CHAPTER 1: INTRODUCTION Food Processor

Operations Management

-Management of systems/ processes that create goods

and/or services

-affects:

1. Companies’ ability to compete

2. Nation’s ability to compete internationally

The 3 Basic Functions: Hospital Process

1. Finance
2. Operations
3. Marketing

Value-Added Process

-the operations function involves the conversion of inputs

into outputs
Production of Goods VS Delivery of Services

 Production of Goods –tangible output

 Delivery of Services –an act

Service Job Categories

1. Government
2. Wholesale/ Retail
3. Financial Services
4. Healthcare
5. Personal Services
Value Added 6. Business Services
7. Education
-difference between the cost of inputs and the value or
price of outputs

Key Differences
Product Packages 1. Customer Contract
2. Uniformity of Input
-combination of goods and services
3. Labor Content of Jobs
-can make a company more competitive 4. Uniformity of Output
5. Measurement of Productivity
6. Production and Delivery
Goods-Service Continuum 7. Quality Assurance
8. Amount of Inventory
9. Evaluation of Work
10. Ability to Patent Design
Good VS Service  Over 18 million workers in manufacturing
jobs
 Accounts for over 70% of value of U.S.
exports
 Average full-time compensation about 20%
higher than average of all workers
 Manufacturing workers more likely to have
benefits
 Productivity growth in manufacturing in the
last 5 years is more than double U.S.
economy
 More than half of the total R&D performed is
in the manufacturing industries
 Manufacturing workers in California earn an
Scope of Operations Management average of about $25,000 more a year than
service workers
1. Forecasting
 When a California manufacturing job is lost,
2. Capacity Planning
an average of 2.5 service jobs is lost
3. Scheduling
4. Managing Inventories
5. Assuring Quality
6. Motivating Employees Challenges of Managing Services
7. Deciding where to locate facilities
 Service jobs are often less structured than
8. Supply chain management\
manufacturing jobs
9. And More
 Customer contact is higher
 Worker skill levels are lower
 Services hire many low-skill, entry-level workers
Types of Operations  Employee turnover is higher
1. Goods Producing  Input variability is higher
-Farming, mining, construction,  Service performance can be affected by
manufacturing, power generation worker’s personal factors
2. Storage/ Transportation
- Warehousing, trucking, mail service,
moving, taxis, buses, hotels, airlines Operations Management Decision Making
3. Exchange
- Retailing, wholesaling, banking, 1. Models
renting, leasing, library, loans 2. Quantitative Approaches
4. Entertainment 3. Analysis of Trade-Offs
- Films, radio and television, concerts, 4. Systems Approach
recording 5. Establishing Priorities
5. Communication 6. Ethics
-Newspapers, radio and television
newscasts, telephone, satellites
Key Decisions of Operations Managers

1. What (resources/amounts)
Decline in Manufacturing Jobs
2. When (needed/scheduled/ordered)
 Productivity 3. Where (work to be done)
4. How (designed)
-increasing productivity allows companies to 5. Who (to do work)
maintain or increase their output using fewer
workers

 Outsourcing
-some manufacturing work has been outsourced
to more productive companies
Decision Making
Why Manufacturing matters
 1. System Design
-capacity, location, arrangement of
departments, product and service
planning, acquisition and placement of
equipment
2. System Operation
-personnel, inventory, scheduling,
project management, quality assurance
- “the whole is greater than the sum of the parts”
-Sub-optimization: can also arise from a focus on
optimizing a unit of a business rather than the results of
the entire business
Pareto Phenomenon

-a few factors account for a high percentage of the

occurrence of some events
Models
-80/20 Rule (80% of problems are caused by 20% of the
-an abstraction of reality activities)
 Physical
 Schematic
 Mathematical Ethical Issues

1. Financial Statements
2. Worker Safety
Benefits of Models (Why Beneficial) 3. Product Safety
4. Quality
1. Easy to use, less expensive
5. Environment
2. Require users to organize
6. Community
3. Increase understanding of the problem
7. Hiring/ Firing workers
4. Enable “what if” questions
8. Closing Facilities
5. Consistent tool for evaluation and standardized
9. Worker’s rights
format
6. Power of mathematics

Business Operations Overlap

Limitations of Models

1. Quantitative information may be emphasized

over qualitative
2. Models may be incorrectly applied and results
misinterpreted
3. Nonqualified users may not comprehend the
rules on how to use the model
4. Use of models does not guarantee good
decisions

Quantitative Approaches
Operations Interfaces
 Linear programming
 Queuing Techniques
 Inventory models
 Project models
 Statistical models

Analysis of Trade-Off

-decision on the amount of inventory to stock

-Increased Cost of Holding Inventory VS Level of

Customer Service
Historical Evolution of Operations Management
Systems Approach
  Industrial Revolution (1770s) The Business Imperative
 Scientific Management (1911)
“The first job we have is to turn out quality merchandise
o Mass Production
that consumers will buy and keep on buying. If we
o Interchangeable Parts
produce it efficiently and economically, we will earn a
o Division of Labor profit, in which you will share.” -William Cooper Procter
 Human Relations Movement (1920-60)
 Decisions Models (1915, 1960-70s)
 Influence of Japanese Manufacturers Imperatives for Modern Organizations:

1. Quality
Trends in Business 2. Productivity
3. Cost
Major Trends:

1. The Internet, E-commerce, E-business

2. Management Technology Importance of Quality
3. Globalization 1. uniquely positioned to accelerate organizational
4. Management of Supply Chains growth through better execution and alignment
5. Outsourcing 2. provides the voice of the customer critical to
6. Agility developing innovative products and services
7. Ethical Behavior 3. can provide an organization with a competitive
edge
4. “No quality, no sales. No sales, no profit. No
Management Technology profit, no jobs.”
1. Technology: application of scientific discoveries
to the development and improvement of goods
and services Examples of Quality Profile
2. Product and service technology 1. Motorola Inc.
3. Process technology - Leader in the U.S. quality revolution
4. Information technology during the 1980s
- Pioneer in continual reduction of defects
and cycle times
Simple Product Supply Chain - Exceptional practices in managing
human assets, sharing data and
Supply Chain: A sequence of activities and
information with employees, customers,
organizations involved in producing and delivering a
and suppliers, and aligning all its
good or service
business processes with key
organizational objectives.

