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ЭКОНОМИЧЕСКИЕ СИСТЕМЫ УПРАВЛЕНИЯ
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Systematization of functions of controlling as a management system oriented towards increasing value: theoretical framework
Controlling system oriented towards organizational increase of value is attributed a wide variety of functions. Systematization of these functions is an important issue of controlling theory and practice. The aim of the article is to identify and systematize the functions of the controlling system. In order to achieve this aim, the analysis of controlling functions, the development of the role of controller and the link between a controller's role and managers' willingness/ability to act was carried out. Based on the theoretical analysis results, the controlling functions were identified and systematized by dividing them into three levels. The management support function, which can be appropriately specified into three first level functions and these can be divided into corresponding second level subfunctions, is considered as the fundamental function of the highest level. In the article, the hierarchical decomposition of all three levels functions is presented and their objectives are determined.
Keywords: controlling, the role of controller, controlling functions
Introduction
In order to ensure organizational value growth in a long-term perspective, it is important to create and introduce a management system, which would coordinate the actions of all management links, help to see the problems and solve them in an integrated approach. One of such systems that integrates planning, control, informational provision, performance evaluation, accounting, and analysis activities to achieve strategic and operational goals is controlling. Introduction of such system by using the inner possibilities potential could be a determining factor ensuring company's success. Researches conducted by many authors [3; 7; 18; 25; 26; 27] confirmed that implementation of the controlling system helps to improve the functionality of organizations and the process of decision making as well as to increase the organizational value.
Yet, it is important to take into account the aspect that the system of controlling oriented towards organizational value growth is related to a significant range of controlling functions which may be conceived differently in every organization. With such a broad interpretation of the controlling functions, there is a threat that the controlling tasks are to become more and more comprehensive and it might be problematic to discern them from other management subsystem tasks. That is why
© D. Tamuleviciene, R. Subaciene, 2017
D. Tamuleviaene
R. Subadene '
clear identification and systematization of functions are important when forming an organization's controlling system.
The aim of the article is to identify and systematize the functions of the controlling system oriented towards organizational value growth. In order to achieve it, these tasks were assigned: 1) carry out the analysis of the controlling functions and of development of a controller's role; 2) evaluate the link between the role of a controller and managers' willingness/ability to act; 3) systematize controlling functions providing their hierarchical decomposition and identifying their objectives.
1. Identification of a controller's role in the context of the controlling functions
Identification of the controlling functions is one of the key questions of controlling theory and practice. Due to variety of controlling concepts and approaches as well as influence of different schools, different functions attributable to controlling are provided in various sources. The ambiguous approach towards the functions was also influenced by different interpretations of the 'function' concept itself. Anderson, Schmidt (1961) suggested to define the term 'functions' in the controlling field as a task or a group of tasks requiring specific skills or competences and relate them to the broad fields of the tasks as well as smaller ones which could be analysed as the subfunctions of the latter ones [1].
Taking this definition into account, some of the authors [20; 21] analysed the controlling functions directly through the tasks perspective. Yet others [6; 10; 11; 12; 14; 16] relied on a broader conception of the functions — that it is the position, activity field or objective. Also, some of the authors [15; 22; 29; 31] supplemented the conception of the controlling functions by introducing them through identification of a controller's — as an employee's responsible for the controlling functions implementation — role.
And even though various authors identified different functions (tasks), yet most of them are related to classic management functions, such as planning, control, coordination, regulation. Other functions are attributable to specific controlling functions and related to accounting, analysis, informational provision fields. Also such functions as organization, systems creation and support, consulting, management promotion and support, variance management, performance evaluation, administration and others are mentioned.
1.1. The development of the role of a controller
In order to identify these functions more clearly, it is appropriate to examine the role of employees responsible for controlling functions implementation in an organization (see table 1). The International Group of Controlling (IGC) uniting the controllers defines the role of a controller as that of a partner of management making a significant contribution to the sustainable success of the organization. To fulfil this role, the International Group of Controlling formulated these tasks for controllers: 1) design and accompany the management process of defining goals, planning and management control so that every decision maker can act in accordance with agreed objectives; 2) ensure the conscious preoccupation with the future and thus make it possible to take advantage of opportunities and manage risks; 3) integrate an organization's goals and plans into a cohesive whole; 4) develop and maintain all management control systems. They ensure the quality of data
and provide decision-relevant information; 5) are the economic conscience and thus committed to the good of an organization as a whole [5].
