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Slide-1
The Controlling Process
(Understanding the concepts of Organizational Control,
Quality control and Total Quality Management)
Chapter Outline
1. Meaning and steps of control
2. What are the purposes of control?
3. Indentifying and addressing the challenges in the design of
control system.
4. Areas of control: Types of resources those are being
controlled
5. Instruments of control
6. Managing control in organization: Issues in managing
control in organization.
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Slide-1 (Contd.)
The Controlling Process
7. Meaning and aspects of quality and the challenges for
service providers.
8. History, meaning, principles and basic tools of total quality
management (TQM)
9. Edward Deming’s understanding of total quality
management (TQM)
a. Definition and principles of TQM
b. 14 points in transformation of US economy.
Source:
1. Management by Stoner
2. Management by Kreitner
3. Management by Griffin
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Slide-02
Meaning of Control
Management control is the
process of ensuring that actual
activities conform to planned
activities.
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Slide – 3
Basic Steps in Control Process
Compare
Establish Measure performance Evaluate
Standards performance with performance
standards & take action
Correct the deviation Change standards
Maintain the status quo
(When performance is (When standard is too
(When performance
poorer than the
matches with stand) ambitious)
standard)
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Slide-04
Purposes of Control
1. Limit the accumulation of error
2. Minimize costs
3. Cope with organizational
complexities
4. Adapt to environmental changes.
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Slide-05
Challenges in the Design of
Control System
1. Indentifying key performance
areas.
2. Identifying strategic control
points.
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Slide-06
Identifying Key Performance Areas or
Key Result Areas
Production Marketing Personnel Finance and
Management/Human Accounting
Resource
Management
Quantity Sales volume Labor relations Capital
expenditure
Quality Sales expense Labor turnover Inventories
Cost Advertisement Labor absenteeism Flow of capital
expenditure
Individual Job Individual Sales - Liquidity
Performance – person’s
performance
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Slide-07
Identifying Strategic Control Points
The most important and useful way of
selecting strategic control points is to focus on
the most significant element/elements only in
a given operation and not considering every
things/many things. It is pertinent to mention
here that 10% of a manufacturer’s products
may yield 60% revenue of an organization and
2% of an organization’s employees may
account for 80% of its grievances.
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Slide-08
Areas of Control: Types of Resources
Those are Being Controlled
1. Physical resources: Includes inventory management, quality
control (maintaining appropriate levels of output quality) and
equipment control (supplying the necessary facilities and
machinery)
2. Human resources: Includes recruitment, selection and
placement, training and development, performance appraisal,
compensation etc.
3. Informational resources: Includes sales and marketing
forecasting, environmental analysis, public relations,
production scheduling and economic forecasting
4. Financial resources: Includes managing organization’s debt,
so that it does not become excessive, ensuring that the firm
always has enough cash on hand to meet its obligation and
that receivables are collected and bills are paid on a timely
basis
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Slide-09
Instruments of Control
1. Operations control (control of operation process) : Focuses on
the process those are used to transform resources into product or
services
2. Financial control (control of financial resource) : Concerned
with the organization’s financial resources eg working control,
retained earnings, business expenses etc. Further, it includes control
provided by budgets [a plan expressed in numerical terms] and other
financial control tools such as labor budget, production budgets etc.
3. Structural control (control through structure) : Concerned with
how the elements of organization’s structure are serving their
intended purpose. Two major forms of structural control are
bureaucratic [an approach which is characterized by formal and
mechanistic structural arrangements] and clan control [an approach
which is characterized by informal and organic structural
arrangements)
4. Strategic control (control through strategy) : Focuses on how
effectively the organization’s strategies are succeeding in helping the
organization meet its goals. To do this requires, that the organization
integrate its strategy and control systems
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Slide-10
Issues in Managing Control
in Organization
1. Knowing the characteristics of
effective control.
2. Knowing why people resist control.
3. Finding out the ways and means to
overcome the resistance.
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Slide-11
Characteristics of Effective Control
1. Integration with planning.
2. Flexibility.
3. Accuracy.
4. Timeliness.
5. Objectivity.
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Slide-12
Why People Resist Control
1. Overcontrol.
2. Inappropriate focus.
3. Reward for inefficiency.
4. Too much accountability.
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Slide-13
Finding out the Ways and Means to
Overcome Resistance to Control
1. Create effective control system.
2. Encourage employee participation.
3. Develop verification procedures.
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Slide-14
Meaning of Quality
Quality may be absolute (degree of excellence) or
relative (the standard of something a measured
against other things of similar kind). Quality is
used mostly in relative sense ie. measured against
other things.
1. “Quality is conformance to requirements”
Philip Crosby
2. “Quality is the totality of features and
characteristics of a product or service that bear on
its ability to satisfy stated or implied needs”
American Society for Quality Control.
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Slide-15
Aspects of Quality
Quality affects both producers and
customer (users). Thus quality has two
aspects;
a. Quality as perceived by producers
( product quality).
b. Quality as perceived by customers
(service quality).
