A New Perspective on Controller Tasks

At the IMC, we see controlling as assuring management rationality. This perspective is much more than merely an abstract conceptual basis; it also has direct consequences for our understanding of controllers’ tasks. It results in types of tasks that are not aimed at securing content (e.g. information supply, strategy, or monitoring) but rather on the way in which these tasks are fulfilled by controllers in interaction with managers.

This differentiation of controllers’ tasks is based on assumptions derived from the perspective of assuring rationality in a management context: 

• On the one hand, this approach assumes that managers do not always follow the company’s objectives but that they are guided by – at times even primarily – their own personal goals (danger of opportunistic behavior).
• On the other hand, it is assumed that managers operate under cognitive constraints, which can range from false perceptions of a situation to inappropriate heuristics.

In addition, managers are not always adequately qualified to carry out certain tasks, e.g., they may not be familiar with capital value calculation or the concept of value-based management because they lack the necessary knowledge of business administration. Such cases result in rationality deficits which directly or indirectly lead to financial losses for the company.

Rationality deficits can – put in simple terms – result from a lack of ability (deficits of ability) or a lack of motivation (deficits of motivation) on the part of the manager. In individual cases, both deficits are neither constant nor consistent: They can be more or less pronounced in different managers and in different situations.

We can derive two key findings from this: 

• Controllers have to adapt themselves to each individual manager when working with management. An “off the shelf” or “one size fits all” solution will not meet the unique needs of each individual manager. 
• At a simple level, we can differentiate between four types of manager: (1) The manager always follows the company’s goals and is sufficiently competent and unbiased to be able to reach the right decisions. (2) The manager follows the right goals but is subject to deficits of ability. (3) The manager does not have any deficits of ability but tends to focus more on his own goals than those of the company. (4) The manager displays deficits of both ability and motivation.

Let’s take a closer look at the four cases: We will see that they exert considerable influence on the precise way that controllers fulfil their tasks; e.g., one and the same piece of information may have to be provided in completely different ways in order to serve its purpose.

First, we consider the case of the competent manager who is committed to the company. Controllers can assume that this manager only delegates tasks to his controller that have been well-thought-out and are beneficial for himself as well as the company. The controller is expected to carry out the task efficiently. There is no need to hold a critical discussion on this task, nor is it necessary to go through a detailed explanation of the results when the task has been completed. Such a situation will be relatively common and might occur, for instance, when the controller is working with a manager who was previously a controller himself and who is, moreover, not suspected of “doing his own thing”. In this case, the controller unburdens the manager. We therefore speak of unburdening tasks.

Controllers are faced with a completely different situation when the manager follows the company’s goals, but shows deficits in his ability. Let’s take an example of the new boss of a development division who was previously one of the company’s best development engineers but who does not know much about business management. To him, even a monthly report requires clarification. Here, controllers are required to provide a longer and more detailed explanation of the figures; the task of unburdening the manager, described in the first case, now has to be complemented – the R&D manager is only able to sufficiently understand the figures by interacting with his controller. We call these tasks complementary tasks.

To summarize, one and the same task in controlling (e.g., planning a particular measure) can, depending on the situation, serve to unburden, to supplement, or to constrain the manager. The controller must be aware that in certain circumstance he has to “deliver” the same task to his managers in a completely different way. To do this, he has to know the manager very well; for instance, he should know the career steps he took to reach his current position and the reputation he has acquired along the way. Controllers also have to be sensitive to the situation in which the manager currently finds himself. Some managers are able to reach a good decision in calm waters, but tend to make mistakes when under pressure. Controllers have to take account of the fact that managers will improve their skills and, to return to our example above, the R&D manager will no longer need to have the figures explained to him after a few months. All in all, controllers have to accept and take into account the individuality of very manager. This makes their work quite challenging, on the one hand, but it also provides a very good grounding for a later career in management.

Professor Utz Schäffer & Professor Jürgen Weber