Sometimes, I get a little worried by the language used to describe the processes we use as managers and leaders. The concept of an organisation having a “management control system” is largely on its way out. Although there remain many old style enterprises where such an approach is still used, more enlightened ones rely on the culture of the organisation to regulate it. Of course, there have been some outrageous acts committed recently within organisations (think News of the World, for instance) but time and time again, what we are told is that it is the culture that was wrong – even if some leaders chose not to challenge this. The hard, but simple, reality is that organisations are far too complex and large for simple solutions such as IT-based controls, to be reliable. You can’t depend on catching people doing things inappropriately. It is far easier to create a culture in which people catch each other doing things well – then the anomalies stand out from the crowd.
The following abstract landed on my desk this evening. There’s nothing wrong with the research, but the concept of a management control system is just so old. However, when you read the item, you begin to see that the authors are actually drilling into the idea of a culture as a control mechanism and, even, recognising that it is leadership style that is working alongside internal controls to shape the behaviour of employees, specifically in the area of organisational commitment;
Leadership impact on organizational commitment: the mediating role of management control systems choice
Christian Kleine, Barbara E. Weißenberger
The notion of organizational commitment has been intensively discussed in many fields of contemporary management research. Current literature in the field of leadership suggests that leadership styles of top management, i.e., CEOs and business unit heads, affect the level of commitment among middle- and lower-level managers. In a parallel vein, scholars in the field of management accounting and control argue that these effects are due to an organization’s management control system. This study is aimed at closing the gap between both strands of literature and examines how leadership and management control systems interact in the process of creating organizational commitment. Building on structural equation modeling, the study extends existing knowledge by analyzing whether the relations between top management’s leadership styles, i.e., initiating structure and consideration, and organizational commitment are mediated by the use of formal and informal management control elements. Based on a sample of 294 German firms, the results suggest that informal control elements, such as personnel and cultural controls, act as hinges through which top management is able to positively transmit leadership behaviors and affect the development of organizational commitment.