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B16-1
Panel 16.1
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Managing for Productivity & Results
You as a manager…
Competitive advantage
Diversity
Globalization
Information technology
Ethical standards
Your happi- ness & goals
…must operate in
a complex environment and…
Planning
Organizing Leading
Controlling
…make decisions about
the four manage-ment functions…
…to achieve product-ivity and realize results
B16-2
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
What is Productivity?
Productivity: the formula of outputs divided by inputs for a specified period of time
Outputs: all goods and services produced
Inputs: not only labor but capital, materials and energy
Productivity = orOutputs
Inputs
Goods + Services
Labor + Capital + Materials + Energy
B16-3
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Controlling
Controlling: is defined as monitoring performance, comparing it with goals, and taking corrective action as needed. Planning
Organizing
Leading
Controlling
B16-4
Panel 16.2
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Controlling for Productivity
Planning
You set goals and decide how to achieve them
Organizing
You arrange tasks, people, and other resources to accomplish the work
Leading
You motivate people to work hard to achieve the organizations goals
Controlling
You monitor performance, compare it with goals, and take corrective action as needed
For product-ivity
B16-5
Panel 16.3
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Why is Control Needed?
Control helps an organization…
1…adapt to change & uncertainty
2…discover irregularities & errors
3…reduce costs, increase productivity, or add value
4…detect opportunities
5…deal with complexity
6…decentralize decision making & facilitate teamwork
B16-6
Panel 16.4
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Steps in the Control Process
Step 1: Establish standards
Step 2: Measure performance
Step 3: Compare perform-ance to standards
Step 4: Take corrective action, if necessary
If yes, take corrective action; revise standards
If no, continue work progress & recognize success
B16-7
Panel 16.5
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Three Types of Control: Future, Present, and Past
Future Oriented
Feedforward controls
Present Oriented
Concurrent controls
Past Oriented
Feedback controls
Before the work is done: Anticipates problems
While the work is going on: Corrects problems as they occur
After the work is done: Corrects problems after they occur
Feedback
B16-8
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Levels & Areas of Control
Strategic control
Tactical control
Operational control
Physical resources
Human resources
Informational resources
Financial resources
B16-9
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Styles of Implementing Controls
Bureaucratic control
Market control
Clan control
B16-10
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Budget
Budget: is a formal financial projection
B16-11
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Financial Statements
Financial Statement: summary of some aspects of an organization’s financial status
B16-12
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Ratio Analysis
Ratio Analysis: practice of evaluating financial ratios
B16-13
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Audits
Audits: formal variations of on organization’s financial and operational systems
B16-14
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
TQM and Its Components
Total Quality Management (TQM): a comprehensive approach led by top management and supported throughout the organization—dedicated to continuous quality improvement, training, and customer satisfaction
Make continuous improvement a priority Get every employee involved Listen to and learn from customers and
employees Use accurate standards to identify and
eliminate problems
B16-15
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Core Principles of TQM
1) People Orientation- Focusing Everyone on Delivering Customer Value
2) Improving Orientation—Focusing Everyone on Continuously Improving Work Processes
B16-16
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Some TQM Techniques
Quality circles
Self-managed teams
Special-purpose teams
Benchmarking
Outsourcing
Reduced cycle time
B16-17
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Keys to Successful Control
They are strategic and results-oriented
They are timely, accurate, and objective
They are realistic, positive, and understandable and encourage self-control
They are flexible
B16-18
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Barriers to Control Success
Too much control
Too little employee participation
Overemphasis on means instead of ends
Overemphasis on paperwork
Overemphasis on one approach instead of multiple approaches
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms Used in This Chapter
Audits
Balance sheet
Budget
Bureaucratic control
Clan control
Concurrent control
Continuous improvement
Control process steps
Controlling
Control standard
External audit
Feedback control
Feedforward control
Financial statement
Fixed budget
Income statement
Incremental budgeting
Internal audit
ISO 9000 series
Lean Six Sigma
Internal audit
Management by exception
Market control
Operational control
Ratio analysis
Reduced cycle time
Six Sigma
Special-purpose team
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