Management control system at Xerox

1.  Outline the management control system at Xerox. What are the key elements that make the system work?

Xerox's management control system laid emphasis on 9 business divisions, supported by 3 geographic customer operations divisions. These 12 units were organized under three operations family focused on the Xerox business management level, and promoting more effective linkages between markets and technologies. Each business unit was given an opportunity to annually set rules and long term plans, which led to proper goal setting and flexibility amongst them. The managers of each division were in charge of managing their individual units to attain the projected results.

The feedback system that was instituted by management was capable of facilitating the planning process efficiently. Also, Xerox's management control system established a unique and advantageous measurement system which was a combination of financial and operational targets. Management linked together the growth and profit measure performances of the company to competitive world-class benchmarking. This competitive world-class benchmarking was used as a tool to measure management and operational excellence against Xerox`s toughest competitors.  The competitive world-class benchmarking also enabled Xerox operational business units to continuously measure their services, business practices and products against its competitors.

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Xerox's management control system established a financial executive council to control the business financial performance of each business unit. This council had as objective to add value rather than financial figures to the management process. It was also designed to enlighten and support Xerox business decisions by analyzing the company`s financial information to management.  The Xerox quality strategy through the “Leadership through Quality” program was also used to measure operational efficiency. It ensured continuous improvement of Xerox's product conformance to world quality standards..

The key element that made Xerox's management control system work amongst others was the Xerox culture. It ensured the effectiveness and durability of Xerox's management control system. This culture was highly proactive, demanding for a more analytical approach to problem solving. Employees were willing to accept change because of the higher level at which they were involved in all areas of developing targets. This employee involvement was the reason of the success of the leadership through quality process. Xerox culture reinforced open communication, the matrix corporate structure, cohesiveness, and company integrity. Also, since both the mixture of financial and operational targets were the measurements, management controllers were able to know the operational and financial aspects of the business.

2.  What recent trends at Xerox do you see influencing the management control process?

The leadership through quality is the trend at Xerox that is currently influencing the management control process. It lays emphasis on quality improvements and competitive benchmarking by instituting a continuous learning process to seek new ways to improve and better the company and its products. Employees were able to communicate and collaborate at all business levels to improve performance and quality.  With leadership through quality, management utilized operational measures such as market share, customer satisfaction, and various quality statistics. The leadership through quality program also encouraged employee involvement by integrating employees within the company to achieve the desired goals and objectives. Employees where empowered to assist each other in looking for ways to find the cause and solution to every problem. Monthly Reports were replaced by quarterly reports. An informal reporting system evolved, which was not hammer but rather an open discussion of issues. Also, Xerox maintained a standards of “NO SURPRISES” and prompted trust among the controllers.

3.  In your opinion, how important are organizational culture and individual personalities in the Xerox control process?

The organizational culture and individual personalities in the Xerox control process are very important for the continuous improvement and successes of Xerox. The organizational culture is composed of norms, values and assumptions for every employee. Management was able to meet very little or no employee resistance to change due to the methods used by management to convey the message.

Management was able to link the purpose of a change to Xerox's corporate objectives which were always part of the organizational culture and individual personalities. The ability to derive a positive organizational culture and individual personalities within Xerox enabled the company to achieve long term corporate goals alongside corporate objectives.  David Kearn`s approach helped to achieve customer satisfaction, increased revenue, profits, and returns on assets. This enabled Xerox to prove the importance of organizational culture and individual personality.

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