Kinicki_2024Release_PPT_Ch16_ACCESS.pptx11

Management principles

1. CHAPTER 16 CONTROL SYSTEMS AND QUALITY MANAGEMENT Techniques for Enhancing Organizational Effectiveness Kapook2981/iStock/Getty Images Access the text alternative for slide images. © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

2. LEARNING OBJECTIVES 16-1 Describe control as a managerial function. 16-2 Describe the steps in the control process and types of control. 16-3 Discuss ways that managers can control an organization. 16-4 Explain the total quality management process. 16-5 Discuss contemporary control issues. 16-6 Discuss how to apply the control process to the career readiness competency of career management and to the process of continuous self-improvement. 2

3. Managing Your Personal and Professional Satisfaction Set Goals: “Begin with the End in Mind.” Prepare: “Put First Things First.” Execute: “Think Win/Win.” Assess and Revise: “Sharpen the Saw.” 3

4. Control: When Managers Monitor Performance 1 L͏O 16-1 Below shows what you as a manager do to get things done. Controlling is shown in relation to the three other management functions. (These are not lockstep; all four functions happen concurrently.) Access the text alternative for slide images. 4

5. CONTROL: WHEN MANAGERS MONITOR PERFORMANCE 2 Six reasons control is needed: To adapt to change and uncertainty. To discover irregularities and errors. To reduce costs, increase productivity, or add value. To detect opportunities and increase innovation. To provide performance feedback. To decentralize decision making and facilitate teamwork. spatuletail /Shutterstock 5

6. The Control Process and Types of Control L͏O 16-2 Steps in the Control Process Types of Controls 6

7. STEPS IN THE CONTROL PROCESS Paying attention to the feedback is particularly important because of its dynamic nature. Access the text alternative for slide images. 7

8. STEP 1 ESTABLISH STANDARDS: “WHAT IS THE OUTCOME WE WANT?” STEP 2 MEASURE PERFORMANCE: “WHAT IS THE ACTUAL OUTCOME WE GOT?” Sample of Performance Standards for Nonprofit, For-Profit, and Service Organizations A table summarizes the 5 performance standards for nonprofit institutions, 5 for profit organizations, and 3 for service organizations. The last row reads, employee engagement (directly via surveys or indirectly via reduced absenteeism). NONPROFIT INSTITUTIONS FOR-PROFIT ORGANIZATIONS SERVICE ORGANIZATIONS Number of financial donors Financial performance Number of customers served Level of charitable contributions Employee hiring and retention Time spent with customers Number of volunteers retained Manufacturing defects Customer satisfaction Number of services provided % reduction in costs Overhead costs Number of customer complaints Employee Engagement (directly via surveys or indirectly via reduced absenteeism) 8

9. STEP 3 COMPARE PERFORMANCE TO STANDARDS: “HOW DO THE DESIRED AND ACTUAL OUTCOMES DIFFER?” Sample control chart for completing assigned readings: Management by exception is a control principle that states that managers should be informed of a situation only if data show a significant deviation from standards. Access the text alternative for slide images. 9

10. STEP 4 TAKE CORRECTIVE ACTION, IF NECESSARY: “WHAT CHANGES SHOULD WE MAKE TO OBTAIN DESIRABLE OUTCOMES?” There are three possibilities: Meet performance expectations: Make no changes. Exceed performance expectations: Reward positive performance. Fall short of performance expectations: Take action to correct negative performance. ARTYuSTUDIO /Shutterstock 10

11. TYPES OF CONTROLS Future-Focused: Feedforward Control. Present-Focused: Concurrent Control. Past-Focused: Feedback Control. Alexander Kirch /Shutterstock 11

12. What Should Managers Control? 1 L͏O 16-3 The Balanced Scorecard: A Comprehensive Approach to Managerial Control Financial Perspective: “What Does Success Look Like to Our Shareholders?” Customer Perspective: “How Do We Appear to Our Customers?” 12

