Managing Quality and Performance

Managing Quality and Performance

1. 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.

   • To effectively control an organization, managers need to decide what information is essential, how they will obtain that information, and how they can and should respond to it.
   • Cyberslackers: People who spend part of their workday sending personal e-mails, shopping, or downloading music and videos that hog available bandwidth and sometimes introduce viruses.
   • Balanced Scorecard: A comprehensive management control system that balances traditional financial measures with operational measures relating to a company’s critical success factors.
     • Financial Performance: Perspective that reflects a concern that the organization’s activities contribute to improving short- and long-term financial performance.
     • Customer Service: Indicators measure such things as how customers view the organization, as well as customer retention and satisfaction.
     • Business Process: Indicators focus on production and operating statistics.
     • Potential for Learning and Growth: Focus on how well resources and human capital are being managed for the company’s future.
     • Managers record, analyze, and discuss various metrics to determine how well the organization is achieving its strategic goals.
   • Under Control: Managers did not keep personal tabs on everything in a large, global organization.
     • Sarbanes-Oxley (SOX)
       • Over Control.
         • Excessive control of employees can lead to demotivation, low morale, lack of trust, and even hostility among workers.
   • Hierarchical Control: Involves monitoring and influencing employee behavior through extensive use of rules, polices, hierarchy of authority, written documentation, reward systems, and other formal mechanisms.
   • Decentralized Control: Based on values and assumptions that are almost opposite to those of hierarchical control.
   • Open-Book Management: Allows employees to see for themselves the financial condition of the company.
     • The goal is to get every employee thinking and acting like a business owner.

2. Feedback: Determine whether performance meets established standards.

   • Steps
     • 1.- Establish Standards of Performance: Standards should be defined clearly and precisely so employees know what they need to do and can determine whether their activities are on target.
     • 2.- Measure Actual Performance: Helps managers stay aware of whether the organization is doing what it should.
     • 3.- Compare Performance to Standards: Performance reports simplify the performance standards for the reporting period alongside the actual performance for the same period and by computing the variance.
     • 4.- Take Corrective Action: Managers determine what changes, if any, are needed.
   • 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. One of the most commonly used methods of managerial control.
     • Created for every division od department within an organization, no matter how small, as long as it performs a distinct project, program, or function.
     • Responsibility Center: Defined as any organizational department or unit under the supervision of a single person who is responsible for its activity.
     • Expense Budget: Includes anticipated and actual expenses for each responsibility center and for the total organization.
     • Revenue Budget: Lists forecasted and actual revenues of the organization.
     • Cash Budget: Estimates receipts and expenditures of money or a daily or weekly basis to ensure that an organization has sufficient cash to meet its obligations.
     • Capital Budget: Lists planned investments in major assets such as buildings, heavy machinery, or complex information technology systems, often involving expenditures over more than a year.
       • Designed to enhance profits.
     • Top-Down Budgeting: Means that the budgeted amounts for the coming year are literally imposed on middle- and lower-level managers.
       • Movement Toward Employee Empowerment.
       • Participation
       • Learning
     • Bottom-Up Budgeting: Process in which lower-level managers anticipate their departments’ resource needs and pass them up to top management for approval.

3. Total Quality Management (TQM): An organization-wide commitment to infusing quality into every activity through continuous improvement.

   • Techniques.
     • Quality Circle: A group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting the quality of their work.
     • Benchmarking: The continuous process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders to identify areas of improvement.
     • Six Sigma: A quality control approach that emphasizes a relentless pursuit of higher quality and lower costs.
     • Cycle Time: Refers to the steps taken to complete a company process.
     • Continuous Improvement (Kaizen): The implementation of a large number of small, incremental improvements in all areas of the organization on an ongoing basis.
   • Trends
     • International Quality Standards
       • ISO 9000 Standards: Represent an international consensus of what constitutes effective quality management as outlined by the International Organization for Standardization.
     • Financial Control Systems
       • Economic Value-Added (EVA): A control system that measures performance in terms of after-tax profits minus the cost of capital invested in tangible assets.
       • Market Value-Added (MVA): A control system that measures the stock market’s estimate of the value of a company’s past and expected capital investment projects.
       • Activity-Based Costing (ABC): A control system that identifies the various activities needed to provide a product and allocates costs accordingly.
       • Corporate Governance: Refers to the system of governing an organization so that the interest of corporate shareholders are protected.

4. Financial Control: Managers need to watch how well the organization is performing financially.

   • Financial Statements: Provide the basic information used for financial position with respect to assets and liabilities at a specific point in time.
     • Assets: Are what the company own.
       • Current Assets: Those that can be converted into cash in a short time period.
       • Fixed Assets: Building and equipment that are long term in nature.
       • Liabilities: Are the firm’s debts.
         • Current Debt: Obligations that will be paid by the company in the near future.
         • Long-Term Debt: Obligation payable over a long period.
       • Owner’s Equity: The difference between assets and liabilities and is the company’s net worth in stock and retained earnings.
   • Income Statement (Profit-and-Loss Statement): Summarizes the firm’s financial performance for a given time interval, usually one year.
     • Bottom Line: Indicates the net income.
   • Financial Analysis: A manager needs to be able to evaluate financial reports that compare the organization’s performance with earlier data or industry norms.
     • Enable the manager to see whether the organization is improving and whether it is competitive with others in the industry.
     • Liquidity Ratio: Indicates an organization’s ability to meet its current debt obligations.
     • Current Ratio: Current assets divided by current liabilities.
     • Activity Ratio: Measures internal performance with respect to key activities defined by management.
     • Inventory Turnover: Tells how many times the inventory is used up to meet the total sales figure.
     • Conversion Ratio: Indicator of a company’s effectiveness in converting inquiries into sales.
     • Profitability Ratio: A financial ratio that describes the firm’s profits in terms of a source of profits.
     • Profit Margin on Sales.
     • Gross Margin.
     • Return on Total Assets (ROA): A valuable yardstick for comparing a company’s ability to generate earnings with other investment opportunities.
     • Leverage Ratio: Refers to funding activities with borrowed money.
     • Debt Ratio.

5. Referencia: Daft, R. (2010). Management. Mason, OH, South-Western Cengage Learining. (novena edición).

6. Código de Honor: Doy mi palabra de que he realizado este trabajo con integridad académica.

7. Ana Lorena Ruiz Zorrilla Sánchez 000594460

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