{"id":13154,"date":"2023-12-28T08:35:48","date_gmt":"2023-12-28T13:35:48","guid":{"rendered":"https:\/\/flevy.com\/blog\/?p=13154"},"modified":"2023-12-28T08:35:48","modified_gmt":"2023-12-28T13:35:48","slug":"levers-of-control-loc","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/levers-of-control-loc\/","title":{"rendered":"Levers of Control (LoC)"},"content":{"rendered":"

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Finding ways to protect organizations from control lapses caused by a creative and empowered workforce has always remained a critical concern for executives.<\/p>\n

These changing times require ingenuity and adaptability to manage employees. \u00a0In highly competitive industries with diverse clientele, companies are heavily dependent on employee imagination and creativity to seize opportunities and meet customer demands.<\/p>\n

The challenges of maintaining control expose businesses to excessive risks or behaviors that harm a company’s reputation.\u00a0 Control failures cost the organizations substantially in terms of reputation damage, fines, business setbacks, and lost opportunities.\u00a0 Control breaches can adversely impact an organization\u2019s data assets, operations, audit results, revenue<\/a>, and profitability<\/a>.<\/p>\n

In competitive markets, control can’t be achieved by hiring good people, aligning rewards, and hoping for the best alone. \u00a0Some organizations adopt tight-knit bureaucracies and maintain control by specifying how tasks should be executed and continuously monitoring them to avoid unwelcome surprises. \u00a0While this approach might seem outmoded for contemporary businesses, it remains effective in situations such as on an assembly line.<\/p>\n

Robert Simons, a Harvard professor, put forth the Levers of Control framework in 1995 to strike a balance between managing and controlling an organization<\/a>.\u00a0 The Levers of Control model recognizes that achieving organizational objectives necessitates more than just setting targets.\u00a0 It involves influencing the behavior of individuals and groups within the organization to work in a coordinated manner toward those objectives.<\/p>\n

As per the Levers of Control model, equilibrium in an organization depends on elements including codes of conduct, formal requirements, procedures, and well-defined boundaries, often enforced by restrictions and penalties. Striking the right balance among these factors and navigating the inherent conflicts between autonomy and control, trial and error, and top-down versus bottom-up administration is the essence of the Levers of Control model.<\/p>\n

The framework encompasses 4 levers, which are not mutually exclusive and can be employed in combination.<\/p>\n

    \n
  1. Belief Systems<\/strong><\/li>\n
  2. Boundary Systems<\/strong><\/li>\n
  3. Diagnostic Control Systems<\/strong> \u00a0<\/strong><\/li>\n
  4. Interactive Control Systems<\/strong><\/li>\n<\/ol>\n

    \"\"<\/a><\/p>\n

    Let\u2019s dive deeper into the first two levers of the model, for now.<\/p>\n

    Belief Systems<\/strong><\/h2>\n

    Belief Systems communicate the core values, mission, and purpose<\/a> of the organization, providing a framework for employee motivation and guidance. \u00a0This lever ensures fulfillment of the mission of the enterprise by inspiring behaviors, values, performance, and a sense of contribution in people to serve the customers better.<\/p>\n

    In the absence of a clearly defined Belief System, employees are left at the mercy of conjecture regarding the desired behaviors and organizational purpose.\u00a0 Belief systems outline the organization\u2019s obligations towards employees, customers, society, and other stakeholders. \u00a0This lever works best for organizations desiring to nurture strong cultures and align diverse actions with central ideals, such as startups and organizations undergoing Transformation<\/a>.<\/p>\n

    Boundary Systems <\/strong><\/h2>\n

    This control lever facilitates setting up standards and policies to inform people about what not to do without hampering their creativity or entrepreneurial abilities.\u00a0 Boundary Systems delineate the limits within which employees operate through rules, codes of conduct<\/a>, and predefined strategic boundaries, outlining acceptable and unacceptable behaviors.<\/p>\n

    These boundaries clearly indicate the nonnegotiable consequences of overstepping moral codes and the opportunities to be avoided. \u00a0Boundary Systems are recommended for sectors subject to stringent regulations, risk-averse enterprises, or organizations aiming to restructure<\/a> or transform behaviors where operational efficiency and reduction of waste and errors are of utmost importance.<\/p>\n

    Interested in learning more about the other levers of the Levers of Control framework? You can download an editable PowerPoint presentation on the Levers of Control Framework<\/strong> here <\/a>on the\u00a0Flevy documents marketplace<\/a>.<\/p>\n

    Do You Find Value in This Framework?<\/strong><\/h2>\n

    You can download in-depth presentations on this and hundreds of similar business frameworks from the\u00a0FlevyPro Library<\/a>.\u00a0FlevyPro<\/a>\u00a0is trusted and utilized by 1000s of management consultants and corporate executives.<\/p>\n

    For even more best practices available on Flevy, have a look at our top 100 lists:<\/p>\n