THE IMPACT OF MANAGEMENT CONTROL SYSTEM ON ORGANIZATIONAL PERFORMANCE (A CASE STUDY OF PROFILE OF SELECTED ENTERPRISES IN DELTA STATE)

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

Management control system is currently being given serious consideration in both private and public organizations. The commitment of enterprise in achieving Excellence is largely determined by the level of control system in place. From recent research, it is obvious that evaluation performance level of an employee in an organization cannot be achieved without effective control system to avoid waste, fraud and mismanagement (Meig’s et al 1982).

All over the world there is awareness that greatest attention should be paid to the improvement of organization management. The reason is obvious, Government constitutes the largest single business entity and her pattern of expenditure through its various parastatals, agency and commissions stimulates a lot of economic activities, (Biodun 1975). Such ever increasing establishment should not be left aloof without a standard control mechanism in place to have an improved organization with sense of direction towards accomplishing the enterprise objectives. If positive results are to be achieved in the organization there must be adherence to stipulated work procedure irrespective of the type of performance in place (Umegbu and Obi, 2007). This work centered on the impact of management control system on the organizational performance, using selected Enterprises in Delta State, as a reference study. From personal experience and observation of organization in the state is void of effective management control system which results to low productivity and inefficiency.

Although the fact remains that the impact of management control system has not been felt so much in organization because a lot of organization has been operating without Management Control System (Tracey 1994) and the control system operational is not adequate enough to effect changes that can produce expected results in the public enterprise. Management control is a major part of managing organization. It comprises plan, methods and procedures used to meet mission goals and objectives and in doing so supports performance based management (Government Performance Acts 1993). Management control also serves as the first line of defence in safeguarding assets, preventing and detecting errors and frauds. In short, management control which is synonymous with management control, help government programme managers achieve desired result through effective stewardship of public resources.

Under normal circumstances, good management control system supposed to help government achieve the following. (Umegbu and Obi 2007)

-    Ensure smooth administration

-    Control cost minimization

-    Ensure capacity and effectiveness utilization of resources

-    Compliance with applicable laws and regulations

-    Maximum benefits derivation and achieve desired result in the system

As the researcher mentioned earlier on, reversal is the case looking closely in the organization and seen what is obtainable. Effective and efficiency of operation in the system is not maintaining a reasonable percentage; this is because there is no total control mechanism/system, where people are guided according to the laws and regulations of the organization.

The relevance of the impact of management control system on the organizational performance cannot be overemphasized since it is the essential information on which action for continued service in the same job, training, promotion, transfer or redeployment should be based.

Since management control system forms the basis for many personnel policies and practices, it is essential that it be effectively administered.

1.2 STATEMENT OF THE PROBLEM

In any research work there is always a problem that the study is set to understand, examine and solve. This study is not exception to this rule.

It is true some incidences that take place in organization make one to wonder if we are progressing or retrogressing. The fact is that many of our organizations (private and public) are simply not performing, inefficiency is thriving and surviving rather than dying.

Therefore, the problem sought to be addressed in this study is the evaluation of the usefulness of management control system on the performance of organizations and their reactions to it. Specifically, in order to make this paper more meaningful, the impact of management control system on organizational performance of selected Enterprises in Delta State, will be examined and evaluation of its effectiveness will be made based on organization opinion and reaction.

The impact of management control system that is of prime value now have little or no place in the public organization, thereby making performance of many organizations to deteriorate as there is decline in the practice of effective management control system which is total adherence to stipulated work procedure to enable management evaluate the effectiveness and efficiency of the organization.

1.       What is the kind of relationship that exist between management control system and performance in organizations.

2.       What kind of relationship exist between the performance of organizations with effective management control system and performance of those that is not under any check or control.

1.3 THE OBJECTIVE OF THIS STUDY

The broad objective of the study is to investigate the impact of management control system on the organizational performance of

The specific objectives are to:

1.       Determine if there is correlation between management Control System and performance of organizations?

2.       Ascertain the relationship between effective management control system and inefficiency in organization.

3.       Determine the relationship between effective management Control and productivity.

4.       Investigate the differences in the performance of organization with effective management control system and the performance of organizations with ineffective management control system.

1.4 RESEARCH QUESTIONS

1.       Does the performance of organization depend on effective management control system?

2.       What kind of relationship exists between effective management control system and inefficiency?

3.       What kind of relationship exists between effective management control system and productivity?

4.       Is there any significant difference between the performance of organization with effective management control and those without?

