Fundamentals of Organizational Control

Control

Taking preventive or corrective action to keep things is tracked checking, testing, regulating, verifying, or adjusting. Objectives are yardsticks for measuring actual performance.

Purpose of the control function

To get the job done despite environmental, organizational, and behavioral obstacles and uncertainties

Types of Controls

Feedforward Control: The active anticipation and prevention of problems, rather than passive reaction

• Concurrent Control: Monitoring and adjusting ongoing activities and processes
• Feedback Control: Checking a completed activity and learning from mistakes

Three Types of Control

Organizational Control Subsystems

Strategic plans

Long-range plans

Annual operating budgets

Statistical reports

Performance appraisals

Policies and procedures

The organization’s culture

Components of Organizational Control Systems

Objectives: Measurable reference points (targets) for corrective action 
Standards:Guideposts on the way achieve objectives. Benchmarking: Identifying, studying, and building upon the best practices of organizational role models.

Evaluation-Reward Systems

Goals of System

To measure and reward individual and team contributions to attaining organizational objectives

To shape effort-reward expectancies in order to motivate better performance

Strategic Control

Strategic planning and strategic control go hand in hand. Top-level strategy sets and/or determines objectives through the organization. Control measures of activities and results are translated up the organizational pyramid.

The Performance Pyramid for Strategic Control

Identifying Control Problems

Executive Reality Checks: Top managers periodically work at lower-level jobs to become more aware of operations.

Internal Audits: Independent appraisals of organizational operations and systems are conducted to assess effectiveness and efficiency.

Symptoms of Inadequate Control

An unexplained decline in revenues or profits

A degradation of service (customer complaints)

Employee dissatisfaction

Cash shortages caused by bloated inventories or delinquent accounts receivable

Idle facilities or personnel

Disorganized operations

Excess costs

Evidence of waste and inefficiency (scrap, rework)

Crisis Management

Organizational Crisis: A low-probability, high-impact event that threatens the viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by the belief that decisions must be made swiftly.

Crisis Management: Anticipating and preparing for events that could damage the organization.Crisis management is intertwining with strategic control. Managers should think about the unthinkable and expect the unexpected.

 

Key Elements of a Crisis Management Program

Developing a Crisis Management Program

Conduct a crisis audit seeking out trouble spots and vulnerabilities. Formulate contingency plans that specify early warning signals, actions to take, and consequences of those actions. Create crisis management teams with specific skills to deal with a crisis. Perfect the program through serious practice and  rehearsals.

An Organizational Crisis Can Come in Many Different Forms

The Quality Challenge

Defining Quality

“Conformance to requirements” (Crosby). A subjective response by customers to the adequacy of product or service quality in meeting their expectations/needs/requirements. There is a national trophy for quality in the United States that means prestige and lots of free media exposure for winners: the Malcolm Baldrige National Quality Award. 

Five Types of Product Quality

1.      Transcendent Quality: Inherent value or innate excellence apparent to the individual
2.      Product-Based Quality: The presence or absence of a given product attribute
3.      User-Based Quality: The ability of the product to meet the user’s expectations
4.      Manufacturing-Based Quality: How well the product conforms to its design specification or blueprint
5.      Value-Based Quality: How much value each customer separately attributes to the product in calculating his/her personal cost-benefit ratio

Unique Challenges for Service Providers

Strategic Service Challenge

To anticipate and exceed customer’s expectations

Distinctive service characteristics: Customers participate directly in the production process. Services are consumed immediately and cannot be stored. Services are provided where and when the customer desires. Services tend to be labor-intensive. Services are intangible.

Defining Service Quality

Five service quality dimensions (RATER)

1.      Reliability (most important)

2.      Assurance

3.      Tangibles

4.      Empathy

5.      Responsiveness

Total Quality Management (TQM)

Creating an organizational culture committed to the continuous improvement of skills, teamwork, processes, product and service quality, and customer satisfaction

Four Principles of TQM

1.      Do it right the first time.

2.      Be customer-centered.

3.      Make continuous improvement a way of life.

4.      Build teamwork and empowerment.

Do It Right the First Time: Designing and building quality into the product

Be Customer-Centered

Internal customers: Anyone in the organization who cannot do a good job unless you do a good job

Customer-centered: Satisfying customers’ needs by anticipating, listening, and responding

Make Continuous Improvement a Way of Life

Kaizen: A Japanese word meaning continuous improvement (quality is an endless journey). Involves the search for actual or potential trouble spots.

