1. Managing Quality and Performance
Chapter 19
Managing Quality and Performance

2. Controlling Managers use a variety of measures to monitor performance:
Controlling work processes
Regulating employee behavior
Systems for financial resources
Evaluating profitability
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3. The Meaning of Control
Organizational control is the systematic process through which managers regulate organizational activities to make them consistent with expectations established in plans, targets, and standards of performance
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4. Choosing Standards and Measures
Common measures and controls:
Sales
Revenue
Profit
More focus on measuring intangibles
Customer service
Increased revenue
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5. The Balanced Scorecard
Balanced perspective of company performance
Integrates various areas of the organization
Managers record, analyze, and discuss the metrics
Serves as core management-control system
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6. 19.1 The Balanced Scorecard
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7. 19.2 Feedback Control Model
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8. Steps of Feedback Control
Establish Standards of Performance
Measure Actual Performance
Compare Performance to Standards
Take Corrective Action
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9. Application to Budgeting
Budgetary control – setting targets and monitoring expenditures
Budgets list planned and actual expenditures
Budgets are associated with a division or department
The unit of analysis for budgeting is the responsibility center
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10. Financial Control
Financial Statements provide basic information for financial control
Balance Sheet shows firm’s financial position
Income Statement profit-and-loss statement or P&L highlights firm’s financial performance
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11. 19.3 Balance Sheet
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12. 19.4 Income Statement
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13. Financial Analysis: Interpreting Numbers
Managers need to evaluate financial reports
Comparing performance with other data and industry standards
Financial Analysis:
Ratios
Statistics
Review:
Profits, assets, sales, and inventory
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14. 19.5 Common Financial Ratios
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15. Hierarchical versus Decentralized Approaches
Hierarchical controls include the monitoring of behavior through rules, policies, reward systems, and written documentation
Decentralized controls based on values and assumptions; rules are only used when necessary
Culture is adaptive, uniting individuals and teams
Managers’ approach to control is changing in many of today’s organizations
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16. 19.6 Comparing Methods of Control
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17. Open-Book Management Decentralized philosophy
Get every employee thinking like an owner
Information sharing and teamwork
Allows employees to see the financial condition of company
See how his/her job fits into organizational success
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18. 19.7 Which Countries Have the Most Secretive Economies?
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19. Total Quality Management (TQM)
Infuse quality into every aspect of the business, all day-to-day activities
Became popular in the U.S. in the 1980s
Focuses on:
Teamwork
Collaboration
Identifying improvements
The goal of TQM is zero-defects
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20. TQM Techniques Quality Circles Benchmarking Six Sigma
Reduced Cycle Time
Continuous Improvement
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21. 19.8 The Importance of Quality Improvement Programs
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22. 19.9 Quality Program Success Factors
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23. International Quality Standards
ISO 9000 standards – International Organization for Standardization
Organization certification
157 Countries
Organizations demonstrate a commitment to quality
Europe leads in certifications but the United States has had large increases
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24. New Financial Control Systems
Economic Value-Added (EVA) – gauge financial performance; look at ways to add value
Market Value-Added (MVA) – Stock market’s estimate of the value of a company
Activity-Based Costing (ABC) – allocating costs across departments and functions
Corporate Governance – systems and rules from the top are safeguards for shareholders
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