13. What Should Managers Control? 2 L͏O 16-3 CONTINUED Internal Business Perspective: “What Must We Do Extremely Well?” Innovation and Learning Perspective: “Are We Equipped for Continued Value and Improvement?” Strategy Mapping: Visual Representation of the Path to Organizational Effectiveness 13

14. THE BALANCED SCORECARD: A COMPREHENSIVE APPROACH TO MANAGERIAL CONTROL A balanced scorecard provides top managers a fast but comprehensive view of the organization via four indicators . Access the text alternative for slide images. Sources: Adapted from Kaplan, R.S. “Conceptual Foundations of the Balanced Scorecard.” Working Paper. 2010. https://www.hbs.edu/ris/Publication%20 Files/10-074_0bf3c151-f82b-4592-b885-cdde7f5d97a6.pdf ; Kaplan, R.S. and D.P. Norton. “The Balanced Scorecard: Measures That Drive Performance.” Harvard Business Review . July–August 2005. https://hbr.org/2005/07/the-balanced-scorecard-measures-that-drive-performance . 14

15. FINANCIAL PERSPECTIVE: “WHAT DOES SUCCESS LOOK LIKE TO OUR SHAREHOLDERS? Budgets: Fixed budgets. Variable budgets. Financial Statements: Balance sheet. Income statement (P&L). Statement of cash flows. Financial Ratios. Hail to the spreadsheet. Professionals often use software, such as Microsoft Excel, to perform budgeting activities. Kaspars Grinvalds /Shutterstock 15

16. FINANCIAL STATEMENTS 1 CLARK, THE COMPUTER DOCTOR PROFIT & LOSS JANUARY 1 THROUGH DECEMBER 31, 2024 A summary table of Clark, the Computer Doctor's profit and loss statement for January 1 to December 31, 2024. The first column shows the statements, the second shows the expenses and the third shows the profits. Income: Jan 1–Dec 31, 2024 Sales 520,615.00 Services Income 32,320.00 Total Income: 552,935.00 Parts and Materials 54,218.00 Gross Profit 498,717.00 Expenses: Bank Service Charges 180.00 Charitable Donations 2,300.00 Dues and Subscriptions 1,750.35 Insurance: General Liability Insurance 2,035.00 Workman's Compensation Insurance 1,018.00 Total Insurance Expense 3,053.00 Payroll Taxes: Payroll 941 14,826.22 Federal Unemployment Tax 215.00 State Unemployment Tax 312.00 Total Payroll Taxes 15,353.22 Payroll: Officer Wages 190,000.00 Salary and Wages 52,329.21 Total Payroll: 242,329.21 Accounting and Legal 1,803.50 Automobile Expenses: Maintenance 323.00 Gas 1,318.49 License 782.20 Total Automobile Expenses: 2,423.69 Office Rent 24,000.00 Office supplies 2,016.48 Repairs and Maintenance 218.60 Telephone and Internet 2,472.18 Utilities 3,040.56 TOTAL EXPENSE 300,940.79 NET INCOME 197,776.21 Income statement: Summarizes an organization’s financial results—revenues and expenses—over a specified period of time, such as a quarter or a year. 16

17. FINANCIAL STATEMENTS 2 The following content is arranged like a table. Table divided into 4 columns. The column headers are marked as: RATIO, CATEGORY, WHAT IS MEASURED and FORMULA. RATIO CATEGORY WHAT IS MEASURED FORMULA Current Ratio Liquidity A company's ability to pay short-term obligations due within a year. Current Assets over Current Liabilities Asset Turnover Ratio Efficiency The efficiency in which a company uses assets to generate revenue. Net Sales over Average Total Assets Return on Investment Ratio Profitability The amount of return on a particular investment relative to its cost. Net Investment Income over Cost of Investment Sources: “Financial Ratios.” Corporate Finance Institute. March 13, 2023. https://corporatefinanceinstitute.com/resources/accounting/financial-ratios ; Birken, E.G. “Understanding Return on Investment (ROI).” Forbes Advisor. September 28, 2022. https://www.forbes.com/advisor/investing/roi-return-on-investment/#:~:text=Return%20on%20investment%20is%20a . Financial ratios , are indicators determined from a company’s financial information and used for comparison purposes. Some of the most common ratios measure a company’s liquidity, turnover, and profitability. 17

