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Describe tools used to measure organizational performance.
Managers can implement controls before an activity begins (feedforward control); during the time the activity is going on (concurrent control); and after the activity has been completed (feedback control)
Describe 3 methods of control.
Market, bureaucratic and clan control
What is market control (method of control)?
market control emphasizes the use of external market mechanisms, such as price competition and relative market share, to establish the standards used in the control system.
What is the bureaucratic method of control?
Bureaucratic control emphasizes organizational authority and relies on admin rules, regs, procedures, and policies
What is the clan control method of control?
Under clan control, employee behaviours are regulated by the shared values, norms, tradition, rituals, beliefs, and other aspects of the org's culture.
What is the service profit chain?
It is the sequence from employes to customers to profit.
Explain in more detail what service profit chain is.
- It is the service sequence from employee to customers to profit.
- The company's strategy and service delivery system influences how employees serve customers - their attitudes, behaviours, and service capability.
- The level of employee service productivity and service quality influences customer perceptions of service value. When service level is high, it has a positive impact on customer satisfaction, which leads to customer loyalty. And customer loyalty improve org revenue growth and profitability.
What does the concept of service profit chain mean for managers?
Managers who want to control customer interactions should work to create long-term and mutually beneficial relationships among the company, employees, and customers. How - by creating a work environment that not only enables employees to deliver high levels of quality service, but makes them feel they are capable of delivering top-quality service. Motivates employees. eg - Westjet Airlines
Draw the service profit chain. - EMPLOYEES FIRST SECTION
Operating strategy & service delivery system
loyalty, productivity & output quality, service quality, service capability, satisfaction
- all swirl around EMPLOYEES
Draw the service profit chain. - CUSTOMERS SECOND SECTION
Service value, satisfaction, loyalty
Draw the service profit chain. - ORGANIZATION THIRD SECTION
What's the top of the chain look like?
(service profit chain)
Operating Strategy and service delivery system.....service concept....target market....outcomes
Current issues of control - what are they?
- Balanced Scorecard
- Corporate Governance
- Role of Boards of Directors
- Financial reporting
- Cross-Cultural differences
- Workplace concerns
- workplace privacy
- employee theft
- Customer interactions
- Service Profit Chain
Name one current issue of control?
- Balanced scorecard
- - a performance measurement taken from different angles (not just a financial perspective)
- - examines 4 areas - financial, customer, internal business process, learning/growth assets
- Financial - activities that improve the s and l-term perf of the org
- Customer - looks at customer's view of org, whether customers return and whether they are satisfied
- Internal business process - looks at how production and ops, such as order fulfillment, are carried out
- Learning/growth loks at how well the company's employees are being managed for the company's future
Balance Scorecard continued - examples
Managers should develop goals in each of the four areas...which are...
financial, customer, internal business process, learning/growth assets
Examples - cash flow, quarterly sales growth, ROI (return on investment) as measures for financial success; dollars spent toward training/# of courses taken by employees as a measure of learning and growth.
What is the intent of a balance scorecard?
To emphasize that all of the areas - financial, customer, internal business process, and learning/growth assets - are important to an org's success and there should be a balance among them.
What is corporate governance?
The system used to govern a corporation so that the interests of corporate owners are protected.
Why is there corporate governance and how has it changed?
Corporate governance failed abysmally at Enron; in the aftermath of these scandals, there have been increased calls for better corporate governance. Two areas - role of boards of directors and financial reporting. This problem exists globally. See The Role of Boards of Directors and Financial Reporting.
What is the role of Boards of Directors?
- original purpose to have a group, independent from management, looking out for the interests of shareholders who aren't involved in day-to-day management. It has not always worked that way in practice. Too cozy with CEO (scratch my back...)
- This is changing - demands on board members of publicly traded companies have increased considerably. Cdn Securities Administrators rules, March 2004, strive to tighten board responsibility somewhat.
What about financial reporting under corporate governance?
Financial reporting - in addition to expanding the role of boards of directors, the Cdn Securities Administrators rules require more financial disclosure by orgs. Leads to better information that is more accurate and reflective of the firm's financial condition.
21st century governance principles? What are some of them?
- Interaction - board, mgt, ext auditor/int auditor
- Board purpose - protect the interests of corp's stockholders and stakeholders (creditors, etc)
- Board responsibilities - monitoring the CEO, overseeing corp's strategy, monitoring risks and corps' control system - employ healthy skepticism
- Independence - arm's length; should be independent in fact and appearance
- Expertise - directors; mix of backgrounds/perspectives
- Meetings/info - meet frequently; access to info and personnel
- Leadership - roles of board chair & CEO separate
- Disclosure - proxy statements should reflect board activities/transactions in a transparent/timely manner
- Committees - composed only of independent directors
- Internal audit - all public companies should maintain an effective, full-time internal audit that reports directly to the audit committee
Cross-cultural differences - explain. Control...
- global organizations - different control systems - what should mgrs know about adjusting controls for cross-cultural differences?
- eg 7-Eleven uses technology to record sales and monitor inventory, also the schedule tasks for store managers
- Indirect control devices - computer-generated reports and analyses; less tech countries, mgrs use direct supervision
- Challenge is comparability of data for measurement and comparison; Scottish/Mexican companies - labour cheaper in Mexico; figures not comparable
- Constraints of what correction action can be taken - in other countries, may not have the option of closing down facilities, laying off employees, taking money out of the country etc
What are the two major workplace concerns?
Workplace privacy and employee theft