Managing New Venture Growth Final Flashcards
Process that involves determining and communicating to employees how they are performing in their jobs and establishing a plan for improvement.
Performance Appraisal
To be effective, a performance appraisal must be…
- Supported by documentation
- Fair
Appraisal performance formula
Ability x Effort = Performance
An employees skill set
Ability
The amount of energy expended
Effort
The degree of accomplishment of the tasks that make up an employee’s job.
Performance
Average production or work
Tasks performed by all employees are approximately the same
When tasks performed by all employees are basically the same, it would be time consuming to use the group average
Performance of specially selected employees
Jobs that involve repetitive tasks (assembly line)
Time Study
Non-cyclical types of work in which many different tasks are performed and there is no set pattern or cycle
Work sampling
Used only when none of the direct methods apply
Expert Opinion
Requires a manager to describe an employee’s performance in written narrative form
Essay Appraisal
Requires the manager to keep a written record of incidents as they occur, involving both satisfactory and unsatisfactory performance
Critical Incident
Manager assesses an employee on factors such as quantity of work, dependability, job knowledge, attendance, accuracy of work, etc. These subjects are measured on a numerical range.
Graphic Rating Scale
Requires a manager to answer yes or no to a series of questions
concerning the employee’s behavior
Checklist
Requires a manager to rank a set of statements describing how an employee carries out the duties and responsibilities of the job.
Forced Choice Rating
Manager is given a list of several employees, then he selects the most valuable and the least valuable and continues this until all employees have been evaluated.
Alternation rating
A list of employees is written on the left side of a sheet of paper. The first employee is compared to all other employees on a given criterion with a check mark being given to the one considered the stronger performer. This is continued until all employees have been compared to all
other employees.
Paired Comparison
Assumes the performance levels of employees is a bell curve, forces a manager to place a certain percentage of employees into
performance levels
Forced Distribution
Potential Errors in performance appraisals
- Leniency
- Central Tendency
- Recency
- Halo Effect
Grouping all the ratings at the positive end of the scale
Leniency
Performance evaluations are based on work performed most recently, generally one or two months before the evaluation
Recency
Tendency of voters to rate most employees as doing average work.
Central Tendency
Manager allows a single prominent characteristic of an employee to influence performance appraisals
Halo Effect
Do’s of performance appraisals
- Base on job performance only
- Use only rating scales relevant to the job itself
- Sincerely work at the appraisal interview process
- Be problem solving oriented
It’s important to emphasize ________ instead of ____________
Work behavior instead of personal traits
Ensure that the employees are allowed to give___________ during the
appraisal
Feedback
Ensure that appraisals are ________, ___________, and ____________.
Written, documented, and retained
Rewards internal to the employee, normally derived from involvement in work activities
Intrinsic rewards
Tangible rewards, controlled and distributed by the organization
Extrinsic Rewards
Sense of achievement, informal recognition, status, job satisfaction, personal satisfaction
Intrinsic rewards
Formal recognition, fringe benefits, incentive payments, base
wages, promotion
Extrinsic Rewards
Rewards related to performance
Incentives
Rewards received bc of employment with organization
Benefits
Extrinsic rewards offered by the organization consisting of base wage or salary, any incentive or bonus, and any benefit employee receives in exchange for their work
Compensation
Two aspects of an operating system
- Design
- Control
Design
Physical layout of the operation
The monitoring of the system on an ongoing basis, this is to ensure quality and manage inventory
Control
Direct costs of a product
Labor and materials
Direct costs are always ________
Variable costs
As the number of products produced increases, the __________ increases
The direct costs increase
Expenses that change in proportion to the level of production or service (training of new employees, travel)
Overhead Expenses (Variable)
Expenses that do not change with the level of production (management of salaries, marketing expense, R&D expense, rent)
Overhead Expenses (fixed)
The degree of excellence specified in the design stage
Quality
4 Ways quality is important
1) Loss of business
2) Liability
3) Costs
4) Productivity
Poor quality can expose a company to _________
High liability costs
Poor quality can cost a company what?
- Money in warranty
- Repair
- Waste
- Replacement costs
Quality allows for ____________
Continuous improvement
Quality at the source
Each employee is not responsible for their own work
Based on a precise set of statistical tools, answers the question what does the customer want in terms of quality then translates the answer into statistical terms.
Six Sigma
Eliminating waste and non value added activities
Lean manufacturing
Relates to the inputs or outputs of the system, used when quality is evaluated w/ respect to a batch of existing products or services.
Product quality control
Searching for and implementing radical changes in business processes to achieve breakthroughs in speed, cost,
Reengineering
Relates to the equipment and processes used during the production process, used to monitor quality while the product is being produced
Process Control
Method of predicting the quality of a batch or large group of products from an inspection of a sample or group of samples from a batch
Acceptance sampling
Why is acceptance sampling used
- Potential for losses or cost of passing defective items are not great relative to the cost of inspection (checking balloons for defects)
- Inspection of some items requires destruction of the product being tested (matches)
Acceptance sampling leaves two possibilities. What are they?