18. CUSTOMER PERSPECTIVE: “HOW DO WE APPEAR TO OUR CUSTOMERS?” Customer Satisfaction: The measure of how products or services provided by a firm meet customer expectations. Customer Retention: Effective customer retention (loyalty) programs focus on three techniques. Set customer expectation. Go the extra mile. Make it personal. Impeccable service. Door attendants at the Ritz-Carlton Hotel in New York open doors for a guest. Keith Bedford/Redux Pictures 18

19. INTERNAL BUSINESS PERSPECTIVE: “WHAT MUST WE DO EXTREMELY WELL?” 1 Productivity Defined by the formula of outputs divided by inputs for a specified period of time. or Efficiency To use resources—people, money, raw materials, and the like—wisely and cost effectively. MikeDotta/Shutterstock 19

20. INTERNAL BUSINESS PERSPECTIVE: “WHAT MUST WE DO EXTREMELY WELL?” 2 Quality Quality contributes to increasing customer loyalty, building a strong reputation, and managing costs. Safety Organizations have a responsibility for the safety of the communities in which they serve, and the people work for them. (Left) icon Stocker/Shutterstock; (Right) Isadora Getty Buyou /Image Source 20

21. SELF-ASSESSMENT 16.1 Assessing the Innovation and Learning Perspective of the Balanced Scorecard This survey is designed to assess the innovation and learning perspective of the balanced scorecard. Please complete Self-Assessment 16. If your instructor has assigned it in Connect. Insert class results here. 21

22. INNOVATION AND LEARNING PERSPECTIVE: “ARE WE EQUIPPED FOR CONTINUED VALUE AND IMPROVEMENT?” Employee Attitudes. Employee Turnover: Functional turnover. Dysfunctional turnover. Resource Capabilities. Organizational Culture. LM Otero/AP Images 22

23. STRATEGY MAPPING: VISUAL REPRESENTATION OF THE PATH TO ORGANIZATIONAL EFFECTIVENESS Sample strategy map for Keurig Dr Pepper Access the text alternative for slide images. Sources: This map was based on information in “Corporate Social Responsibility.” Keurig Dr Pepper, https://www.keurigdrpepper.com/en/our-company/corporate-responsibility (accessed May 17, 2023); “Corporate Responsibility Report 2021.” Keurig Dr Pepper, 20. 23

24. Total Quality Management 1 L͏O 16-4 Quality Control and Quality Assurance Deming Management: The Contributions of W. Edwards Deming to Improved Quality Core TQM Principles: Deliver Customer Value and Strive for Continuous Improvement 24

25. Application-Based Activity Delivering Managerial Control kritchanut /123RF 25

26. Total Quality Management 2 L͏O 16-4 Continued Applying TQM to Services Some TQM Tools, Techniques, and Standards Takeaways from TQM Research 26

27. QUALITY CONTROL AND QUALITY ASSURANCE Quality Control Quality Assurance Funtap /Shutterstock 27

28. DEMING MANAGEMENT: THE CONTRIBUTIONS OF W. EDWARDS DEMING TO IMPROVED QUALITY W. Edwards Deming proposed ideas for making organizations more responsive, more democratic, and less wasteful. Quality should be aimed at the needs of the consumer. Companies should aim at improving the system, not blaming workers. Improved quality leads to increased market share, increased company prospects, and increased employment. Quality can be improved on the basis of hard data, using the PDCA cycle. 28

29. THE PDCA CYCLE: PLAN-DO-CHECK-ACT The PDCA cycle: Plan-Do-Check-Act  The four steps continuously follow each other, resulting in continuous improvement. Access the text alternative for slide images. Source: From Deming, W. Edwards. Out of the Crisis. Plan Do Study Act Cycle. Massachusetts Institute of Technology, 2000, p. 88. 29

