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
