managing quality and performance
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Managing Quality and Performance
Week 10
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
The Meaning of Control
Organizational control is the systematic process through which managers regulate
organizational activities to make them consistent with expectations established in
plans, targets, and standards of performance
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Choosing Standards and Measures
• Common measures and controls:– Sales– Revenue– Profit
• More focus on measuring intangibles– Customer service– Increased revenue
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
The Balanced Scorecard Balanced perspective of company
performance
Integrates various areas of the organization
Managers record, analyze, and discuss the metrics
Serve as core management-control system
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
The Balanced Scorecard
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Feedback-Control Model
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Steps of Feedback Control
Establish Standards of Performance
Measuring Actual Performance
Compare Performance to Standards
Take Corrective Action
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Application to Budgeting
• Budgetary control – setting targets and monitoring expenditures
• Budgets list planned and actual expenditures
• Budgets are associated with a division or department
– The unit of analysis for budgeting is the responsibility center
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Types of Budgets
Expense Budget Revenue Budget Cash Budget Capital Budget
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Financial ControlFinancial Statements provide basic information
for financial control
Income Statement profit-and-loss
statement or P&L highlights firm’s
financial performance
Balance Sheet shows firm’s
financial position
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
The Changing Philosophy of Control
• Hierarchical controls include the monitoring of behavior through rules, policies, reward systems and written documentation
• Decentralized controls based on values and assumptions, rules are only used when necessary– Culture is adaptive, uniting individuals & teams
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Hierarchical and Decentralized Methods of Control
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Open-Book Management
Decentralized philosophy
Promotes information sharing
Allows employees to see the financial condition of company
How jobs fit into organizational success
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
International Opacity Index
SOURCE: Joel Kurtzman and Glenn Yago, “Opacity Index, 2007-2008: Measuring Global Business Risks,” published by Milken Institute (April 2008), http://www.milkeninstitute.org/pdf/2008OpacityIndex.pdf (accessed June 16, 2008).
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Total Quality Management (TQM)• Infuse quality into every aspect of the
business, all day-to-day activities• Became popular in the U.S. in the 1980s• Focuses on:– Teamwork– Collaboration– Identifying improvements
• The goal of TQM is zero defects
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
TQM Techniques
Quality Circles
Benchmarking
Six Sigma
Reduced Cycle Time
Continuous Improvement
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
The Importance of Quality Improvement Programs
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Quality Program Success Factors
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International Quality Standards• ISO 9000 standards – International
Organization for Standardization– Organization certification– 157 Countries
• Organizations demonstrate a commitment to quality
• Europe leads in certifications but the United States has had large increases
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