Chapter 8 – Maintaining Control and Improving Quality

Kreitner/Eliason Foundations of Management

I. Fundamentals of Organizational Control

A. Control: taking preventive or corrective actions to keep
things on track
1. The word suggests the operations of checking, testing,
regulating, verifying, or adjusting.
2. Managers use control to detect deviations ranging from
desirable standards and make appropriate adjustments.
3. The purpose of the control function is always the same: get
the job done despite environmental, organizational, and
behavioral obstacles and uncertainties.
II. Types of Control
A. Feedforward Control: The active participation of problems
and their timely prevention, rather than after the fact
reaction.
1. Feedforward control addresses the issue, “What can we do
ahead of time to help our plan succeed?”
2. It states, “The only way managers can exercise control
effectively is to see the problems coming in time to do
something about them.”
3. Examples: preventive maintenance on machinery and
equipment, and due diligence
B. Concurrent Control: The process of monitoring and
adjusting ongoing activities and processes.
1. Known as real-time control because it deals with the
present
2. Example: Adjusting the water temperature of the water
while taking a shower
C. Feedback Control: The gathering of information about a
completed activity,
evaluating that information, and taking steps to
improve the similar activities
in the future.
1. Permits managers to use information on past
performance to bring future
performance in line with planned objectives.
k)

2. C
l) orrection action takes place after the fact = increased cost
3.
2. Tests the quality and validity of objectives

4. By Monitoring complaints from discharged patients about

billing errors, a hospital
comptroller learns about problems in the billing process.
m)
III. Components of Organizational Control Systems
A. Seven distinct control subsystems
1. Strategic plans
2. Long-range plans
3. Annual operating budgets
4. Statistical reports
5. Performance appraisals
6. Policies and procedures
7. Cultural control
B. Objectives
1. An objective is a target signifying what should be
accomplished and when.
C. Standards
1. Serve as guideposts on the way to teaching objective
targets
2. Provide feed forward control by warning people when they
are off track
3. A proven technique for establishing challenging standards
is benchmarking.

4. Benchmarking- Identifying, studying, and building upon the

best practices
of organizational role models.
D. An evaluation-reward system
1. Provides a performance review
2. Extrinsic rewards need to be tied equitably to documented
results and improvement.
IV. Identifying Control Problems
A. Executive reality check
1. Occurs when top-level managers periodically work in the
trenches to
increase their awareness of operations.
B. Audits
1. Two types of auditing: External- the verification of an
organization’s
financial records and reports. Internal- the independent
appraisal of
organizational operations and systems to assess
effectiveness and efficiency.
 C. Symptoms of Inadequate Control
1. An unexplained decline in revenues or products
2. A degradation of service
3. Employee dissatisfaction
4. Cash shortages caused by bloated inventories or
delinquent accounts
receivable.
5. Idle facilities
6. Disorganized operations
7. Excessive costs
8. Evidence of waste and inefficiency
V. The Quality Challenge: Quality is conformance to requirements
A. Five Types of Product Quality
1. Transcendent quality- inherent value or innate excellence
is apparent
2. Product-based quality- the presence or absence of a
given product attribute
3. User-based quality- determined by the product’s ability to
meet user’s
expectations
4. Manufacturing-based quality- how well the product
conforms to design
specifications or blueprints
5. Value-based quality- giving customers what they want at a
price they
think is fair
B. Unique Challenges for Service Providers
1. Customers participate directly in the production process
2. Services are consumed immediately and cannot be stored
3. Services are provided where and when the customer
desires
4. Services tend to be labor intensive
5. Services are intangible
C. Defining Service Quality
1. There are five service quality dimensions
 Reliability
 Assurance
 Tangibles
 Empathy
 Responsiveness
VI. An Introduction to Total Quality Management (TQM)
A. Definition
1. Total Quality Management is creating an organizational
culture committed to continuous improvement in every regard
 2. TQM is anchored in organizational culture because
successful TQM is deeply embedded in virtually every aspect of
organizational life
B. Four Principles of TQM
1. Do it right the first time- build and design quality into
products
2. Be customer-centered
 Anticipate the customer’s needs
 Listen to the customer
 Learn how to satisfy the customer
 Respond appropriately to the customer
 Customers can be internal or external customers, internal
customers depend on your work to get their job done
C. Make continuous improvement a way of life.
1. Kaizen- a Japanese word meaning “continuous
improvement.”
2. Four general avenues for continuous improvement:
 Improved and more consistent product and service quality.
 Faster cycle times (in cycles ranging from product
development to order processing to payroll processing).
 Greater flexibility (for example, faster response to
changing customer demands and new technology).
 Lower costs and less waste (for example, eliminating
needless steps, scraps, rework, and non-value-adding
activities).
D. Build Teamwork and Empowerment
1. Empowerment occurs when employees are adequately
trained, provide with
all relevant information and the best possible tools, fully
involved in key
decisions and fairly rewarded for results.
E. The seven basic TQM process improvement tools
1. Flow chart-a graphic display of a sequence of activities and
decisions
2. Cause-and-effect Analysis-also called a fishbone diagram, it
shows cause-and-effect relationships.
3. Pareto Analysis- bar chart indicating which problem needs
the most attention.
4. Control Chart-visual aid showing acceptable and
unacceptable variations from the norm for repetitive
operations.
5. Histogram- bar chart indicating deviations from a standard
bell-shaped curve.
6. Scatter Diagram- diagram that plots relationships between
two variables.
 7. Run Chart- a trend chart for tracking a variable over time.
VII. Deming Management
1. The application of W. Edwards Deming’s ideas for more
responsive, more
democratic, and less wasteful organizations.
2. The approach qualifies as a revolution because when it
was first proposed by
Deming it directly challenged Frederick Taylor’s Scientific
Management.

VIII. Principles of Deming Management

A. Quality Improvement Drives the Entire Economy
1. Higher quality eventually means more jobs
B. The Customer Always Comes First
C. Don’t Blame the Person, Fix the System
1. Deming accused U.S. managers of finding someone to
blame rather than fixing the problems with the current
system.
2. People can and will turn out better quality work if the
system allows them to.
D. Plan-Do-Check-Act
1. The PDCA cycle is Deming’s plan-do-check-act cycle,
which relies on observed data to continuously improve
operations.
IX. Deming’s 14 Points
A. Constant Purpose
1. Strive for improvement in order to remain competitive.
B. New Philosophy
1. Consider new realities to be more cautious with
resources
C. Give up on quality by inspection
1. Quality should be built from the beginning
D. Avoid the constant search for lowest-cost suppliers.
E. Seek continuous improvement
1. Improving to get greater productivity and lower costs.
F. Train everyone
1. Everyone should have a clear idea of how their job is
done.
G. Provide real leadership
H. Drive fear out of the workplace
1. Employees should be comfortable asking questions
I. Promote teamwork
J. Avoid slogans and targets
1. Posters and slogans which put carry pride put
pressure on
 employees.
2. Control charts and other tools can work in contrast
and provide
encouragement for workers.
K. Get rid of numerical quotas
L. Remove barriers that stifle pride in workmanship
M. Education and self-improvement is key.
1. Greater knowledge = greater opportunity
N. The transformation is EVERYONE’s job

Reference:
Kreitner, Robert (2005) Foundations of Management: basics and best
practices,
Houghton Mifflin Company, New York.