1.5 RESEARCH HYPOTHESES

H01      There is no significant relationship between management control system and the performance of organization.

H02    There is no significant relationship between effective management control system and inefficiency in organization.

H03    There is no significant relationship between effective management control system and low productivity in organization.

H04    There is no significant difference between the performance of organization under effective management control and the performance of organization that is not under check.

1.6 SIGNIFICANCE OF THE STUDY

The impact of effective management control system in the performance of organization of the state cannot be overemphasized. The researcher is of the view that the research work will be of immense value to the following:

(a)     Organization workers/employees: The research work will go a long way to help the employee to understand more of the meaning and the importance of management control system as well as its practices. The worth of management control system will also be appreciated in the system.

(b)     Another area of consideration is the area of policy making. This research work will also enable policy makers in the country to make workable policies and to know the necessary polices that will suit the organization of the state.

(c)      Academically, the thesis will widen the knowledge of students of tertiary institutions and researchers in both graduate and undergraduate levels.

1.7 SCOPE OF THE STUDY

Various research works has been done on various management field of which impact of management control system is one of the paramount area. Most of these works has not been directed toward organizational performance except in private organization.

With this in mind, it had been my uppermost desire and interest to go into the area of management control system to cover facts about its impact on the performance of organization using selected Enterprises in Delta State, as a reference study because of many enterprises of the State.

Therefore, I had taken pain to employ all avenue available to collect adequate and up-to date information about the subject matter.

1.8 LIMITATIONS OF THE STUDY

During the research work, the researcher faced a lot of challenges. Prominent among these problems is that there were not enough time because the researcher was constrained by time pressure since he had to combine both academic work with official engagement.

Secondly, is the problem of suspicion by some Government officials so many of them may not be willing to disclose certain information’s to the researcher simply because the researcher might be a government agent that could implicate them with the information disclosed. As a result, the researcher travelled far and near for related text books, going through ranks and file of many management related write up and books in order to get enough information both for primarily and secondary data. This processes involves photocopy, sorting, traveling etc. which entails a lot of financial commitment. A lot of calls was be made, send text messages without getting feed-back from the receiver.

The researcher must not fail to say that there was a very big constrain in getting access to internet. The internet operators will tell you that the system is down or that the signal is poor. Besides, because some of the staff may not be able to read and write very well to get the questionnaire at the time appointed was a serious issue during this research work.

Upon all, these predicaments, the researcher try to submit a comprehensive and accurate report to the best of my knowledge.

1.9 DEFINITION OF TERMS

System: Is a group of inter related components that seek the attainment of a common goal by accepting input and producing outputs.

Management Control: This is the whole system of control, financial and otherwise established by a management in order to carry on the business of the enterprise in an order to carry on the business of the organization in an orderly and efficient manner.

Organization: This is government Agency backed by State Laws and charged with the responsibility of tapping available human and material resources for economic development and general welfare of the people.

Control: A control system is a system built to maintain a desired state.

Enterprise: A company, organization of business

Productivity: The rate at which goods are produced and the amount produced.

Inefficiency: Not using time, money, energy etc in the best way

Public: A group of people who have a particular or who have something in common e.g tribe, group, clan, region, state, local government etc.

1.10 PROFILE OF SELECTED ENTERPRISES IN DELTA STATE

The profile of the selected enterprises in Delta State is stated below.

Delta Steel Company (DSC)

In April 1971, the Nigeria Steel Development Authority (ASDA) was established by a military decree (No 9 of April 14). In 1979 it was metamorphosized into several organizations of which Delta Steel was among. Delta Steel Company was commissioned in 1982 and produced steel from imported from Ore in Local Steel scrip.

Location: Delta Steel Company (DSC) is located in Ovwian, Aladja Warri, Delta State.

Facilities: It was established to produce industrial raw materials as:

-      Cast Iron (Different categories)

-      Rods and Bars (both high tensile and steel varieties

-      Wires (in all it ramifications)

-      Structural Steel (light, medium, heavy structured)

-      Flat sheet steels (plan and galvanise ad also spectron classified as flat)

-      Stainless and other special alloy steels

-      Rails and pipes

-      Plat (various sizes in width, in thickness)

DESOPADEC

Delta State Oil Producing Areas Development Commission (DESOPADEC) was established July 2007, although it has retroactive effect from August 2006 under the governorship of Chief James Ibori. A board with an executive chairman and commissioners from the oil bearing ethnics nationalities in the state were subsequently put in place.

