Management decision making processes and frameworks

¶ … Horn of Africa experienced what was termed the worst drought in 60 years. The drought, caused by the failure of the rains for two consecutive seasons, led to a severe food crisis across Djibouti, Somalia, Ethiopia, and Kenya, and killed more than 100,000 people while placing hundreds of thousands at risk of starvation. According to Hiller and Dempsey (2011), the greatest tragedy was that the world had seen this disaster coming, but little had been done to prevent it. From as early as 2010, there had been clear indications of a looming crisis and its consequences. La Nina, a climate condition that would lead to drier than normal conditions over the entire area had already been confirmed. Further warnings of the crisis were repeated and became more strident in 2011. In light of all the warning signs, it is, therefore, rather surprising that proper response from the international aid system only came after the rains failed for a second successive time and by then, the crisis had already reached its peak and millions had been affected. This revealed flaws in the international emergency system and pointed to the ineffective application of management control systems by national governments, relief agencies, and non-governmental organizations (NGO's) in responding to disasters.

By definition, management control systems (MCS) are a set of communication structures and systems that organizations use to collect information and to apply it in evaluating the performance of different organizational resources. They provide information that enables the management team to direct behavior and steer the organization towards its competitive advantage and strategic objectives. In responding to crises like the Horn of Africa drought, it is imperative for national governments and organizations to apply the management control systems that will lead to timely and effective responses. This text evaluates the 2011 drought in detail and examines how ineffective management systems may have led to poor response by national governments, relief agencies, and NGOs. It starts by identifying the flaws in these systems and goes on to evaluate how an organization's MCS are implicated in the response to a crisis. It then looks at the role MCS played in the poor response to the 2011 crisis, and provides recommendations for better responses in future.

Flaws in the organizational, national and international response systems

Hiller and Dempsey (2011) state that it is outrageous that in spite of the advancement in technology in recent years, and all the knowledge that is available on ways to prevent drought and famine, thousands of lives were still lost in 2011. They further explain that a key evaluation of the humanitarian response in the Horn of Africa revealed that there was failure of earlier preventive action from 2010, as well as a collective failure in providing relief when it was needed the most in 2011. Sophisticated early warning systems (EWS) had already indicated that preemptive action was required to prepare for the drought and avoid costs that could be incurred later once the crisis reached its peak. The Food Security and Nutrition Working Group for East Africa (FSNWG) had also advised humanitarian organizations to implement multi-sectoral programs and to begin large scale response planning. The warnings went largely unheeded, which resulted in far greater suffering, malnutrition and damage to livelihoods.

The fact that all the four countries that were affected by the drought were in different situations was also not considered during planning. The crisis played out differently in all the countries with Somalia being the worst affected due to the unstable political environment. Kenya was struggling with a new constitution and at the time, almost all donor-funded and government projects in dry lands were slowed down by corruption allegations. Instead of focusing on the EWS, the Kenyan government also overemphasized on the food aid system, which made it harder to respond to the crisis because such systems rely on assessments that are done every year, and they often provide figures that are out of date. Although Ethiopia had developed a plan for interventions in advance; the government had underestimated the number of people that needed assistance, which also frustrated relief efforts.

Overall, the response at scale was not of the quality stipulated in the NGO code of conduct and the disaster prevention principles outlined in the Good Humanitarian Donorship Principles (Hiller and Dempsey, 2011). This can be largely attributed to the reliance on the media to first report the story as a disaster. Majority of the donors could not access funds from their headquarters until the media broke the story to the world, a point when malnutrition was at its worst. Moreover, even after the drought had been confirmed, relief agencies and NGOs were still reluctant to provide relief due to the fear of getting it wrong and risking their reputation and money; the fear that they would undermine the ability of the affected governments; and the belief that malnutrition was a common occurrence in the affected areas. The national governments of the two entities were also at fault because they had tried to conceal how bad the situation was because a declaration of an emergency would have been taken as a sign of weaknesses (Hiller and Dempsey, 2011). Such attitudes need to be corrected because effective responses to crises require those affected to be proactive.

It is evident that if the early warning signs had triggered a more substantive and earlier response, the scale of death and suffering would have been reduced. Fortunately, the flaws can be corrected by a review of the management control systems.

How an organization's management control systems are implicated in the response to a crisis

Accuracy and planning

The MCS have a huge role to play in the response to any crisis. First, they facilitate accuracy in planning. In the event of an imminent disaster, any form of information is not useful unless it is comparable to the set targets and benchmarks. Selznick (1984) explains that the two main activities management control systems should prioritize during planning are: task or operational control and strategic planning. In the 2011 crisis, there was a lot of inaccurate information that did not tally with the targets that had been set, which slowed the response. For instance, Ethiopia had only planned for 2.8million in case of the disaster, while the actual number was 4.5 million and this made it difficult for donors to access more funds from their headquarters. The United Nations (UN) had also underestimated the people in need of emergency aid because in the planning phase, MCS had failed to realign the seasons in the horn of Africa with the timeline of appeals, which gave a misleading picture of needs (Hiller and Dempsey, 2011). Therefore, in agreement with Mintzberg (1987), timely and effective response to crises is determined by how accurate the information used by MCS is, particularly because it has a great impact on the plans that are eventually put in place.

