What are the Levers of Control?
The Levers of Control, introduced by Robert Simons (1995), gives managers in large companies a framework to manage the tension between (value) creation and control (managing and measuring value).
Levers of Control are defined as any:
- Formal information-based routine or procedure
- that is used by management
- to maintain or alter patterns in organizational behavior.
What are Simons’ Levers of Control
- Belief Systems that an organization must put in place so that it can control commitment to the organization’s vision, core values, mission statements, vision statements, credos and statements of purpose.
- Boundary Systems which an organization must have so that it can stake out the territory for each participant: codes of conduct, predefined strategic planning methods, asset acquisition regulations, operational guidelines.
- Diagnostic Control Systems. These must be put in place by a company so that it can optimize outcomes, and get the work done: output measurement, valuation standards, incentive systems and compensation systems.
- Interactive Control Systems. Smart organizations use these for tracking new ideas, for triggering new learning, and for properly positioning the organization for the future: incorporating process data into management interaction, face-to-face meetings with employees, challenging data, assumptions and action plans of subordinates.
What Questions are Related to the Levers of Simons?
To get a better handle on understanding an organization, Simon recommends the following questions.
- Have senior managers communicated the core values of the business in a way that people understand and embrace?
- Have managers in your organization clearly identified the specific actions and behaviors that are not allowed?
- Are diagnostic control systems adequate at monitoring critical performance variables?
- Are the control systems interactive? And have they been designed to stimulate learning?
- Are you paying enough for traditional internal controls?