1.      Avenues for Continuous Improvement

2.      Improved and more consistent product and service quality

3.      Faster cycle times

4.      Greater flexibility

5.      Lower costs and less waste

Build Teamwork and Empowerment

—  Empowerment

1.      Adequate training

2.      Access to information and tools

3.      Involvement in key decisions

4.      Fair rewards for results

—  Teamwork

1.      Suggestion systems

2.      QC circles and self-managed teams

3.      Teamwork and cross-functional teams

The Seven Basic TQM Process Improvement Tools

Flow Chart: A graphic display of a sequence of activities and decisions

Cause-and-Effect Analysis: A fishbone diagram that helps visualize important cause-and-effect relationships

Pareto Analysis (80/20 Analysis): A bar chart indicating which problem needs the most attention

Control Chart: Visual aid showing acceptable and unacceptable variations from the norm for repetitive operations

Histogram: A bar chart indicating deviations from a standard bell-shaped curve

Scatter Diagram: A plot of relationships between two variables

Run Chart: A trend chart for tracking a variable over time

 Everyone Benefits from Improved Quality

Deming Management

Deming Management: Application of W. Edwards Deming’s ideas to revitalize productive systems to make them more responsive to the customer, more democratic, and less wasteful. Challenges the concept of scientific management.

Principles of Deming Management

1.      Quality improvement drives the entire economy.

2.      The customer always comes first.

3.      Don’t blame the person; fix the system.

4.      Plan-Do-Check-Act (PDCA cycle).

 Deming’s PDCA Cycle

Deming’s 14 Points

1.      Constant purpose

2.      New philosophy

3.      Give up on quality by inspection

4.      Avoid the constant search for lowest-cost suppliers

5.      Seek continuous improvement

6.      Train everybody

7.      Provide real leadership

8.      Drive fear out of the workplace

9.      Promote teamwork

10.  Avoid slogans and targets

11.  Get rid of numerical quotas

12.  Remove barriers that stifle pride in workmanship

13.  Education and self-improvement are key

14.   “The transformation is everyone’s job”

Change: Organizational & Individual Perspectives

Types of Organizational Change

1.      Anticipatory changes: Planned changes based on expected situations
2.      Reactive changes: Changes made in response to unexpected situations
3.      Incremental changes: Subsystem adjustments required to keep the organization on course
4.      Strategic changes: Altering the overall shape or direction of the organization

Four Types of Organizational Change

Organizational & Individual Perspectives

1.      Tuning: The most common, least intense, and least risky type of change. Also known as preventive maintenance and kaizen (continuous improvement). Key is to actively anticipate and avoid problems rather than waiting for something to go wrong
2.      Adaptation: Incremental changes that are in reaction to external problems, events, or pressures. 3.      Reorientation: Change that is anticipatory and strategic in scope and causes the organization to be significantly redirected. Also called “frame bending” (Nadler and Tushman). 
4.      Re-Creation: Intense, risky, and decisive change that reinvents the organization. Also called “frame breaking” (Nadler and Tushman)

Individual Reactions to Change happens on an individual level, even in the workplace. How People Respond to Changes They Like

Three-stage process

1.      Unrealistic optimism

2.      Reality shock

3.      Constructive direction

How People Tend to Respond to Changes They Like

On-the-Job changes generally are more feared than welcomed. How People Respond to Changes They Fear and Dislike. 

Stages

1.      Getting off on the wrong track

2.      Laughing it off

3.      Growing self-doubt

4.      Buying in

5.      Constructive direction

How People Respond to Changes They Fear and Dislike

 How to Help Individuals Deal with Change: A Contingency Approach