Saturday, February 8, 2014

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”