2. MidwayUSA
- Catalog and Internet retailer offering
“Just About Everything (SM)” for
shooters, reloaders, gunsmiths, and
hunters.
Other Important Trends - Vision: “To be the best-run business in
America for the benefit of our
1. Ethical behavior Customers.”
2. Operations strategy - Focus on customers has yielded
3. Working with fewer resources impressive results.
4. Revenue management
5. Process analysis and improvement
6. Increased regulation and product liability
7. Lean production

Formal Definitions of Quality

CHAPTER 2: QUALITY
 Transcendent Perspective Excellence - Separate quality departments
Product Perspective Quantities of Product - Ford Motor Company
Attributes - Statistical methods and quality
User Perspective Fitness for Intended assurance
Use - Professional societies and publications
Value Perspective Quality VS Price 4. Post World War II
Manufacturing Perspective Conformance to - Evolution of quality management in
Specifications Japan
Customer Perspective Meeting or Exceeding - W. Edwards Deming and Joseph Juran
Customer Expectations
5. US “Quality Revolution”
- Quality crisis around 1980
Customers - Growth of product quality awareness in
manufacturing industries
1. Consumers 6. Early Success
- Ultimate buyers of goods and services - Malcolm Baldrige National Quality
2. External Customers Award (1987)
- Business-to-Business - Books, consulting, training
3. Internal Customers 7. From Product Quality to Total Quality
- Anyone who receives goods or services Management
from someone else within an - Little Q” vs. “Big Q” and TQM
organization 8. Management Failures
- Cynicism and disinterest
- “No, TQM isn’t dead. TQM failures just
Quality Perspective prove that bad management is still alive
and kicking.”
9. Performance Excellence
- Focus on customer value, organizational
sustainability, improvement of
effectiveness and capabilities, and
organizational and personal learning
10. Emergence of Six Sigma
- a customer-focused, results-oriented
approach to business improvement
11. Current and Future Challenges
- Continue to apply the principles of
quality and performance excellence.
- Quality is “a race without a finish line.”

Growth of Modern Quality Management

History of Quality Management

1. Ancient History
- Zhou Dynasty in China
2. The Age of Craftsmanship
- Skilled workers during the Middle Ages
- Industrial Revolution

3. Early 20th Century

Contemporary Influences on Quality

1. Global Responsibility Quality in Manufacturing and Assembly

2. Consumer Awareness
3. Globalization -Both technology and people are essential to high-quality
4. Increasing Rate of Change manufacturing
5. Workforce of the Future
6. Aging Population
7. Twenty-first Century Quality Quality in Process Design
8. Innovation
-Manufacturing processes must be capable of producing
output that meets specifications consistently

Manufacturing Systems
Quality in Finished Goods Inspection and Testing

Purpose of Final Product Inspection: to judge the

quality of manufacturing, to discover and help to resolve
production problems that may arise, and to ensure that
no defective items reach the customer

Quality of Installation and Service

Service after the Sale: one of the most important

factors in establishing customer perception of quality and
customer loyalty

Quality in Services

Service: any primary or complementary activity that

Quality in Marketing
Marketing and Sales Personnel: responsible for
determining the needs and expectations of consumers
does not directly produce a physical product – that is, the
non-goods part of the transaction between buyer
(customer) and seller (provider)
Services and Manufacturing (Critical Differences)

Quality Product Design 1. Customer needs and performance standards are

Product Design and Engineering Functions: develop
technical specifications for products and production
processes to meet the requirements determined by the
marketing function
Quality in Purchasing
-purchasing agent should not simply be responsible for
low-cost procurement, but should maintain a clear focus
on the quality of purchased goods and materials
Components of Service Quality
more difficult to identify and measure
2. Services requires a higher degree of
customization
3. Output is intangible
4. Services are produced and consumed
simultaneously
5. Customers are often involved in actual process
6. Services are more labor-intensive than
manufacturing
7. Services handle large numbers of transactions

