1. MANAGEMENT
RICHARD L. DAFT

2. Managing Quality and Performance
Managing Quality and Performance
CHAPTER 18

3. Learning Outcomes
Define organizational control and explain why it is a key management function.
Explain the benefits of using the balance scorecard to track performance and control of the organization.
Explain the four steps in the control process.
Discuss the use of financial statements, financial analysis, and budgeting as management controls.
Contrast the hierarchical and decentralized methods of control.
Identify the benefits of open-book management.
Describe the concept of total quality management and major TQM techniques, such as quality circles, benchmarking, Six Sigma principles, reduced cycle time, and continuous improvement.
Identify current trends in quality and financial control, including ISO certification, economic value-added and market value-added systems, activity-based costing, and corporate governance, and discuss their impact on organizations.
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4. What Is Your Attitude Toward Control?
Managers must balance control with motivation and creativity
Managers control:
Work processes
Employee behavior
Financial resources
Profitability
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5. The Meaning of Control
The systematic process of regulating organizational activities to meet expectations
Established plans
Targets
Standards
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6. Choosing Standards and Measures
Common forms of control include financial performance
Sales
Revenue
Profit
There is a growing need to measure intangible aspects of performance
Customer Service
Customer Retention
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7. The Balanced Scorecard
Comprehensive management control system that balances traditional financial measures with:
Customer Service
Internal Business Processes
Learning and Growth
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8. Review the Scorecard
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9. Steps of Feedback Control
Establish Standards of Performance
Measure Actual Performance
Compare Performance to Standards
Take Corrective Action
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10. Feedback Control Model
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11. Controlling and Budgeting
Budgets are reports that list planned and actual expenditures
Budget reports highlight the variance between budgeted and actual amounts
Budgets are created for all departments and divisions in an organization
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12. Types of Budgeting Expense Budget Revenue Budget Cash Budget
Expense Budget
Revenue Budget
Cash Budget
Capital Budget
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13. Financial Control Review performance and highlight potential problems
Review performance and highlight potential problems
Most common financial statements
Balance Sheet
Income Statement or Profit & Loss Statement
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14. Sample Financial Statements
Starting point for financial control
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15. Financial Analysis: Interpreting the Numbers
Managers need to be able to evaluate financial reports
Comparisons allow managers to see improvement and focus on competition
Ratios and statistics highlight relationships
Ratios are stated fractions or proportions
Liquidity, activity, profitability and leverage
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16. Common Financial Ratios
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17. The Changing Philosophy of Control
Hierarchical versus Decentralized Approaches
Open Book Management
Total Quality Management (TQM)
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18. Hierarchical and Decentralized Methods
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19. Open-Book Management Information sharing Teamwork
Information sharing
Teamwork
Encourage active participation
Commitment to goals
Open-book management allows employees to see for themselves—through charts, computer printouts, meetings, and so forth—the financial condition of the company
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20. Total Quality Management
Total Quality Management (TQM) is a decentralized control philosophy
Infuse quality into every activity in a company through continuous improvement
Toyota is a good example of the results of TQM
TQM became attractive in the 1980s because of its success in Japan
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21. International Opacity Index
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22. TQM Techniques Quality Circles Benchmarking Six Sigma
Quality Circles
Benchmarking
Six Sigma
Reduced Cycle Time
Continuous Improvement
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23. The Importance of Quality Improvement Programs
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24. Quality Program Success Factors
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25. Trends in Quality and Financial Control
International Quality Standards
New Financial Control Systems
Economic Value-Added (EVA)
Market Value-Added (MVA)
Activity-Based Costing (ABC)
Corporate Governance
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