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Amity Business School

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Amity Business SchoolMBA Class of 2009, Semester IV

Management in Action Social, Economic & Ethical Issues

Dr. Sanjay Srivastava


Module I: Introduction• Modern Management Practices and Issues

Involved, Outsourcing Management Services and Evolution of Management Consultancy, Skills-set Required for Management Consultants. Consulting and performance counseling.


Outsourcing Opportunity or Burden• International outsourcing has become the easy way out for many

organizations seeking to stay competitive in a global economy, whereas establishing a lean Six Sigma organization requires sustained and consistent hard work. Proponents say outsourcing is the only way costs can be cut enough to keep the organization competitive. Ultimately, the decision to outsource jobs should be based on both economic and value criteria. Unless managers face the obligation to ensure that both the organization and its suppliers are producing at the highest quality levels and the lowest lean cost, the job is not being done. Only this cost base can determine the decision to outsource. It is the quality professional's responsibility to challenge the value of all activities throughout the organization that do not contribute to a lean quality culture. The first objective should be insourcing excellence. Outsourcing should be the last resort.


• Often a company will look to a contract manufacturer to improve efficiency or reduce labor costs.

• In Most cases the objective of outsourcing is a targeted 20% cost reduction, with actual savings coming from direct labor and variable cost.

• while a seemingly low bid may look attractive, incomplete or misunderstood specifications can result in an overhead nightmare.


• Before entering into a contract, a company should ask these questions: Does the contract manufacturer have the capability to do change control, corrective or preventive action, or process capability studies? Who will support design changes?


Management Consultancy• "The services provided by an independent and

qualified person or persons in identifying and investigating problems concerned with policy, organization, procedures and methods, recommending appropriate action and assistance in implementation".


The consultant Conundrum Are consultants good or bad? Under what

circumstances would you bring them in, and what does bringing them in say about the skills of your own people?

- Albany, New York- Source : Winning : The Answers, confronting 74

of the toughest Questions in Business Today, Jack and Suzy Welch


Outside Consultants• Watch the Bull not the man.

-Donald R. Keough

• Separate the product from the presentation.

• Consultants are con artists.

• The problem with many of them is that they address the wrong questions.


• They are constantly “reengineering” – mainly they’re reengineering the language.

• They try to quantify the human behaviour.• They are called to validate a decision that has already

been made by a manager insecure in his authority.• Consultants should never supplement leaders.• .


• What does “growth” mean in a consulting/business context ? Why it is important?

• Consultants live and breathe knowledge management because they sell business solutions and knowledge itself

• In consulting most valuable part of knowledge originates almost entirely from the clients assignments.

• The consultant as technology broker.• We should know our business best. We don’t need

consultants to tell us what to do.


Industry A Industry B

Industry C

Industry D

Industry E

Technology

Broker

The Model of Consultant: A Technology Broker Who Transfers Business Knowledge Across Industries

Source: Andrew Hargadon and Robert I. Sutton, “Technology Brokering and Innovation: Evidence from a product design firm," Academy of Management Proceedings 1996


Skill set for Consultants• Develop client centered approach.• Building trust is critical both with the client and the

members of the system.• Walking in with a packaged solution is not respectful.• Helping people solve their own problems is the essence of

useful consulting work.• Have to be a good listener.• How many psychiatrists does it take to change a light

bulb?• Organizational change consultants must be skilled in

assessing readiness, processing perspective on resistance, growing internal resources, and providing open and non judgmental feedback


Management Consultants• Known as Evolutionary rather than

Revolutionary.

• Application must be Collaborative and

Authoritarian.

• Doctors of Management.


Public Perception of Consultants • A consultant is a person who takes your money and annoys your

employees while tirelessly searching for the best way to extend the consulting contract.

• Consultants will hold a seemingly endless series of meeting to test various hypotheses and assumptions. These exercises are a vital step toward tricking managers into revealing the recommendation that is most likely to generate repeating consulting business.

