Managing Quality and

Performance - Principles of
controlling
 Learning Outcomes
◉ After studying this chapter, you should be able to:
◉ Define organizational control and explain why it is a key management
function.
◉ Explain the four steps in the control process.
◉ Describe the benefits of using a balanced scorecard to track the
performance and control of the organization
◉ Define total quality management (TQM), and specify the four basic TQM
principles.
◉ Describe at least three of the seven TQM process improvement tools.
◉ Explain how Deming’s PDCA cycle can improve the overall management
process 2
 Organizational Control

◉ Organizational control refers to the systematic process of

regulating organizational activities to make them consistent
with the expectations established in plans, targets, and
standards of performance

3
4
Why is control so important ?

5
6
 Control Process

Four Steps of Feedback Control

1) Establish Standard of Performance
2) Measure Actual Performance
3) Compare Performance to standards
4) Take Corrective actions

7
Control Process
1) Establish Standard of Performance
A control standard, or performance standard or simply standard, is the desired performance level for a
given goal
2) Measure Performance
Performance data are usually obtained from five sources: (1) employee behavior and deliverables, (2)
peer input or observations, (3) customer feedback, (4) managerial evaluations, and (5) output from a
production process.
3) Compare Performance to standards
Control charts are a visual statistical tool used for quality control purposes. They help managers set upper
and lower quality limits on a process and then monitor (control) performance in order to keep it within
these limits, correcting course if results stray above the upper or below the lower limit over time
4) Take Corrective actions
This step concerns feedback—modifying, if necessary, the control process according to the results or
effects. There are three possibilities here: (1) Make no changes. (2) Recognize and reinforce positive
performance. (3) Take action to correct negative performance. 8
Feedback Control Model

9
Types of Control

10
 Types of Control

◉ Feed-forward control: active anticipation and prevention of problems,

rather than passive reaction
◉ Concurrent control involves monitoring and adjusting ongoing
activities and processes to ensure compliance with standards
◉ Feedback control is gathering information about a completed activity,
evaluating that information, and taking steps to improve similar
activities in the future.
◉ Feedback control permits managers to use information on past
performance to bring future performance into line with planned
objectives and acceptable standards
11
 Levels and Areas of Control
Levels of Control
1) Strategic Control by Top Managers
Strategic control is monitoring performance to ensure that strategic plans are being
implemented and taking corrective action as needed
2)Tactical Control by Middle Managers
Tactical control is monitoring performance to ensure that tactical plans—those at the
divisional or departmental level—are being implemented and taking corrective action as
needed
3) Operational Control by First-Line Managers
Operational control is monitoring performance to ensure that operational plans—day-to-day
goals—are being implemented and taking corrective action as needed

12
 Identifying Control Problems

1)Executive reality check: top managers periodically working at lower-

level jobs to become more aware of operations
2) Internal Auditing: independent appraisal of organizational
operations and systems to assess whether acceptable policies and
procedures are followed, established standards are met, resources are
used efficiently and economically, planned missions are accomplished
effectively, and the organization’s objectives are being achieved

13
 SYMPTOMS OF INADEQUATE
CONTROLdecline in revenues or profits
◉ An unexplained
◉ A degradation of service (customer complaints)
◉ Employee dissatisfaction (complaints, grievances, excessive absenteeism,
turnover)
◉ Idle facilities or personnel
◉ Disorganized operations (workflow bottlenecks, excessive paperwork)
◉ Excessive costs
◉ Evidence of waste and inefficiency (scrap, rework)

14
 Controlling for organizational and employee Performance

Organizational performance the accumulated results of all the organization’s work

activities
Measures of organizational Performance
Organizational Productivity is the amount of goods or services produced divided
by the inputs needed to generate that output
Output is measured by the sales revenue an organization receives when goods are
sold (selling price × number sold).
Input is measured by the costs of acquiring and transforming resources into
outputs.
Organizational effectiveness is a measure of how appropriate organizational goals
are and how well those goals are met 15
 Controlling for employee Performance
◉ Delivering effective performance feedback
◉ Using Disciplinary Action

