Control Tightness

The benefit of any management control system (MCS) is derived from the increase in

the likelihood that the organizational objectives will be achieved relative to what

could be expected if the MCS were not in place. This benefit can be described in terms

of MCS tightness (or looseness) because tighter MCSs should provide a higher degree of

certainty that employees will act as the organization wishes.

Many articles and books in the practitioner-oriented management literature use the

control tightness phrase. They describe firms as having tight or loose controls (or as having

tightened or loosened their controls). For example, when Sterling Software acquired

Knowledge Ware, the two companies’ MCSs were described in contrasting terms.

Sterling was said to have tight financial controls, while Knowledge Ware was said to

have very weak or nonexistent financial controls.1

How tightly to apply management controls is a major management decision that has

received little attention in research studies and textbooks, and if so, it is primarily discussed

in a results-control context.2 The concept of tight control can certainly be applied to results

controls. Tight results controls might involve detailed (often line-by-line) and frequent

(monthly or even weekly) budget reviews of performance and significant performancedependent

incentives.3 But there are many other ways to affect tight management control,

such as by using reinforcing combinations of various management control types.

Conceptually, effective implementation of tight control requires that management has

detailed and reasonably certain knowledge about how one or more of the control objects

– results, actions, or personnel/culture – are related to the overall organizational objectives.

The following sections describe how each of the management control types can be

used to generate tight control.