Amity Business School

Amity Business School

MBA Class of 2009, Semester IV
Management in Action Social, Economic & Ethical Issues
Dr. Sanjay Srivastava

1
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Module I: Introduction
• Modern Management Practices and Issues
Involved, Outsourcing Management Services
and Evolution of Management Consultancy,
Skills-set Required for Management
Consultants. Consulting and performance
counseling.
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Outsourcing Opportunity or Burden

• International outsourcing has become the easy way out for many
organizations seeking to stay competitive in a global economy,
whereas establishing a lean Six Sigma organization requires
sustained and consistent hard work. Proponents say outsourcing is
the only way costs can be cut enough to keep the organization
competitive. Ultimately, the decision to outsource jobs should be
based on both economic and value criteria. Unless managers face
the obligation to ensure that both the organization and its suppliers
are producing at the highest quality levels and the lowest lean cost,
the job is not being done. Only this cost base can determine the
decision to outsource. It is the quality professional's responsibility to
challenge the value of all activities throughout the organization that
do not contribute to a lean quality culture. The first objective should
be insourcing excellence. Outsourcing should be the last resort.
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• Often a company will look to a contract

manufacturer to improve efficiency or reduce
labor costs.
• In Most cases the objective of outsourcing is a
targeted 20% cost reduction, with actual savings
coming from direct labor and variable cost.
• while a seemingly low bid may look attractive,
incomplete or misunderstood specifications can
result in an overhead nightmare.
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• Before entering into a contract, a company

should ask these questions: Does the
contract manufacturer have the capability
to do change control, corrective or
preventive action, or process capability
studies? Who will support design
changes?
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Management Consultancy
• "The services provided by an independent and
qualified person or persons in identifying and
investigating problems concerned with policy,
organization, procedures and methods,
recommending appropriate action and
assistance in implementation".
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The consultant Conundrum

Are consultants good or bad? Under what
circumstances would you bring them in,
and what does bringing them in say about
the skills of your own people?
- Albany, New York
- Source : Winning : The Answers, confronting 74
of the toughest Questions in Business Today,
Jack and Suzy Welch
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Outside Consultants
• Watch the Bull not the man.
-Donald R. Keough
• Separate the product from the
presentation.
• Consultants are con artists.
• The problem with many of them is that
they address the wrong questions.
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• They are constantly “reengineering” – mainly they’re

reengineering the language.
• They try to quantify the human behaviour.
• They are called to validate a decision that has already
been made by a manager insecure in his authority.
• Consultants should never supplement leaders.
• .
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• What does “growth” mean in a consulting/business

context ? Why it is important?
• Consultants live and breathe knowledge management
because they sell business solutions and knowledge
itself
• In consulting most valuable part of knowledge originates
almost entirely from the clients assignments.
• The consultant as technology broker.
• We should know our business best. We don’t need
consultants to tell us what to do.
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The Model of Consultant: A Technology Broker Who Transfers

Business Knowledge Across Industries

Industry A Industry B

Technology
Broker Industry C

Industry E

Industry D

Source: Andrew Hargadon and Robert I. Sutton, “Technology Brokering and

Innovation: Evidence from a product design firm," Academy of Management
Proceedings 1996
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Skill set for Consultants

• Develop client centered approach.
• Building trust is critical both with the client and the
members of the system.
• Walking in with a packaged solution is not respectful.
• Helping people solve their own problems is the essence
of useful consulting work.
• Have to be a good listener.
• How many psychiatrists does it take to change a light
bulb?
• Organizational change consultants must be skilled in
assessing readiness, processing perspective on
resistance, growing internal resources, and providing
open and non judgmental feedback
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Management Consultants
• Known as Evolutionary rather than
Revolutionary.
• Application must be Collaborative and
Authoritarian.
• Doctors of Management.
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Public Perception of Consultants