Table 1. Comparison of the role of a controller, singled out in the authors' works
Source The description of the role of a controller
Controller mission statement (IGC, n.d.) A partner of management making a significant contribution to the sustainable success of the organization
Ruda, Martin, Gruenhagen (2008) Consultant/coach, change agent, service provider, "kontrolleur"/supervisor, driving force
Angelkort, Sandt, Weißenberger (2008) Consultant making management decisions, management accounting information provider
Weber, Schaffer (2008) Calculator, controller, navigator, economic "conductor", initiator of changes, innovator, architect
Todorovic-Dudic (2015) Commentator, business partner, scorekeeper, custodian
Möller, Seefried, Wirnsperger (2017) Technical expert, informer, navigator, business partner
The role of the controller is presented in a broader context by Ruda, Martin, Gru-enhagen (2008), Angelkort, Sandt, Weifienberger (2008), Todorovic-Dudic (2015), Moller,Seefried, Wirnsperger (2017) [2; 15;22; 28]. It is noteworthy, that all these authors identified the role of the controller through an empirical research method. The eesytts of the Todorovtc-Dfdir (f01t) retearch revralud ehate4% ohf2e suev^eh companies state that the main role of a controller is to provide the managers of various levels with professionel coesutoei1 assi))f2te [ 2yf. IS thus conpritaef to vdganizatiena1 vyloe creation which means that at the same time the controller becomes a business partner. Ruda, Martin, Gruenhagen (2008) studied the role of a controller in small and medium-sized German enterprises and revealed that 85% of the studied organizations sees a controller as a consultant/coach, 65% as a service provider, 50% as a change agent, 41% as an organization "drivingforce" mdonly!5% tgn "kontrolleur"ora supemsor [22].
.c Ê-
Figure 1. The development of the role of a controller
Business partner
Navigator
Informer
Technica expert
Generation of ideas when solving the
issues of organization's activity continuity and value creation; systems creation and development
Support of strategy formation and implementation process; support of decisions making optimization; redirection of management staff
Planning and budgets formation; internal reports formation and comments provision
Cost accounting and cost calculation; solving of special economic tasks; formation of financial reports; tax accounting
Business partner
Navigator
Informer
Technica expert
Source: compiled by the authors, based on [15].
After carrying out the research on controller's role dynamics, Moller, Seefried, Wirnsperger (2017) determined that over time the role of a controller evolved from an executor to an initiator [15]. And even though — according to the authors — both before and now a controller of an organization could be introduced as a technical expert, informer, navigator and business partner, yet each role's scope of tasks changed significantly over a few decades (see figure 1).
Weber, Schaffer (2008) also envisaged the controller's role development by maintaining that the approach towards a controller as a calculator, supervisor, navigator, economic "conductor" has to be supplemented by new roles which are initiator of changes, innovator, architect. According to the authors, it is the feedback to growing changes in intensity [31]. Controller, by being independent, has favourable conditions to become an initiator of the process of changes, create and design innovative systems and maintain efficient management ensuring the success of the organization in a long-term perspective.
1.2. Analysis ofthe liiJi betweena controller' s roleandmanagers' wdUmjpiess/aMO to ait
Itisimportint tonole thatdtstintuishment of conlrolling functionsanda controller's rolc in npactieular ecganézatéonali o highle dependa on menaaers' competencies. It was underlined by the promotors of the approach of controlling as a system to ensure rational management Schaffer, Weber, Prenzler (2001), Pietsch (2003), Weber, Schaffer (2008), Weber (2011), ShhfSei(1013) [17; rt; 24; 30; ril Accordi^ to tSe smhroas, the purptiso ofcunOrolling (s to suupuit manaenment by feoeldlna it will sariooi servic es to ensu rerrtional manaaemsai hici sionr. Confro lllng (upports managemenrin inri oui ways: reduces workload for management staff by helping to make the decisions and supervising their implementation process; supplements the management by providing information and advisiue; preeenCs the mouag ers from matán1 inefficieno denmou^wMch are based on the i nteresto ot thn Sfpaotmaiti ou nmployees. Division of these tasks workload depends on managers' willingness and ability to act (see figure 2).
