Formal managerial controls, though almost vanished as a subject in contemporary management science, are still a ubiquitous feature of modern organizations. Formal managerial control can be understood as the process by which managers officially define their subordinates' performance goals and standards, measure and monitor employees' conduct and output, and tie rewards and sanctions to goal attainment. Though interest in control scholarship has waned, it remains a popular and current topic for the practice of management. A possible reason for the high practical interest in this topic is that formal managerial controls are thought to solve the cooperation problem, a problem which has been referred to as the core of the managerial task (Miller, 1992). The cooperation problem stems from the organizational members having different and often conflicting goals, and these individual goals often conflict with the goals of the organization. This problem is most pronounced in the case of the corporate commons. The problem of the commons depicts a situation where benefits are jointly gained and shared but costs are borne individually. Because no employee can be excluded from the commons, some amount of free-riding is likely to occur (Hardin, 1968). Simon (1991) argues that the quality and success of an organization depends vitally on its ability to solve the problem of the commons.

Thus it can be argued that one of the main managerial objectives is to solve the problem of cooperation. In general two solutions are discussed.