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Managing Quality and Performance

Managing Quality and Performance. Week 10. 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.

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Managing Quality and Performance

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  1. Managing Quality and Performance Week 10

  2. 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

  3. Choosing Standards and Measures • Common measures and controls: • Sales • Revenue • Profit • More focus on measuring intangibles • Customer service • Increased revenue

  4. 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

  5. The Balanced Scorecard

  6. Feedback-Control Model

  7. Steps of Feedback Control • Establish Standards of Performance • Measuring Actual Performance • Compare Performance to Standards • Take Corrective Action

  8. 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

  9. Types of Budgets • Expense Budget • Revenue Budget • Cash Budget • Capital Budget

  10. Financial Control • Balance Sheet shows firm’s financial position • Income Statement profit-and-loss statement or P&L highlights firm’s financial performance Financial Statements provide basic information for financial control

  11. 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

  12. Hierarchical and Decentralized Methods of Control

  13. Open-Book Management • Decentralized philosophy • Promotes information sharing • Allows employees to see the financial condition of company • How jobs fit into organizational success

  14. 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).

  15. 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

  16. TQM Techniques • Quality Circles • Benchmarking • Six Sigma • Reduced Cycle Time • Continuous Improvement

  17. The Importance of Quality Improvement Programs

  18. Quality Program Success Factors

  19. 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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