1. Understanding Management First Canadian Edition Slides prepared by Janice Edwards College of the Rockies Copyright © 2009 Nelson Education Ltd.

2. Chapter 15 Copyright © 2009 Nelson Education Ltd.. 2-2 Productivity through Management

3. Copyright (c) 2009 Nelson Education Ltd. 15-3 Learning Objectives 1. Define organizational control and explain why it is a key management function. 2. Describe differences in control focus, including feedforward, concurrent, and feedback control. 3. Explain the four steps in the control process. 4. Contrast the bureaucratic and decentralized control approaches. 5. Discuss how to measure and manage productivity.

4. Copyright (c) 2009 Nelson Education Ltd. 15-4 Learning Objectives (Cont’d) 6. Describe the concept of total quality management (TQM) and major TQM techniques. 7. Explain the value of open-book management and the balanced scorecard approaches to control in a turbulent environment.

5. Copyright (c) 2009 Nelson Education Ltd. 15-5 Organizational Control The systematic process of regulating organizational activities to make them consistent with the expectations established in plans, targets, and standards of performance.

6. Copyright (c) 2009 Nelson Education Ltd. 15-6 Organizational Control Focus FFeedforward: Preliminary or preventive CConcurrent: Monitor ongoing activities FFeedback: Postaction or output control

7. Copyright (c) 2009 Nelson Education Ltd. 15-7 Ex. 15.1 Organizational Control Focus Feedforward Control Anticipates Problems Examples Pre-employment drug testingInspect raw materialsHire only college graduates Focus is on Inputs Concurrent Control Solves Problems as They Happen Examples Adaptive cultureTotal quality management Employee self-control Focus is on Ongoing Processes Feedback Control Solves Problems After They Occur ExamplesAnalyze sales per employeeFinal quality inspection Survey customers Focus is on Outputs

8. Copyright (c) 2009 Nelson Education Ltd. 15-8 Budgetary Control The process of setting targets for an organization’s expenditures, monitoring results and comparing them to the budget, and making changes as needed.

9. Copyright (c) 2009 Nelson Education Ltd. 15-9 Ex. 15.3 Bureaucratic and Decentralized Methods of Control

10. Copyright (c) 2009 Nelson Education Ltd. 15-10 Managing Productivity Productivity is the organization’s output of goods and services divided by its inputs. Lean manufacturing – cut waste, improve quality and productivity.

11. Copyright (c) 2009 Nelson Education Ltd. 15-11 Total Quality Management (TQM) AAn organization-wide commitment to infuse quality into every activity through continuous improvement. FFocuses on teamwork, increasing customer satisfaction, and lowering costs.

12. Copyright (c) 2009 Nelson Education Ltd. 15-12 TQM Techniques Most companies that have adopted TQM have incorporated: Quality circles. Benchmarking. Six sigma quality principles. Reduced cycle time. Continuous improvement.

13. Copyright (c) 2009 Nelson Education Ltd. 15-13 Ex. 15.5 Quality Program Success Factors

14. Copyright (c) 2009 Nelson Education Ltd. 15-14 International Quality Standards ISO 9000 A set of international standards for quality management systems. Process of application and certification for ISO 9000 is expensive and time-consuming. Recognized standard for evaluating and comparing companies on a global basis.

15. Copyright (c) 2009 Nelson Education Ltd. 15-15 Economic Value Added (EVA) A way to gauge financial performance. A company’s net (after-tax) operating profit minus the cost of capital invested in the company’s tangible assets.

16. Copyright (c) 2009 Nelson Education Ltd. 15-16 Control Systems for Turbulent Times Open-Book Management Sharing of financial information and results with all employees in the organization. Allows employees to see financial condition of the company. Shows individual employees how his/her job fits into the big picture. Ties employee rewards to the company’s overall success.

17. Copyright (c) 2009 Nelson Education Ltd. 15-17 Control Systems for Turbulent Times (Cont’d) The Balanced Scorecard Balances traditional financial measures with operational measures relating to a company’s critical success factors. Measures: Financial performance Customer service Internal business processes Organization’s capacity for learning and growth

18. Copyright (c) 2009 Nelson Education Ltd. 15-18 Ex. 15.7 The Balanced Scorecard