The Effect of Contextual Factors on the Design of Management Control Systems

In order to develop a human resource strategy; there must be a linkage of the entire human resource function with the firm’s business strategy in order to improve business strategy execution. The first recommendation

Business environment is facing a rapid change that reminds the business management to focus on its core competencies to survive and sustain in the competitive environment. The core competencies can be developed by strategic human resource management. According to Armstrong (2006) employees are the valued assets for a company. The strategic human resource management is mainly developed in accordance to the fact that human resources need to be managed strategically for the company to enjoy sustainable competitive advantage.

Today 's fast-paced, competitive business environment has resulted in "rediscovery" of the human resource management function as a group that may be able to enhance firm competitiveness and performance by being "strategic" (Dyer & Kochan, 1995; Ulrich, 1997). Strategic Human Resource Management is a term describing an integrated approach to the development of Human Resource Strategy that will enable the organization to achieve its goals (Armstrong, 2005). Whiles strategy is an action that managers take to attain one or more of the organization’s goals. Strategy presents a general direction set for the company and its various components to achieve a desired state in the future. This results from the detailed

The strategic use of human resources is essential for all organisations that have objectives involving growth and stability. Therefore, it is essential for companies to closely examine their practices regarding their human capital to ensure a successful working environment. A selection of the major strategies and topics involving human capital are illustrated in the following report. Crackberry Communications should use this information to analyse potential risks and opportunities their human resource managers face.

The practise of Human Resources is moving from the traditional forms of managing people to a more strategic form whereby the Human Resources function is closely linked with organisational performance and success. This strategic form of human resources has increased the need for the Human Resource professional to understand the linkages between Corporate Strategy, Human Resource Strategy and Employee Integration.

This paper intends to define, firstly, the Human Resource management, functions and then, broadly, the System in terms of General System Theory. Strategic Human Resource Management has been defined in various ways and by various scholars. Following are the most precise definitions: “Designing and implementing a set of internally consistent policies and practices that ensure a firm’s human capital (employees’ collective knowledge, skills and abilities) contributes to the achievement of its business objectives” (Huselid, Jackson, Schuler and Randoll, 1997: 171) “It is the pattern of planned human resource deployments and activities intended to enable a firm to achieve its goals” (Wright, 1998: 187). First, the Human Resource System, consists

A helpful tool to consider when discussing the possibilities of a culture for a particular company is the Hofstede 's Cultural Dimension. Hofstede’s Cultural Dimension studies different aspects of a nation 's culture in comparison to other cultures around the world. Each part of the Hofstede’s Cultural Dimensions deals with how specific cultures react to different scenarios. The Hofstede 's Cultural Dimension is subdivided into six specific categories. These categories, also called indexes include the following: Power Distance (PDI), Individualism versus Collectivism (IDV), Masculinity versus Femininity (MAS), Uncertainty avoidance index (UAI), Long Term Orientation

Psychologist, Dr. Geert Hofstede developed a framework to link culture and organizational behavior considered the most useful outline for a scholarly community. The basis of his framework is comprehensive research involving 160,000 participants’ of managers and employees from 53 countries throughout the world. The study categorized the five cultural dimensions as Power/ Distance, Individualism /Collectivism, Uncertainty Avoidance, Masculinity / Femininity, and Short-Term / Long-Term Orientation (Khan 2014). Evaluating and understanding that culture has influence on how trade is conducted in a particular country and around the world, is critical in helping to increase a leader’ knowledge and ability to communicate and direct resources, to make viable business decisions globally. In addition, knowledge of the five cultural dimensions can be an effective tool for business leaders dealing with the rapidly growing cultural diversity within their respective countries.

This paper determines the effects contextual factors have on the design of Management Control Systems. The paper firstly discusses what is meant by “Management Control Systems” and what is expected of “Management Control Systems”. Contingency-based research is outlined and five key contextual variables are identified for discussion. The five factors (external environment, technology, structure and size, strategy and national culture) are assessed to determine their impact on design and implementation of management control systems.

Professor G • Hofstede culture more than fifty countries around the world conducted the investigation , analysis and comparison . In the field of international academic Professor G • Hofstede study is considered the cultural differences and cultural differences affect the authority of the management strategy. In the global economy , and the world are focused on the development of the company 's strategy on how to meet the largest market , the largest customer of products and services and the study of different cultures and values is the key to the success of such a strategy .

Today, human resources are seen as "the available talents and energies of people who are available to an organization as potential contributors to the creation and realization of the organization's mission, vision, strategy and goals" (Jackson and Schuler, 2000, p. 37).There exist two models that seek to describe what strategy is and how an organization should develop such strategy. The first model known as the Industrial Organization (I/O) model is based on the assumption that firms competing in the same industries are homogenous and emphasizes the external environment as the basis for organizational decision making. The second model, called the Resource Based View contrasts the I/O model by assuming that individual firms are unique and

Through the past few years, and due to different theoretical and empirical studies performed, MCS have been demonstrated to be an important element in improving innovation. Moreover, innovation has a crucial role in the product development process which is a key aspect in a company. Therefore, as stated in the article on page 324,

VOLE Worldwide Inc commenced trading in November 2002 and offers the world’s first managed Voice over Internet Protocol (VOIP) communications network. Providing a videophone package similar to a mobile/cell phone plan, VOLE manages the service which includes provision of a videophone for free use, while the customer just talks. For an affordable flat-price monthly fee, the customer enjoys unlimited video-talk time in addition to full videophone support.

Simons (1995) defines management control systems (MCSs) as formal, information-based routines and procedures used by managers to maintain or adjust patterns in organisational activities. The quality of control systems is referred to their effectiveness, regardless the type, either they exist in positive or negative form. The characteristics portrayed by individual companies are not identical, hence each of them may require different type of controls. Variation in firm’s objectives, strategies, cultures, structures and sizes are the factors that oppose the idea to rely extensively on a control system that use financial target as a single scope of performance measures. Contingency theory postulates “there is no universal applicable control system with universal validity to all organisation in all settings. In contrast, the specific surroundings and external factors an organisation is exposed to shape the system” (CIMA, 2013). Besides, firms may experience unpredictable incidents that occur in many ways such as inconsistent demands, mismanagement of employees, crises with suppliers, economy instability, etc. For these reasons, organisations should adapt their structure to the contingencies, assuming the idea that the greater the adaptation, the better the performance (Junqueira & Dutra, 2015).

Human Capital is the most sought after resource today for the whole business world when compared to any other resource. In fact, it has become the most critical resource across the globe. Organizations, big or small, are only capitalizing on the human potential, their strengths and their core competencies to achieve a remarkable competitive advantage.