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Slide-16
Quality as Perceived by Producers (Product Quality)
1. Product attribute based quality – Soft tissue, rough sand paper, sweet
Conway, flawless glass signify product based quality in very different
ways.
2. User – based quality – Quality of a product is determined by its ability
to meet the users expectations. Does it get the job done? Is it reliable?
3. Manufacturing – based quality – How well does the product conform
to its design specifications or blue print?
4. Value based quality – Value is simply giving customers what they want
at a price they consider fair. When you hear some one say “I got a lot for
my money,” the speaker is describing value based quality.
5. Transcendent quality – Inherent value or innate excellence is apparent
to the individuals. Observing people’s reactions to pieces of art in a
museum, is a good way to appreciate the subjectiveness of this type of
quality. Beauty, as they say is in the eye of the beholder.
* Kreitner Page 575 – 576
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Slide-17
Quality as – Perceived the Customers
(Service quality)
Quality of service is the perception of
customer about it. There are however 5
dimensions of quality service viz
reliability, assurance, tangibility,
empathy and responsiveness (RATER).
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Slide-18
Unique Challenges for Service Providers
1. Customers participate directly in the
process.
2. Services are consumed immediately and
cannot be stored.
3. Services are generally provided where
and when the customers desires.
4. Service tends to be labor – intensive.
5. Service are intangible.
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Slide-19
Meaning of Total Quality Management
Total quality management (TQM) is defined as, “creating and
organizational culture committed to the continuous improvement of
skills, team work process, product and service quality, and customer
satisfaction”
Marshall Sashkin and Kenneth, J. Kiser
The most pervasive approach to managing quality has been called total
quality management (TQM). TQM describes a strategic commitment
by top management to change its whole approach to business to make
quality a guiding factor in everything it does.
Ricky. W. Griffin
Total quality management (TQM) describes a management approach
to long term success through customer satisfaction. In a TQM effort all
members of an organization participate in improving process,
products, service and the culture.
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Slide-20
Principles of Total Quality Management
1. Strategic commitment – The starting point for TQM is a strategic
commitment by top management. Without a commitment from top
management, quality improvement will prove to be just a slogan or gimmick
with little or no real change.
2. Continuous improvement - Continuous improvement means improving
the overall system by constantly improving the little details. There are four
general avenues for continuous improvement
(a) Improved and more consistent product and service quality (b) Faster
cycle times [cycles ranging from product development to order
processing to pay roll processing] (c) Greater flexibility (faster response to
changing customer demands and new technology) (d) Lower costs and less
waste.
3. Customer focused – Satisfying the customers needs by anticipating,
listening and responding.
4. Total employee involvement – TQM is employee driven. In other words it
empowers employees at all levels in order to tap their full creativity,
motivation and commitment.
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Slide-21
Basic Tools of TQM Process Improvement
1. Flow – Chart – Is a graphic display of a sequence of activities and dicisions.
2. Cause – and – effect analysis – A cause and effect diagram (fishbone
diagram). For example, did the computer crash because of an
operator error or equipment failure or a power surge or a software
problem?
3. Pareto analysis – A bar chart indicating which problem needs the
most attention.
4. Control chart – A visual aid showing acceptable and unacceptable
variations from the norms for repetitive operations.
5. Histogram – A bar chart indicating deviations from a standard bell
shaped curve.
6. Scatter diagram – A diagram that plots relationship between two
variables.
7. Run chart – A run chart also called a time series or trend chart which
tracks a variable over time.
Source: Robert Kreitner (Page: 583-585)
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Slide-22
Edward Deming’s Understanding of Total
Quality Management (TQM)
W. Edward Deming considered total
quality management (TQM) as the
application of a kind of management in
organization which is more responsive,
more democratic and less wasteful than
conventional total quality management.
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Slide-23
Principles of Deming’s Management
1. Quality improvement drives the
entire economy.
2. Customer always comes first.
3. Don’t blame the person, fix the
system.
4. PDCA Cycle: Plan → Do → Check →
Act → Repeat.
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Slide-24
Deming’s 14 Points to Transform US Industry
from Backward Stage (As Deming Thought)
1. Constant purpose/continuous effort.
2. New philosophy. wiser use of existing resources
without additional resources.
3. Give up the idea of checking quality by inspection.
4. Avoid the constant search for lowest – cost
suppliers.
5. Seek continuous improvement of production
process.
6. Train everyone.
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Slide-24 (Contd.)
Deming’s 14 Points to Transform US Industry
from Backward Stage (As Deming Thought)
7. Provide real leadership .
8. Drive fear out of the workplace.
9. Promote teamwork.
10. Avoid slogans and targets.
11. Get rid of numerical quotas.
12. Remove barriers that kill pride in workmanship.
13. Education and self improvement are keys to
development.
14. The transformation is everybody’s job.
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