Figure2. Aconfroller's role andmanaggrs' willingness/abilityto ac1 tenel link
The role of a controller, consultant, informer
Managers' willingness to act level
high
Controlling tasks: tasks of provision of consultancy and informational services
Controlling tasks, tasks of limiting the managers' actions
The role of a controller: business partner, navigator, initiator of
Controlling tasks, tasks of decreasing the managers' workload
high
^Managers' ability to act level
Controlling tasks, tasks of limiting the managers' actions
¡ The role of a controller: "economic conscience"; supervisor, coordinator
Source: compiled by the authors, based on [23; 24; 30].
As we can see in the figure 2, the higher the level of the managers' willingness/ability to act, the more tasks decreasing the managers' workload are attributed to controlling. And vice-versa: as the level of the managers' willingness/ability to act decreases, the controller becomes a supervisor, organization's "economic consciousness" and thus limits managers' actions to prevent them from making inefficient decisions.
2. Identification of the functions of controlling as a management system oriented towards increasing value
The carried-out analysis of the controlling functions, controller's role development and the link between a controller's role and managers' willingness / ability to act revealed that the essential function of controlling is to help management staff to fulfil the tasks to achieve the organization's aims and ensure the increase in organizational value. By carrying out this function, the controlling system facilitates the managers' work by providing consultancy, information services as well as attributing some of the tasks to themselves thus reducing their workload. This system also works as "economic conscience" because it prevents the managers from making inefficient decisions thus ensuring rational management of an organization.
Hereby, when developing a controlling system, it is appropriate to develop the management support function as the fundamental one which would be responsible for the increase of strategic and operational goals as well as the organizational value growth. Although, when carrying out the controlling functions analysis, only some of the authors Angelkort, Sandt, WeiBenberger, 2008, Moller, Seefried, Wirnsperger, 2017) distinguished management promotion and support as an independent function; however it is indirectly mentioned in most of the analysed authors' works [2; 8; 15]. I.e. Horvath (2011) summarizes all the functions distinguished in his research by stating that controlling is a management promotion and support function oriented towards the result [9]. Weber, Schaffer (2008) carried out a detailed analysis of controller's role changes and presented the controlling system as a social system management element having the most important function of management support when solving mutual management coordination tasks, etc. [31].
In order to specify the fundamental controlling function, it is important to break it down into smaller sub functions which implementation would ensure proper management support in all management levels. After evaluating various authors' approach and the functions they distinguish, it is proposed to elaborate the fundamental management support function into first level functions: 1) methodological; 2) coordinating; 3) informational, and elaborate these into second level functions. Fundamental and first as well as second level functions proposed to be attributed to the controlling system decomposition is presented in figure 3.
The objective of methodological function attributed to the first level functions group is to create a common methodology of the controlling system ensuring achievement of organization's goals implementation and application. It is proposed to break down this function into two independent subfunctions: 1) systems development which is responsible for planning and budgets formation; plans and budgets implementation control; management accounting and reporting; performance evaluation and responsibility accounting
systems design, introduction, development and support; 2) methodical which is responsible for choice of appropriate instruments, methods and means to achieve strategic and operational goals.
It is important to distinguish methodological function as an independent one because a common methodology of systems design, development as well as choice of methods, instruments and means would ensure generation of appropriate information for decisions making and actions coordination, i.e. would enable efficient implementation of other two first level functions — coordinating and informational. In addition, with the help of this function, planning, control, variance management, internal accounting and reporting, performance evaluation tasks that were mentioned most frequently by the authors would be implemented as a result of systems creation as well as methods, instruments and means selection. Necessity to distinguish a methodological function is also based on development of the role of a controller Taking into account the fact that in recent years the employees of the controlling department have been valued as business partners responsible for generation of ideas to solve organization's business continuity and value creation issues through systems creation and development, it is appropriate to consider this function as one of the essential functions to support and promote management.
Figure 3. Controlling system functions and their objectives
Figure 3: Controlling system functions and their objectives
Fundamental function
[Management support 1
The sought result: growth of organization's strategic and operational aims achievement level
. T T .
^ Methodological ^^ : ^ Coordinating"^ ; ^
Informational
The sought result: creation of implementation and application methodology of a common controlling system ensuring achievement of organization'
The sought result: optimization of time/ quality ratio to make management decisions
The sought result: formation of a common informational base and its target usage to achieve the organization's aims
i Systems | I development )
responsitbe for designing,
nmng and budgets\ formation
talion control I
I Methodical I
i :
—^ Adjustment j
reponsibbe for choice of
and means
consistency of actions and means when making
ireporting i
achieve strategic^ j
account the changing conditions of a company
responzibbe for continuous monitoring and recording of quantitative and qualitative indicators variaQons in Ihe internal
respomi&e for timely
presentation of appropriate accounting
responsible for search and application of the main controlled
organization's value
responsible for
management staff to decrease the risks of flawed management
responsible for changes o f planned actions and
nting
Source: compiled by the authors
Source: compiled by the authors.
