Control of overall Performance

Many of the controls are based on feedback by measuring deviations from plans. Also, the traditional approach is to find out who is responsible for the undesirable deviation and to get that person to correct it. This is direct control. In this kind of control is based on some questionable assumptions. But it will be better to prevent undesirable deviations from occurring in the first place. It is therefore recommended that “preventive control” be applied; with this approach, a highly qualified manager will make fewer mistakes, thus reducing (but certainly not eliminating) the need for direct control. Let us start with the more traditional and important overall controls of budget summaries and other financial analyses.

Planning and control are increasingly being treated as an interrelated system. Along with techniques for partial control, control devices have been developed for measuring the overall performance of an enterprise or an integrated division or project within it – against total goals.

There are many reasons for control of overall performance. In the first place as overall planning must apply to enterprise or major division goals so must overall controls be applied to the enterprise. In the second place, decentralization of authority – especially in product or territorial divisions creates semi-independent units and these must be subjected to overall controls to avoid the chaos of complete independence. In the third place, overall controls permit measuring an integrated area manager’s total effort, rather than parts of it.

Many overall controls in business are, as one might expect, financial. Business owes its continued existence to profit-making; its capital resources are a scarce; life-giving element. Since finance is the binding force of business, financial controls are certainly an important objective gauge of the success of plans.

Financial measurements also summarize as a common denominator of the operation of a number of plans. Further, they accurately indicate total expenditure of resources in reaching goals. This is true in all forms of enterprise. Although the purpose of an educational or government enterprise is not to make monetary profits, any responsible manager must have some way of knowing what goal achievement has cost in terms of resources. Proper accounting is important not only for business but for government as well. Professor Anthony at Harvard points out that in government, accounting often hides important facts. As a result several cities, including New York, were nearly bankrupt before their financial conditions became clear.

Financial controls, like any other control, have to be tailored to the specific needs of the enterprise or the position. Doctors, lawyers and managers at different organizational levels do have different needs for controlling their area of operation. Financial analyses also furnish an excellent “window” through which accomplishment in non-financial areas can be seen. A deviation from planned costs for example may lead a manager to find the causes in poor planning, inadequate training of employees, or other non-financial factors.