1) Producer Risk
2) Consumer Risk
Risk producer takes in possibly rejecting a good batch
Producer risk
Risk of consumer accepting a bad product
Consumer risk
Types of Inventory
- Raw material
- In process
- Finished goods
Buffer between production and purchasing, material waiting to be used to make the product
Raw material
Buffer between rate of flow between production processes (keeps your labor force working)
In process inventory
Buffer between final stage of of production and shipping (allows ppl to buy the products they need when they need them)
Finished goods
Why keep inventory?
Allows the company to:
- Purchase, produce, and ship in economic lot sizes rather than in small jobs (economies of scale)
- Produce on a smooth continuous basis even if demand for finished good fluctuates
- Prevents major problems when forecasts of demand are in error or when unforeseen slowdowns or stoppages in supply of production occur
Philosophy for production to ensure the correct items arrive at the correct time.
Just in Time Inventory
What are methods used to track inventory
- Bar code technology
- Physical inventory
When items are scanned at point of sale, they are then subtracted from inventory
Bar code technology
Physically counting all of the inventory, this ensures effectiveness of our inventory control system
Physical Inventory
Finished goods are ready to be shipped out or sold, generally a finished product
Independent demand
Subassembly or component parts used to make a finished product, there demand is based on the number of finished products being produced
Dependent demand
The number of tires needed for new cars being manufactured depends upon the number of cars being made
Dependent demand
Method of managing inventories based on the total value of their uses per unit. This method segregates high dollar items, which tend to be monitored more than low dollar items.
ABC Classification system
The amount of inventory maintained to accommodate unexpected changes in demand and supply and allow for variations in delivery time.
Safety Stock
What are ordering costs made up of?
Order time, shipping costs, and set up costs
(usually insignificant costs)
What is actually costs to hold inventory
Carrying costs
What do carrying costs consist of?
- Insurance
- Storage costs
- Opportunity cost of money
- Pilferage (stealing)
- Obsolescence (becoming outdated)
Process of ensuring that organizational activities are going
according to plan, accomplished by comparing actual performance to
predetermined standards or objectives, then taking action to correct for any deviation
Control
Control is used to:
- Prevent crisis
- Standardize outputs
- Appraise employee performance
- Update plans
- Protect organizations assets
Two concerns of control
1) Stability
2) Objective realization
Managers must ensure the organizations is operating within established boundaries of constraint, which are determined by policies, budgets, ethics, laws, etc
Ensuring stability
Requires constant monitoring to ensure that progress is being made toward established objectives
Objective realization
Three requirement for control
1) Setting standards
2) Monitoring Performance
3) Correcting for deviations
Standard is the value used as a point of reference for comparing other values (output per hour, inventory level, etc)
Setting Standards
Gather data and detect problems
Monitoring performance
Taking corrective action to ensure standards are being met.
Correcting for deviations
Repetitive acts requiring very little thought, generally normal in the course of business
Foolproof
Requiring very little human interaction (thermostat regulating a
building’s temperature)
Automatic
Requires human response, physically checking records
Operator
Layer that controls the person or person implementing controls. (Boss checking production records for the previous day)
Supervisory
Ultimate feedback loop, manager pulls together all information provided by all other controls
Informational controls
Types of control
1) Behavioral or personal
2) Output or impersonal
3) Control tolerance
Based on direct personal surveillance, the front line supervisor watching their employee
Behavioral/personal
Based on the measurements of output, tracking sales performance or production
Output/impersonal
Variation from the standard that is acceptable for the manager (perfect is not a reasonable standard)
Control tolerance
3 Factors to consider w/ control
1) Economic considerations
2) Behavioral considerations
3) Flexibility and Innovation
Employees do not like working in an
environment where they feel like every move is being monitor
Behavioral considerations
Controls cost money
Economic considerations
3 types of control
1) Preliminary (steering) control
2) Concurrent (screening) control
3) Post action control
Goal is to prevent a problem from happening. (purchase order)
Preliminary (steering) control
Focuses on the process as it is occurring, the goal is to detect a
problem as it is happening (monitoring the drive thru operation at a fast food restaurant or monitoring a phone call
Concurrent (screening) control
Checking after an event to keep a small issue from getting out of hand.
(review or the profit and loss statement each mont
Post Action control
It will never solve a problem
It is the most widely used control
Post Action control
Statement of expected results or requirements expressed in
financial terms
Budget
Designed to stop basing the current years budget on the previous years budget. Every activity is analyzed based on the need for the current year.
Zero Based budgeting
Information from income statements, balance sheets,
etc. used for analysis purposes
Financial controls
Examples of direct observation
- Managers daily tour of facility
- Company president’s annual visit
- Methods study by an engineer
Presents only the facts (balance sheet or income statement)
Informational reports
Interprets the facts (outside audit)
Analytical report
Audit conducted by company personnel on a facility
Internal audit
Audit performed by an outside accounting firm, used to verify internal numbers
External audit
Who are required to have an external audit?
Publicly traded companies
