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CONTROLLING ORGANIZATIONAL PERFORMANCE THROUGH PRODUCTIVITY AND QUALITY

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Principles of Management ­ MGT503
VU
Session 15.45
CONTROLLING ORGANIZATIONAL PERFORMANCE
THROUGH PRODUCTIVITY AND QUALITY
Types of controls
A.
Controls can be classified according to their timing or place in the productive cycle.
1.
Feedforward control focuses on the regulation of inputs to ensure that they meet
the standards necessary for the transformation process.
a.
The emphasis is upon preventing problems.
b.
Other names for feedforward control are "preliminary control," "pre-
control," "preventative control" and "steering control."
2.
Concurrent control involves the regulation of ongoing activities that are part of
the transformation process to ensure that conform to organizational standards.
a.
Checkpoints are in place to determine whether to continue the process,
take corrective action, or stop work altogether.
b.
Other names for concurrent control are "screening" and "yes-no
control."
c.
This type of control is not appropriate for work that requires creativity or
innovation.
3.
Feedback control is regulation exercised after a product or service has been
completed in order to ensure that the final output meets organizational standards
and goals.
a.
Feedback control is used when feedforward and concurrent controls are
not feasible or are too costly.
b.
Feedback control serves a number of functions:
1)
To serve as a final means to check for deviations not detected
earlier
2)
To provide information that will facilitate the planning process
3)
To provide information regarding employee performance
c.
Other names for feedback control are "post action control" or "output
control."
B.
Multiple control systems are systems that use two or more of the feedforward,
concurrent, and feedback control processes and involve several strategic control points.
1.
Multiple control systems develop because of the need to control various aspects of
a productive cycle, including inputs, transformation, and outputs.
2.
Computer software companies provide examples of processes complex enough to
require multiple controls.
C.
The degree to which human discretion is part of a control process determines whether it is
cybernetic or non-cybernetic.
1.
A cybernetic control system is a self-regulated control system that, once it is put
into operation, can automatically monitor the situation and take corrective action
when necessary, e.g., a heating system or some computerized inventory systems.
2.
A non-cybernetic control system is a control system that relies on human
discretion as a basic part of its process.
CONTROLLING FOR ORGANIZATIONAL PERFORMANCE
A.
What Is Organizational Performance?
Performance is the end result of an activity. Managers are concerned with organizational performance--
the accumulated end results of all the organization's work processes and activities.
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Principles of Management ­ MGT503
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Measures of Organizational Performance
Employees need to see the connection between what they do and the outcomes. The most frequently used
organizational performance measures include organizational productivity, organizational effectiveness, and
industry rankings.
1.
Organizational productivity is the overall output of goods or services produced divided by the
inputs needed to generate that output. It's the management's job to increase this ratio.
2.
Organizational effectiveness is a measure of how appropriate organizational goals are and how
well an organization is achieving those goals.
TOOLS FOR MONITORING AND MEASURING ORGANIZATIONAL PERFORMANCE
Managers might use any of the following types of performance control tools: financial controls, information
controls, balanced scorecard approach, or benchmarking best practices approach.
A.
Financial Controls.
1.
Traditional Financial Control Measures.
a.
Financial ratios are calculated by taking numbers from the organization's primary financial
statements--the income statement and the balance sheet. The four key categories of financial ratios
are as follows.
1)
Liquidity ratios measure an organization's ability to meet its current debt obligations.
2)
Leverage ratios examine the organization's use of debt to finance its assets and whether it's able to
meet the interest payments on the debt.
3)
Activity ratios measure how efficiently the firm is using its assets.
4)
Profitability ratios measure how efficiently and effectively the firm is using its assets to generate
profits.
b.
We have also discussed budgets as a planning tool. However, budgets are also control tools. They
provide managers with quantitative standards against which to measure and compare actual
performance and resource consumption.
2.
Other Financial Control Measures. Managers are using measures such as EVA (economic value
added) and MVA (market value added).
a.
Economic value added is a tool for measuring corporate and divisional performance by
calculating after-tax operating profit minus the total annual cost of capital.
b.
Market value added adds a market dimension by measuring the stock market's estimate of the
value of a firm's past and expected capital investment projects.
B.
Information Controls.
Controlling information can be vital to an organization's success. We need to look at the
development and use of management information systems.
1.
A management information system is a system that provides managers with needed and usable
information on a regular basis.
a.
Managers need usable information, not just data
b.
Data are raw, unanalyzed facts. Information is analyzed and processed data.
2.
Information can help managers control the various organizational areas efficiently and effectively.
It plays a vital role in the controlling process.
C.
Balanced Scorecard Approach.
1.
The balanced scorecard is a performance measurement tool that looks at four areas--financial,
customer, internal processes, and people/innovation/growth assets--that contribute to a
company's performance.
2.
The intent of the balanced scorecard is to emphasize that all of these areas are important to an
organization's success.
D.
Benchmarking of Best Practices
1.
Benchmarking is the search for the best practices among competitors or non-competitors that
lead to their superior performance.
