Management Control Systems Managerial Accounting Essay

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A broader empirical analysis of the levers of control framework reveals that the differences in the efficacy and appropriateness of this approach depend on whether or not the system of control and measurement is engaged with primarily as a diagnostic device, or more as an interactive system (Widener 2005). As noted above, interaction is a key element of the framework -- arguably the most important element, as the others are entirely useless without proper and adequate interaction between all elements of the organization and the managerial control system (Simons 1995). At the same time, when interactive procedures consume managerial attention, the firm suffers; it is the balance between interactive attention and diagnostic control that makes Simons' framework effective (Widener 2005). This is precisely the balance that is missing from Wincor Nixdorf.

Case Description and Analysis

In the case of Wincor Nixdorf, however, the imbalance is tilted towards the opposite direction. Managerial attention has been consumed by diagnostic measures and controls of late; the reduced profitability of the company brought about by a marked reduction in end-consumer spending and the general turmoil in the banking world -- which is comprised of many of Wincor Nixdorf's direct clients -- has made an unmistakable alteration to the company's bottom line, not only through the reduced sales but also through a profound change to the ration of the cost of design, development, and production compared to per-unit profits. While this is a situation that quite clearly demands attention and reaction no matter what framework is being applied, it should not be management's sole focus.

The multifaceted nature of Simons' levers of control framework for understanding managerial control systems quite explicitly demands that equal attention be paid to both interactive and diagnostic control systems, which in turn influence (and are influenced by) the less directly and quickly alterable boundary and belief systems (Simons 1995). At Wincor Nixdorf, increasing attention to the accounting figures of the company has led to an inordinate influence of accounting practices and conclusions on managerial control and activity, leading to a far more drastic reaction to the global recession that is actually warranted. This is in keeping with the findings detailed above that suggest that companies unused to dealing with instability are more likely to alter managerial control systems and their application in major ways when instability and uncertainty are eventually encountered (Asel 2009). The extremity of this reaction is almost always detrimental.

As a large, global company that has been remarkably stable in its market share and profitability since the company's inception, and especially since its recent acquisitions and mergers, Wincor Nixdorf's sudden increase in conservativism following the accounting changes wrought by the global recession is not surprising. Its focus and dependence on accounting measures and practices when making business decisions in the past two years, especially in the last eighteen months, has led to ineffective managerial control due to a lack of attention to interactive forces and control levers and a preponderance of diagnostic controls (Simons 1995; Widener 2005). Reestablishing an effective managerial control system through the application of Simons' framework will bring accounting practices back into proper focus.

Findings and Conclusions

What is needed at Wincor Nixdorf, essentially, is balance in the managerial control system and the effects of accounting and other diagnostic measures on this system. This problem is predicted and identified by Simons' managerial control system framework of the four levers of control, and the literature on this subject ad regarding this framework also suggests both short- and long-term solutions to the problem. Taking the time to evaluate all aspects of the company's operations, from the interactive activities and indirect effects of individual departments with or on each other to the overall systems of beliefs and boundaries that exist within the organization, will lead to a clearer decision-making base for the company as well as a more effective system of control being put into place. Reaction to accounting figures alone is not motivating to individuals nor does it create an effective long-term strategy for growth and profitability, both of which are certainly the continuing goals of Wincor Nixdorf and any company in these uncertain times.

Developing a true understanding of the levers of control framework of managerial control is the first step in implementing a more effective managerial control system at Wincor Nixdorf. Company leadership and departmental managers must take on a broader perspective if the company is to not only survive the global recession, but to realize its full growth potential during this turbulent time. The company's extreme reaction to new accounting figures must be mitigated by this more comprehensive view of the company's situation and capabilities.


Abas. (1999). "Management Control Systems in an Industry in Early Evolution in a Developing Country: A Longitudinal Case Study." Miami university of Ohio. Accessed 5 February 2010.

Asel, J. (2009). "Risk Management and Management Control - The impact of the financial crisis on the use of Management Control Systems." 18th EDAMBA summer academy. Accessed 5 February 2010.

Simons, R. 1995. Control in an age of empowerment. Harvard Business Review (March/April), pp. 80-8.

Tuomela, T. (2005). "The interplay of different levers of control: A case study of introducing a new performance measurement system." Management accounting research 16(3), pp. 293-320.

Widener, S. (2005). "An Empirical Analysis of the Levers of Control Framework." AAA Management Accounting Section 2006 Meeting…[continue]

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