• A consultant is a person who takes your money and annoys your
employees while tirelessly searching for the best way to extend the
consulting contract.
• Consultants will hold a seemingly endless series of meeting to test
various hypotheses and assumptions. These exercises are a vital
step toward tricking managers into revealing the recommendation
that is most likely to generate repeating consulting business.
• After the correct recommendation is discovered, it must be justified
by a lengthy analysis. Analysis is designed to be as confusing as
possible, thus discouraging any second guessing by staff members
who are afraid of appearing dense.
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Public Perception of Consultants

• Consultants use a standard set of decision tools that
involve creating alternative scenarios based on different
assumptions. Any pesky assumption that does not fit that
does not fit the predetermined recommendation is quickly
discounted as being uneconomical by the consultants.
• Consultants will often recommend that you do whatever
you are not doing now.
• Consultants do not need much experience in industry in
order to be experts; they learn quickly.
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Public Perception of Consultants

• Consultants eventually leave, which makes them excellent
scapegoats for major management blunders.
• Consultants can schedule time in your boss’s calendar because they
don’t have your reputation as a troublemaker who constantly brings
up unsolvable issues.
• Consultants often are more trusted than your regular employees.
• Consultants will return phone calls because it is all billable time to
them.
• Consultants work preposterously long hours, thus making the regular
staff feel worthless for only working 60 hours a week.
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Quality
• Quality has many dimensions. It can be discussed in
terms of :
– Quality of goods
– Quality of services
– Quality of actions
– Quality of encounters
– Quality of life.
• Likewise, quality can have many definitions based on
what needs to be emphasized in a given situation. For
example, quality can be defined as conformance to
requirements from a product control viewpoint, as fitness
for use from the marketing viewpoint, or uniformity
around target from the producer’s viewpoint.
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History of Quality Revolution

• The quality movement can trace its roots back to
medieval Europe, where craftsmen began organizing
into unions called guilds in the late 13th century.
• The factory system, with its emphasis on product
inspection, started in Great Britain in the mid-1750s and
grew into the Industrial Revolution in the early 1800s.
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History of Quality Revolution

• After the United States entered World War II,
quality became a critical component of the war
effort
• The armed forces initially inspected virtually
every unit of product; then to simplify and speed
up this process without compromising safety, the
military began to use sampling techniques for
inspection, aided by the publication of military-
specification standards and training courses in
Walter Shewhart’s statistical process control
techniques.
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History of Quality Revolution

• The birth of total quality in the United
States came as a direct response to the
quality revolution in Japan following World
War II. The Japanese welcomed the input
of Americans Joseph M. Juran and W.
Edwards Deming and rather than
concentrating on inspection, focused on
improving all organizational processes
through the people who used them.
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History of Quality Revolution

• By the 1970s, U.S. industrial sectors such
as automobiles and electronics had been
broadsided by Japan’s high-quality
competition. The U.S. response,
emphasizing not only statistics but
approaches that embraced the entire
organization, became known as total
quality management (TQM).
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History of Quality Revolution