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Principles of Management ­ MGT503
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2.
Research shows that best practices frequently already exist within an organization, but usually go
unidentified and unused.
Internal benchmarking best practices program.
Establishing Quality Management Systems
By implementing international quality standards like ISO-9000, European Quality Award, Deming Prize, or
Malcom Balridge Award; an organization can boost its productivity and quality. This will give leverage for a
continuous improvement and consistent quality products for customers and keeping the employees happy
as well. One can also adapt TQM philosophy of Deming, Juran or Crosby or Taguchi to outperform their
competitors in the global market.
THE END
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Table of Contents:
  1. HISTORICAL OVERVIEW OF MANAGEMENT:The Egyptian Pyramid, Great China Wall
  2. MANAGEMENT AND MANAGERS:Why Study Management?
  3. MANAGERIAL ROLES IN ORGANIZATIONS:Informational roles, Decisional roles
  4. MANAGERIAL FUNCTIONS I.E. POLCA:Management Process, Mistakes Managers Make
  5. MANAGERIAL LEVELS AND SKILLS:Middle-level managers, Top managers
  6. MANAGEMENT IDEAS: YESTERDAY AND TODAY, Anthropology, Economics
  7. CLASSICAL VIEW OF MANAGEMENT:Scientific management
  8. ADMINISTRATIVE VIEW OF MANAGEMENT:Division of work, Authority
  9. BEHAVIORAL THEORIES OF MANAGEMENT:The Hawthorne Studies
  10. QUANTITATIVE, CONTEMPORARY AND EMERGING VIEWS OF MANAGEMENT
  11. SYSTEM’S VIEW OF MANAGEMENT AND ORGANIZATION:Managing Systems
  12. ANALYZING ORGANIZATIONAL ENVIRONMENT AND UNDERSTANDING ORGANIZATIONAL CULTURE
  13. 21ST CENTURY MANAGEMENT TRENDS:Organizational social Responsibility
  14. UNDERSTANDING GLOBAL ENVIRONMENT WTO AND SAARC
  15. DECISION MAKING AND DECISION TAKING
  16. RATIONAL DECISION MAKING:Models of Decision Making
  17. NATURE AND TYPES OF MANAGERIAL DECISIONS:Decision-Making Styles
  18. NON RATIONAL DECISION MAKING:Group Decision making
  19. GROUP DECISION MAKING AND CREATIVITY:Delphi Method, Scenario Analysis
  20. PLANNING AND DECISION AIDS-I:Methods of Forecasting, Benchmarking
  21. PLANNING AND DECISION AIDS-II:Budgeting, Scheduling, Project Management
  22. PLANNING: FUNCTIONS & BENEFITS:HOW DO MANAGERS PLAN?
  23. PLANNING PROCESS AND GOAL LEVELS:Types of Plans
  24. MANAGEMENT BY OBJECTIVE (MBO):Developing Plans
  25. STRATEGIC MANAGEMENT -1:THE IMPORTANCE OF STRATEGIC MANAGEMENT
  26. STRATEGIC MANAGEMENT - 2:THE STRATEGIC MANAGEMENT PROCESS
  27. LEVELS OF STRATEGIES, PORTER’S MODEL AND STRATEGY DEVELOPMENT (BCG) AND IMPLEMENTATION
  28. ENTREPRENEURSHIP MANAGEMENT:Why Is Entrepreneurship Important?
  29. ORGANIZING
  30. JOB DESIGN/SPECIALIZATION AND DEPARTMENTALIZATION
  31. SPAN OF COMMAND, CENTRALIZATION VS DE-CENTRALIZATION AND LINE VS STAFF AUTHORITY
  32. ORGANIZATIONAL DESIGN AND ORGANIC VS MECHANISTIC VS VIRTUAL STRUCTURES
  33. LEADING AND LEADERSHIP MOTIVATING SELF AND OTHERS
  34. MASLOW’S NEEDS THEORY AND ITS ANALYSIS
  35. OTHER NEED AND COGNITIVE THEORIES OF MOTIVATION
  36. EXPECTANCY, GOAL SETTING AND RE-ENFORCEMENT THEORIES
  37. MOTIVATING KNOWLEDGE PROFESSIONALS LEADERSHIP TRAIT THEORIES
  38. BEHAVIORAL AND SITUATIONAL MODELS OF LEADERSHIP
  39. STRATEGIC LEADERSHIP MODELS
  40. UNDERSTANDING GROUP DYNAMICS IN ORGANIZATIONS
  41. GROUP CONCEPTS, STAGES OF GROUP DEVELOPMENT AND TEAM EFFECTIVENESS
  42. UNDERSTANDING MANAGERIAL COMMUNICATION
  43. COMMUNICATION NETWORKS AND CHANNELS EFFECT OF ICT ON MANAGERIAL COMMUNICATION
  44. CONTROLLING AS A MANAGEMENT FUNCTION:The control process
  45. CONTROLLING ORGANIZATIONAL PERFORMANCE THROUGH PRODUCTIVITY AND QUALITY