Objectivity

MCS have a large influence on the objectivity of the organization. Very often, managers do not act on the basis of control system results. According to Hiller and Dempsey (2011), the major reason the relief efforts did not reflect the principles of disaster prevention set in the NGO code of conduct and Good Humanitarian Donorship Principles was because they took too long to respond to the crisis because of fear of being termed as interventionists. During disasters like drought, for instance, they are required to act fast as any time wasted equates to lives being lost. However, NGOs and relief organizations had to wait for media to break the story and for national governments to declare a crisis, which they were reluctant to do. Therefore, the objectivity of the MCS will also determine how effective the response to the disaster will be.

Integration

When controls are consistent with the values and structure of the organization, they will work in harmony with the policies applied in the organization, and hence response will be faster (Kaplan and Norton, 1996). Among the four countries, Kenya's response was more efficient than response to other droughts because MCS in different relief organizations set up to deal with disasters had become an integrated part of the organizational culture. Moreover, MCS also determine how well risk management plans are integrated with both short-term and long-term plans.

Flexibility

In this context, the flexibility of MCS refers to how well NGOs and national governments can adapt to changing conditions during response to a crisis. If NGOs, relief agencies and governments had noticed that data that was being provided was not reflective of the actual situation in the Horn of Africa, the concerned management would have identified better sources and adapted to those, which would have reduced the extent of the damage. Rigid MCS do not allow for adjustments for unexpected opportunities and threats; and the organization incurs more expenses, and spends more time correcting the situation. Hiller and Dempsey (2011) explain that although agencies like Save the Children and Oxfam had begun small scale responses by the end of 2010, they were not able to adapt their programming to meet the increased level of need in the six months that followed once rain in the second season failed. This implies that rigid MCS will often lead to slower responses in the event of unanticipated events.

The role management control systems played in the unsatisfactory response to the 2011 crisis

Poor strategic plans

Mintzberg (1987) opines that MCS will be able to formulate better strategic plans by crafting strategies instead of planning strategies. While planning relies on an orderly thinking, crafting is able to utilize past experience and it combines strategy implementation and formulation into a fluid learning process that gives rise to more creative strategies. Simons (1995) also asserts that MCS and hierarchical command have to be revised regularly in order to facilitate adaptability and strategic responsiveness, which will maximize the performance of the strategies that are formulated. Since 1980, there have been 42 droughts in the horn of Africa with a total of 109 million people being affected. However, traditional strategies that have often been applied in past droughts were also used in 2011, which led to numerous errors and slow responses. Organizations, therefore, should have been upgraded plans and strategies according to the unique requirements

Ineffective risk management strategies

There needed to be better risk management approaches that made use of the early warning signs that had been given. MCS should have focused on managing risks in order to reduce the impact of the crisis. For example, in Ethiopia, 2.7 million would have been saved if the non-operational local water schemes had been revived instead of transporting 5L of water every day, which cost relief organizations more than 3 million (Hiller and Dempsey, 2011). In Kenya, it would also have been more effective to keep animals alive using supplementary feeding instead of replacing entire herds of cattle.

Failure to act on uncertainty

Although the effectiveness of MCS relies on accurate information, the circumstances in the 2011 crisis were different. The high levels of malnutrition and mortality that were experienced indicated that MCS in majority of the organizations had not prepared adequately for any unanticipated events. Had they been more objective and keen on saving livelihoods and lives, they would have responded immediately and put more pressure on national governments to declare the drought as a disaster.

Little emphasis on non-performance measures

Non-performance measures are quantitative measures that cannot be expressed in monetary units. Otley (1999) states that MCS in most organizations only consider financial performance and put more emphasis on theories and frameworks that are drawn primarily from the field of economics. This was particularly true in the 2011 crisis because prior to the disaster, national governments had only focused on the measures that could only be expressed in monetary units, such as the amount of food that would be set aside and how many liters of water were to be delivered. Had they measured the preparedness of different communities or established ways of increasing their resilience, fewer lives would have been affected.

Recommendations for better responses in the future

MCS should utilize long-term programs when responding to forecasts of a crisis. According to Hiller and Dempsey (2011) these will lead to better responses because they establish links with the community, which will make it easier to identify the complexities and vulnerabilities involved and help in building better relationships with the donors. Instead of relying on information from the media to form response strategies, early humanitarian response will also require organizations to ensure that MCS gather and utilize their own information from reliable sources. In future, organizations should not wait for such crises to be declared as disasters by the concerned government since it has been confirmed that governments will always be reluctant to show weakness. Wrapp (1984) also states that managers have to ensure they are well informed, they focus their time and energy on result oriented goals, and that they use MCS that will easily adapt to changing situations.

Control systems should focus on managing the risks that are involved instead of managing the crisis. To eliminate the chances of forecasts being wrong, organizations should adopt risk management strategies that will reduce the impact of the crisis once it happens (Selznick, 1984). This can be achieved once MCS develop common approaches to triggers that will prompt quick action. The systems should also integrate risk management strategies into all activities that involve partnerships and collaborations with other humanitarian organizations.