Quality in Production Planning & Scheduling 1. People

- “If we take care of our people, they will
-poor quality often results from time pressures caused by take care of our customers.”
insufficient planning and scheduling 2. Technology
- Computers and information technology
 - E-commerce
Quality in Business Support Functions
1. Finance and Accounting
- Budgeting, cost of quality
2. Legal Services
- Liability
3. Quality Assurance
- Coaching and special studies
Competitive Advantage
Quality supports the following characteristics:
1. Is driven by customer wants and needs
2. Makes significant contribution to business
success
3. Matches organization’s unique resources with
opportunities
4. Is durable and lasting
5. Provides basis for further improvement
6. Provides direction and motivation
Quality and Profitability
Quality and Business Results
1. Hendricks and Singhal study of quality award
winners
2. Performance results of Baldrige Award
recipients
Quality and Personal Values
1. Personal initiative has a positive impact on
business success
2. Quality-focused individuals often exceed
customer expectations
3. Quality begins with personal attitudes
4. Attitudes can be changed through awareness
and effort (e.g., personal quality checklists)
Unless quality is internalized at the personal level, it will
never become rooted in the culture of an organization.
CHAPTER 3: Customer Focus
Importance of Customers
-Without customers, you don’t have a business.” - Don
Peppers and Martha Rogers
Satisfying Customers
- To meet or exceed customer expectations,
organizations must fully understand all product and
service attributes that contribute to customer value and
lead to satisfaction and loyalty
 Meeting specifications, reducing defects and
errors, and resolving complaints.
 Designing new products that truly delight the
customer
 Responding rapidly to changing consumer and
market demands
 Developing new ways of enhancing customer
relationships
Customer Focus in ISO 9000
1. Top management -shall ensure that customer
requirements are determined and are met with
the aim of enhancing customer satisfaction.
2. Standards -require that the organization
determine customer requirements, including
delivery and post-delivery activities, and any
requirements not stated by the customer but
necessary for specified or intended use.
3. Organizations -must establish procedures for
communicating with customers about product
information and other inquiries, and for obtaining
feedback, including complaints.
4. Standards -require that the organization monitor
customer perceptions as to whether the
organization has met customer requirements;
that is, customer satisfaction.
Key Customer-Focused Practices for Performance
Excellence
1. Identify the most important customer groups and
markets, considering competitors and other
potential customers, and segment the customer
base to better meet differing needs.
2. Understand both near-term and longer-term
customer needs and expectations (the “voice of
the customer”) and employ systematic
processes for listening and learning from
 customers, potential customers, and customers comments and complaints and daily
of competitors to obtain actionable information performance results.
about products and customer support.
3. Understand the linkages between the voice of
the customer and design, production, and Customer Satisfaction
delivery processes; and use voice-of-the-
customer information to identify and innovate -result of delivering a product or service that meets
product offerings and customer support customer requirements
processes to meet and exceed customer
-drives profitability (The typical company gets 65 percent
requirements and expectations, to expand
of its business from existing customers, and it costs five
relationships, and to identify and attract new
times more to find a new customer than to keep an
customers and markets.
existing one happy)
4. Create an organizational culture and support
framework that allows customers to easily
contact an organization to conduct business,
receive a consistently positive customer Customer Engagement
experience, provide feedback, obtain assistance,
-customers’ investment in or commitment to a brand and
receive prompt resolution of their concerns, and
product offerings
facilitate improvement.
5. Manage customer relationships that build loyalty, Characteristics:
enhance satisfaction and engagement, and lead
to the acquisition of new customers.  customer retention and loyalty,
6. Measure customer satisfaction, engagement,
 customers’ willingness to make an effort
and dissatisfaction; compare the results relative
to do business with the organization,
to competitors and industry benchmarks; and
and
use the information to evaluate and improve
organizational processes.  customers’ willingness to actively
advocate for and recommend the brand
and product offerings
Quality Profile

1. Park Place Lexus

American Customer Satisfaction Index (ACSI)
- Client-relationship management
database that tracks all aspects of the -Measures customer satisfaction at a national level
PPL-Client interaction and provides the
resulting information to members -Introduced in 1994 by University of Michigan and
(employees) American Society for Quality
- Empowers members to resolve client -Based on results of telephone interviews conducted in a
complaints on the spot by allowing them national sample of 46,000 consumers who recently
to spend up to $250 to resolve a bought or used a company’s product or service
complaint, or up to $2,000 by
committee.
- A focus on personal and organizational
learning motivates members, which then ACSI Model of Customer Satisfaction
results in exceptional understanding of
client’s needs and the ability to deliver
service to meet those needs

2. K&N Management
- Vision “to become world famous by
delighting one guest at a time.”
- Builds and maintains a focus on “guest
delight,” relying on innovation and
technology to create product offerings
that meet or exceed guest requirements.
- All leaders carry a personal digital
assistant (PDA) that alerts them of guest
Identifying Customers Key Product Quality Dimensions

1. Consumers Performance Primary Operating Characteristics

- those people who ultimately purchase Features “bells and whistles”
and use a company’s products Reliability probability of operating for specific
2. Internal Customers time and conditions of use
- the recipient of another’s output (which Conformanc degree to which characteristics match
could be a product, service or e standards
information) Durability amount of use before deterioration or
3. External Customers replacement
- those who fall between the organization Serviceability speed, courtesy, and competence of
repair
and the consumer, but are not part of
Aesthetics look, feel, sound, taste, smell
the organization.

Examples of Quality Dimensions

AT&T Customer-Supplier Model

- The natural customer-supplier linkages among

individuals, departments, and functions build up the
“chain of customers” throughout an organization that
connect every individual and function to the external
customers and consumers, thus characterizing the
organization’s value chain Key Dimensions of Service Quality

Reliability ability to provide what was

promised
Costumer Segmentation Assurance knowledge and courtesy of
employees and ability to convey
1. Demographics trust
2. Geography Tangibles physical facilities and appearance
3. Volumes of personnel
4. “Vital few” and “useful many” Empathy degree of caring and individual
5. Profit potential attention
Responsivenes Willingness to help customers and
s provide prompt service
Net Present Value of the Customer (NPVC)

-Total Profits (revenues associated with a customer Example:

minus expenses needed to serve a customer)
discounted over time

-often used to segment customers by profit potential

Kano Model of Customer Requirements Example:

1. Dissatisfiers (“must haves”)

- expected requirements that cause
dissatisfaction if not present
2. Satisfiers (“wants”)
- expressed requirements
3. Exciters/delighters (“never thought of”)
- unexpected features

Voice of the Customer

-customer requirements, as expressed in the customer’s

own terms
Example (Affinity Diagram):
-Listening Pods: variety of methods used by
organizations to collect information about customer
needs and expectations, their importance, and customer
satisfaction with the company’s performance on these
measures

Customer Listening Posts

1. Comment cards and formal surveys

2. Focus groups
3. Direct customer contact
4. Field intelligence
5. Complaints
6. Internet and social media monitoring

Example: (Nestlé Purina PetCare Company)

Gap Model

-linking VOC to Internal Processes

Analyzing Voice of the Customer Data

Affinity Diagram
Perceived Quality: comparison of actual quality to
expected quality

Building a Customer-Focused Organization

1. Making sincere commitments to customers
2. Ensuring quality customer contact
3. Selecting and developing customer contact
employees
4. Managing complaints and service recovery
Service Recovery and Complaint Management
-The average company never hears from 96 percent of
its unhappy customers. Dissatisfied individual and
business customers tend not to complain. For every
complaint received, the company has 26 more
customers with problems, six of whom have problems
that are serious

Moments of Truth
-where customer satisfaction or dissatisfaction takes
place
-every interaction between a customer and organization
-Of the customers who make a complaint, more than half
will again do business with that organization if their
complaint is resolved. If the customer feels that the
complaint was resolved quickly, the figure jumps to 95
percent