30. CORE TQM PRINCIPLES: DELIVER CUSTOMER VALUE AND STRIVE FOR CONTINUOUS IMPROVEMENT 1 Total quality management (TQM) is a comprehensive approach—led by top management and supported throughout the organization—dedicated to continuous quality improvement, training, and customer satisfaction. TQM has four components: Prioritize continuous improvement. Involve every employee. Listen to and learn from customers and employees. Use accurate standards to identify and eliminate problems. dizain/Shutterstock 30

31. CORE TQM PRINCIPLES: DELIVER CUSTOMER VALUE AND STRIVE FOR CONTINUOUS IMPROVEMENT 2 Two core principles of TQM: People orientation: Everyone involved with the organization should focus on delivering value to customers. Improvement orientation: Everyone should work on continuously improving the work processes. Kaizen is a Japanese philosophy of small continuous improvement . Shutterstock 31

32. APPLYING TQM TO SERVICES Service industries provide intangible products. One clear prerequisite for providing excellent service is effective training. Judging the quality of services is different from judging the quality of manufactured goods. It comes down to meeting the customer’s satisfaction which is perception. Dorothy Alexander/ Alamy Stock Photo 32

33. SELF-ASSESSMENT 16.2 Assessing Your Satisfaction with Your College or University Experience This survey is designed to assess the extent to which you are satisfied with your college experience. Please complete Self-Assessment 16.2 if your instructor has assigned it in Connect. Insert class results here. 33

34. 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. Lean Six Sigma 4.0: Using technology to drive real-time quality and agility. ISO 9000 and ISO 14000: Meeting standards of independent auditors. Suwin /Shutterstock 34

35. TAKEAWAYS FROM TQM RESEARCH TQM principles have been used by thousands of organizations through the years. A team of researchers concluded that the vast majority of TQM adopters follow its general principles, which in turn fosters improved operational performance. 35

36. Contemporary Control Issues L͏O 16-5 Using Artificial Intelligence to Control Employee Tracking and Monitoring 36

37. USING ARTIFICIAL INTELLIGENCE TO CONTROL Increasing productivity by: Predictive maintenance. Operational safety. Capacity utilization. Enhancing supply chain management: Supply chains are a major cost center. Companies are therefore paying closer attention to the sourcing, shipping, and warehousing of their products and the ingredients and component parts they require. . Molly Darlington/Newscom 37

