According to Baldelomar (2014), the evaluation of the internal control system allows determining the nature, timing and scope of the performance audit procedures that will be applied in the company; it also defines the strengths and weaknesses of the business organization by quantifying all its resources. Through the examination and objectives of internal control, records and evaluation of the financial statements, the confidence that the entity must present to society is created. The evaluation of the internal control system based on principles, rules, standards, procedures and systems of recognized technical value is the foundation of a good financial audit.The financial auditor must ensure that all the appropriate and necessary measures are fulfilled in the implementation of the internal control evaluation system.
In the internal control evaluation process, an auditor must review high volumes of documents, which is why the auditor is forced to schedule selective tests to make inferences about the reliability of their operations. To give certainty about the objectivity of a selective test and its representativeness, the auditor has the resource of statistical sampling, for which the following essential aspects must be taken into account: The sample must be representative; The sample size varies inversely with the quality of the internal control; The examination of the included documents must be exhaustive in order to make an adequate inference; There will always be a risk that the sample is not representative and therefore that the conclusion is not adequate. The questionnaire method,It consists of the evaluation based on questions, which must be answered by those responsible for the different areas under examination. Through the responses given, the auditor will obtain evidence that must be verified with alternative procedures which will help determine if the controls are operating as designed. The application of questionnaires will help to determine the critical areas in a uniform and reliable way.The application of questionnaires will help to determine the critical areas in a uniform and reliable way.The application of questionnaires will help to determine the critical areas in a uniform and reliable way.
The narrative method consists of a detailed description of the most important procedures and the characteristics of the internal control system for the different areas, mentioning the records and forms that intervene in the system. The graphic method, also called flowcharts, consists of revealing or describing the organic structure of the areas under examination and of the procedures using conventional symbols and explanations that give a complete idea of the entity's procedures; Its advantages are that: It identifies the absence of financial and operational controls; It allows a panoramic view of the operations or the entity; Identify deviations from procedures; Identify excess or missing procedures;Facilitates understanding of the auditor's recommendations to management on accounting or financial matters; The evaluation must ensure the integrity and accuracy of the operations carried out by the economic entity.
Among the evaluation techniques; We have: 1. Eye verification techniques, among these are: Comparison, Observation, Selective Review, Tracking. 2. Verbal verification techniques: Inquiry. 3. Written verification techniques: Analysis: Reconciliation; Confirmation. 4. Techniques of documentary verification: Verification, Computing. 5. Physical verification techniques: Inspection. All these evaluation techniques can be found applied in the different types of articles that have to do with this topic in the financial channel. The graphic evaluation form and quantifies the level of performance of the company, is based on: The criteria or areas to be evaluated; The ordering of commitments; The sub-areas or units to be evaluated within the respective area; Control qualification; Deviation marks;Compliance with recommendations; Study and evaluation of the internal control system.
According to Ballesteros (2014), within the framework of the internal control evaluation, the auditor has to understand the structure, policies, procedures and qualities of the company's personnel, in order to: protect its assets, ensure the validity of the information, promote efficiency in operations, and stimulate and ensure compliance with the policies and guidelines issued by management. Controls in internal control can be characterized as either accounting or administrative: 1. Accounting controls include the organization plan and all the methods and procedures whose mission is to safeguard assets and the reliability of accounting records.; two.Administrative controls are related to the regulations and procedures existing in a company related to operational efficiency and compliance with management policies and normally only indirectly influence the accounting records. It is obvious that the independent auditor must focus his work on accounting controls due to the repercussions that these have on the preparation of financial information and, therefore, for the purposes of technical standards, internal control is understood to be limited to accounting controls. However, if the auditor believes that certain administrative controls may be important with respect to the annual accounts, they should review and evaluate them. The implementation and maintenance of an internal control system is the responsibility of the entity's management,that you must subject it to continuous monitoring to determine that it is working as prescribed.
Todo sistema de control interno tiene unas limitaciones. Siempre existe la posibilidad de que al aplicar procedimientos de control surjan errores por una mala comprensión de las instrucciones, errores de juicio, falta de atención personal, fallo humano, etc. Las transacciones son el componente básico de la actividad empresarial y, por tanto el objetivo primero del control interno; La transacción origina un flujo de actividad desde su inicio hasta su conclusión. Tendremos flujos de ventas, compras, costes, existencias, etc. Las cuatro fases son: autorización, ejecución, anotación, y contabilización. Por definición, todo sistema de control interno va estrechamente relacionado con el organigrama de la empresa. Este debe reflejar la auténtica distribución de responsabilidades y líneas de autoridad.
The duties of a group of employees must be assigned in such a way that one or more of these employees, acting individually, check the work of the others. It is essential that every company has a clear and well planned organization and each of its members has an appropriate knowledge of their role.
According to Ortega (2014), the evaluation of internal control is a process carried out by the auditors and comprises two phases: 1. The preliminary review of the system in order to know and understand the procedures and methods established by the entity. 2. Performance of compliance tests to obtain reasonable assurance that the controls are in use and that they are operating as designed. The degree of reliability of an internal control system can be determined by: questionnaire, flow chart. A questionnaire, using closed questions, will allow to form a guiding idea of the audit work. It must be done by areas, and the auditing companies have ready-made models applicable to their clients.The graphic representation of the system will allow us to carry out an adequate analysis of the control points that the system itself has, as well as its weak points that indicate possible improvements in the system. It is about the graphic representation of the document flow, the operations carried out with them and the people involved.
This system is very useful in repetitive operations, such as the sales system in a commercial company. In the case of individualized operations, such as the acquisition of investment goods, the graphic representation is usually not very efficient. The information that must be part of a flow diagram is: the procedures to initiate the action, such as the authorization of the supply, allocation to cost centers, etc.; the nature of routine checks, such as number sequences, prices in purchase requisitions, etc; the division of functions between departments, the sequence of operations, the destination of each of the documents (and their copies); the identification of custodial functions.A compliance test is the examination of the available evidence that one or more internal control techniques are operating during the audit period.