• By the last decade of the 20th century, TQM was
considered a fad by many business leaders. But while
the use of the term TQM has faded somewhat,
particularly in the United States, its practices continue.
• In the few years since the turn of the century, the quality
movement seems to have matured beyond Total Quality.
New quality systems have evolved from the foundations
of Deming, Juran and the early Japanese practitioners of
quality, and quality has moved beyond manufacturing
into service, healthcare, education and government
sectors.
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Walter A Shewart
• Father of Statistical Quality Control
– Successfully brought together the
disciplines of Statistics, Engineering and
Economics.
– Most widely known for Control Charts
– Professional career:
• Western Electric: 1918-1924
• Bell Telephone Lab : 1925 - 1956
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Joseph M. Juran
• "It is most important that top
management be quality-minded. In the
absence of sincere manifestation of
interest at the top, little will happen
below.“
• Started Career at Bell Lab in1924
• Prepared what may have been the first
text on statistical quality control—and
perhaps the ancestor of today's widely
used Western Electric Statistical Quality
Control Handbook.
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Joseph M. Juran
• Second Career at New York University
• Reputation in quality management led the Union of
Japanese Scientists and Engineers to invite him to Japan
in 1954.
• Juran gave more credit to the Japanese than to
Americans for what transpired over the next 30 years.
What would have happened if no American experts had
lectured in Japan in the 1950s? About the same that did,
Juran believes: "It might have taken them two or three
years longer to arrive at the same place," he said.
Indeed, by the 1960s, Juran began to report to Americans
on the new ideas on quality coming out of Japan—ideas
like quality circles.
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W. Edward Deming
• Received ASQ’s Shewart Medal for
1955
• He has been described variously as a
national folk hero in Japan, where he
was influential in the spectacular rise of
Japanese industry after World War II;
as the high prophet of quality control; as
an imperious old man; and as founder
of the third wave of the Industrial
Revolution.
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W. Edward Deming
• While working as a mathematical physicist at
the U.S. Department of Agriculture in 1938,
Deming was responsible for courses in math
and statistics at the Graduate School of the
USDA, and he invited Walter Shewhart to
lecture there.
• Later in I938, Deming moved to the Bureau of
the Census, where he was an adviser in
sampling. In what is probably the first
application of statistical quality control
principles to a non-manufacturing problem,
Deming brought Shewhart's principles into use
on clerical operations for the 1940 census.
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W. Edward Deming
• Deming and Juran Introduced SQC to Japanese
workers after world war II.
• In recognition of Deming's efforts in Japan, JUSE
created the Deming Prize in 1951. He was
awarded the Second Order Medal of the Sacred
Treasure by Emperor Hirohito in 1960.
• 1980 TV aired a documentry "If Japan Can, Why
Can't We?" in which he was featured prominently.
• Ford Motor company was among the first to invite
Deming to help transform its operations.
• In 1992 Ford Taurus outsold the Hona Accord and
became the leader in domestic sales.
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Total Quality
• The birth of total quality in the United States was in direct
response to a quality revolution in Japan following World
War II, as major Japanese manufacturers converted
from producing military goods for internal use to
producing civilian goods for trade.
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Total Quality
• Deming, Juran and Japan
• The Japanese welcomed input from foreign companies and
lecturers, including two American quality experts:
• W. Edwards Deming, who had become frustrated with
American managers when most programs for statistical quality
control were terminated once the war and government
contracts came to and end.
• Joseph M. Juran, who predicted the quality of Japanese goods
would overtake the qualiy of goods produced in the United
States by the mid-1970s because of Japan’s revolutionary rate
of quality improvement.
• Japan’s strategies represented the new “total quality”
approach. Rather than relying purely on product inspection.
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Total Quality
• The American Response
• At first, U.S. manufacturers held onto to their assumption
that Japanese success was price-related.
• As years passed, price competition declined while quality
competition continued to increase. A 1980 NBC-TV
News special report, “If Japan Can… Why Can’t We?”
highlighted how Japan had captured the world auto and
electronics markets
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Total Quality
• The American Response
• The chief executive officers of major U.S. corporations
stepped forward to provide personal leadership in the
quality movement. The U.S. response, emphasizing not
only statistics but approaches that embraced the entire
organization, became known as Total Quality Management
(TQM).
• Several other quality initiatives followed. The ISO 9000
series of quality-management standards, were published in
1987. The Baldrige National Quality Program and Malcolm
Baldrige National Quality Award were established by the
U.S. Congress the same year.
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Beyond Total Quality

• By the end of the 1990s Total Quality
Management (TQM) was considered little
more than a fad by many American
business leaders (although it still retained
its prominence in Europe).
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Beyond Total Quality

• Some examples of this maturation:
• In 2000 the ISO 9000 series of quality management standards was revised
to increase emphasis on customer satisfaction.
• Beginning in 1995, the Malcolm Baldrige National Quality Award added a
business results criterion to its measures of applicant success.
• Six Sigma, evolved into an organizational approach that achieved
breakthroughs – and significant bottom-line results. When Motorola
received a Baldrige Award in 1988, it shared its quality practices with
others.
• Quality has moved beyond the manufacturing sector into such areas as
service, healthcare, education and government.
• The Malcolm Baldrige National Quality Award has added education and
healthcare to its original categories: manufacturing, small business and
service. Many advocates are pressing for the adoption of a “nonprofit
organization” category as well.