Our Perspective on Controlling

Integrating economic, sociological, and psychological perspectives

What is our understanding of controlling? To put it simply, we focus on people: These people do not fit the mold of homo oeconomicus, but are individuals with different likings and preferences as well as different skills and cognitive limitations. For a long time now we have been following a behavioral perspective, an approach which is now gaining momentum in other areas of business administration. 

We focus on two aspects: the function of controlling and the controllers who support an (essential) part of this function.

To us, the function of controlling means assuring management rationality

This is based on our assumptions of the players involved: Not all managers follow the company objectives, some may pursue their own interests. Not every manager makes the right decisions in every situation. Managers make mistakes. Put these together and it makes sense to have measures in place to assure the quality of management, beginning with a review of the foundations of decision making through to the influences shaping individual decision making processes.

Controllers play an important role in this task by providing transparency, supporting managers in the planning process, assisting them with specific questions on business issues, and also by keeping track of targets and instigating measures to address any discrepancies.

Managers are highly individual people and rationality assurance must be just as individual

Controllers are only successful when they tailor themselves to "their" managers. The form of support required by a manager who relies heavily on his "gut feeling" differs from that required by a brilliant analyst, just as it differs for the predominantly market-driven manager and the ardent technophile, or the career climber and the manager primarily focused on company objectives. 

The individuality of managers also means that controllers need to keep this diversity in mind in all matters requiring the coordination of several managers, such as the annual planning process or the distribution of investment funds. On the one hand, there are differing interests to be reconciled. On the other hand, controllers need to be aware that managers are not all equally capable of using financial controlling tools. Ambitious tools can be helpful for making better decisions, but they can also lead to problems when it comes to coordination.

One of controllers’ key tasks is to keep the overall perspective in mind

They do this by providing the business vernacular, such as financial performance metrics, which managers use to achieve company targets. This language has to be simple enough for everyone to understand, yet also precise enough to enable good coordination. Controllers have to adapt this language in response to the changes that their companies are required to make in order to ensure survival, and to do this they need to constantly adapt themselves, too.

The language of controlling and the tools used to do it are, however, just one side of the coin. They do not work – or work badly at best – if the necessary cultural basis is missing. In our opinion, a controlling culture comprises three elements: a strict results-driven approach, transparency, and the primacy of critical discourse. Controllers and managers are required to seek and cultivate such a culture.

Our ten perspectives on controllers and controlling

To clarify our perspective, we have broken it down into ten aspects as shown in the following diagram. Each aspect has its own keyword. They are all closely interrelated, and none of them is dispensable. Two are highlighted in the diagram: "How do controllers see managers?" introduces the basic principles of the behavioral approach; "Controlling & culture" sets the contextual framework for the other nine aspects.

Our ten perspectives on controllers and controlling

All ten topics are clearly and concisely described in their own short video. Finally, these explanatory videos take a different tack on controlling from our point of view: On the one hand, assuring management rationality requires creativity; on the other hand, controllers must be able to communicate complex facts in a way that is easy to understand. Enjoy watching!