Example (Airplane): -Customers who remain unsatisfied after complaining

result in substantial amounts of negative word of mouth
1. Making a reservation
2. Purchasing tickets
3. Checking baggage Complaint Resolution
4. Boarding a flight
5. Ordering a beverage 1. Acknowledge that a customer had a problem
6. Requests a magazine 2. Express empathy for the inconvenience that the
7. Deplanes customer encountered; willingly accepting the
8. Picks up baggage complaint
3. Describe corrective action concisely and clearly
4. Appeal to the customer for continued loyalty
Consumer Contract Requirements

-measurable performance levels or expectations that Complaint Management Process at Cargill Corn
define the quality of customer contact with an Milling
organization

1. Technical: Response time

- answering the telephone within two rings
or shipping orders the same day
2. Behavioral Requirements
- using a customer’s name whenever
possible

Example (St. Luke’s Hospital, Kansas City):

Management Customer Relationships

1. Customer-supplier partnerships
- long-term relationships characterized by
teamwork and mutual confidence
2. Customer-focused technology
- Customer Relationship Management
(CRM) software -includes market
segmentation and analysis, customer
service and relationship building,
effective complaint resolution, cross-
 selling goods and services, order
processing, and field service
Measuring Customer Satisfaction and Engagement
1. Discover customer perceptions of how well the
organization is doing in meeting customer
needs, and compare performance relative to
competitors.
2. Identify causes of dissatisfaction and failed
expectations as well as drivers of delight to
understand the reasons why customers are loyal
or not loyal to the company.
3. Identify internal work process that drive
satisfaction and loyalty and discover areas for
improvement in the design and delivery of
products and services, as well as for training and
coaching of employees.
4. Track trends to determine whether changes
actually result in improvements.
Designing Satisfaction Surveys
1. Identify Purpose
2. Identify the Customer
3. Determine who should conduct the survey
4. Select the appropriate survey instrument
5. Design questions and Response Scales to
achieve Actionable Results
Responses: tied directly to key business processes, so
that what needs to be improved is clear; and information
can be translated into cost/revenue implications to
support the setting of improvement priorities
Likert Scales used for Customer Satisfaction
Measurement
Analyzing Feedback Performance Importance
Analysis
Why Customer Satisfaction Efforts Fail
1. Poor measurement schemes
2. Failure to identify appropriate quality dimensions
3. Failure to weight dimensions appropriately
4. Lack of comparison with leading competitors
5. Failure to measure potential and former
customers
6. Confusing loyalty with satisfaction
Measuring Customer Loyalty
1. Overall satisfaction
2. Likelihood of a first-time purchaser to
repurchase
3. Likelihood to recommend
4. Likelihood to continue purchasing the same
products or services
5. Likelihood to purchase different products or
services
6. Likelihood to increase frequency of purchasing
7. Likelihood to switch to a different provider
Net Promoter Score (NPS)
-Developed and a registered trademark of: Fred
Reichheld, Bain & Company, and Satmetrix
- “What is the likelihood that you would recommend us?”
evaluated on a scale from 0 to 10.
 Promoters: 9 or 10 - loyal customers who will
typically be repeat customers
 Passives: 7 or 8 - customers who are satisfied
but may switch to competitors
 Detractors: 6 or below -unhappy customers who
may spread negative comments
- percentage of promoters minus the percentage of
detractors
Customer Perceived Value (CPV)
-measures how customers assess benefits—such as
product performance, ease of use, or time savings—
against costs, such as purchase price, installation cost or
time, and so on, in making purchase decisions.
CHAPTER 4: WORKFORCE FOCUS
-“We’ve got nothing, technology-wise, that anyone else
can’t have. There’s no secret Toyota Quality Machine
out there. The quality machine is the workforce -- the
team members on the paint line, the suppliers, the
engineers -- everybody who has a hand in production
here takes the attitude that we’re making world-class
vehicles.” -Toyota Georgetown
Workforce
-everyone who is actively involved in accomplishing the
work of an organization
-encompasses paid employees as well as volunteers
and contract employees, and includes team leaders,
supervisors, and managers at all levels.
-Associates/ Partners: referred to employees by some
companies to signify the importance that people have in
driving business performance
Workforce Focus in ISO 9000
 Personnel performing work affecting product
quality shall be competent on the basis of
appropriate education, training, skills, and
experience.
 Organizations should determine the level of
competence that employees need, provide
training or other means to ensure competency,
evaluate the effectiveness of training or other
actions taken, ensure that employees are aware
of how their work contributes to quality
objectives, and maintain appropriate records of
education, training, and experience.
 The standards address the work environment
from the standpoint of providing buildings,
workspace, utilities, equipment, and supporting
services needed to achieve conformity to
product requirements, as well as determining
and managing the work environment, including
safety, ergonomics, and environmental factors.
Key Workforce-Focused Practices for Performance
Excellence
1. Understand the key factors that drive workforce
engagement, satisfaction, and motivation.
2. Design and manage work and jobs to promote
effective communication, cooperation, skill
sharing, empowerment, innovation, and the
ability to benefit from diverse ideas and thinking
of employees and develop an organizational
culture conducive to high performance and
motivation.
3. Make appropriate investments in development
and learning, both for the workforce and the
organization’s leaders.
4. Create an environment that ensures and
improves workplace health, safety, and security,
and supports the workforce via policies,
services, and benefits.
5. Develop a performance management system
based on compensation, recognition, reward,
and incentives that supports high performance
work and workforce engagement.
6. Assess workforce engagement and satisfaction
and use results for improvement.
7. Assess workforce capability and capacity needs
and use the results to capitalize on core
competencies, address strategic challenges,
recruit and retain skilled and competent people,
and accomplish the work of the organization.
8. Manage career progression for the entire
workforce and succession planning for
management and leadership positions.
Quality Profile
1. Veterans Affairs Cooperative Studies Program
(VACSP) Clinical Research Pharmacy
Coordinating Center (the Center)
- a federal government organization that
supports clinical trials targeting current
health issues for America’s veterans.
- sees engagement as the single most
important criterion for workforce
satisfaction
- Excellence in the workplace, superior
customer service, and personal
involvement in organizational
improvement are rewarded through the
Center’s performance management
system with visible, tangible benefits
2. PRO-TEC Coating Company
- joint venture between United States
Steel Corporation and Kobe Steel Ltd. of
 Japan, providing coated sheet steel High-performance work - work approaches used to
primarily to the U.S. automotive industry. systematically pursue ever-higher levels of overall
- Culture centered around three organizational and human performance
fundamental concepts—ownership,
responsibility, and accountability.
- Associates work in self-directed teams
and are empowered, innovative leaders
who fix problems as they are identified.