38. EMPLOYEE TRACKING AND MONITORING 1 TABLE 16.6 Advantages and Disadvantages of Employee Tracking and Monitoring Table divided into 2 columns summarizes Advantages and Disadvantages of Employee Tracking and Monitoring. The column headers are marked as: ADVANTAGES and DISADVANTAGES. ADVANTAGES DISADVANTAGES Managers claimed employee tracking and monitoring . . . Employees claimed employee tracking and monitoring . . . Reduced their uncertainty about employees' engagement. Increased their stress, anxiety, and burnout. A survey indicated 59% of employees reported feeling stressed or anxious about their employer's surveillance. Superscript a Reduced employees' distraction associated with social media and video streaming services. Introduced distractions because they felt micromanaged and worried about the monitoring system generating a productivity score that would negatively impact their performance review. Improved employees' outcomes (e.g., safety and productivity). Measured the wrong things. Software tracked busyness, or "vanity metrics" (keystrokes, time logged in, mouse movement, time away from desk), more than the substantive parts of business (reading, collaborating, critical thinking, and problem solving). Increased employees' accountability. Decreased the degree to which they took responsibility for their work because they felt the system was unfair and took away their autonomy. Superscript a “ ExpressVPN Survey Shows Widespread Surveillance on Remote Workers,” ExpressVPN , May 20, 2021, https://www.expressvpn.com/blog/expressvpnsurvey-surveillance-on-the-remote-workforce/. Sources: Ravid , D.M., J.C. White, D.L. Tomczak, A.F. Miles, and T.S. Behrend. “A Meta-Analysis of the Effects of Electronic Performance Monitoring on Work Outcomes.” Personnel Psychology 76 (2023): 5–40; Eyal , N. “Managers, Stop Distracting Your Employees.” Harvard Business Review . January 12, 2023. https://hbr.org/2023/01/managers-stop-distracting-your-employees ; Thiel, C.E., J. Bonner, J.T. Bush, D.T. Welsh, and N. Garud . “Stripped of Agency: The Paradoxical Effect of employee monitoring on deviance.” Journal of Management 49 (2023): 709–740; Kantor, J., A. Sundaram, A. Aufrichtig , and R. Taylor. “The Rise of the Worker Productivity Score.” The New York Times . August 15, 2022. https://www.nytimes.com/interactive/2022/08/14/business/worker-productivity-tracking.html?te=1&nl=the-morning&emc=edit_nn_20220815 ; Murty, R.N. and S. Karanth , “Monitoring Individual Employees Isn’t the Way to Boost Productivity.” Harvard Business Review . October 27, 2022. https://hbr.org/2022/10/monitoring-individual-employees-isnt-the-way-to-boost-productivity ; Thiel, C., J.M. Bonner, J. Bush, D. Welsh, and N. Garud . “Monitoring Employees Makes Them More Likely to Break Rules.” Harvard Business Review . June 27, 2022. https://hbr.org/2022/06/monitoring-employees-makes-them-more-likely-to-break-rules ; Kalischko , T. and R. Riedl . “Electronic Performance Monitoring in the Digital Workplace: conceptualization, Review of Effects and Moderators, and Future Research Opportunities.” Frontiers in Psychology 12 (2021): 633031; Trivedi, S. and N. Patel. “Virtual Employee Monitoring: A Review on Tools, Opportunities, Challenges, and Decision Factors.” Empirical Quests for Management Essences 1 (2021): 86–99; Ravid , D.M., D.L. Tomczak, J.C. White, and T.S. Behrend. “EPM 20/20: A Review, Framework, and Research Agenda for Electronic Performance Monitoring.” Journal of Management 46 (2020): 100–126. 38

39. EMPLOYEE TRACKING AND MONITORING 2 Advantages and Disadvantages of Employee Tracking and Monitoring: Employees’ attitudes and behaviors reveal the following conclusions: Performance monitoring does not improve employee performance. Monitoring increases employee stress. Employees have more positive attitudes toward employee tracking and monitoring when organizations are more transparent and when they use less invasive monitoring methods. (Result of meta-analysis of 94 studies.) Chesky/Shutterstock 39

40. SELF-ASSESSMENT 16.3 To What Extent Is Your Organization Committed to Total Quality Management? This self-assessment is designed to gauge the extent to which organizations students have in mind are committed to total quality management (TQM). Insert class results here. 40

41. Losing Control with Automation Manager’s Hot Seat 41

42. Career Corner: Process for Managing Career Readiness L͏O 16-6 FIGURE 16.7 Model of career readiness Access the text alternative for slide images. 42

43. CAREER CORNER: MANAGING YOUR CAREER READINESS The Control Process and Career Management A model of continuous self-improvement Access the text alternative for slide images. 43

44. CONTINUOUS SELF-IMPROVEMENT ͏ Willingness: The keystone competency. ͏ The PDCA cycle: The engine behind continuous self-improvement. ͏ The self-management cycle: The tactics behind continuous self-improvement. ͏ Career readiness competencies: The defining career readiness competencies needed to execute continuous self-improvement. Gustavo Frazao /Shutterstock 44

45. LIFE LESSONS FOR YOUR CAREER MANAGEMENT Plan ​: Find your passion and follow it.  Develop self-awareness.​ Ask others for feedback.​ Learn how to develop leadership skills.​ Do ​: Adopt a proactive approach to life-long learning.​ Every situation is different, so be flexible. ​ Check ​: Keep your cool and take yourself lightly.​ Act ​: Go with the flow and stay positive.​ 45

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