Chapter 16 MGT240

Barriers to Effective Measurement

Objectives are fuzzy Managers put too much trust in informal feedback systems Employees resist new measurement systems Companies focus too much on measuring activities instead of results

Two Core Principles of TQM

People orientation everyone involved in the organization should focus on delivering value to customers Improvement orientation everyone should work on continuously improving work processes

Deming Management

Quality should be aimed at the needs of the consumer Companies should aim at improving the system, not blaming workers Improved quality leads to increased market share, increased company prospects, & increased employment Quality can be improved on the basis of hard data, using the PDCA cycle

In Harvey's job, he takes random samples of production runs to ascertain quality. His job involves:

Statistical process control

Why Measure-Managed Firms Succeed

Top executives agree on strategy Communication is clear There is better focus and alignment The organizational culture emphasizes teamwork and allows risk taking

Total Quality Management (TQM)

a comprehensive approach - led by top management and supported throughout the organization - dedicated to continuous quality improvement, training, and customer satisfaction

incremental budgeting

allocates increased or decreased funds to a department by using the last budget period as a reference point only incremental changes in the budget request are reviewed

fixed budgets

allocates resources on the basis of a single estimate of costs

variable budget

allows the allocation of resources to vary in proportion with various levels of activity

Decentralized control

an approach to organizational control that is characterized by informal and organic structural arrangements

Bureaucratic control

an approach to organizational control that is characterized by use of rules, regulations, and formal authority to guide performance

budget

formal financial projection

audit

formal verification of an organization's financial and operational systems

Jeff's sales goal was to "improve sales". Which barrier to measurement is this?

fuzzy objectives

Balanced scoreboard

gives top managers a fast but comprehensive view of the organization via four indicators: (1) customer satisfaction, (2) internal processes, (3) innovation and improvement activities and, (4) financial measures

return ratios

how effective management is generating a return or profit

A drug test employed by an organization in its hiring process is an example of a(n) _______ resource control.

human

liquid ratios

indicate how easily a firm's assets can be converted to cash

controlling

defined as monitoring performance, comparing it with goals, and taking corrective action as needed

debt management ratios

degree to which a firm can meet it's long-term financial obligations

RATER scale

enables customers to rate the quality of a service along dimensions - reliability, assurance, tangibles, empathy, and responsiveness

innovation and learning

learning and growth of employees

operational control

monitoring performance to ensure that operational plans - day-to-day goals - are being implemented and taking corrective action as needed

Strategic control

monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed

tactical control

monitoring performance to ensure that tactical plans - those at the divisional or departmental level - are being implemented

Productivity

outputs divided by inputs where: outputs are the goods and services produced, and inputs are labor, capital, materials, and energy

customer

priority is taking care of the customer

financial

profitability, growth, shareholder values

internal business

quality, employee skills, and productivity

Enterprise resource planning (ERP)

software systems, information systems for integrating virtually all aspects of a business, helping managers stay on top of the latest developments.

income statement

summarizes an organization's financial results - revenues and expenses - over specified period of time

balanced sheet

summarizes an organization's overall financial worth - assets and liabilities - at a specific point in time

A UPS driver fails to perform according to the standards set for the route and traffic conditions. A supervisor rides along and gives suggestions for improvement. This is the ____________ stage of the control process.

take corrective action

strategy map

visual representation of the four perspectives of the balanced scorecard that enables managers to communicate their goals so that everyone in the company can understand how their jobs are linked to the overall objectives of the organization