Evolution of Workforce Management Characterized by:

Taylor system and scientific management 1. flexibility
2. innovation
 Improved productivity 3. knowledge and skill sharing
 Changed manufacturing work into series of 4. alignment with organizational directions,
mundane and mindless tasks customer focus, and rapid response to changing
 Promulgated adversarial relationships between business needs and marketplace requirements
labor and management
 Failed to exploit the knowledge and creativity of
the workforce
Conditions of Collaboration” in a High Performance
Work Culture

Workforce Management 1. Respect

2. Aligned values
-also been widely known as human resource 3. Shared purpose
management, or HRM 4. Communication
5. Trust
-consists of those activities designed to provide for and
coordinate the people of an organization

 determining the organization’s workforce needs; Workforce Engagement

 assisting in the design of work systems;
 recruiting, selecting, training and developing,
counseling, motivating, and rewarding
employees;
 acting as a liaison with unions and government
organizations; and
 handling other matters of employee well-being.
Strategic Human Resource Management
-concerned with the contributions HR strategies make to
organizational effectiveness, and how these
contributions are accomplished
-involves designing and implementing a set of internally
consistent policies and practices to ensure that an
organization’s human capital (employees’ collective
knowledge, skills, and abilities) contributes to overall
business objectives
- the extent of workforce commitment, both emotional
and intellectual, to accomplishing the work, mission, and
vision of the organization
-engaged workers:
 find personal meaning and motivation in
their work,
 have a strong emotional bond to their
organization, are actively involved in
and committed to their work,
 feel that their jobs are important, know
that their opinions and ideas have value,
and
 often go beyond their immediate job
responsibilities for the good of the
organization
Advantages of Workforce Engagement

1. Replaces the adversarial mentality with trust and

cooperation
High Performance Work Culture
2. Develops the skills and leadership capability of
Performance - the extent to which an individual individuals, creating a sense of mission and
contributes to achieving the goals and objectives of an fostering trust
organization.
 3. Increases employee morale and commitment to
the organization
4. Fosters creativity and innovation, the source of
competitive advantage
5. Helps people understand quality principles and
instills these principles into the corporate culture
6. Allows employees to solve problems at the
source immediately
7. Improves quality and productivity

Top Drivers of Workforce Engagement

1. Commitment to organizational values.

2. Knowing that customers are satisfied with
products and services.
3. Belief that opinions count.
4. Clearly understanding work expectations. Designing High-Performance Work Systems
5. Understanding of how personal contributions
help meet customer needs. 1. Work and Job Design
6. Being recognized and rewarded fairly. 2. Empowerment
7. Knowing that senior leaders value the workforce. 3. Teamwork
8. Being treated equally with respect. 4. Work Environment
9. Being able to concentrate on the job and work 5. Workforce Learning and Development
processes. 6. Compensation and Recognition
10. Alignment of personal work objectives to work 7. Performance Management
plans.

Work Design
Employee Involvement (EI) -how employees are organized in formal and informal
-Any activity by which employees participate in work- units, such as departments and teams
related decisions and improvement activities, with the
objectives of tapping the creative energies of all
employees and improving their motivation Job Design

-responsibilities and tasks assigned to individuals

Motivation

-an individual’s response to a felt need Enhancing Work Design

-Theories: 1. Job enlargement: expanding workers’ jobs

2. Job rotation: having workers learn several
1. Content Theories tasks and rotate among them
- Maslow; MacGregor; Herzberg 3. Job enrichment: granting more authority,
2. Process Theories responsibility, and autonomy
- Vroom; Porter & Lawler
3. Environmentally-based Theories
- Skinner; Adams; Bandura, Snyder, &
Williams Hackman-Oldham Model

-proposes that five core characteristics of job design:

Classification of Motivation Theories 1. task significance

2. task identity
3. skill variety
4. autonomy
5. feedback from the job

-influence three critical psychological states

 1. experienced meaningfulness
2. experienced responsibility
3. knowledge of results

-drive work outcomes:

1. employee motivation
2. growth satisfaction
3. overall job satisfaction
4. work effectiveness

Empowerment

-Giving people authority to make decisions based on

what they feel is right, to have control over their work, to Team Skill Requirements
take risks and learn from mistakes, and to promote
change 1. Conflict management and resolution
2. Team management
-sincere belief and trust in people 3. Leadership skills
4. Decision making
5. Communication
Successful Empowerment 6. Negotiation
7. Cross-cultural training
1. Provide education, resources, and
encouragement
2. Remove restrictive policies/procedures
3. Foster an atmosphere of trust Boeing A&T Team Development Process
4. Share information freely
5. Make work valuable
6. Train managers in “hands-off” leadership
7. Train employees in allowed latitude

Teams

-a small number of people with complementary skills

who are committed to a common purpose, set of
performance goals, and approach for which they hold
themselves mutually accountable

Types:

1. Management teams
2. Natural work teams
3. Self-managed teams
4. Virtual teams Life Cycle of Teams
5. Quality circles
6. Problem solving teams 1. Forming
7. Project teams - takes place when the team is
introduced, meets together, and
Examples (Baptist Hospital, Inc.) explores issues of their new assignment.
2. Storming
 - occurs when team members disagree
on team roles and challenge the way
that the team will function.
3. Norming
- takes place when the issues of the
previous stage have been worked out,
and team members agree on roles,
ground rules, and acceptable behavior
when doing the work of the team.
4. Performing
- characterizes the productive phase of
the life cycle when team members
cooperate to solve problems and Compensation and Recognition
complete the goals of their assigned
-all aspects of pay and reward, including promotions,
work.
bonuses, and recognition, either monetary and
5. Adjourning
nonmonetary or individual and group
- phase in which the team wraps up the
project, satisfactorily completes its
goals, and prepares to disband or move
on to another project

