A LEARNING BASED APPROACH TO MANAGERIAL CONTROL

Abstract

The problem tackled in this research is about the broad issue of managing performance in those organizations which embrace the philosophy and operating tools of lean production. The Management Control Systems (MCS) and the Operations Management (OM) literature have recently started a conversation at their interface, whereby it has been claimed that lean production implies new approaches to control. In this regard, the narrow focus on the design and operation of control systems as the main objective of analysis has left largely unexplored the behavioural aspects which underlie the use of MCS in lean environments. The research reported in this project makes an attempt to fill this gap. Specifically, it examines the role played by managers – as the unit of analysis – in the use of control systems in lean environments. The work adopts as its structural foundation a notion of lean organizations which is not bounded only to shop-floor considerations (Hines et al., 2004). Likewise, a comprehensive notion of control systems (Ferreira and Otley, 2009) is embraced with the aim of tackling the problem through a modern view of management control. These two stances ensure greater exploratory power to the research.

Based on three case studies conducted in Italy in 2015, this research develops a grounded model which suggests that the use of control systems in lean manufacturing organizations is driven by a number of interrelated mechanisms. These support two main integrated learning-based approaches to control, which are: (i) managers use control systems to understand the basic drivers of performance which configure the operations of the lean manufacturing system; (ii) managers use control systems to establish an accepted “control regime” based on: the use of measures to support collective reasonings for strategy execution, and to set up well-defined communication infrastructures in the organization; knowledge-sharing practices stimulated by the production context and also supported by the influence capabilities of managers; and, formal training to influence subordinates’ aptitude for the work.

These findings, by contributing to both the MCS and the OM literature, take a step further in understanding how performance management can be structured and operated in lean environments. In particular, they shed light on the behavioural underpinnings of control in such environments.