Chapter 19

Managing Quality and Performance

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 Controlling
Managers use a variety of measures to monitor
performance:
Controlling work processes
Regulating employee behavior
Systems for financial resources
Developing human resources
Evaluating profitability

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 The Meaning of Control

Organizational control is the systematic process

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 Feedback Control Model

 Establish Standards of Performance

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 19.1 Feedback Control Model

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 The Balanced Scorecard
 Balanced perspective of company performance
 Integrates various areas of the organization
 Managers record, analyze, and discuss the metrics
 Serves as core management-control system

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 19.2 The Balanced Scorecard

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 Hierarchical versus
Decentralized approaches
 Hierarchical controls include the monitoring of
behavior through rules, policies, reward systems, and
written documentation
 Decentralized controls based on values and
assumptions; rules are only used when necessary
Culture is adaptive, uniting individuals and teams

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 19.3 Hierarchical and
Decentralized Methods of Control

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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Open-Book Management
 Decentralized philosophy
 Gets every employee thinking like an owner
 Information sharing and teamwork
 Allows employees to see the financial condition of
company
 Sees how his/her job fits into organizational
success

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 19.4 Which Countries Have the Most
Secretive Economies?

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 Total Quality Management
 Infuse quality into every aspect of the business, all
day-to-day activities
 Became popular in the U.S. in the 1980s
 Focuses on:
Teamwork
Collaboration
Identifying improvements
 The goal of TQM is zero defects

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 TQM Techniques

 Quality Circles
 Benchmarking
 Six Sigma
 Quality Partnering
 Continuous Improvement

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 19.5 A Five-Step Benchmarking
Process

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 19.6 The Importance of Quality
Improvement Programs

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 19.7 Quality Program Success Factors

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 Budgetary Control
 Setting targets and monitoring expenditures
 Budgets list planned and actual expenditures
 Budgets are associated with a division or department
The unit of analysis for budgeting is the responsibility
center

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 Budgets Managers Use
 Expense Budget
 Revenue Budget
 Cash Budget
 Capital Budget
Top-down Budgeting
Bottom-up Budgeting
 Zero-Based Budget

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 Financial Control
Financial Statements provide basic information for
financial control

Income Statement
profit-and-loss
Balance Sheet
(P&L) statement
shows firm’s
highlights firm’s
financial position
financial
performance

19in part.
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 19.8 Balance Sheet

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 19.9 Income Statement

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 Interpreting the Numbers
 Managers need to evaluate financial reports
 Comparing performance with other data and
industry standards
 Financial Analysis:
Ratios
Statistics
 Review:
Profits, assets, sales, and inventory

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 19.10 Common Financial Ratios

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 International Quality Standards

 ISO 9000 standards – International Organization for

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 Corporate Governance
 Goes beyond systems and rules from the top to
safeguard shareholders
 Ensures accountability, fairness, and transparency in
all its dealings
 U.S. Legal Requirements:
 Auditing reforms – internal and external
 Certification of financial reports by top leaders
 Enhanced public financial disclosure
 Justification of Board structure

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