The auditor should obtain audit evidence by testing compliance with: Existence: control exists; Effectiveness: the control is working efficiently; Continuity: the control has been working for the entire period. The objective of compliance tests is to be satisfied that a control technique was operating effectively during the entire audit period; Period in which the tests are developed and their extension. The independent auditors may perform the compliance tests during the preliminary period. When this is the case, the application of such tests to the entire remaining period may not be necessary, depending mainly on the result of these tests in the preliminary period as well as the evidence of compliance, within the remaining period,that can be obtained from substantive tests performed by the independent auditor. The determination of the extent of the compliance tests will be carried out on statistical or subjective bases.
Statistical sampling is, in principle, the ideal means to express in quantitative terms the auditor's judgment regarding reasonableness, determining the extent of the tests and evaluating their result. When subjective bases are used, the reasons that have led to such choice must be recorded in the working papers, justifying the criteria and bases of selection. Once the questionnaires have been carried out and the system graphically represented in accordance with the procedures, we have to combine both in order to carry out an analysis and identify the strengths and weaknesses of the system. In this identification work, the ability to understand the system and understand the strengths and weaknesses of its internal control primarily influences.The combination of both will give us the level of confidence of the controls that operate in the company, and it will be necessary to determine if the errors have a direct impact on the financial statements, or if the strengths of the control would eliminate the error.
PERFORMANCE AUDIT:
For Fuentes (2014), performance auditing consists of operational or management oversight, that is, they are an independent and objective review of government tasks, programs or organizations, by estimating the results in qualitative or quantitative terms, or both, which therefore verifies the effect on social and economic conditions, thus meeting the criteria of effectiveness, efficiency and economy. Efficiency of the public task and with which the objectives of the audited entity and the results achieved in relation to those intended have been carried out. This criterion is measured by results with strategic and impact indicators.
Government efficiency, which refers to the optimization of the use of resources. This aspect is analyzed by the Supreme Audit Institutions (SAIs) through the examination of information systems and control and performance measures. This criterion is measured by the fidelity of the operation to the design of the program in question, with management indicators, comparing them with the best governmental practices. Economy, focuses on the control of activities in accordance with reasonable administrative principles and practices and with the applicable guidelines. This criterion is measured by the cost of the public policy evaluated against the results, taking into account the lowest possible cost.
The relevance of this type of audit lies in the fact that it provides an independent, but not repetitive, examination of public policies, verifying their impact on the target populations through quality indicators (eg degree of citizen satisfaction); it examines the validity and reliability of performance measurement systems, and allows analyzing the behavior of the political actors involved (both that of the entities responsible for implementing the policies, as well as that of their operators). Furthermore, the key point of performance audits is that, by comparing the measurement of the results of programs and public policies with the corresponding objectives and with the means for their implementation, and by enabling the analysis of operational processes,This type of review allows evaluating how well public programs operate according to the economy, efficiency, and effectiveness of government activities. Thus, it is feasible to know the degree of fulfillment of the purposes or objectives proposed by public policies.
Considering the foregoing and despite their evident contribution to strengthening accountability, at the global level the practice of these audits is not homogeneous and in most countries it is still incipient due to limited methodological advances, contrary to what happens with the vast existing regulations for conducting financial audits. Few SAIs that are members of the International Organization of Supreme Audit Institutions (INTOSAI) report substantial progress in the generation of guidelines for the practice of performance audits under specific criteria and requirements. For this reason, within INTOSAI, the Subcommittee for Performance Auditing was established to publish standards and guidelines for the implementation of performance audits.
It is worth highlighting the work done in trying to keep abreast of new developments in the field. This has facilitated the adoption of good international practices, resulting in the development of a methodology that, together with practice, has been progressively improved. Thus, institutional efforts have been directed towards focusing performance audits on a systematic, interdisciplinary, organized, objective, purposeful, independent and comparative review of the social impact of public management and the consistency between what was proposed and what was obtained.
In the same sense Estupiñán (2012); points out that performance auditing measures the social impact of public management and compares what was proposed with what was achieved. This exam includes the identification of strengths, weaknesses and opportunities for improvement. The purpose is to know if the public entities fulfilled their objectives, goals and attributions, and if they exercised the resources in accordance with the regulations and the purpose for which they were assigned. The evaluation criteria used are effectiveness, efficiency and economy, as well as the quality of goods and services, citizen satisfaction and the behavior of the actors, when appropriate.
It also indicates that the performance audit involves the execution of an objective, systematic and professional examination of evidence, carried out in order to provide an independent evaluation of the performance (performance) of the entity aimed at improving the effectiveness, efficiency and economy in the use of public resources, to facilitate decision-making by those responsible for taking corrective actions and improving their accountability to the public. The development of the Performance audit involves the evaluation of the effectiveness, efficiency and economy in the operations of an entity, as well as the verification of the cost / benefit relationship; performance, returns, achievements, results, etc.The development of the Performance audit by its approach involves a systematic review of the activities of an entity in relation to the fulfillment of objectives and goals (effectiveness) and, regarding the correct use of resources (efficiency and economy). Its general purpose can be seen below: Performance evaluation (performance); Identification of improvement opportunities; and Development of recommendations to promote improvements or other corrective actions.
Performance evaluation refers to the evaluation of the performance obtained by an entity. This evaluation implies comparing the route followed by the entity when conducting its activities with: a) the objectives, goals, policies and standards established by the legislation or by the entity itself, and b) other reasonable evaluation criteria.
The identification of opportunities for improvement refers to the increase in the conditions of effectiveness, efficiency and economy, constituting the categories under which improvements in operations can be classified. Opportunities for improvement can be identified through information analysis, interviews with officials of the entity or outside of it, observing the operations process, reviewing the internal reports of the past and present and, exercising professional judgment based on the experience of the auditor or in other sources.
The Development of recommendations to promote improvements or other corrective actions refers to the nature and scope of the recommendations made in the Performance audit process is variable. In some cases, recommendations may be made on specific matters; However, in other cases, after analyzing the cost / benefit of implementing recommendations on highly complex activities, it may be feasible to suggest that the entity itself carry out a more in-depth study of the specific area and adopt the improvements it deems appropriate, in the circumstances.
