Chapter 7

Organization Based Operational Control Processes


All organizations have organization (org) charts, and they are powerful things. This graphical depiction of reporting relationships says a lot about the organization and, more importantly, how it works. Its mere existence reflects the need for a hierarchy of accountability: the chain of command. It also shows the perceived best practice of segregating tasks and organizing work to accomplish the organization’s missions. As such, the org chart provides a natural basis for financial management and control.

A cost managed organization using an organization based control process takes advantage of the reporting relationships embedded in the org chart. Subordinates report their ...

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