July 4, 2007 the Delta State House of Assembly led by Rtd. Hon (Dr.) Olise Imegwu pass a resolution calling on Dr. Uduaghan to dissolve the Board over issues of improper membership of commissioners, July l6 2007 the Government rejuvenate the Board.

Objective:

-      To executive a clear and critical mandate, rehabilitation, rejuvenate, resuscitate the people and oil communities of oil producing areas of Delta State.

-      Other developing project as may be determined from time to time.

Some activities

-      Manage and supervise the affairs of the Commission

-      Establish and maintain such department as it may deem fit for the effective discharge of its functions.

-      Make rules and regulation for carrying out functions of the commissions

-      Pay the staff of Commission, general remuneration and allowances as appropriate

-      Do other things that are necessary and expedient for efficient performance.

Presently, Delta State Government has appointed a new Management Board for the DESOPADEC. The members of the new Board were screened and cleared by the Rtd. Hon. Victor Ochei led Delta State House of Assembly on 11 August, 2011

The composition of the New Board is as follows.

-      Chairman — Oritsual Kpojho and 8 other members. The secretary will be source from the State civil service. The new Board take over from caretaker committee headed by Mr. Reginald Boyoko.

Delta Hotels (Agbor and Orerokpe)

Delta Hotels Agbor and Orerokpe were established in the early 70s in the Local Government Headquarters of Ika Local Government and Okpe Local Government Council respectively. The main objective was to built a relaxation and recreation centres for government officials posted to these local government areas. District officers (DO’s) were equally put in mind so as to have a resting place after their usual daily activities.

Facilities: Table Tennis Court and Basket Ball Pitch. As a result of these facilities, they used to have competition with neighbouring villages around these local government headquarters, although, from the research carried out, it has been privatized but still serve the public.

Osubi Airport

Warri Airport (Osubi airstrip) is located at Osubi, 1.8km from the city of Warri. The plan was first drawn in the late 1970s because of it states as an oil city but it was languished for over 2 decades, due to corruption.

Shell finally decided to build and commissioned it on its own and was opened for commercial use on 1st April, 1999. It is reckoned to be one of the busiest aviation facilities in Nigeria and operational in conjunction with other oil companies. The maintenance and facilities are among the best in the country.

Contribution:

1.       It has opened up Warri for business and investors who are assured of a quick and convenient means of travel

2.       It has promoted safe travel and general aviation operations with its ultra modern navigational and landing facilities.

Proposed Facilities:

-      Internal works

-      Car park

-      4 kilometer runway

-      Artillery facilities

-      Health care with estimate cost of 37.3 billion

Delta Building Society

Delta Building Society is located at 126B Nnebesi Road, Asaba, Nigeira. This was established by the Delta State Government under the governorship of ChiefJames Ibori to finance projects which includes:

-      To grant loan

-      Western Union Money Transfer

-      Financial Investment Service

Loan money for real purchase of estates and houses. It was established to finance government projects especially building and estates. It also involves giving loan with considerable collateral security.

Oghara Stadium

Oghara Township Stadium is a multi-stadium built by Governor James Ibori who belief that charity begins at home. Is a multi-use stadium and is currently used mostly for football matches and hosted some of the final tournament for sporting activities.

Location: Within the town of Oghara in Ethiope West Local Government Area of Delta State, Nigeria.

Facilities: Swimming pool, street lights, well structured Hotels with student facilities for the athletics was built December 10, 2011. Health equipment facilities for athletics, it is a place for colourful ceremony.

Warri Stadium

Warri stadium is located at Cemetery road in Warri Delta State, Nigeria. Is currently used for football matches, is a multi-purpose stadium. Boasting of the best sporting activities. Warri Stadium has a capacity of not less than 80,000 people. It was described as a first class stadium by the confederation of African Athletics (CM). Is regular home for Warri wolves. It hosted the final tournament for the 2006 Women African Football Championship.

Other activities

Field tract events, table tennis court and other smaller indoor games, is currently under renovation by the Government of Delta State.

Asaba Stadium

Asaba Stadium is also a multi-purpose stadium. Is situated in the state capital of Delta State, Asaba. The stadium is under the supervision of a board including other stadium of the state which is a section of ministry of sport. Other activities within the stadium are table tennis court, basket ball pitch and other field events. Asaba stadium had hosted many football matches.

February 15, 2013, Governor Ewetan Uduaghan assured that the stadium will be completed in 6 months and should be ready to host local and international matches.

Recently, it was named after Steven Keshi, who February 15, 2013 led Nigeria to win a third AFCON title.