Meanwhile for Hernández (2012); points out that the performance audit is a broad examination of the entity's administrative systems, for this purpose the personnel, treasury, supply, budget, debt, accounting and control system is examined; all in order to determine the degree of economy, efficiency and effectiveness with which the resources and activities of these entities are managed. The development of the performance audit involves the a priori determination of the objectives, such as: i) Determining the degree to which the results or benefits provided by the legal regulations are being achieved, by the entity itself, the program or project, according to be the case; ii) Establish whether the entity acquires, protects and uses its resources efficiently and economically; iii) Determine if the entity,program or project has complied with applicable laws and regulations regarding efficiency and economy; iv) Establish whether the managerial controls implemented in the entity or project are effective and ensure the efficient development of activities and operations.
For Herrador (2012); it is established that the performance audit considers a selective examination of the components of institutional management, such as effectiveness; efficiency; economy; the financial aspect and compliance with the rules. In this regard, effectiveness: refers to the degree to which a government program or project entity achieves its objectives and goals or other benefits that were intended to be achieved, provided for in the legislation or established by another authority. Efficiency refers to the relationship between the goods or services produced or delivered and the resources used for that purpose (productivity), compared to an established performance standard. The economy is related to the terms and conditions under which entities acquire resources, be they financial, human,physical or technological (Computerized Information System), obtaining the required quantity, at a reasonable level of quality, at the appropriate time and place, and at the lowest possible cost.
The financial component is essential to have adequate accounting and appropriate procedures for the preparation of financial reports. In a Performance audit, the financial component may constitute only one element to be considered in the evaluation of other areas in the examined entity. Compliance is generally executed with the financial component. Compliance refers to the subjection of public officials to applicable laws and regulations and internal policies and procedures.
Within its scope, the performance audit can incorporate elements of a financial, compliance, effectiveness, efficiency and economy nature.
Government auditing standards are applicable for the development of performance auditing, since they constitute criteria that strengthen and standardize its exercise, as well as allow evaluating the development and result of the work performed. However, such guides do not contain all the information the auditor needs to satisfy, for example, the requirement to properly plan their work or determine the magnitude of the evidence necessary to support an observation; since many aspects have to do with the good judgment and criteria of the auditor.
However Hevia (2012); indicates that the performance audit involves carrying out an evaluation process that includes three major phases such as Planning; Execution; e, Report.
Regarding Planning: Although the activities related to planning have a greater incidence at the beginning of the examination, they continue during the execution and even in the formulation of the report, because while the final document is not approved and distributed, its content may be subject to to adjustments, product of new decisions that will force to refine the planning still in the phase of the report. The formulation of the report does not begin in the third phase, but begins to be considered from the planning stage. During planning, the audit team is basically dedicated to obtaining an adequate understanding and knowledge of the activities of the entity to be examined, carrying out limited review actions, based on the provisions of the strategic review plan, with the object of determining, among other aspects,the objectives and scope of the exam, as well as the conditions to carry them out. During this phase the auditor dedicates his best efforts to planning the strategy to be used in the case of the audit.
The execution involves the collection of documents, tests and analysis of evidence, to ensure its sufficiency, competence and relevance, in order to accumulate them for the formulation of observations, conclusions and recommendations, as well as to certify having carried out the examination of in accordance with the quality standards established in this manual. During the execution phase, audit procedures and techniques are applied and includes: tests and evaluation of controls, identification of findings (condition and criteria), development of observations (including condition, criteria, cause, effect and evaluation of comments from the entity) and communication of results to the officials of the entity, program and / or project examined;
The Report is the third phase, in which the audit team formalizes its observations in the audit report. This document, which is the final product of the examination, must detail, in addition to the elements of the observation (condition, criteria, cause and effect), comments from the entity, the final evaluation of such comments, as well as the conclusions and recommendations. After the quality control, by which the quality standards used in the preparation of the report are confirmed, it is finally approved and sent to the audited entity, in the form and manner established by the rules of the governing body of government control.
Meanwhile Tuesta (2012); notes that performance auditing includes management in the most convenient way possible. Since the development of the performance audit involves the participation of teams and of the highest possible level; which must be administered to fulfill the activities and missions entrusted. The audit teams are multidisciplinary in nature, made up of professionals from various specialties, skills and levels of experience. Such teams generally include: Audit Manager; Supervisor; Auditor in charge; Auditors; Specialists and Assistants: i) The Audit Manager or equivalent managerial level has responsibility for the Performance audit, from the selection of the entity to be examined and planning, to the formulation of the corresponding Report,as well as in terms of compliance with the policies set for its implementation. Your responsibilities include:
Acquire in-depth knowledge of the entity under examination, coordinate the aspects related to the information gathering and analysis process; Monitor that the audit planning process has been developed satisfactorily; Ensure that the findings, observations, conclusions and recommendations are valid, appropriate and pertinent; Manage the personnel in charge of the audit and the financial resources assigned to it; Establish an appropriate information flow with the team leader and members of the audit team and officials of the audited entity; Follow up on the development of the work, so that the deadlines established for the completion of the work are met; Safeguard compliance with government auditing standards;ii) For each audit, responsibility for its management should be assigned to the Supervisor and an experienced auditor in charge. Their responsibilities include: Formulating and executing the strategic review plan and preparing the strategic review report; Examine the area (s) and each activity in the execution phase; Safeguard compliance with the deadlines established for the completion of the work; Supervise the work carried out by the members of the audit team, ensuring compliance with the tasks set out in the detailed work programs; Comply with and ensure compliance with government auditing standards and the provisions contained in the Government Audit Manual-MAGU;iii) The members of the audit team are the ones who develop the execution phase and have contact with the officials and employees of the audited entity, in order to obtain evidence, carry out tests, prepare work papers and coordinate the work of the assistants of audit that collaborate in the formation of current work files. Likewise, it has participation in the planning and organization of the detailed audit programs to be used in the execution phase.has participation in the planning and organization of the detailed audit programs to be used in the execution phase.has participation in the planning and organization of the detailed audit programs to be used in the execution phase.
At a normative level, there is Gálvez (2012), who maintains that the objectives pursued by the Performance audit with an effectiveness approach are: Determine the degree to which the results or benefits provided by the applicable legal regulations are being achieved or, by the entity that approved the program; The effectiveness of the entities, programs; If the entity has complied with the laws and regulations applicable to the program or activity.
