Misdirected Directive

The Case of the Misdirected Directive* The Dashman Company was a large concern making many types of equipment for the armed forces of the United States. It had over 20 plants, located in the central part of the country, whose purchasing procedures had never been completely coordinated. In fact, the head office of the company had encouraged each of the plant managers to operate with their staffs as separate independent units in most matters. Late in 1940, when it began to appear that the company would face increasing difficulty in securing certain essential raw materials, Mr. Manson, the company’s president, appointed an experienced purchasing executive, Mr. Post, as vice president in charge of purchasing, a position especially created for him. Mr. Manson gave Mr. Post wide latitude in organizing his job, and he assigned Mr. Larson as Mr. Post’s assistant. Mr. Larson had served the company in a variety of capacities for many years, and knew most of the plant executives personally. Mr. Post’s appointment was announced through the formal channels usual in the company, including a notice in the newsletter published by the company. One of Mr. Post’s first decisions was to begin immediately to centralize the company’s purchasing procedure. As a first step he decided that he would require each of the executives who handled purchasing in the individual plants to clear with the head office all purchase contracts which they made in excess of $10,000. He felt that if the head office was to do any coordinating in a way that would be helpful to each plant and to the company as a whole, he must be notified that the contracts were being prepared at least a week before they were to be signed. He talked his proposal over with Mr. Manson, who presented it to his board of directors. They approved the plan. Although the company made purchases throughout the year, the beginning of its peak buying season was only three weeks away at the time this new plan was adopted. Mr. Post prepared