Ingredients for Successful Teams Compensation:

1. Clarity in team goals 1. Merit versus capability/performance based plans

2. Improvement plan 2. Gainsharing
3. Clearly defined roles
Recognition:
4. Clear communication
5. Beneficial team behaviors 1. Monetary or non-monetary
6. Well-defined decision procedures 2. Formal or informal
7. Balanced participation 3. Individual or group
8. Established ground rules
9. Awareness of group process
10. Use of scientific approach
Effective Recognition and Reward Strategies

1. Give both individual and team awards

Workplace Environment Key Factors 2. Involve everyone
3. Tie rewards to quality
1. Health 4. Allow peers and customers to nominate and
2. Safety recognize superior performance
3. Overall well-being 5. Publicize extensively
6. Make recognition fun

Workplace Learning and Development

 Research indicates that companies that spend
heavily on training their workers outperform
companies that spend considerably less, as
measured on the basis of overall stock market
returns.
 Focus on both what people need to know as well
as what things they need to know how to do.
 Continual reinforcement of knowledge learned is
essential.
MEDRAD Learning and Development Process
Performance Management
-How you are measured is how you perform
-Conventional performance appraisal systems
 Focus on short-term results and individual
behavior; fail to deal with uncontrollable factors
-New approaches
 Focus on company goals such as quality and
behaviors like teamwork
 360-degree feedback; mastery descriptions

Premier Performance Management Process
2. having the right materials and equipment to do
the job
3. receiving recognition and feedback on progress
and development
4. having opinions that count
5. feeling of importance of the job
6. opportunities to learn grow and develop

Gallup Engagement Index Classification

1. Engaged employees
- work with passion and feel a profound
connection to their company
- drive innovation and move the
organization forward.
2. Not-engaged employees
- essentially “checked out.”
- sleepwalking through their workday
- putting in time, but not enough energy or
passion into their work
Assessing Workforce Effectiveness, Satisfaction,
and Engagement

1. Outcome Measures
3. Actively disengaged employees
-number of teams, rate of growth, percentage of - aren’t just unhappy at work
employees involved, number of suggestions - busy acting out their unhappiness
implemented, time taken to respond to suggestions, - undermine what their engaged
employee turnover, absenteeism, and grievances; coworkers accomplish every day
perceptions of teamwork and management
effectiveness, engagement, satisfaction, and
empowerment Sustaining High-Performance Work Systems
2. Process Measures -Regular assessment of:
-number of suggestions that employees make, numbers 1. workforce capability and capacity needs;
of participants in project teams, participation in 2. hiring, training and retention of employees; and
educational programs, average time it takes to complete 3. career progression and succession planning
a process improvement project, whether teams are
getting better, smarter, and faster at performing
improvements, improvements in team selection and
planning processes, frequency of use of quality Workforce Capability
improvement tools, employee understanding of problem- -an organization’s ability to accomplish its work
solving approaches, and senior management processes through the knowledge, skills, abilities, and
involvement competencies of its people

Measuring Workforce Engagement Workforce capacity

Gallup Q12 -an organization’s ability to ensure sufficient staffing
-12 survey statements that Gallup found as those that levels to accomplish its work processes and successfully
best form the foundation of strong feelings of deliver products and services to customers, including the
engagement ability to meet seasonal or varying demand levels

-Factors:
Effective Hiring Practices
1. what is expected in one’s work
 1. Determine key employee skills and
competencies
2. Identify job candidates based on required skills
and competencies
3. Screen job candidates to predict suitability and
match to jobs

Succession Planning

- is vital to long-term sustainability

 Formal processes to identify, develop, and

position future leaders
 Mentoring, coaching, and job rotation Key Process Management Principles for Performance
 Career paths and progression for all employees Excellence

1. Identify vital work processes that relate to core

competencies and deliver customer value,
profitability, organizational success, and
sustainability.
2. Determine key work process requirements,
incorporating input from customers, suppliers,
partners, and collaborators.
3. Design and innovate work processes to meet all
requirements, incorporating new technology,
organizational knowledge, cycle time,
CHAPTER 5: PROCESS FOCUS
productivity, cost control, and other efficiency
Wisdom from Texas Instruments and effectiveness factors.
4. Seek ways to prevent defects, service errors,
“Unless you change the process, why would you expect and rework and minimize costs associated with
the results to change?” inspections, tests, and process or performance
audits.
5. Implement work processes and control their day-
Process to-day operation to ensure that they meet design
requirements, using appropriate performance
-a sequence of linked activities that is intended to measures along with customer, supplier, partner,
achieve some result and collaborator input as needed.
6. Improve work processes to achieve better
-involve combinations of people, machines, tools,
performance, reduce variability, improve
techniques, materials, and improvements in a defined
products and services, and keep processes
series of steps or actions.
current with business needs and directions, and
Examples: share improvements with other organizational
units and processes to drive organizational
1. machining learning and innovation.
2. mixing 7. Incorporate effective process management
3. assembly practices in the overall supply chain.
4. filling orders
5. approving loans
Quality Profile