Within the general planning actions of the audits, programs or activities that appear to show no problems or some difficulties can be selected; However, before defining the course to follow, it must be taken into account whether the entity to be examined: Is recently created or has been previously evaluated; It is developing very rapidly and is national in scope; It comprises an area of great interest to the Congress of the Republic or the Executive Power; You have a very large budget allocation or you may be authorized more resources in the future.
The activities carried out by the auditor should be oriented, mainly, to the following aspects: Objectives of the program or activity; Evaluation criteria; Evaluation and presentation of reports on effectiveness; and, Performance of the effectiveness evaluation system.
The main concern for the auditor is to properly understand the objectives of the program and how they relate to the expected results. The objectives and goals of the programs should be specified as precisely as possible, since otherwise it would be difficult to determine whether the program or activity is achieving the expected results. Unless there is clarity and detail in the objectives or benefits that are expected to be achieved, the evaluation of the programs or the information system oriented towards the evaluation of such objectives, will have limited use as a management tool or feedback mechanisms for the decision making. Therefore, it is important that the program or activity has defined the following elements: Clear and measurable objectives and goals; Compliance deadlines and financial cost.
It is possible that in the course of the audit there will be cases in which both the legal regulations and the program itself have not clearly established objectives and goals. In this case, the auditor must obtain the authorized opinion of the responsible officials and arrive at coinciding points of view, as a prior step to defining the criteria to be used for measuring and evaluating the degree of progress obtained. If an adequate understanding of this matter is not reached, the auditor will have to conclude that the program or activity under examination has not established clear and measurable objectives and goals and, consequently, it is not feasible to measure the achievement of the physical goals achieved, for be unattainable, unreal, or non-existent.
Another situation that could arise is that the physical goals corresponding to the program or activity examined have undergone significant changes over time. These facts, which apparently refer to increases or decreases inherent to government management, should lead the auditor to carry out a more exhaustive analysis, in order to determine the potential effects of such events on the goals initially established by the programs.
Not all program objectives can be properly evaluated, since there are several factors that could affect the nature of the measures to be implemented. Efforts to measure how and to what extent the objectives and goals are achieved within a program or other benefits, can be based on a system of continuous performance measurement (performance) or on periodic evaluations of the program or activity, generally of quantitative character.
The procedures established by the program to measure effectiveness must reflect the most appropriate techniques and their costs must be duly justified. When the effectiveness criteria are supported in a performance information system, the auditor should examine the way in which its use was planned, the validity and reliability of such criteria, the accuracy of the data it provides, and the propriety of the standards. established to evaluate performance.
Performance evaluation is an inherent responsibility of the program or activity, since it constitutes the first source of information to know the progress made in the achievement of objectives and goals. These evaluations are performed by the entity's own personnel or third parties. In this context, the auditor must review the data from the performance evaluation, in order to establish whether the evaluation criteria and measurement methods used are reliable and reasonable and, above all, whether the information obtained has the same attributes.
If, in the execution phase, situations such as: non-existence of performance evaluation reports or lack of reliable data on the results obtained are identified, such factors could constitute limitations for carrying out an objective evaluation of the achievements. In this case, the auditor should recommend that the examination program implement an appropriate information system to evaluate its performance.
During the audit, the procedures for organizing and managing the evaluation activities and information on the effectiveness of the program or activity should be examined. This task includes management controls, both for planning and compilation, as well as for the presentation of information on the effectiveness of the program or activity.
The information provided by the performance evaluations is a source that must be considered by the senior management of each entity when making decisions or designing specific policies for the program. The role of the auditor in this field is to determine whether the performance evaluation reports have been reported to the officials and whether they have considered them when making decisions.
For Bacón (2011); A performance audit, with a focus on the effectiveness of the programs, may include aspects such as: Objectives and goals of a program or those recently created or in execution, to establish whether these are appropriate, convenient or pertinent; Benefits to be achieved by a program or activity; Factors that are preventing satisfactory results; Compliance with laws and regulations applicable to the program; Management control system implemented by the program to evaluate effectiveness, prepare reports and monitor its execution; Alternatives adopted by the administration for the execution of activities at a lower cost.
The work related to the audit with an effectiveness approach can be oriented according to two perspectives: the results of the program or the management controls and procedures. When the focus is determined on the results of the program, the evaluation of effectiveness should begin by identifying its importance, this should allow examining the quality of the evaluations carried out by your administration and arriving at preliminary judgments about their effectiveness; however, the causes of the evaluation problems will generally be associated with the managerial controls and procedures used to evaluate the results. When the focus is management controls and procedures, the auditor should focus on the organization of the program and the criteria for conducting and evaluating its activities,with which it will be able to establish the degree of fulfillment of the governmental dispositions, as well as the way in which the activities are administered based on the criteria of effectiveness, efficiency and economy.
CONTRIBUTIONS FROM THE PERFORMANCE AUDIT:
BUSINESS ECONOMY:
According to Carmona (2014), business economics is related to the terms and conditions under which companies acquire resources, be they financial, human, physical or technological, obtaining the required quantity, at a reasonable level of quality, at the time and place appropriate and at the lowest possible cost. If these factors are not taken into account, it could result in goods or services at higher costs, of lower quality or obtained at the wrong time. An economic operation acquires such resources in appropriate quality and quantity and at the lowest possible cost. The distinction between economy and efficiency is often unclear. For example, if resources are obtained by paying premiums, this will have a direct impact on the unit cost of services. But, this situation is a matter related to the economy, not efficiency,that has to do with the use of the assets in the entity's operations.
