Like most areas of business, management control is essential to the smooth running of a company and must learn the lessons of the health context. The impact of the COVID-19 pandemic on companies is not yet known, but it is undeniable that a good capacity to adapt is tantamount to survival for many of them. Pierre-Laurent Bescos, an expert in performance management, talks to us about management control and its need for agility.
The association of certain words can lead to confusion. How can you compare the term emergency which, in the current context, refers to the medical, with the management controlperformance management (planning, monitoring activities and decision-making)?
The health crisis has led to an avalanche of articles and books on the subject of lessons to be learned. And this applies to all areas, including business management. But how does the health crisis affect management control?
This difficult period has highlighted one word: agility. This was used to criticise the actions of the French government and the European Union. These bodies are said to lack the necessary responsiveness to deal with the problems associated with COVID-19. In management, the idea of agility is a long-standing one, and consequently has implications for management control. But what are these implications that are now becoming urgent needs?
Agility and management
In the common sense, being agile means being responsive. It means being quick to make decisions and implement them.
But speed is not the only quality to be mobilised. Defined as a certain dexterity in body movements, the notion of agility in the business context is akin to flexibility. The most common application of agility in business management initially concerned IT projects: this approach is intended to be more flexible and adapted, and places the customer's needs at the centre of the project's priorities.
In management, it is more a question of reacting to an economic context described as VUCA. This acronym stands for "volatility, uncertainty, complexity, ambiguity". This context is complex to grasp and its trends are unclear. In short, this context, specific to emerging markets, has now spread to the entire planet.
Many managers have used the term agility to promote organisational changes that are more in line with this type of context. For example, Saint-Gobain has abandoned its traditional organisation around business lines and adopted country-based management of its activities in order to be 'more agile' and 'closer to the market' (The world from 26/11/2018). More recently, Danone devised a reorganisation plan entitled Local FirstThis will enable Danone to move from an organisation by business to one by country. In this way, Danone estimates that it will be able to reduce its costs by €700 million (The world from 05/18/2021). The watchword here is responsiveness to fast-changing markets.
But how do you understand a VUCA context?
- over there volatility markets: this requires greater flexibility, for example by having production capacity capable of reacting more quickly to local variations in demand;
- l'uncertainty This means processing all kinds of information in order to identify trends and key variables that explain demand. This is one of the reasons why big data and digitalization;
- the complexity It calls for a simplification of organisational structures and processes at all levels to ensure greater responsiveness and efficiency in decision-making and implementation.
- ambiguity This can be reduced by experimenting with new solutions and innovation.
So how can we also talk about agility in management control?
Agility and management control
Agile management control already exists, having been tried out by a few pilot companies. This is mainly the case for the budgetary approach with the beyond budgeting. It's not a question of managing without a budget, but rather of redesigning the tool to encourage frequent changes to forecasts.
In addition, :
- reduction in the number of objectives defined ;
- greater decentralisation of decision-making ;
- flexibility in allocating resources to business units ;
- simplified performance evaluation.
There is also a need for dashboards that are more in tune with managers' needs, a better understanding of the link between financial and non-financial objectives, and the introduction of risk and sustainable development indicators. Digitalisation is used as an essential means of reducing reporting times. Smartphone applications, for example, enable managers to monitor performance in real time. When it comes to analysing costs, the time variable is becoming essential, whether in terms of monitoring hourly rates, developing new products or optimising procurement or production processes.
Towards change management
Ultimately, there are a few guidelines that will make management control more agile in a VUCA environment. The most important is the need to restore consistency, in particular by ensuring better coordination between the various management control tools. Other priorities include reducing the time taken to disseminate key management indicators and using agile tools, and being closer to management control clients. This need for proximity means not only being geographically closer to responsibility centres, but also being better acquainted with their management needs so as to avoid being "out of touch" with them. time consuming. Under these conditions, management controllers can be considered as business partners or even performance managers.
This requires careful and constant change management, because habits are difficult to change. For example, it is common to see management controllers on training courses who have not yet mastered collaborative working (document sharing, in particular). However, the rise of teleworking in the current health context has reduced the differences between companies. In other words, there are major differences in the way agility is taken into account in management control, depending on the sector of activity, the way in which the company is run, and the way in which the company is managed. governanceThis may be a function of size, or other contingency factors familiar to management control.
References
- BENNETT N. and LEMOINE G. J. - What a difference a word makes: Understanding threats to performance in a VUCA world. Business Horizons, 2014, vol. 57, no. 3, p. 311-317.
- AGHINA W., DE SMET A. and WEERDA, K. - Agility: It rhymes with stability. McKinsey Quarterly, 2015, vol. 3, p. 58-69.
- Agile Manifesto
- Agile Manifesto Principles
