Management Control Systems and the 2011 Horn of Africa Drought

Introduction

The Horn of Africa experienced what was described as the worst drought in 60 years. The drought, caused by the failure of rains for two consecutive seasons, led to a severe food crisis across Djibouti, Somalia, Ethiopia, and Kenya, killing more than 100,000 people while placing hundreds of thousands more at risk of starvation. According to Hiller and Dempsey (2011), the greatest tragedy was that the world had seen this disaster coming, yet 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 Niña, a climate condition that produces drier than normal conditions across the entire region, had already been confirmed. Further warnings became more frequent and more urgent in 2011.

In light of all these warning signs, it is therefore rather surprising that a proper response from the international aid system came only after the rains failed for a second successive time — by which point the crisis had already reached its peak and millions had been affected. This revealed significant flaws in the international emergency system and pointed to the ineffective application of management control systems (MCS) by national governments, relief agencies, and non-governmental organizations (NGOs) in responding to disasters.

By definition, management control systems 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 management control systems that lead to timely and effective responses. This paper evaluates the 2011 drought in detail and examines how ineffective management systems may have contributed to poor responses by national governments, relief agencies, and NGOs. It identifies the flaws in these systems, evaluates how an organization's MCS are implicated in the response to a crisis, examines 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 advancements in technology and all the knowledge available on ways to prevent drought and famine, thousands of lives were still lost in 2011. They explain that a key evaluation of the humanitarian response in the Horn of Africa revealed a failure of earlier preventive action from 2010, as well as a collective failure in providing relief when it was needed 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 would be incurred later once the crisis reached its peak. The Food Security and Nutrition Working Group for East Africa (FSNWG) had advised humanitarian organizations to implement multi-sectoral programs and to begin large-scale response planning. The warnings went largely unheeded, resulting in far greater suffering, malnutrition, and damage to livelihoods.

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

Overall, the response at scale did not meet 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 reliance on the media to first report the story as a disaster. The majority of donors could not access funds from their headquarters until the media broke the story to the world — at a point when malnutrition was at its worst. Moreover, even after the drought had been confirmed, relief agencies and NGOs remained reluctant to provide relief due to the fear of being perceived as interventionists, concerns about risking their reputation and funds, fears of undermining the affected governments' authority, and the belief that malnutrition was a common occurrence in the affected areas. The national governments were also at fault because they had attempted to conceal how serious the situation was, since a declaration of emergency would have been seen as a sign of weakness (Hiller and Dempsey, 2011). Such attitudes need to be corrected, because effective responses to crises require proactive action from all parties involved.

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 significantly reduced. Fortunately, these flaws can be corrected through a thorough review of management control systems.

How Management Control Systems Are Implicated in Crisis Response

Accuracy and Planning

MCS have a crucial role to play in the response to any crisis. First, they facilitate accuracy in planning. In the event of an imminent disaster, information is only useful if it is comparable to established 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, a great deal of inaccurate information did not align with the targets that had been set, which slowed the response. For instance, Ethiopia had planned for only 2.8 million people in the event of disaster, while the actual number was 4.5 million — making it difficult for donors to access additional funds from their headquarters. The United Nations had also underestimated the number of people in need of emergency aid because, during 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 actual needs (Hiller and Dempsey, 2011). Therefore, in agreement with Mintzberg (1987), timely and effective response to crises is determined by the accuracy of the information used by MCS, particularly because it has a significant impact on the plans that are eventually implemented.

Objectivity

MCS also have a large influence on the objectivity of an organization. Very often, managers do not act solely on the basis of control system results. According to Hiller and Dempsey (2011), a major reason the relief efforts did not reflect the principles of disaster prevention set out in the NGO code of conduct and Good Humanitarian Donorship Principles was that organizations took too long to respond due to fear of being characterized as interventionists. During disasters like droughts, organizations are required to act quickly, as any time wasted directly equates to lives lost. However, NGOs and relief organizations waited for the media to break the story and for national governments to formally declare a crisis — which those governments were reluctant to do. The objectivity of MCS will therefore determine how effective any disaster response will ultimately be.

Integration

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

Flexibility

In this context, the flexibility of MCS refers to how well NGOs and national governments can adapt to changing conditions during a crisis response. If NGOs, relief agencies, and governments had recognized that the data being provided did not reflect the actual situation in the Horn of Africa, concerned managers could have identified better information sources and adapted to them, thereby reducing the extent of the damage. Rigid MCS do not allow for adjustments in response to unexpected opportunities and threats; as a result, the organization incurs greater expenses and spends more time correcting the situation. Hiller and Dempsey (2011) explain that although agencies such as Save the Children and Oxfam had begun small-scale responses by the end of 2010, they were unable to adapt their programming to meet the increased level of need in the six months that followed once the second season's rains failed. This illustrates that rigid MCS will often lead to slower responses in the event of unanticipated events.

Conclusion

The effectiveness of management control systems depends on how well managers make use of the information available to them. The poor response by the international aid community and the affected national governments to the 2011 crisis can be largely attributed to untimely responses to available — albeit inaccurate — information, which rendered the MCS of most organizations ineffective. MCS play a crucial part in crisis response, particularly because they enhance accuracy and objectivity and facilitate strategic planning. They also determine how flexible an organization is in adapting to changing circumstances, and how well risk management strategies are integrated with short- and long-term plans. Consequently, MCS contributed significantly to the poor response caused by weak strategic planning, failure to act on uncertain information, little emphasis on non-financial performance measures, and the use of poor risk management strategies.

In addition to early warnings being ignored, donors lacked access to funds due to data inaccuracies; food aid systems were overemphasized; and the political situations in the four affected countries frustrated relief efforts. Such problems have a negative impact on all NGOs, relief agencies, and aid organizations during a crisis, as they are bound to incur greater costs — and consequently there will be far greater malnutrition, death, and loss of livelihoods than would have occurred with more effective intervention. In future, there should be better responses to early warning systems, greater focus on risk management, equal use of both financial and non-financial control measures, and attention to social, economic, and political development as part of a comprehensive humanitarian strategy.

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