. Using a robust Management Information System proves advantageous in such cases, but not all organizations invest in adopting MIS. Zero or less automation may increase the need and desire of employees to seek opportunities, whereas they are also struggling to get the management's attention.

It is difficult to eliminate a single source of tension in the organization but MCS can try to reduce the impact of it. Adoption of digital comes with various tensions. Top management must understand this and work accordingly.