Managerial Controls vs. Operational Controls

Attribute	Managerial Controls	Operational Controls
Focus	Strategic	Day-to-day
Scope	Organization-wide	Department or process-specific
Responsibility	Top management	Operational staff
Objective	Long-term goals	Short-term goals
Frequency	Periodic	Continuous

Introduction

When it comes to managing a business effectively, controls play a crucial role in ensuring that goals are met, risks are mitigated, and resources are utilized efficiently. Two key types of controls that organizations use are Managerial Controls and Operational Controls. While both types of controls are essential for the success of a business, they serve different purposes and are implemented at different levels within the organization.

Managerial Controls

Managerial Controls are high-level controls that are put in place by top management to guide the overall direction of the organization. These controls are focused on strategic objectives, long-term goals, and the overall performance of the organization. Managerial Controls are designed to provide a framework for decision-making, resource allocation, and performance evaluation at the organizational level.

• Managerial Controls are typically implemented by senior executives and the board of directors.
• These controls include setting strategic goals, defining key performance indicators, and monitoring overall organizational performance.
• Managerial Controls are forward-looking and help to ensure that the organization is moving in the right direction to achieve its long-term objectives.
• Examples of Managerial Controls include strategic planning, budgeting, and performance reviews at the executive level.
• Managerial Controls are essential for aligning the efforts of different departments and ensuring that the organization as a whole is working towards common goals.

Operational Controls

Operational Controls, on the other hand, are controls that are put in place at the operational level of the organization to ensure that day-to-day activities are carried out efficiently and effectively. These controls are focused on specific processes, tasks, and activities within the organization and are designed to ensure that operations run smoothly and in accordance with established standards and procedures.

• Operational Controls are typically implemented by middle managers and supervisors who are responsible for overseeing specific departments or functions.
• These controls include setting operational targets, monitoring performance metrics, and implementing corrective actions to address any deviations from standards.
• Operational Controls are focused on the short-term and are aimed at ensuring that daily operations are running smoothly and meeting established benchmarks.
• Examples of Operational Controls include quality control measures, inventory management procedures, and production scheduling at the departmental level.
• Operational Controls are essential for ensuring that day-to-day activities are aligned with the overall strategic goals of the organization and that resources are being used efficiently.

Comparison

While Managerial Controls and Operational Controls serve different purposes within an organization, they are both essential for ensuring that the organization is able to achieve its goals and objectives effectively. Managerial Controls provide the strategic direction and framework for decision-making at the organizational level, while Operational Controls ensure that day-to-day activities are carried out in alignment with the overall strategic goals.

Managerial Controls are focused on long-term objectives and overall organizational performance, while Operational Controls are focused on short-term operational efficiency and effectiveness. Both types of controls are necessary for the success of an organization, as they work together to ensure that resources are allocated effectively, risks are managed, and goals are met.

Managerial Controls and Operational Controls also complement each other in many ways. Managerial Controls provide the overarching framework and direction for the organization, while Operational Controls help to ensure that the day-to-day activities are carried out in accordance with the strategic goals set by top management. By working together, these controls help to create a cohesive and efficient organization that is able to adapt to changing market conditions and achieve sustainable growth.

Conclusion

In conclusion, Managerial Controls and Operational Controls are both essential for the success of an organization. While Managerial Controls provide the strategic direction and framework for decision-making at the organizational level, Operational Controls ensure that day-to-day activities are carried out efficiently and effectively. By implementing both types of controls, organizations can ensure that resources are utilized effectively, risks are managed, and goals are met in a timely manner.