EFFECT OF MANAGEMENT CONTROL SYSTEM ON ORGANIZATIONAL PERFORMANCE: THE CASE OF SELECTED COMMERCIAL BANK BRANCHES IN HOSANNA TOWN, HADIYA ZONE, SNNPR, ETHIOPIA

Abstract

The influence of Management Control System on business strategies and firms’ performance has been empirically investigated in numerous studies during the past decade in several developed and emerging economies. Based on the contemporary competitive, complex, and mutable global business environments, organizations are being challenged in order to adopt business models which assist them to address the strategic uncertainties and risks faced in their business environment. The motives of this study were examining the effects of management control system on organizational performance in selected commercial bank of Hossana town. This research was carried out through cross-sectional survey design and mainly based on data collected through questionnaires and interview. Target population of survey study were 300 who are employees and managers and 171 sample respondents were selected from target population by Yamane formula and also stratified sampling technique was applied to proportionate sample size from each stratum or each branch of the CBE and then simple random method was used to select employees within branches, but managers were selected purposively. The study was analyzed in quantitative study approaches, but qualitative approaches are used from key informant interviews conducted for managers of banks to strengthen the quantitative approaches, questionnaire with five point Likert scale used for quantitative explanation which were filled by employees and managers, and finally, it was processed and analyzed by (SPSS) version 20 and the other statistical methods including descriptive statistics and inferential statistics. The descriptive and inferential statistical tools such as; mean, percentage, correlation and multiple regressions were used to analyze collected data. The result of descriptive analyzes indicates that the mean score of reward and benefit package is comparatively less of all studied management control system dimensions. This implies that the selected banks of Hossana town were not providing the level of reward and benefit as demanded by employees. The findings suggest that selected banks need to improve all the dimensions of management control system. Although, based on a finding of regression analysis result, except strategic planning and management which is insignificant effect on organizational performance with p value of > 0.05, all the independent variables had relatively strong significant and direct effect on organizational performance with p value <0.05. Based on the research results, it is recommended for the selected banks to improve reward and benefit package dimensions for employees, allocating budget based on relative importance of dimensions, carrying out depth research, continuously evaluating organizational performance, reviewing suggestion box and act accordingly.