BUSINESS EFFICIENCY:
According to Carmona (2014), business efficiency is the positive result after the adequate rationalization of resources, in accordance with the purpose sought by those responsible for management. It is also obtaining results with available resources. It is synonymous with a better use of time and movements in institutional processes. Efficiency is not so easy to achieve, all resources, policies, standards, processes, procedures, techniques and business practices have to be properly arranged. On the other hand, efficiency refers to the relationship between the goods or services produced or delivered and the resources used for that purpose (productivity), compared to an established performance standard.Entities will be able to guarantee their permanence in the market if they strive to carry out efficient business management, customer-oriented and with a sustained level of quality in the products and / or services it provides. Efficiency can be measured in terms of the results divided by the total costs and it is possible to say that the efficiency has grown by a certain percentage (%) per year. This measure of cost efficiency can also be inverted (total cost in relation to the number of products) to obtain the unit cost of production. This relationship shows the cost of production of each product. In the same way, the time (calculated for example in terms of man-hours) that it takes to produce a product (the inverse of labor efficiency) is a common measure of efficiency.Efficiency is the relationship between the results in terms of goods, services and other results and the resources used to produce them. Empirically, there are two important measures: i) Cost efficiency, where results are related to costs, and, ii) Work efficiency, where achievements refer to a key production factor: the number of workers. If an auditor intends to measure efficiency, he should begin the audit by analyzing the main types of results / outputs of the entity.the number of workers. If an auditor intends to measure efficiency, he should begin the audit by analyzing the main types of results / outputs of the entity.the number of workers. If an auditor intends to measure efficiency, he should begin the audit by analyzing the main types of results / outputs of the entity.
The auditor could also analyze the results by ascertaining whether the combination of results achieved is reasonable or by verifying the quality of these. When we use an efficiency approach for this purpose, the auditor should assess, when analyzing how the program has been executed, how well the company has handled the situation. This means studying the audited company to check how the work has been organized. Some questions that may be asked in the efficiency analysis are:
Were the feasibility studies of the projects realistic and formulated so that operations could be based on them ?; Could the project have been implemented in another way so that lower production costs would have been obtained ?; Are the working methods the most rational ?; Are there bottlenecks that could be avoided ?; Are there unnecessary overlaps in the delegation of responsibilities ?; How well do the different units cooperate to achieve a common goal ?; Are there any incentives for officials who strive to cut costs and complete work on time? Efficiency refers to the relationship between the services provided or delivered by the entities and the resources used for that purpose (productivity), in comparison with an established performance standard.Efficiency is the relationship between costs and benefits focused on finding the best way to do or execute tasks (methods), so that resources (people, vehicles, various supplies and others) are used in the most efficient way. rational possible.
Rationality implies adapting the means used to the ends and objectives that are to be achieved, this means efficiency, which leads to the conclusion that companies will be rational if the most efficient means are chosen to achieve the desired objectives, taking into account that the objectives that are considered are the organizational ones and not the individual ones. Rationality is achieved through rules and regulations that govern the behavior of the components in search of efficiency. Efficiency seeks to use the most appropriate means, methods and procedures that are properly planned and organized to ensure optimal use of available resources. Efficiency is not concerned with the ends, as it does with efficiency, if not with the means. Efficiency,It can be measured by the amount of resources used in the provision of services. Efficiency increases as costs and resources used decrease. It is related to the use of resources to obtain a good or objective.
BUSINESS EFFECTIVENESS:
According to Johnson and Scholes (2013), business effectiveness is the degree to which the entity achieves its objectives and goals or other benefits that it intended to achieve, provided for in the legislation or set by the Board of Directors. If an auditor is focused on effectiveness, he should begin by identifying the goals of the entity's programs and operationalizing the goals to measure effectiveness. You will also need to identify the target group for the program and seek answers to questions such as: Has the goal been achieved at a reasonable cost and within the established time ?; Was the target group defined correctly ?; Are people satisfied with the education and equipment provided ?; To what extent does the supplied equipment meet the needs of the target group ?;Is the equipment being used by citizens? Effective management is related to the fulfillment of the actions, policies, goals, objectives, mission and vision of the company; as established by modern business management.
According to Chiavenato (2013), business effectiveness is the process undertaken by one or more people to coordinate the work activities of other people in order to achieve high-quality results that a person could not achieve alone. Competitiveness comes into play in this framework, which is defined as the extent to which a company, under free market conditions, is capable of producing goods and services that pass the market test, while maintaining or expanding real income from your employees and partners. Also in this framework, quality is conceived, which is the totality of the features and characteristics of a product or service that refer to its capacity to satisfy expressed or implicit needs. Also effective management,It is the set of actions that allow obtaining the maximum performance from the activities carried out by the entity. Making the members of an entity work together more productively, enjoying their work, developing their skills and abilities and being good representatives of the company, presents a great challenge for its managers.
Management can be considered effective if: i) the entity's operational objectives are being achieved; ii) They have adequate information to the point of achieving the entity's operational objectives; iii) If the administrative, financial, economic, labor, patrimonial and other information of the entity is reliably prepared; and, iv) If the applicable laws and regulations are complied with. While institutional management is a process, its effectiveness is a state or condition of the process at a given time, the same one that exceeding the established standards facilitates achieving effectiveness. The determination of whether a management is “effective” or not and its influence on its effectiveness constitutes a subjective stance that results from the analysis of whether the five Internal Control components of the Report are present and functioning effectively:control environment, risk assessment, control activities, information and communication and supervision. The effective operation of management and control provides a reasonable degree of assurance that one or more of the categories of established objectives will be met.
According to Johnson and Scholes (2013), business effectiveness refers to the degree to which the entity achieves its objectives and goals or other benefits that it intended to achieve set by managers or required by society. Efficacy or effectiveness is the degree to which institutional objectives are achieved. In other words, the way in which a set of results is obtained reflects effectiveness, while the way in which resources are used to achieve them refers to efficiency. Efficacy is the normative measure of the achievement of results. The entities have indicators for measuring the achievements of the services. When these results or standards are achieved, the objective of good governance applied by this type of entity will have been achieved. For the entity to be effective,It must meet these three basic conditions: Achieve institutional objectives; Perform internal system maintenance; and, Adapt to the external environment.
According to Robbins (2013), within the framework of business effectiveness, company managers have a variety of techniques to achieve that the results conform to the plans. The basis of good governance and control of the entity is that the result depends on the people. Among the important considerations to ensure the results and therefore the effectiveness of the managers we have: the will to learn, the acceleration in the preparation of the management team, the importance of planning for innovation, evaluation and remuneration to the management team, adjustments of the information, need for management research and development, need for thought leadership, etc. The results obtained by effective management must not only occur for the entity itself,but especially it must be reflected in better services and citizen contentment, especially in the participatory context of modern management.