The second proposed first level function is coordinating which is responsible for compatibility of coordination among members of organization and applied means when making management decisions and changes in planned actions and means to evaluate changing external and internal environment conditions. Taking into account these two aspects, it is appropriate to break down this function into two smaller sub functions: 1) adjustment and 2) adaptive. The objective of the coordinating function is the aim to optimize management decisions making time/quality ratio. Appropriateness of distinguishing this function is related to development of the role of a controller. As the studies by Ruda, Martin, Gruenhagen (2008), Todorovic-Dudic, (2015), Möller, Seefried, Wirnsperger (2017) have shown, the role of a controller as a navigator has expanded considerably and the most important task attributed to this role is optimization of decisions making process by coordinating actions [15; 22; 28].
The third — informational — function is related to controlling objective to provide timely and proper information for management staff in all management levels. Distinguishing this function would enable creation of a common information basis, expand possibilities to obtain timely information and use it appropriately to achieve organization's aims. Informational support, as an independent function, was distinguished by Küpper (1987), Hahn, Hungenberg (2001), Jasüdiene (2006), Angelkort, Sandt, Weißenberger (2008), Lakis, Mackevicius, Gaizauskas (2010), Horvath (2011), Reichmann (2011), Todorovic-Dudic, (2015) [2; 8; 9; 10; 13; 14; 19; 28]. Schaffer, Weber, Prenzler (2001), Weber (2011), Schaffer (2013) indicated that the role of a controller is important when informing managers [23; 24; 30]. Möller, Seefried, Wirnsperger (2017) noted that even though this role has decreased a little in the recent years, it still remains very important [15]. Weber (2011) — after carrying out controlling functions and tasks analysis — stated that regardless of the functions development, the main task of controlling remains informing the management about the economic situation and the economic activity inside the organization [30]. All these aspects justify appropriateness of distinguishing informational function.
In order to specify tasks and activities attributed to the informational function, it is proposed to elaborate it by breaking it down into four sub functions:
1. Analytical—responsible for search, application and analysis of the main controlled indicators and criteria designed to evaluate the organization's success potential and activity results. Realisation of this function aims at revealing economic reserves as well as identifying and eliminating weak and problematic areas of an organization.
2. Accounting — responsible for timely presentation of appropriate accounting data for making management decisions. This function might be implemented through the systems of management accounting and reporting, responsibility accounting and reporting and — if there is a need — financial accounting and reporting. As Lakis, Mackevicius, Gaizauskas (2010) notes, the controller determines the reporting procedures to properly harmonise information which circulate between the centre and departments and is related to accounting, accountability, financial policies and development strategy [14].
3. Monitoring — responsible for continuous monitoring and recording of quantitative and qualitative indicators variations in the internal and external environments. The
objective of this function is to monitor how the planned tasks are implemented, are the financial, material and human resources used efficiently.
4. Consulting—responsible for consulting and provision of methodological support for the management staff to decrease the risks of flawed management decisions. This function is especially significant in those organizations where the managers' willingness to act level is high but the ability to act level is low (see figure 2).
In summary, the distinguished fundamental management support function and its breaking down into lower levels functions and sub functions show a clear hierarchy of the controlling system functions which realization will help to achieve organization's goals and increase its value.
Conclusions
The carried out analysis of the role of a controller development as well as the link between the role of a controller and managers' willingness/ability to act revealed that the fundamental controlling function is the management support. Its objective is to increase main strategic and operational goals achievement rate and ensure the growth of organizational value in the long-term perspective. To ensure a proper management support in all management levels, it is appropriate to divide the management support function into three smaller sub functions. After evaluating various authors' approach and the functions they distinguish, it is proposed to specify the fundamental function into first level functions: 1) methodological; 2) coordinating; 3) informational, and elaborate these into second level functions. The distinguished fundamental management support function and its breaking down into lower levels functions and sub functions show a clear hierarchy of the controlling system functions which realization will help to achieve organization's goals and increase its value.
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