Chapter 19 Management Org

Compare performance to standards

-comparing actual activities to standards. When standards and performance deviate from each other managers should think of reasons why this is happening.

Open Book Management

Allows employees to see for themselves through charts, computer printouts, meetings and so on the financial condition of the company. Shows the individual employee how his or her job fits into the big picture and affects the financial future of the organization. Ties employee rewards to the company's overall success. The goal is to get every employee to think as a business owner and helps employees to understand and appreciate why efficiency in their job is important to the organization.

Total Quality Management

An organization wide effort to infuse quality into every activity in a company through continuous improvement. Managing quality is a concern for every organization.

The TQM philosophy

Focuses on teamwork, increasing customer satisfaction and lowering costs. It is implemented by encouraging managers and employees to collaborate across departments and functions.

Activity-based Costing (ABC)

allocates costs across business processes. Attempts to identify all various activities needed to provide a product or service and allocates costs accordingly.

Customer service

covers things such as how customers view the organization as well as customer retention and satisfaction.

Cash Budget

estimated receipts and expenditures of money on a daily or weekly basis to ensure that the organization has sufficient cash on hand to meet obligations.

Internal business process

focus on producing and operating stats such as fulfillment and cost per job.

Learning and growth capacity

focuses on how well resources and human capital are being managed for the company's future

Expense Budget

includes anticipated and actual expenses for each responsibility center and for the total organization.

Hierarchical control

involves monitoring and influencing employee behavior through extensive use of rules, policies, hierarchy of authority, written documentation, reward systems and other formal mechanisms.

The balanced score card

is a comprehensive management control system that balances traditional financial measures with operational measures relating to a company's critical success factors.

Revenue budget

lists forecasted and actual revenues of the organization.

Capital Budget

lists planned investments in major assets often made for over several years.

Make corrections as necessary

make adjustments so that standards and performance can be met together.

Budgets

one of the most common used methods of managerial control in the process of setting targets for an organizations expenditures.

Financial performance

reflects a concern for improving the company's long term and short term financial performance. (net income, return on investment)

Decentralized control

relies on cultural values, traditions, shared beliefs, and trust to foster compliance with organizational goals. Managers operate on assumption that employees are trustworthy and willing to preform efficiently without extensive rules.

ISO 9000 standards

represents a international consensus of what constitutes effective quality management as outlines by the International Organization for Standardization

Measure actual performance

should be related to standards

Establish standards of performance

should state what is being measured and why. Should be financial and nonfinancial measurements

Balance sheet

shows the organizations financial state in respect to assets and liabilities as of a certain point in time.

Income statement

summarizes a firm's financial performance in respect to revenues and expenses and resulting in net income.

Feedback Control Model

•Establish standards of performance •Measure actual performance •Compare performance to standards •Make corrections as necessary

Balance Score card Perspectives

•Financial performance •Customer service •Internal business process •Learning and growth capacity The balanced score card should be used with a performance management approach.

TQM techniques

•Quality circles- a group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting the quality of their work. •Benchmarking- is defined as the continuous process of measuring products, services and practices against the toughest competition or those companies recognized as industry leaders to identify areas for improvement. •Six sigma- a highly ambitious quality standard that specifies a goal of no more than 3.4 defects per million parts. Always pursuing and demanding lower costs and higher quality management. •Reduced cycle time-