DON’T MAKE REPORTING SYSTEMS FOR CONTROL

The first reason is that they sometimes mistake a reporting system for management control. A management control system must link actual performance to the plan. A system which records only the past performance without linking it to the company plans is not a control system. It’s only a reporting system. Controls aren’t as good as they could be because the results aren’t compared against the plan often enough. That is the first reason. The second reason has to do with the plan itself. When we’re examining our plan the question we need to ask ourselves is, ‘Do we have our plan broken down into meaningful segments?’ Each segment will serve as a guidepost, like the buoys in the sea, to give us a clear, concise indication of where we are. If the segments are derived accurately, they help us plan where we want to go. The segmentation can be very useful in looking at each product group. If we look at the sales figures within product groups objectively, we see things which help us with our plan.