Ensuring that organizations are protected from breaches in control that may result from an empowered and innovative workforce has always been a top priority for executives.
In these dynamic times, effective employee management necessitates the application of resourcefulness and adaptability. Organizations that function within highly competitive industries and cater to a diverse clientele heavily depend on the resourcefulness and originality of their personnel to seize competitive advantage and exceed customer needs.
Due to the challenges inherent in maintaining control, organizations are exposed to an inordinate amount of risk or reputation-damaging behavior. Organizations suffer substantial financial losses as a result of control failures, which include reputational damage, financial penalties, operational setbacks, and lost business opportunities. An infringement of control may result in adverse consequences for an organization, including damage to its data assets, operations, audit outcomes, revenue, and profitability.
In competitive markets, control cannot be achieved through the mere employment of competent individuals, alignment of incentives, and chance. A limited number of organizations elect to implement inflexible bureaucratic systems as a means of preserving control through the regulation of task execution and continuous monitoring to avert unfavorable occurrences. While this approach may seem outdated to contemporary businesses, it remains effective in situations such as assembly lines.
The Levers of Control framework was introduced by Harvard professor Robert Simons in 1995 as a method to attain an organizational equilibrium between control and management. The Levers of Control paradigm recognizes that setting ambitious targets is insufficient to achieve the objectives of an organization. It involves directing the behavior of both individuals and groups within the organization to ensure that they work in unison to achieve the specified goals.
Equilibrium within an organization is determined by elements such as codes of conduct, structures, procedures, and well-defined boundaries—often enforced via penalties and restrictions—according to the Levers of Control model. Achieving an optimal equilibrium among these variables and navigating the inherent divergences between control and autonomy, trial and error, and top-down versus bottom-up management are the pillars upon which the Levers of Control model is built.
The framework is composed of 4 interdependent levers that can be employed in tandem:
- Belief Systems
- Boundary Systems
- Diagnostic Control Systems
- Interactive Control Systems
Let’s us now proceed with a more in-depth analysis of the initial two levers of the model.
Belief Systems
Belief systems function as a mechanism for communicating the core values, objectives, and mission of the organization, thus providing guidance and motivation to staff members. By encouraging people to improve their customer service through the inculcation of positive values, conduct, performance, and a feeling of inclusion, this lever ensures the fulfillment of the organization's objectives.
In the absence of a clearly-defined Belief System, employees are forced to depend on conjecture regarding the organization's intended behaviors and objectives. The obligations of the organization with respect to its clients, staff, community, and other stakeholders are outlined in the Belief Systems. This lever is particularly efficacious for enterprises that are enduring Transformation and organizations seeking to cultivate resilient cultures while harmonizing varied behaviors with fundamental values.
Boundary Systems
Without stifling individuals' capacity for innovation or entrepreneurship, this control mechanism permits the development of policies and standards that instruct individuals on bad behavior. Boundary systems implement regulations, codes of conduct, and premeditated strategic boundaries to delineate acceptable and abhorrent employee conduct, thereby establishing governing parameters.
These boundaries clearly define the irreversible consequences of violating ethical principles and the potential outcomes that should be avoided. Boundary systems are preferred by risk-averse organizations, industries subject to stringent regulations, or those aiming to restructure or modify processes where operational efficiency, error and waste minimization, and efficiency are of the utmost importance.
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 here on the Flevy documents marketplace.
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