Process VS Function 1. Honeywell Federal Manufacturing &

Technologies
- Multidisciplinary engineering and
manufacturing operations for national
defense systems.
- Checks that ensure processes align with
goals, and feedback scorecards, the
 system identifies, implements,
measures, and sustains the “critical-to-
quality” needs necessary for desired
performance.
- Six Sigma Plus Continuous
Improvement Model that ensures
integration of customer and business
requirements into all design projects
2. Boeing Aerospace Support
- Developed a seven-step approach for
defining, managing, stabilizing, and
improving processes.
- Teams of employees who “own” and are
responsible for the company’s complex
operations and processes are the core
of the company’s high performance work
environment.
- The “AS People System” helps to
ensure that employees understand
priorities and expectations; have the
knowledge, training, and tools they need
to do the job and to assess performance
against goals and objectives; and are
rewarded and recognized for their
accomplishments
Process Management
-planning and administering the activities necessary to
achieve a high level of performance in key business
processes, and identifying opportunities for improving
quality and operational performance, and ultimately,
customer satisfaction
Process Management Activities
1. Design
- Ensuring that the inputs to the process,
such as materials, technology, work
methods, and a trained workforce are
adequate, and that the process can
achieve its requirements.
2. Control
- Maintaining consistency in output by
assessing performance and taking
corrective action when necessary.
3. Improvement
- Continually seeking to achieve higher
levels of performance in the process,
such as reduced variation, higher yields,
fewer defects and errors, smaller cycle
times, and so on
Process Management and ISO 9000
 The entire set of standards is focused on an
organization’s ability to understand, define,
document, and manage its processes.
 Organizations must plan and control the design
and development of products and manage the
interfaces between different groups involved in
design and development to ensure effective
communication and clear assignment of
responsibility.
 The standards address a wide variety of process
management activities, including control of
production and service, control of monitoring and
measuring devices, and improvement of quality
management system effectiveness.
AT&T Process Management Principles
 Process improvement focuses on the end-to-end
process.
 The mind-set of quality is one of prevention and
continuous improvement.
 Everyone manages a process at some level and
is simultaneously a customer and a supplier.
 Customer needs drive process improvement.
 Corrective action focuses on removing the root
cause of the problem rather than on treating its
symptoms.
 Process simplification reduces opportunities for
errors and rework.
 Process improvement results from a disciplined
and structured application of the quality
management principles.
Types of Processes
1. Value-creation processes: most important to
“running the business”
a. Design processes – activities that
develop functional product specifications
b. Production/delivery processes –
those that create or deliver products
2. Support processes: most important to an
organization’s value creation processes,
employees, and daily operations
Projects as Processes
-In many companies, value-creation processes take the
form of Projects: temporary work structures that start
up, produce products or services, and then shut down
-Project management: involves all activities associated
with planning, scheduling, and controlling projects
Process Requirements
1. Value creation process
- usually depend on consumer or external
customer needs.
2. Support process
- driven by internal customer needs and
must be aligned with the needs of key
value-creation processes
Value Creation Processes for Pal’s Sudden Service
Process Design
-Goal: to develop an efficient process that satisfies both
internal and external customer requirements and is
capable of achieving the requisite level of quality and
performance
-Considerations: include safety, cost, variability,
productivity, environmental impact, “green”
manufacturing, measurement capability, and
maintainability of equipment
Process Mapping
Process Map (flowchart): describes the specific steps
in a process
Developing Process Maps
1. Begin with the process output and ask, “What is
the last essential sub-process that produces the
output of the process?”
2. For that sub-process, ask, “What input does it
need to produce the process output?” For each
input, test its value to ensure that it is required.
3. For each input, identify its source. In many
cases, the input will be the output of the previous
sub-process. In some cases, the input may
come from external suppliers.
4. Continue backward, one sub-process at a time,
until each input comes from an external supplier
Analyzing Process Maps
 Are the steps in the process arranged in logical
sequence?
 Do all steps add value? Can some steps be
eliminated and should others be added in order
to improve quality or operational performance?
Can some be combined? Should some be
reordered?
 Are capacities of each step in balance; that is,
do bottlenecks exist for which customers will
incur excessive waiting time?
 What skills, equipment, and tools are required at
each step of the process? Should some steps be
automated?
 At which points in the system might errors occur
that would result in customer dissatisfaction, and
how might these errors be corrected?
 At which point or points should quality be
measured?
 Where interaction with the customer occurs,
what procedures and guidelines should
employees follow to present a positive image?

Service Process Design
-Designing a service essentially involves determining an
effective balance among all three of these
-3 basic components:
1. Physical facilities, processes and procedures
2. Employee behavior
3. Employee professional judgment
Key Service Dimensions
Key Questions for Service Process Design
1. What service standards are required to be met?
2. What is the final result of the service to be
provided?
3. At what point does the service begin, and what
signals its completion?
4. What is the maximum waiting time that a
customer will tolerate?
5. How long should it take to perform the service?
6. Who must the consumer deal with in completing
the service?
7. What components of the service are essential?
Desirable? Superfluous?
8. Which components can differ from one service
encounter to another while still meeting
standards?
Design for Agility
Agility
- flexibility and short cycle times
- is crucial to such customer-focused strategies as mass
customization
Flexibility
- ability to adapt quickly and effectively to changing
requirements
Examples:
1. rapid changeover from one product to another
2. rapid response to changing demands
3. the ability to produce a wide range of
customized services
Mistake-Proofing Processes
Typical reasons for mistakes and errors;
1. Forgetfulness due to lack of reinforcement or
guidance
2. Misunderstanding or incorrect identification
because of the lack of familiarity with process or
procedures
3. Lack of experience
4. Absentmindedness and lack of attention,
especially when a process is automated
Preventing Mistakes
1. Designing potential defects and errors out of the
process
- eliminates any possibility that the error
or defect will occur and will not result in
rework, scrap, or wasted time.
2. Identifying potential defects and errors and
stopping a process before they occur
- Often results in some non-value-added
time.
3. Identifying defects and errors soon after they
occur and quickly correcting the process
- Results in some scrap, rework, and
wasted resources.
Poka-Yoke
- an approach for mistake-proofing processes using
automatic devices or simple methods to avoid human
error
Based on:
1. Prediction: recognizing that a defect is about to
occur and providing a warning
2. Detection: recognizing that a defect has
occurred and stopping the process
Examples:
 Many machines have sensors that would be
activated only if the part was placed in the
correct position.
 A device on a drill counts the number of holes
drilled in a work piece; a buzzer sounds if the
 work piece is removed before the correct -control is different from Improvement:
number of holes has been drilled.
 Computer programs display a warning message
if a file that has not been saved is to be closed.
 Passwords set for web accounts are entered
twice.
 Orders for critical aircraft parts use pre-fit foam
forms that only allow the correct part to be
placed in them, ensuring that the correct parts
are shipped.
 Associates at Amazon sort products into bins
that weigh them and compare the weight to the
order; if there is an inconsistency, the associate
is prompted to verify the items. Elements of Control Systems

