Managing Quality and Performance in Organizations - CH15

Organizational control

The systematic process of regulating organizational activities to make them consistent with the expectations established in plans, targets, and standards of performance.

Feedback Control Model

A model that includes four steps: establish standards of performance, measure actual performance, compare performance to standards, and take corrective action.

Balanced scorecard

A comprehensive management control system that balances traditional financial measures with operational measures relating to a company's critical success factors.

Hierarchical control

Involves monitoring and influencing employee behavior through extensive use of rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms.

Decentralized control

Relies on cultural values, traditions, shared beliefs, and trust to foster compliance with organizational goals.

Algorithmic control

Use of software algorithms to set targets, measure performance, provide feedback, and decide rewards for employees.

Total Quality Management (TQM)

An organization-wide effort to infuse quality into every activity in a company through continuous improvement.

Quality circle

A group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting the quality of their work.

Benchmarking

The continuous process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders to identify areas for improvement.

Six Sigma

A highly ambitious quality standard that specifies a goal of no more than 3.4 defects per million parts.

DMAIC

A five-step methodology referred to as define, measure, analyze, improve, and control that provides a structured way for organizations to approach and solve problems.

Quality partnering

Quality control personnel work alongside others within a functional area, identifying opportunities for quality improvements throughout the work process.

Kaizen

Implementation of a large number of small, incremental improvements in all areas of the organization on an ongoing basis.

Budgetary control

Process of setting targets and monitoring expenditures.

Responsibility center

Any organizational department or unit under the supervision of a single person who is responsible for its activity.

Expense budget

Outlines the anticipated and actual expenses for a responsibility center.

Revenue budget

Lists forecasted and actual revenues of the organization.

Cash budget

Estimates receipts and expenditures of money on a regular basis to ensure sufficient cash to meet an organization's obligations.

Capital budget

Plan for investments in major assets to be depreciated over several years.

Zero-based budget

Approach to planning that starts at zero and requires a complete justification for every line item in a budget.

Top-down budgeting

Budgeted amounts for the coming year are literally imposed on middle- and lower-level managers.

Bottom-up budgeting

Lower-level managers anticipate their department's budget needs and pass them up to top management for approval.

Balance sheet

Financial statement that shows the firm's financial position with respect to assets and liabilities at a specific point in time.

Income statement

Financial statement that summarizes the firm's financial performance for a given time interval, usually one year.

Liquidity ratio

Indicates an organization's ability to meet its current debt obligations.

Activity ratio

Measures internal performance with respect to key activities defined by management.

Profitability ratios

State profits relative to a source of profits, such as sales or assets.