А basic factor causing a demand for control in organizations, is the uncertainty and turbulence they are facing. Of course, there are also other factors calling for control, such as the need to coordinate activities and to motivate behavior. But, behind these needs we still find the uncertain future to be the factor causing these other needs.
There are three major ways for organizations to deal with uncertainty:
1. To internalize a market through the acquisition of a supplier;
2. To make long-term agreements with customers and suppliers;
3. To improve the ability of the organization to control its situation.
When we are talking about control we mean any process in which a person or group of persons or organization of persons determines, that is, intentionally effects, the behavior of another person, group, or organization.
During the years several changes and modifications have been made to control functions:
- Functions as maintenance of organizational communication;
- The securing of essential services from individuals;
- The formulation of purpose and objectives.
There are the four means to control in increasingly turbulent situations:
1. Design of the organizational structure including the appointment of people with the right knowledge and experiences to the positions and the design of the reward system
2. Design of strategies based on the mission of the organization
3. Formal control systems such as a planning, budgeting and control system
4. Informal control systems such as establishing a certain culture and ways of conduct within the organization.
In the face of increased uncertainty the control systems may be changed in three major ways:
1. Instead of doing plans only once a year, planning is turned into a more continuous activity;
2. Relatively more effort is put on follow-up in comparison with planning;
3. The amount of information collected and spread within the company will increase.
Now days markets and competitors change so quickly that a one year budget offers a too long planning horizon to be suitable for a short run system. Besides adapting the control system to the uncertainty faced, the focal organization will also make arrangements so as to meet other demands and purposes of control.