[ppt]organizational control and quality improvementiris.nyit.edu/~shartman/mgmt102/ch16.pptx · web...

Organizational Control and Quality Improvement

Organizational Control Processes

Chapter Sixteen

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Chapter Objectives

Identify three types of control and the components common to all control systems.

Discuss organizational control from a strategic perspective.

Identify the four key elements of a crisis management program.

Identify five types of product quality.

Explain how providing a service differs from manufacturing a product and identify the five service-quality dimensions.


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Chapter Objectives (contd)

Define total quality management (TQM) and specify the four basic TQM principles.

Describe at least three of the seven TQM process improvement tools.

Explain how Demings PDCA cycle can improve the overall management process.

Specify and discuss at least four of Demings famous 14 points.


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Fundamentals of Organizational Control

Control

Taking preventive or corrective action to keep things on track

Checking, testing, regulating, verifying, or adjusting

Objectives are yardsticks for measuring actual performance.

Purpose of the control function

To get the job done despite environmental, organizational, and behavioral obstacles and uncertainties


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Types of Controls

Feedforward Control

The active anticipation and prevention of problems, rather than passive reaction

Concurrent Control

Monitoring and adjusting ongoing activities and processes

Feedback Control

Checking a completed activity and learning from mistakes


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Figure 16.1: Three Types of Control


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Organizational Control Subsystems

Strategic plans

Long-range plans

Annual operating budgets

Statistical reports

Performance appraisals

Policies and procedures

The organizations culture


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Components of Organizational Control Systems

Objectives

Measurable reference points (targets) for corrective action

Standards

Guideposts on the way to achieving objectives

Benchmarking: Identifying, studying, and building upon the best practices of organizational role models


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Evaluation-Reward Systems

Goals of System

To measure and reward individual and team contributions to attaining organizational objectives

To shape effort-reward expectancies in order to motivate better performance


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Strategic Control

Strategic planning and strategic control go hand in hand.

Top-level strategy sets and/or determines objectives through the organization.

Control measures of activities and results are translated up the organizational pyramid.


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Figure 16.2: The Performance Pyramid for Strategic Control


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Identifying Control Problems

Executive Reality Checks

Top managers periodically work at lower-level jobs to become more aware of operations.

Internal Audits

Independent appraisals of organizational operations and systems are conducted to assess effectiveness and efficiency.


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Identifying Control Problems (contd)

Symptoms of Inadequate Control

An unexplained decline in revenues or profits

A degradation of service (customer complaints)

Employee dissatisfaction

Cash shortages caused by bloated inventories or delinquent accounts receivable

Idle facilities or personnel

Disorganized operations

Excess costs

Evidence of waste and inefficiency (scrap, rework)


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Crisis Management

Organizational Crisis

A low-probability, high-impact event that threatens the viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by the belief that decisions must be made swiftly


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Crisis Management (contd)

Crisis Management

Anticipating and preparing for events that could damage the organization

Crisis management is intertwined with strategic control.

Managers should think about the unthinkable and expect the unexpected.


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Figure 16.3: Key Elements of a Crisis Management Program


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Developing a Crisis Management Program

Conduct a crisis audit seeking out trouble spots and vulnerabilities.

Formulate contingency plans that specify early warning signals, actions to be taken, and consequences of those actions.

Create crisis management teams with specific skills to deal with a crisis.

Perfect the program through serious practice and rehearsals.


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Table 16.1: An Organizational Crisis Can Come in Many Different Forms


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The Quality Challenge

Defining Quality

Conformance to requirements (Crosby)

A subjective response by customers to the adequacy of product or service quality in meeting their expectations/needs/requirements

There is a national trophy for quality in the United States that means prestige and lots of free media exposure for winners: the Malcolm Baldrige National Quality Award.


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Five Types of Product Quality

Transcendent Quality

Inherent value or innate excellence apparent to the individual

Product-Based Quality

The presence or absence of a given product attribute

User-Based Quality

The ability of the product to meet the users expectations


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Five Types of Product Quality (contd)

Manufacturing-Based Quality

How well the product conforms to its design specification or blueprint

Value-Based Quality

How much value each customer separately attributes to the product in calculating his/her personal cost-benefit ratio


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Unique Challenges for Service Providers

Strategic Service Challenge

To anticipate and exceed customers expectations

Distinctive service characteristics

Customers participate directly in the production process.