• After the correct recommendation is discovered, it must be justified by a lengthy analysis. Analysis is designed to be as confusing as possible, thus discouraging any second guessing by staff members who are afraid of appearing dense.


Public Perception of Consultants• Consultants use a standard set of decision tools that

involve creating alternative scenarios based on different assumptions. Any pesky assumption that does not fit that does not fit the predetermined recommendation is quickly discounted as being uneconomical by the consultants.

• Consultants will often recommend that you do whatever you are not doing now.

• Consultants do not need much experience in industry in order to be experts; they learn quickly.


Public Perception of Consultants• Consultants eventually leave, which makes them excellent

scapegoats for major management blunders.• Consultants can schedule time in your boss’s calendar because they

don’t have your reputation as a troublemaker who constantly brings up unsolvable issues.

• Consultants often are more trusted than your regular employees.• Consultants will return phone calls because it is all billable time to

them.• Consultants work preposterously long hours, thus making the regular

staff feel worthless for only working 60 hours a week.


Quality• Quality has many dimensions. It can be discussed in

terms of :– Quality of goods

– Quality of services

– Quality of actions

– Quality of encounters

– Quality of life.

• Likewise, quality can have many definitions based on what needs to be emphasized in a given situation. For example, quality can be defined as conformance to requirements from a product control viewpoint, as fitness for use from the marketing viewpoint, or uniformity around target from the producer’s viewpoint.


History of Quality Revolution• The quality movement can trace its roots back to

medieval Europe, where craftsmen began organizing into unions called guilds in the late 13th century.

• The factory system, with its emphasis on product inspection, started in Great Britain in the mid-1750s and grew into the Industrial Revolution in the early 1800s.


History of Quality Revolution• After the United States entered World War II,

quality became a critical component of the war effort

• The armed forces initially inspected virtually every unit of product; then to simplify and speed up this process without compromising safety, the military began to use sampling techniques for inspection, aided by the publication of military-specification standards and training courses in Walter Shewhart’s statistical process control techniques.


History of Quality Revolution• The birth of total quality in the United

States came as a direct response to the quality revolution in Japan following World War II. The Japanese welcomed the input of Americans Joseph M. Juran and W. Edwards Deming and rather than concentrating on inspection, focused on improving all organizational processes through the people who used them.


History of Quality Revolution• By the 1970s, U.S. industrial sectors such

as automobiles and electronics had been broadsided by Japan’s high-quality competition. The U.S. response, emphasizing not only statistics but approaches that embraced the entire organization, became known as total quality management (TQM).


History of Quality Revolution• By the last decade of the 20th century, TQM was

considered a fad by many business leaders. But while the use of the term TQM has faded somewhat, particularly in the United States, its practices continue.

• In the few years since the turn of the century, the quality movement seems to have matured beyond Total Quality. New quality systems have evolved from the foundations of Deming, Juran and the early Japanese practitioners of quality, and quality has moved beyond manufacturing into service, healthcare, education and government sectors.


Walter A Shewart• Father of Statistical Quality Control

– Successfully brought together the disciplines of Statistics, Engineering and Economics.

– Most widely known for Control Charts– Professional career:

• Western Electric: 1918-1924• Bell Telephone Lab : 1925 - 1956


Joseph M. Juran• "It is most important that top

management be quality-minded. In the absence of sincere manifestation of interest at the top, little will happen below.“

• Started Career at Bell Lab in1924• Prepared what may have been the first

text on statistical quality control—and perhaps the ancestor of today's widely used Western Electric Statistical Quality Control Handbook.


Joseph M. Juran• Second Career at New York University• Reputation in quality management led the Union of

Japanese Scientists and Engineers to invite him to Japan in 1954.

