MGT 250 Chapter Notes - Chapter 16: Balanced Scorecard, Total Quality Management, Economic Value Added
9 May 2018
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MGT 150 Ch. 16: Managing Human Resource Systems Dec. 12th, 2017
▪ 16-1: The Control Process: regulatory process of establishing standards to achieve organizational goals,
comparing actual performance against standards, & taking corrective action when necessary.
• 16-1a: Standards: basis of comparison for measuring extent to which various kinds of organizational
performance are satisfactory/unsatisfactory.
➢ Benchmarking: process of identifying outstanding practices, processes, & standards in other
companies & adapting them to own company.
• 16-1b: Comparison to Standards: quality of comparison depends largely on measurement & info
systems company uses to keep track of performance.
• 16-1e: Feedback, Concurrent, & Feedforward Control: mechanism for gathering info about
performance deficiencies after they occur; then used to correct/prevent performance deficiencies.
➢ Concurrent Control: mechanism for gathering info about performance deficiencies as they occur,
thereby eliminating/shortening delay between performance & feedback.
➢ Feedforward Control: mechanism for monitoring performance inputs rather than outputs to
prevent/minimize performance deficiencies before they occur.
• 16-1f: Control Isn’t Always Worthwhile/Possible:
➢ Control Loss: situation in which behavior & work procedures don’t conform to standards.
➢ Regulation Costs: costs associated w/ implementing/maintaining control.
➢ Cybernetic Feasibility: extent to which it’s possible to implement each step in control process.
▪ 16-2: Control Methods:
• 16-2a: Bureaucratic Control: use of hierarchical authority to influence employee behavior by
rewarding/punishing employees for compliance/noncompliance w/ organizational policies, rules, &
procedures.
• 16-2b: Objective Control: use of observable measures of worker behavior/outputs to assess
performance & influence behavior.
➢ Behavior Control: regulation of behaviors & actions that workers perform on job.
➢ Output Control: regulation of workers’ results/outputs through rewards & incentives.
• 16-2c: Normative Control: regulation of workers’ behavior & decisions through widely shared
organizational values & beliefs.
• 16-2d: Concertive Control: regulation of workers’ behavior & decisions through work group values &
beliefs.
• 16-2e: Self-Control (Self-Management): control system in which managers & workers control own
behavior by setting own goals, monitoring own progress, & rewarding themselves for goal achievement.
▪ 16-3: What To Control?:
• 16-3a: The Balanced Scorecard: measurement of organizational performance in 4 equally important
areas: finances, customers, internal operations, & innovation & learning.
1. Customer Perspective: how do customers see us? (customer defections)
2. Internal Perspective: at what must we excel? (total quality management)
3. Innovation & Learning Perspective: can we continue to improve and create value?
(sustainability)
4. Financial Perspective: how do we look to shareholders? (budgets, cash flows, & economic value
added)
➢ Financial Advantages of Balanced Scorecard Over Traditional Control Processes:
1. Forces managers at every level of co. to set specific goals & measure performance in each of 4 areas.
2. Minimizes chances of suboptimization: performance improvement in 1 part of organization but
only at expense of decreased performance in another part.
• 16-3b: The Financial Perspective: Controlling Budgets, Cash Flows, & Economic Value Added:
➢ Cash Flow Analysis: predicts how changes in business will affect ability to take in more cash than it
pays out.
➢ Balance Sheets: accounting statements that provide snapshot of a co’s financial position at a
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Document Summary
Concurrent control: mechanism for gathering info about performance deficiencies as they occur, thereby eliminating/shortening delay between performance & feedback. Feedforward control: mechanism for monitoring performance inputs rather than outputs to prevent/minimize performance deficiencies before they occur: 16-1f: control isn"t always worthwhile/possible: Control loss: situation in which behavior & work procedures don"t conform to standards. Regulation costs: costs associated w/ implementing/maintaining control. Behavior control: regulation of behaviors & actions that workers perform on job. Cash flow analysis: predicts how changes in business will affect ability to take in more cash than it pays out. Balance sheets: accounting statements that provide snapshot of a co"s financial position at a. Income statements: accounting statements, also called profit & loss statements, that show what has happened to organization"s income, expenses, & net profit over a period of time. Financial ratios: calculations typically used to track business"s liquidity (cash), efficiency, & profitability over time compared to other businesses in its industry.
