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Business Management
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What is the controlling function of management?
Determining whether goals are being met and what actions to take if performance falls short of goals
Reviewing performance
Cannot be completed unless the company has specific goals and plans
The last of the management functions is that of controlling. Controlling includes measuring outcomes against goals to see if goals were met or if changes need to be made. Standards should be in place to be able to make the determination of whether goals and plans were met effectively or not.
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Control Methods
Establish a goal or standard, based on company policies
Measuring performance
Comparing performance to standard
Analyzing differences from standard, usually requiring teamwork
Correcting the differences and monitoring the progress
Specific control processes are necessary to create a quality product or service. Steps such as setting a standard from the beginning, measuring the performance and comparing it to the standard are essential. Analyzing what actually deviated from the standard and correcting the differences are important final steps in the control process before assessing or re-assessing if goals have been met.
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Quantity Standards
Measurable standards such as number of units produced, number of prospective customers contacted
Quality Standards (Quality Control)
A standard of perfection such as zero pricing errors on an invoice, or sampling products to check for errors
Time Standards
Examples include deadlines being met for job completion, materials or products becoming spoiled or defective due to expiration
Cost Standards
Financial profit or loss, measurement tool can be a budget, especially with inventories
** Focus of this lesson
Four main standards exist to evaluate the extent to which goals were met and should be measurable. Examples of quantity standards include producing a specified number of units or contacting a desired number of potential customers. Quality standards will be discussed later but include processes for preventing errors and setting goals of perfection. Time standards include meeting deadlines and using products and inventories before they expire. Cost standards include controlling costs of inventories and other budget items to keep them within defined limits.
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Necessary Assumptions:
That no errors are acceptable
That employees are responsible for quality
Rewards based on achieving quality standards
Deming and TQM
Baldrige
ISO 9000 and ISO 14000
Different measures of effective quality control management exist among different companies and countries which help to close the gap of incompatibility among products and operations. Ask students if they have seen car commercials where it is mentioned that a particular make has won the “Malcolm Baldrige” award.
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6. Total Quality Management (TQM)
Shift from efficiency to QUALITY which leads to success
Total Quality Management
(TQM)
Long-term commitment to quality
Customer satisfaction
Employee morale
In the decades prior to the 1950s, many businesses focused on making products efficiently, as with assembly line processes, but Deming’s Total Quality Management shifted that focus to producing higher-quality products, because efficient did not always mean high quality.
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Tools of TQM:
Flow charts
Cause and effect analysis
Scatter diagrams
Teamwork
Any process can best be quantified through the use of tools, whether it be flow charts to describe a process, cause and effect analysis to demonstrate how errors may have occurred and what can be done to alleviate the problem, or scatter diagrams that can visually represent where errors are occurring. Teamwork can also be considered a tool as it can help a process proceed more efficiently when employees work together.
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Summary of Deming’s Principles:
Emphasizes increasing quality and developing an effective organization
Customer satisfaction
Employee motivation
Relies on leadership and cooperation as opposed to traditional management focus on close employee supervision
Prior to the 1950s business goals consisted mainly of trying to produce as much as possible as efficiently as possible. Deming’s principles emphasized a shift toward increasing the quality of products as well as customer satisfaction and employee motivation.
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Summary of Deming’s Principles (continued):
Look for new and improved ways to complete work with increased effectiveness and quality
Teamwork and getting employees involved in decision-making
Employees are valuable to success
Training and education are encouraged
Deming stressed teamwork and motivating employees through effective leadership, training, and education.
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Malcolm Baldrige National Quality Award created in 1987
Companies must demonstrate that they have implemented a program to develop and maintain quality in all of its products and activities.
For the winning companies, demand is usually increased for its products.
The Malcolm Baldrige National Quality Award was created in 1987 to reward companies who demonstrated programs to develop and maintain quality in all areas. This is a prestigious award also because winners of this award also saw increased demand for, and therefore sales of, their products.
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Leadership
Strategic planning
Customer and market focus
Measurement, analysis, and knowledge management
Workforce focus
Process management
Results
The Baldrige Award has several categories such as leadership, strategic planning, and customer/market focus. Other categories of consideration include knowledge management, workforce focus, process management, and results.
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International Organization for Standardization
Promotes global quality
Arose from lack of standardization among products produced by different companies and countries, which created a barrier to international trade
Two main goals:
to develop agreements on production designs to increase compatibility among products
to establish standards to ensure quality and reliability among different companies
Over 130 participating countries
While quality standards were identified and rewarded through the Deming award in Japan and the Baldrige award in America, the ISO standards were a major international improvement in quality standardization.
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ISO 9000
Specific requirements for manufacturing processes and product specifications
ISO 14000
Specific requirements for environmental management
Companies follow guidelines for use of resources and protection of the environment
Results:
More efficient trade among businesses and countries
Increased quality of products and operations in thousands of companies
The ISO standards have achieved positive results for the countries that follow its guidelines in the areas of international trade and improvement in the quality of products for thousands of companies.
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