Participants in Strategic Evaluation and Control

Since strategic evaluation and control is a part of strategic management process, all those persons who participate in strategy formulation and implementation should also participate in strategic evaluation except those who act in advisory capacity .Board of directors, chief executive, other managers, corporate ,planning staff, consultants participate in strategic managen1ent process. Out of these corporate planning staff and consultants act either advisors or facilitators Thus, three groups of personnel are actively involved in strategic evaluation and control though their areas of evaluation and control differ. In some cases, outside agencies like financial institutions or government, mostly to the case of public sector enterprises also participate in strategic evaluation and control either through their participation in board of directors or having power to interfere with management practices. However, the role of financial institutions in strategic evaluation and control is quite limited excel through their nominee’s on board of directors. In the case of public sector enterprises, the role of government in strategic evaluation is perform’” through nomination of board members and through controlling ministries of particular enterprises. In some specific situations, authorities may be constituted at above the board level to evaluate the performance of group companies. For example, Tata Group has set up Group Executive Office (GEO) and Business review Commit- tees (BRCs) to review the performance of group companies numbering about one hundred. If we exclude these cases, the role of board of directors, chief executive, and other managers in strategic evaluation and control is quite significant.

Role of Board of Directors: Board of directors of a company, being the trustee of share- holders’ property, is directly answerable to-4hem. Thus, board should be directly involved in strategic evaluation and control However, since board does not participate in day-to-day management process; it evaluates the performance of the company concerned after certain intervals in its meetings. Therefore, the role of board of directors is limited to evaluating and controlling those aspects of the organisational functioning which have long-term implications. Such aspects are overall financial performance, overall social concern and performance, and certain key management practices having significant impact on organization’s long-term survival Generally, the evaluation and control information used by the board is concise but comprehensive as compared to control reports used at lower levels.

Role of Chief Executive: The chief executive of an organisation is responsible for overall performance. Therefore, his role is quite crucial in strategic evaluation- and control. Though he is not involved in evaluation of routine performance which is left to other managers, he focalizes his attention on critical variations between planned and actual. Generally, he applies the principle of management by exception which is a system of identification and communication of that signal which is critical and needs the attention of a high-level manager. Depending on the size of the organisation, the chief executive’s role varies in the context of evaluation and control on day-to-day basis. In a smaller organisation, the chief executive may, perhaps, be interested in daily production and cost figures, but in a large organisation, these become unimportant for him from his control point of view. Thus, in a large organisation, the chief executive is more involved on controlling through return on investment, value added, and other indicators which measure performance of overall organisation.

Role of Other Managers: Besides board of directors and chief executive, other managers are also involved in strategic evaluation and control. These are finance managers, SBU managers, and middle-level managers. Their role in strategic evaluation and control is as follows:

• Finance managers are primarily concerned with finding out deviations between planned and actual performance expressed in monetary terms. These are done through financial analysis, budgeting, etc.
• SBU managers are responsible for overall evaluation and control of their respective strategic business units. In fact, they are the chief executives of their own SBUs except that they report to the chief executive of the organisation from whom they seek directions.
• Middle-level managers, mostly functional managers and sub- unit managers are responsible for evaluation and control of their respective functions and sub-units. These managers are more concerned with day-to-day operational control and prepare reports to be used by higher-level managers. For example a production manager is more interested in controlling production volume, production cost, product quality, etc.

Role of Organisational Systems in Evaluation: Strategic evaluation operates in the context of various organisational systems. An organisation develops various systems which help in integrating various parts of the organization. The major organisational systems are: information system, planning system, motivation system, appraisal system, and development system. All these systems play their role in strategic evaluation and control. Some of these systems are closely and directly related and some are indirectly related to evaluation and control. For example, information system is closely linked to evaluation as it provides clue as to how the organisation is progressing. Development system, on the other hand, is not closely linked to evaluation system but is under- taken as a post-control action. In the light of this, let us see how various organisational systems play their role in strategic evaluation and control.

Information System: Evaluation and control action is guided by adequate information from the beginning to the end. Management information and management control systems are closely interrelated; the information system is designed on the basis of control system. Every manager in the organisation must have adequate information about his performance, standards, and how he is contributing to the achievement of organisational objectives. There must be a system of information tailored to the specific management needs at every level, both in terms of adequacy and timeliness.

Control system ensures that every manager gets adequate information. The criterion for adequacy of information to a manager is his responsibility and authority that is in the context of his responsibility and authority, what type of information the manager needs. This can be determined on the basis of careful analysis of the manager’s functions. If the manager is not using any information for taking certain action, the information may be meant of informing him only and not falling within his information requirement Thus, an effective control system ensures the flow of the information that is required by an executive, nothing more or less. There is another aspect of information for control and other function, that is, the timeliness –I information. Ideally speaking, the manager should be supplied information when he needs it for taking action. For correcting the deviation timely action is require by the manager concerned. For this purpose must have the information at proper time and covering the functioning of a period which is subject to control. The control system functions effective, on the basis of the information which is supplied in the organisation. -However, the information is used as a guide and on this basis, identifies what action can be taken.

Planning System: Planning is the basis for control in the sense that it provides the entire spectrum on which control function is based In fact, these two terms are often used together in the designation of the department which carries production planning, scheduling and routing. It emphasizes that there is a plan which directs the behavior and activities in the organisation. Control measures these behavior and activities and suggests measures to remove deviation, if any. Control further implies the existence of certain goals and standards. These goals are provided by the planning process. Control is the result of particular plans, goals, or policies. Thus, planning offers and affects control. Not only that, the planning is also affected by control in the sense that many of the information provided by control is used for planning and preplanning. Thus, there is a reciprocal relation- ship between planning and control.

Since planning and control systems are closely interlinked, there should be proper integration of the two. This integration can be achieved by developing consistency of strategic objectives and performance measures. Prescribing performance measures which are strategically important is quite significant because often it is said ‘what you measure is what you get’. In developing performance measures, two considerations must be taken into account. First, the performance measures should focus on whether short-term profitability, or growth and technological ascendancy, or logistic efficiency, or some other objectives should be of primary concern. Second, the measures should relate to the managerial domain of each of the managers as each of them is responsible to exercise control in his own domain.

Motivation System: Motivation system is not only related to evaluation and control system but to the entire organisational processes. Lack of motivation on the part of managers is a significant barrier in the process of evaluation and control. Since the basic objective of evaluation and control is to ensure that organisational objectives are achieved, “motivation plays a central role in this process. It energizes managers and other employees in the organisation to perform better which is the key for organisational success.

Appraisal System: Appraisal or performance appraisal system involves systematic evaluation of the individual with regard to his performance on the job and his potential for development. While evaluating an individual, not only his performance is taken into consideration but also his abilities and potential for better performance. Thus, appraisal system provides feedback for control system about how individuals are performing.

Development System: Development system is concerned with developing personnel to perform better in their present positions and likely future positions that they are expected to occupy. Thus, development system aims at increasing organisational capability through people to achieve better results. These results, then, become the basic for evaluation and control.