The Design and Use of Management Control Systems: An Extended Framework for Analysis

This paper puts forward the Performance Management and Control (PMC) framework as a research tool for describing the structure and operation of management control systems (MCS). The framework has been inductively generated from the observation of MCS design and use practices in four different organizations, and from our reflections on the strengths and weaknesses of previous frameworks that have been used to examine control systems. It is also based on our understanding of the major issues in the design and use of performance management and control systems acquired from previous experience in conducting such studies. This paper begins by reporting on the differing ways in which management control systems were designed and used in four different organizations. These organizations were selected to be different in several ways, whilst having control systems that were believed to be effective. The study uses the frameworks proposed by Simons (1995) and Otley (1999) to characterise various aspects of control systems design. The two frameworks used both proved useful in illuminating different aspects of management control systems design, but each also had weaknesses or blind spots. Building on these frameworks, on the case study material, our wider experience and on our understanding of the literature, we propose an extended framework that both elaborates Otley's five questions into twelve questions, and also integrates it with Simons' framework. In particular, it argues that it is the coherence of the links between the aspects of the system identified by Otley (1999) that are crucial to effective outcomes. It is believed that this extended framework will provide a useful research tool for those wishing to study the design and operation of performance management and control systems.