BUSINESS PRODUCTIVITY:
According to Robbins (2013), business productivity can be defined as the relationship between the amount of goods and services produced and the amount of resources used. In manufacturing, productivity is used to evaluate the performance of workshops, machines, work teams and employees. On the other hand, productivity in terms of employees is synonymous with performance. In a systematic approach we say that something or someone is productive with a quantity of resources (Inputs) in a given period of time, the maximum number of products is obtained. Productivity in machines and equipment is given as part of its technical characteristics. Not so with human resources or workers. Influencing factors must be considered. In addition to the ratio of quantity produced by resources used,in productivity other very important aspects come into play, such as: Quality: Quality is the speed at which goods and services are produced, especially per unit of labor or work. Productivity = Output / Inputs. Inputs: Labor, Raw material, Machinery, Energy, Capital. Outputs: Products. Same entrance, bigger exit. Smaller entrance same exit. Increase output decrease input. Increase output faster than input. Decrease the output less than the input.Smaller entrance same exit. Increase output decrease input. Increase output faster than input. Decrease the output less than the input.Smaller entrance same exit. Increase output decrease input. Increase output faster than input. Decrease the output less than the input.
Productivity is defined as the relationship between inputs and outputs, while efficiency represents the cost per unit of output. For example: In the case of laundry services, the productivity measure would be given by the relationship between the number of services per hour / company. Productivity would be measured from the cost of the service, which would be integrated not only by the time spent by the personnel providing the service, but also by all the other inputs involved in that particular event, such as materials for washing, time of service, etc. In companies that measure their productivity, the formula most frequently used is: Productivity: Number of units produced and Inputs used. This model applies very well to a manufacturing company,workshop or that manufactures a homogeneous set of products. However, many moderate companies manufacture a wide variety of products. The latter are heterogeneous both in value and in production volume and their technological complexity can present great differences. In these companies, overall productivity is measured on the basis of a defined number of "profit centers" that adequately represent the actual activity of the company. The formula then becomes: Productivity:In these companies, overall productivity is measured on the basis of a defined number of "profit centers" that adequately represent the actual activity of the company. The formula then becomes: Productivity:In these companies, overall productivity is measured on the basis of a defined number of "profit centers" that adequately represent the actual activity of the company. The formula then becomes: Productivity:
Production a + prod.b + prod. N… + Inputs used. Finally, other companies measure their productivity based on the commercial value of the products. Productivity: Net sales of the company / Salaries paid. All these measures are quantitative and the qualitative aspect of production is not considered in them (a product should be done well the first time and respond to the needs of the customers).
Any additional costs (restarts, remanufacturing, replacement, repair after sale) should be included in the productivity measure. A product can also have beneficial or negative consequences on the other products of the company. In effect, if a product satisfies the customer, he will be inclined to buy other products of the same brand; If the customer has been dissatisfied with a product, they will be inclined not to buy other products of the same brand again.
The cost related to the company's image and quality should be included in the productivity measure. In order to measure productivity progress, the Productivity Index (P) is generally used as a point of comparison: P = 100 * (Observed Productivity) / (Productivity Standard). Observed productivity is the productivity measured during a defined period (day, week, month, year) in a known system (workshop, company, economic sector, department, labor, energy, country) The productivity standard is the base productivity or earlier for reference. With the above we see that we can obtain different productivity measures, evaluate different systems, departments, companies, resources such as raw materials, energy, among others.But the most important thing is to define the trend through the use of productivity indexes over time in our companies, make the necessary corrections in order to increase efficiency and be more profitable.
Important elements to consider to increase the productivity of the company are human capital as the investment made by the organization to train and educate its members and the instructor of the working population, which are the knowledge and skills that are directly related to the results of the job. Productivity Index: In order to measure productivity progress, the Productivity Index (P) is generally used as a point of comparison: P = 100 * (Observed Productivity) / (Productivity Standard). Observed productivity is the productivity measured during a defined period (day, week, month, year) in a known system (workshop, company, economic sector, department, labor, energy, country). The productivity standard is the base or previous productivity that serves as a reference.With the above we see that we can obtain different productivity measures, evaluate different systems, departments, companies, resources such as raw materials, energy, among others.
But the most important thing is to define the trend through the use of productivity indexes over time in our companies, make the necessary corrections in order to increase efficiency and be more profitable. Important elements to consider to increase the productivity of the company are human capital as the investment made by the organization to train and educate its members and the instructor of the working population, which are the knowledge and skills that are directly related to the results of the job.
There are internal and external factors that affect productivity. Among the internal factors we have: Land and buildings; Materials; Energy; Machines and equipment; Human resource. Among the external factors we have: Availability of materials or raw materials; Skilled labor; State policies related to taxation and tariffs; Existing infrastructure; Availability of capital and interest; Adjustment measures applied
The only way for a business to grow and increase its profitability (or profits) is by increasing its productivity. And the fundamental instrument that causes greater productivity is the use of methods, the study of time and a system of payment of wages. Of the total cost to be covered in a typical company for manual metal products invoice, 15% is for direct labor, 40% for general expenses. It must be clearly understood that all aspects of a business or industry - sales, finance, production, engineering, costs, maintenance and administration - are fertile areas for the application of adequate methods, time study and systems of payment of wages.
It must be remembered that the philosophies and techniques of methods, time study, and wage payment systems are equally applicable in non-manufacturing industries. For example: Service sectors such as hospitals, government agencies and transportation. Whenever men, materials and facilities are brought together to achieve a certain objective, productivity can be improved through the intelligent application of the principles of methods, time studies and the wage payment system.
According to Johnson and Scholes (2013), business productivity is the relationship between the amount of products obtained by a production system and the resources used to obtain said production. It can also be defined as the relationship between the results and the time used to obtain them: the less time it takes to obtain the desired result, the more productive the system. In reality, productivity must be defined as the efficiency indicator that relates the amount of resources used with the amount of production obtained. Productivity assesses the capacity of a system to produce the products that are required and at the same time the degree to which they take advantage of the resources used, that is, the added value.
