How to balance between trust and control?

The standard publication of Robert Simons (Levers of control; how managers use innovative control systems to drive strategic renewal, Harvard Business Review) is still very relevant in current business strategy and operations.

I regularly receive feedback during internal audits in mostly international environments. On the one hand this is like;

“…. due to the burden of continuous checks and audit I hardly find time for improvement of results and creating value …”

And on the other hand;

“… there is a need for more intensive enforcement of the rules that we agreed upon together … lack of supervision/control leads to mistakes and inefficiencies …”

Control

Control can, in this respect, be defined as the processes and systems that management uses to steer the deployment of human capital in such a way that the organization goals are being realized. So, control is much more than checks and audits with which it is often confused, especially in an international environment where ‘control’ and ‘audit’ complement each other well. Control can be visualized as per below:

Business strategy

The left side covers the traditional field of classic control. The right side covers soft controls. Organizations (and so their staff and management) tend to put more focus on the left side than following this balanced model. An important reason is the continuous regulatory pressure and supervisory activities by various stakeholders. Short and midterm focus often wins from the longer-term vision. In addition, if there is an issue or exception from the standard, there is usually a direct reference to regulation and enforcement including the associated focus on reporting/documentation.

Is this a problem?

Not necessarily. Provided that the division of roles within the board and management of the organization is clear and healthy sparring continues between core values, risk focus, controls with room for entrepreneurship and learning.

The composition of board or management team of the organization should be consistent with the above and not mutually reinforce each other on one aspect.

So, in the control framework, the balance between trust and control is to be found by taking position as management.

Mario Cornel
Managing Consultant


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