Management Control System in Professional Organizations Prepared By:- Vikas Rajput Roll No:- 39

Management Control System in Professional Organization Research & development organizations, Law firms, accounting firms, engineering firms, consulting firms, advertising agencies and other sports and arts organizations are some of the examples of professional service organizations.

1.Pricing:- Profession is one in which members are use to keeping track of their time, fees generally are related to professional time spent on the engagement. In other professions, such as investment banking, the fee typically is based on the monetary size of the security issue. In others there are fixed price for the project.

2.Strategic Planning and Budgeting:- Formal strategic planning systems are not as well developed organizations as in manufacturing companies of similar size. Professional org. have no great need for such systems. In professional org. The principal assets are people.

3.Control of operations:- The inability to set standards for task performance, the desirability of carrying out work by teams, the consequent problems of managing a matrix org. and the behavioral characteristics of professionals all complicate the planning and control of the day-to-day operations in a professional org.

4. Profit centers and Transfer Pricing :- Supports units, such as maintenance, information processing, transportation, printing, and procurement of material and services, charge consuming units for their services.

Characteristics of Professional Organization 1.Goals:- A dominant goal of a manufacturing company is to earn a satisfactory profit, specifically a satisfactory return on assets employed. A professional org. has relatively few tangible assets. its principal asset is the skill of its professional staff, which doesn’t appear on the balance sheet. Their goal is to provide adequate compensation to the professionals, To increase their size, it reflects economies of scale by using efforts of central personnel staff.

2.Professionals:- Professional org. are labor intensive and the labour is of a special type. Many professionals prefer to work independently, rather than as a part of a team.

3.Output and Input Measurement:- The Output of a professional organizations cannot be measured in physical terms, such as units, tons or gallons. For eg:- We can measure the no. of hours a lawyer spends on a case, but this is a measure of input, not output. Output is the effectiveness of the lawyer’s work and should we measure in terms of performance.

4.Small Size:- With few exceptions, such as some law firms and accounting firms, professional org. are relatively small and operate at a single location.

5.Marketing:- There is no clear separation of marketing activities in professional org. In some, such as law, medicine and accounting, the profession’s ethical code limits the amount and character of overt marketing efforts by professionals

Special Thanks to: Deepak Sharma Rimple Patel Mrs. Rutvi Sarang

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