Higher productivity using the same resources or producing the same goods or services results in higher profitability for the company. Therefore, the company's quality management system tries to increase productivity. Productivity is directly related to the continuous improvement of the quality management system and thanks to this quality system, product quality defects can be prevented and thus improve the company's quality standards without reaching the end user. Productivity is related to production standards. If these standards are improved, then there is a saving of resources that is reflected in the increase of the utility.
The term global productivity is a concept that is used in large companies and organizations to contribute to the improvement of productivity through the study and discussion of the determinants of productivity and the elements that intervene in it. By way of example, it is indicated what the Collective Agreement of the company SEAT, SA establishes to define what they understand by total productivity: Study of work cycles and loads, as well as their distribution; Conjugation productivity-quality; Alternatives to production support in order to improve efficiency; Study of the lack of efficiency both from technical stoppages and rejections; Study of materials and work in progress; Advice and participation.
Although the term productivity has different types of concepts, basically two are considered: as labor productivity and as total factor productivity (TFP). Labor productivity or productivity per hour worked, is defined as the increase or decrease in yields based on the work required for the final product. Productivity per hour worked or labor productivity. Total factor productivity (TFP) is defined as the increase or decrease in returns in the variation of any of the factors involved in production: labor, capital or technique, among others. It is related to the performance of the economic process measured in physical or monetary units, by relation between the factors used and the products obtained.It is one of the terms that defines the objective of the technical subsystem of the organization. Productivity in machines and equipment is given as part of their technical characteristics. In addition to the ratio of quantity produced by resources used, other very important aspects come into play in productivity, such as: Quality: The quality of the product and the process refers to the fact that a product must be manufactured with the best possible quality according to its price and It must be manufactured right the first time, that is, without re-processes. Productivity = Output / Inputs. It is the efficiency ratio of the system, be it of labor or materials. Inputs: Labor, Raw Material, Machinery, Energy, Capital, Technical Capacity. Outputs: Products or services. Same entrance, bigger exit. Smaller entrance same exit.Productivity in machines and equipment is given as part of their technical characteristics. In addition to the ratio of quantity produced by resources used, other very important aspects come into play in productivity, such as: Quality: The quality of the product and the process refers to the fact that a product must be manufactured with the best possible quality according to its price and It must be manufactured right the first time, that is, without re-processes. Productivity = Output / Inputs. It is the efficiency ratio of the system, be it of labor or materials. Inputs: Labor, Raw Material, Machinery, Energy, Capital, Technical Capacity. Outputs: Products or services. Same entrance, bigger exit. Smaller entrance same exit.Productivity in machines and equipment is given as part of their technical characteristics. In addition to the ratio of quantity produced by resources used, other very important aspects come into play in productivity, such as: Quality: The quality of the product and the process refers to the fact that a product must be manufactured with the best possible quality according to its price and It must be manufactured right the first time, that is, without re-processes. Productivity = Output / Inputs. It is the efficiency ratio of the system, be it of labor or materials. Inputs: Labor, Raw Material, Machinery, Energy, Capital, Technical Capacity. Outputs: Products or services. Same entrance, bigger exit. Smaller entrance same exit.In addition to the ratio of quantity produced by resources used, other very important aspects come into play in productivity, such as: Quality: The quality of the product and the process refers to the fact that a product must be manufactured with the best possible quality according to its price and It must be manufactured right the first time, that is, without re-processes. Productivity = Output / Inputs. It is the efficiency ratio of the system, be it of labor or materials. Inputs: Labor, Raw Material, Machinery, Energy, Capital, Technical Capacity. Outputs: Products or services. Same entrance, bigger exit. Smaller entrance same exit.In addition to the ratio of quantity produced by resources used, other very important aspects come into play in productivity, such as: Quality: The quality of the product and the process refers to the fact that a product must be manufactured with the best possible quality according to its price and It must be manufactured right the first time, that is, without re-processes. Productivity = Output / Inputs. It is the efficiency ratio of the system, be it of labor or materials. Inputs: Labor, Raw Material, Machinery, Energy, Capital, Technical Capacity. Outputs: Products or services. Same entrance, bigger exit. Smaller entrance same exit.The quality of the product and the process refers to the fact that a product must be manufactured with the best possible quality according to its price and must be manufactured right the first time, that is, without re-processes. Productivity = Output / Inputs. It is the efficiency ratio of the system, be it of labor or materials. Inputs: Labor, Raw Material, Machinery, Energy, Capital, Technical Capacity. Outputs: Products or services. Same entrance, bigger exit. Smaller entrance same exit.The quality of the product and the process refers to the fact that a product must be manufactured with the best possible quality according to its price and must be manufactured right the first time, that is, without re-processes. Productivity = Output / Inputs. It is the efficiency ratio of the system, be it of labor or materials. Inputs: Labor, Raw Material, Machinery, Energy, Capital, Technical Capacity. Outputs: Products or services. Same entrance, bigger exit. Smaller entrance same exit.Products or services. Same entrance, bigger exit. Smaller entrance same exit.Products or services. Same entrance, bigger exit. Smaller entrance same exit.
Increase output decrease input. Increase output in greater proportion than input
Decrease the output less than the input.
Productivity improvement is obtained by innovating in: Technology; Organization; Human Resources; Labor Relations; Working conditions; Quality; Others.
Regarding productivity, sustainability and social impact; According to the hypotheses of neoclassical economics, productivity is evaluated according to the factors of production capital and labor only, ignoring the amount of natural resource used. This is a consequence of the time when the model was devised (19th century), in which there were no known limits to the exploitation of these resources. However, today the situation has evolved a lot and we know that we are getting closer and closer to the depletion of fossil fuels (see Peak oil) and various raw materials.
This translates into the fact that humanity's global ecological footprint exceeds the Earth's biocapacity to renew its natural resources. Thus, when productivity increases, in general, for the same amount of capital and labor, the amount of natural resource employed increases. This translates into a negative effect in terms of sustainability, except if the resources come from recycling. In the same way, if productivity increases, the number of hours worked to obtain the same amount of production decreases, so fewer workers are needed to maintain production, causing an increase in unemployment.