16
 The Balanced Scorecard : A Dashboard-like view of an
organization

◉ The balanced scorecard is a comprehensive management control system that balances

traditional financial measures with operational measures relating to a company’s critical
success factors
1) Financial performance. The financial performance perspective reflects a concern that the
organization’s activities contribute to improving short- and long-term financial performance
2) Customer service. Customer service indicators measure information such as how
customers view the organization and customer retention and satisfaction
3) Internal business processes. Business process indicators focus on production and
operating statistics
4) Organization’s potential for learning and growth, focusing on how well resources and
human capital are being managed for the company’s future

17
18
 Total Quality Management (TQM)

◉ Total quality management (TQM): creating an organizational culture committed

to continuous improvement of skills, teamwork, processes, product and service
quality, and customer satisfaction
◉ Consultant Richard Schonberger’s shorthand definition calls TQM “continuous,
customer-centered, employee driven improvement.
TQM can have a positive impact if managers understand and enact these 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 19
 Avenues for continuous improvement

◉ There are four general avenues for continuous improvement:

1. Improved and more consistent product and service quality
2. Faster cycle times (in cycles ranging from product development to order
processing to payroll processing)
3. Greater flexibility (for example, faster response to changing customer
demands and new technology)
4. Lower costs and less waste (for example, eliminating needless steps, scrap,
rework, and non–value adding activities

20
The Seven Basic TQM Process Improvement Tools

21
 The Seven Basic TQM Process Improvement Tools

◉ A flow chart is a graphical representation of a sequence of activities and decisions.

Standard flow-charting symbols include boxes for events or activities, diamonds for key
decisions, and ovals for start and stop points.
◉ Fishbone diagram: a cause-and effect diagram
◉ Pareto analysis: bar chart indicating which problem needs the most attention
◉ A control chart is used to monitor actual versus desired quality measurements during
repetitive operations
◉ A histogram is a bar chart showing whether repeated measurements of a given quality
characteristic conform to a standard bell-shaped curve.
◉ A scatter diagram is used to plot the correlation between two variables
◉ Run chart also called a time series or trend chart tracks the frequency or amount of a
given variable over time
22
 Some TQM Tools, Techniques, and Standards

◉ Outsourcing: Let Outsiders Handle It

◉ Reduced Cycle Time: Increasing the Speed of Work Processes
◉ Statistical Process Control: Taking Periodic Random Samples
◉ Six Sigma and Lean Six Sigma: Data-Driven Ways to Eliminate
Defects
◉ ISO 9000 and ISO 14000: Meeting Standards of Independent
Auditors
◉ Quality Circles
◉ Benchmarking
23
 DEMING MANAGEMENT
◉ Deming management is the application of W. Edwards Deming’s ideas to
revitalize productive systems by making them more responsive to the
customer, more democratic, and more efficient

24
Deming’s PDCA Cycle

25
 Deming’s 14 Points
◉ Constant purpose
◉ New philosophy
◉ Give up on quality by inspection
◉ Avoid the constant search for lowest-cost suppliers
◉ Seek continuous improvement
◉ Train everyone
◉ Provide real leadership
◉ Drive fear out of the workplace
◉ Promote teamwork
◉ Avoid slogans and targets
◉ Get rid of numerical quotas
◉ Remove barriers that stifle pride in workmanship
◉ Education and self-improvement are key
◉ The transformation is everyone’s job 26
 The Keys to Successful Control Systems

1. They Are Strategic and Results Oriented

2. They Are Timely, Accurate, and Objective
3. They Are Realistic, Positive, and Understandable and Encourage
Self-Control
4. They Are Flexible

27
 Barriers to Control Success

Too Much Control

Too Little Employee Participation
Overemphasis on Means Instead of Ends
Overemphasis on Paperwork
Overemphasis on One Instead of Multiple Approaches

28
29
 The Keys to Your Managerial Success

◉ Adopt a proactive approach to life-long learning

◉ Find your passion and follow it
◉ Encourage self-discovery, and be realistic
◉ Every situation is different, so be flexible
◉ Focus on career readiness
◉ Learn how to develop leadership skills

30