Direct Control versus Preventive Control

The analysis of controls stresses the variety of approaches that managers follow to make results conform to plans. At the basis of control is the fact that the outcome of plans is dependent on the people who carry them out. For instance, a poor educational system cannot be controlled by criticizing its product, the unfortunate graduate, a factory turning out inferior products cannot be controlled by consigning products to the scrap heap; and a firm plagued with customer complaints cannot be controlled by ignoring the complainers. Responsibility for controllable deviations lies with whoever has made unfortunate decisions. Any hope of abolishing unsatisfactory results lies in changing the future actions of the responsible person, through additional training, modification of procedures, or new policy. This is the crux of controlling the quality of management.

There are two ways of seeing to it that the responsible people modify future action. The normal procedure is to trace the cause of an unsatisfactory result back to the persons responsible for it and get them to correct their practices. This may be called direct control. The alternative in the area of management is to develop better managers who will skill fully apply concepts, techniques, and principles and who will look at managing and managerial problems from a systems point of view, thus eliminating undesirable results caused by poor management. This will be referred to as preventive control.

In every enterprise, hundreds, and even thousands, of standards are developed to compare the actual output of goods or services in terms of quantity, quality, time, and cost with plans. A negative deviation indicates in terms of goal achievement, cost, price, personnel, labor-hours, or machine hours that performance is less than good or normal or standard and that results are not conforming to plans.

Apple computer, Inc., enjoyed a phenomenal early success after it was founded in 1977 by Steve Wozniak, the technical expert, and Steve Jobs, the marketing genius.

However, success did not last for very long, partly because of the introduction of the IBM Personal Computer. In the early 1980s, in the view of some observers, Apple needed tighter control and a more professional approach to managing. John Sculley was lured from the Pepsi-Cola Company to give Apple a new direction.

To bring the company under control, Sculley employed cost-cutting measures to improve its profitability. At the same time, however, research and development expenditures were increased so that the company could remain a technological leader in the field. The firm was also reorganized to reduce duplication of efforts, to lower the break even point, and to reduce friction among the departments. To improve its effectiveness and efficiency, Apple introduced new reporting procedures. Furthermore, considerable efforts were made to control the inventory level, which is a serious problem in the personal-computer industry. These measures, combined with a successful strategy (Apple’s Macintosh computer is making inroads into business corporations which are dominated by IBM) and helped by the popularity of desktop publishing, resulted in an increase of over 150% in earnings in the 1986 fiscal year.