Services are consumed immediately and cannot be stored.

Services are provided where and when the customer desires.

Services tend to be labor-intensive.

Services are intangible.


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Unique Challenges for Service Providers (contd)

Defining Service Quality

Five service quality dimensions (RATER)

Reliability (most important)

Assurance

Tangibles

Empathy

Responsiveness


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Total Quality Management (TQM)

Creating an organizational culture committed to the continuous improvement of skills, teamwork, processes, product and service quality, and customer satisfaction

Four Principles of TQM

Do it right the first time.

Be customer-centered.

Make continuous improvement a way of life.

Build teamwork and empowerment.


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Do It Right the First Time

Designing and building quality into the product

Be Customer-Centered

Internal customers: Anyone in the organization who cannot do a good job unless you do a good job

Customer-centered: Satisfying customers needs by anticipating, listening, and responding


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Make Continuous Improvement a Way of Life

Kaizen: A Japanese word meaning continuous improvement (quality is an endless journey)

Involves the search for actual or potential trouble spots

Avenues for Continuous Improvement

Improved and more consistent product and service quality

Faster cycle times

Greater flexibility

Lower costs and less waste


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Build Teamwork and Empowerment

Empowerment

Adequate training

Access to information and tools

Involvement in key decisions

Fair rewards for results

Teamwork

Suggestion systems

QC circles and self-managed teams

Teamwork and cross-functional teams


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The Seven Basic TQM Process Improvement Tools

Flow Chart

A graphic display of a sequence of activities and decisions

Cause-and-Effect Analysis

A fishbone diagram that helps visualize important cause-and-effect relationships

Pareto Analysis (80/20 Analysis)

A bar chart indicating which problem needs the most attention


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The Seven Basic TQM Process Improvement Tools (contd)

Control Chart

Visual aid showing acceptable and unacceptable variations from the norm for repetitive operations

Histogram

A bar chart indicating deviations from a standard bell-shaped curve

Scatter Diagram

A plot of relationships between two variables

Run Chart

A trend chart for tracking a variable over time


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Figure 16.4: Everyone Benefits from Improved Quality


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Deming Management

Deming Management

Application of W. Edwards Demings ideas to revitalize productive systems to make them more responsive to the customer, more democratic, and less wasteful

Challenges the concept of scientific management

Principles of Deming Management

Quality improvement drives the entire economy.

The customer always comes first.

Dont blame the person; fix the system.

Plan-Do-Check-Act (PDCA cycle).


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Figure 16.5: Demings PDCA Cycle


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Demings 14 Points

Constant purpose

New philosophy

Give up on quality by inspection

Avoid the constant search for lowest-cost suppliers

Seek continuous improvement

Train everybody

Provide real leadership

Drive fear out of the workplace

Promote teamwork

Avoid slogans and targets

Get rid of numerical quotas

Remove barriers that stifle pride in workmanship

Education and self-improvement are key

The transformation is everyones job


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Summary

Feedforward control is preventive in nature, whereas feedback control is based on the evaluation of past performance.

Strategic control involves the downward translation of objectives and the upward translation of performance measures.

The four elements of a crisis management program are anticipate, plan, staff, and practice.

Five types of product quality are transcendent, product-based, user-based, manufacturing-based, and value-based.

Service providers face a unique set of challenges.


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Summary (contd)

TQM involves creating a culture dedicated to customer-centered, employee-driven continuous improvement.

Seven basic TQM process improvement tools are flow charts, fishbone diagrams, Pareto analysis, control charts, histograms, scatter diagrams, and run charts.

Demings plan-do-check-act (PDCA) cycle forces managers to make decisions and take actions on the basis of observed and carefully measured data.

Deming formulated 14 points that urge managers to seek continuous improvement through extensive training, leadership, teamwork, and self-improvement.


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Terms to Understand

Control

Feedforward control

Concurrent control

Feedback control

Benchmarking

Executive reality check

Internal auditing

Crisis management

Contingency plan

Quality

Total quality management (TQM)

Internal customers

Customer-centered

Kaizen

Flow chart

Fishbone diagram

Pareto analysis

Control chart

Histogram

Scatter diagram

Run chart

Deming management

PDCA cycle


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[ppt]organizational control and quality improvementiris.nyit.edu/~shartman/mgmt102/ch16.pptx · web...

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