Managing Quality and Performance

Managing Quality and Performance

Week 10

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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


Choosing Standards and Measures

• Common measures and controls:– Sales– Revenue– Profit

• More focus on measuring intangibles– Customer service– Increased revenue


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


The Balanced Scorecard


Feedback-Control Model


Steps of Feedback Control

Establish Standards of Performance

Measuring Actual Performance

Compare Performance to Standards

Take Corrective Action


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


Types of Budgets

Expense Budget Revenue Budget Cash Budget Capital Budget


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


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


Hierarchical and Decentralized Methods of Control


Open-Book Management

Decentralized philosophy

Promotes information sharing

Allows employees to see the financial condition of company

How jobs fit into organizational success


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).


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


TQM Techniques

Quality Circles

Benchmarking

Six Sigma

Reduced Cycle Time

Continuous Improvement


The Importance of Quality Improvement Programs


Quality Program Success Factors


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

Documents

Managing Quality and Performance