Chapter 15: Productivity Through Quality Control Systems

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Chapter 15Productivity Through Quality Control
Systems
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Learning Objectives
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• Define organizational control and explain why it
  is a key management function.
• Describe differences in control focus, including
  feedforward, concurrent, and feedback control.
• Explain the four steps in the control process.
• Contrast the bureaucratic and decentralized
  control approaches.
• Describe the concept of total quality management
  and major TQM techniques.
• Explain the value of open-book management and the
  balanced scorecard approaches to control in a
  turbulent environment.

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Managerial and Quality Control
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• Control is a critical issue facing every manager
  in every organization today
• Quality control
• Office productivity
• Basic systems
• allocating financial resources,
• developing human resources,
• analyzing financial performance, and evaluating
  overall productivity

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Organizational Control
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• The systematic process through which managers
  regulate organizational activities to make them
  consistent with expectations established in
• Plans
• Targets
• Standards of Performance

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Organizational Control
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• Managers need to decide
• What information is essential
• How will they obtain that information
• How they can/should respond

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Three Types of Control
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• Feed forward
• Preliminary or preventive control
• Concurrent
• Assesses current work activities
• Rules and regulations
• Ensure that work activities produce the correct
  results
• Feedback
• Focuses on the organizations outputs also
  called post-action or output control

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Organizational Control Focus
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Exhibit 15.1
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Feedforward Control
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• Preliminary or preventive control
• Identify and prevent deviations
• Forecasting trends and managing risk

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Concurrent Control
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• Monitors ongoing activities to ensure consistency
  
• Assesses
• Current work activities
• Relies on performance standards
• Includes rules and regulations

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Feedback Control
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• Focuses on outputs
• Post action or output control
• Establish Standard of Performance
• Measure Actual Performance
• Compare Performance to Standards

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Feedback Control Model
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Exhibit 15.2
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Budgetary Control
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• Most commonly used method of managerial control
• Expense budgets
• Revenue budgets
• Cash budgets
• Capital budgets
• Process of setting targets
• Top-down budgeting
• Bottom-up budgeting
• Monitor results and compare to budget

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Responsibility Center
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• Organizational unit under the supervision of a
  single person who is responsible for its activity

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Financial Statements
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• Basic information for financial control
• Balance sheet- shows firms financial position
  with respect to assets and liabilities at a
  specific point in time
• Income statement- summarizes the firms financial
  performance for a given time interval
  (profit-and-loss statement)

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Control Philosophies
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• Bureaucratic control
• rules
• policies
• hierarchy of authority
• reward systems
• written documentation
• Decentralized control
• cultural values
• traditions
• shared beliefs
• trust

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Lean Manufacturing

• Cut Waste
• Improve Quality
• Problem Solving
• Highly Trained Employees
• Employee Empowerment
• Think Lean
• Stop Production Lines

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Measuring Productivity

• Organizations output of products and services
  divided by its inputs
• Total Factory Productivity
• Partial Productivity

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Total Quality Management (TQM)
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• Organizationwide commitment to infusing quality
  into every activity through continuous
  improvement
• Quality circles
• Benchmarking
• Six Sigma
• Reduced cycle time
• Continuous improvement

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TQM Success Factors
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• Tasks make high skill demands on employees
• TQM serves to enrich jobs and motivate employees
• Problem-solving skills are improved for all
  employees
• Participation and teamwork are used to tackle
  significant problems
• Continuous improvement is a way of life

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Trends in Quality Control
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• International Quality Standards
• Economic Value-Added (EVA)

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Control Systems for Turbulent Times
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• Open-Book Management
• sharing financial information and results with
  all employees
• Balanced scorecard
• comprehensive management control system

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The Balanced Scorecard
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Exhibit 15.9
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New Workplace Concerns

• Corporate Governance
• Undercontrol
• Overcontrol

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A New ApproachBalance Scorecard
Financial Performance
Internal Business Processes
Customer Service
Exhibit 15.10
Learning and Growth