1. a standard or goal,
Types of Service Errors 2. a means of measuring accomplishment,
3. comparison of results with the standard to
1. Task Errors provide feedback, and
- include doing work incorrectly, work not 4. the ability to make corrections as appropriate.
requested, work on the wrong order, or
working too slowly
2. Treatment errors Processes and Control Measures (City of Coral Springs)
- in the contact between the server and
the customer, such as lack of courteous
behavior, and failure to acknowledge,
listen, or react appropriately to the
customer.
3. Tangible errors
- such as unclean facilities, dirty uniforms,
inappropriate temperature, and
document errors
4. Customer errors in preparation
- such as the failure to bring necessary
materials to the encounter, to
understand their role in the service
transaction, and to engage the correct
service.
-
Control and Improvement
5. Customer errors during an encounter
- such as inattention, misunderstanding, -Control should be the basis for organizational learning
or simply a memory lapse, and include and lead to improvement and prevention of defects and
failure to remember steps in the process errors
or to follow instructions.
6. Customer errors at the resolution stage of a -After-action review:
service encounter
 What was supposed to happen?
- include failure to signal service
inadequacies, to learn from experience,  What actually happened?
to adjust expectations, and to execute  Why was there a difference?
appropriate post-encounter actions.  What can we learn?

Process Control Process Control in Manufacturing

Control: the activity of ensuring conformance to - Control is usually applied to incoming materials, key
requirements and taking corrective action when processes, and final products and services.
necessary to correct problems and maintain stable -Effective quality control systems include:
performance
  documented procedures for all key processes;
 a clear understanding of the appropriate
equipment and working environment;
 methods for monitoring and controlling critical
quality characteristics; approval processes for
equipment;
 criteria for workmanship, such as written
standards, samples, or illustrations; and
 maintenance activities.

Effective Control Systems Continuous Improvement

 Documented procedures for all key processes;
 A clear understanding of the appropriate
equipment and working environment;
 Methods for monitoring and controlling critical
quality characteristics;
 Approval processes for equipment;
 Criteria for workmanship, such as written
standards, samples, or illustrations; and
 Maintenance activities.
Process Control in Services
1. The Ritz-Carlton Hotel Company
-Self-control of the individual employee based on
their spontaneous and learned behavior.
-Basic control mechanisms, which are carried out by
every member of the workforce. The first person who
detects a problem is empowered to break away from
routine duties, investigate and correct the problem
immediately, document the incident, and then return to
their routine.
- refers to both incremental changes, which are small
and gradual, and breakthrough improvements, which are
large and rapid
- important because:
 Customer loyalty is driven by delivered value.
 Delivered value is created by business
processes.
 Sustained success in competitive markets
requires a business to continuously improve
delivered value.
 To continuously improve value-creation ability, a
business must continuously improve its value-
creation processes.
Learning
-understanding why changes are successful through
feedback between practices and results, leading to new
goals and approaches

-Critical success factor control for critical 4 stages of Learning

processes. Process teams use customer and
1. Planning
organizational requirement measurements to determine
2. 2. Execution of plans
quality, speed, and cost performance. These
3. 3. Assessment of progress
measurements are compared against benchmarks and
4. 4. Revision of plans based upon assessment
customer satisfaction data to determine corrective action
findings
and resource allocation. In addition, The Ritz-Carlton
conducts both self-audits and outside audits. Kaizen

-a Japanese word that means gradual and orderly

continuous improvement
Process Improvement
-Focus on small, gradual, and frequent
Deming’s View of a Production System
improvements over the long term with minimum
financial investment, and participation by everyone
in the organization

Kaizen Blitz
-an intense and rapid improvement process in which a
team or a department throws all its resources into an
improvement project over a short time period, as
opposed to traditional kaizen applications, which are
performed on a part-time basis.
-Blitz teams: generally comprised of employees from all
areas involved in the process who understand it and can
implement changes on the spot
Managing Supply Chain Processes
Suppliers: include not only companies that provide
materials and components, but also distributors,
transportation companies, and information, health care,
and education providers

-Many companies segment suppliers into categories

based on their importance to the business and manage
Breakthrough Improvement them accordingly

-refers to discontinuous change, as opposed to the

gradual, continuous improvement philosophy of kaizen
-result from innovative and creative thinking; often these
are motivated by stretch goals, or breakthrough
objectives
Benchmarking
-the search of industry best practices that lead to
superior performance
-Best Practices: approaches that produce exceptional
results, are usually innovative in terms of the use of
technology or human resources, and are recognized by
customers or industry experts
Types of Benchmarking
1. Competitive benchmarking
- studying products or business results
against competitors to compare pricing,
technical quality, features, and other
quality or performance characteristics.
2. Process benchmarking
- identifying the most effective practices in
key work processes in organizations that
perform similar functions, no matter in
what industry
Supply Chain Management Principles
1. Recognizing the strategic importance of
suppliers in accomplishing business objectives,
particularly minimizing the total cost of
ownership,
2. Developing win-win relationships through long-
term partnerships rather than as adversaries,
and
3. Establishing trust through openness and
honesty, thus leading to mutual advantages
Supplier Certification
-designed to rate and certify suppliers who provide
quality materials in a cost-effective and timely manner
-Certified Supplier: one that, after extensive
investigation, is found to supply material of such quality
that routine testing on each lot received is unnecessary
(The Pharmaceutical Manufacturers Association)
-Supplier certification processes: can be time-
consuming and expensive to administer.
-Using a uniform set of standards such as ISO 9000 can
reduce costs.

Reengineering

-the fundamental rethinking and radical redesign of

business processes to achieve dramatic improvements
in critical, contemporary measures of performance, such
as cost, quality, service, and speed

- involves asking basic questions about business

processes:

1. Why do we do it?
2. Why is it done this way?