• Juran gave more credit to the Japanese than to Americans for what transpired over the next 30 years. What would have happened if no American experts had lectured in Japan in the 1950s? About the same that did, Juran believes: "It might have taken them two or three years longer to arrive at the same place," he said. Indeed, by the 1960s, Juran began to report to Americans on the new ideas on quality coming out of Japan—ideas like quality circles.


W. Edward Deming• Received ASQ’s Shewart Medal for

1955• He has been described variously as a

national folk hero in Japan, where he was influential in the spectacular rise of Japanese industry after World War II; as the high prophet of quality control; as an imperious old man; and as founder of the third wave of the Industrial Revolution.


W. Edward Deming• While working as a mathematical physicist at

the U.S. Department of Agriculture in 1938, Deming was responsible for courses in math and statistics at the Graduate School of the USDA, and he invited Walter Shewhart to lecture there.

• Later in I938, Deming moved to the Bureau of the Census, where he was an adviser in sampling. In what is probably the first application of statistical quality control principles to a non-manufacturing problem, Deming brought Shewhart's principles into use on clerical operations for the 1940 census.


W. Edward Deming• Deming and Juran Introduced SQC to Japanese

workers after world war II.• In recognition of Deming's efforts in Japan, JUSE

created the Deming Prize in 1951. He was awarded the Second Order Medal of the Sacred Treasure by Emperor Hirohito in 1960.

• 1980 TV aired a documentry "If Japan Can, Why Can't We?" in which he was featured prominently.

• Ford Motor company was among the first to invite Deming to help transform its operations.

• In 1992 Ford Taurus outsold the Hona Accord and became the leader in domestic sales.


Total Quality• The birth of total quality in the United States was in direct

response to a quality revolution in Japan following World War II, as major Japanese manufacturers converted from producing military goods for internal use to producing civilian goods for trade.


Total Quality• Deming, Juran and Japan• The Japanese welcomed input from foreign companies and

lecturers, including two American quality experts: • W. Edwards Deming, who had become frustrated with

American managers when most programs for statistical quality control were terminated once the war and government contracts came to and end.

• Joseph M. Juran, who predicted the quality of Japanese goods would overtake the qualiy of goods produced in the United States by the mid-1970s because of Japan’s revolutionary rate of quality improvement.

• Japan’s strategies represented the new “total quality” approach. Rather than relying purely on product inspection.


Total Quality• The American Response• At first, U.S. manufacturers held onto to their assumption

that Japanese success was price-related.• As years passed, price competition declined while quality

competition continued to increase. A 1980 NBC-TV News special report, “If Japan Can… Why Can’t We?” highlighted how Japan had captured the world auto and electronics markets


Total Quality• The American Response• The chief executive officers of major U.S. corporations

stepped forward to provide personal leadership in the quality movement. The U.S. response, emphasizing not only statistics but approaches that embraced the entire organization, became known as Total Quality Management (TQM).

• Several other quality initiatives followed. The ISO 9000 series of quality-management standards, were published in 1987. The Baldrige National Quality Program and Malcolm Baldrige National Quality Award were established by the U.S. Congress the same year.


Beyond Total Quality• By the end of the 1990s Total Quality

Management (TQM) was considered little more than a fad by many American business leaders (although it still retained its prominence in Europe).


Beyond Total Quality• Some examples of this maturation:

• In 2000 the ISO 9000 series of quality management standards was revised to increase emphasis on customer satisfaction.

• Beginning in 1995, the Malcolm Baldrige National Quality Award added a business results criterion to its measures of applicant success.

• Six Sigma, evolved into an organizational approach that achieved breakthroughs – and significant bottom-line results. When Motorola received a Baldrige Award in 1988, it shared its quality practices with others.

• Quality has moved beyond the manufacturing sector into such areas as service, healthcare, education and government.

• The Malcolm Baldrige National Quality Award has added education and healthcare to its original categories: manufacturing, small business and service. Many advocates are pressing for the adoption of a “nonprofit organization” category as well.

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