CONTINUOUS BUSINESS IMPROVEMENT:
According to Johnson and Scholes (2013), continuous institutional improvement is synonymous with change in all its context, policies, strategies, tactics, actions; processes, procedures and techniques that are being developed, all with the purpose of achieving efficiency, effectiveness, productivity and competitiveness in favor of its clients. Although it was always necessary to apply continuous improvement, avoiding being trapped in the molds that gave rise to past situations, today the changes are faster and more powerful, which is why continuing to see the processes with the paradigms of the past will lead to companies to the loss of competitiveness and then to its disappearance. It is necessary to constantly update the paradigms. Reviewing and criticizing these permanently becomes a necessity and an obligation.
Continuous improvement involves enlisting all members of the companies in a strategy aimed at systematically improving quality and productivity levels, reducing costs and response times, improving customer and consumer satisfaction rates, for that purpose. way to improve returns on investment and the company's market share.
Continuous improvement implies constantly reducing the levels of waste, something that is adapted to the current era marked by the need to safeguard scarce resources, but it also means continuously reducing the levels of pollution of the environment, something that is and will be every day most vital on a planet subject to deep and serious imbalances.
Soon, to access bank loans, it will not only be necessary to present updated balances of the financial situation, but it will also require reports from environmental auditors that certify the good management of care for the environment that companies make both in the development of their processes, and in the design of your products. For this reason, to the four factors currently monitored in the balanced scorecard, which revolve around the perspectives: financial, internal process, customer, and learning and staff growth, the one corresponding to the control of the effects on the environment, an aspect fully contemplated by ISO 14000 and subsequent standards.
Responding to the needs of customers to have goods and services at reasonable prices, of quality, that satisfy the requirements, in adequate quantity and deadlines, respecting the environment and avoiding ecological damage and human health, implies yes or yes to improve day by day to continue being the best. As in an Olympic competition, whoever conforms to his previous records is destined to be surpassed by his competitors and get away from the possibility of getting on the podium. In the market economy, getting on the podium means getting a significant market share. It should be remembered that most of this participation remains in the hands of the first positioned companies.
Interpreting Johnson and Scholes (2013), continuous improvement implies both the implementation of a system, as well as continuous learning of the organization, the monitoring of a management philosophy, and the active participation of all staff. Companies cannot continue to give the advantage of not making full use of the intellectual, creative and experience capacities of all their personnel. The time when some thought and others only worked has ended. As in collective sports where there was a thinking figure and others ran and sacrificed around him, today in teams everyone has the duty to think and run.
In the same way, as a product of social and cultural changes, in companies everyone has a duty to do their best for the success of these companies. Their jobs, their future and their possibilities for growth in personal and professional development depend entirely on it. Today company personnel must participate in work teams such as quality control circles, benchmarking teams, process improvement and problem solving teams. With different characteristics, special objectives and way of operating, they all have a similar fundamental goal: the continuous improvement of the processes and products and services of the companies.
Staying in old habits or work processes implies losing foreign markets, but also internal markets in the hands of competitors from the same region, the country itself or abroad that continuously lower the costs of their products and services, improve quality and delivery times, thereby consistently increasing the added value for its customers and consumers.
If continuous improvement is so evident and necessary, how is it feasible for many entrepreneurs and company directors to refuse to see and adopt it, or in other words, why they refuse to become aware of this imperative need. It can be said that they refuse for several reasons, the main ones being: firstly the much mentioned resistance to change, secondly the need for commitment, persistence and discipline that continuous improvement requires, thirdly possessing both an ethic of work, as a culture of believing and wanting continuous improvement, and fourthly, the demand for permanent learning. As mentioned at the beginning, the strong conservatism, which leads to not questioning any paradigm, added to the lack of mental openness to contemplate and understand the change in the environment,As well as the inability to see in continuous improvement a strategic advantage (or a disadvantage or weakness in case of not applying it) leads companies to remain firm in the processes, products, services and forms of management that allowed them to grow and develop in the past. But what until yesterday allowed them to compete today no longer allows them to even participate in the contest. For these purposes, the Fosbury Effect should be mentioned. For many years the most common way to perform the high jump was the "roller jump": the athlete ran up to the bar and launched himself in a rolling motion.services and forms of management that allowed it to grow and develop in the past. But what until yesterday allowed them to compete today no longer allows them to even participate in the contest. For these purposes, the Fosbury Effect should be mentioned. For many years the most common way to perform the high jump was the "roller jump": the athlete ran up to the bar and launched himself in a rolling motion.services and forms of management that allowed it to grow and develop in the past. But what until yesterday allowed them to compete today no longer allows them to even participate in the contest. For these purposes, the Fosbury Effect should be mentioned. For many years the most common way to perform the high jump was the "roller jump": the athlete ran up to the bar and launched himself in a rolling motion.
During the games held in Mexico during 1968, the athlete Dick Fosbury surprised the world by establishing a new Olympic brand and winning the gold medal with a new technique he had worked on for several years: the "Fosbury jump" consisting of running towards the bar and pass it by jumping on your back. Fosbury "changed the model" in the high jump, replaced a model by a new one in its entirety. Applying these concepts to the area of production, administration and management of companies, this implies that it is necessary to adopt the new techniques if the company is to be kept in competition, it is no longer useful to perfect the old methods. What can be said of those companies that do not even manage to perfect their own production methods.
Playing Johnson and Scholes (2013), continuous improvement does not imply trying to do better what has always been done. Continuous improvement implies applying creativity and innovation in order to continuously improve machine tool set-up times, improve the way work is organized, moving from work by process to work by product or in cells, improve staff training expanding their knowledge and experiences by increasing their work versatility. Improving means changing the way of seeing and producing quality, it means stopping controlling quality to start designing and producing it. All this and much more means continuous improvement, that is why so many flee from it, and that is why it is so necessary,which leads those who adopt it conscientiously and as a philosophy of life and work to improve not only the company, but also the quality of life at work.
TOTAL BUSINESS QUALITY:
Interpreting Terry (2013), total business quality is the most evolved stage within the successive transformations that the term Quality has undergone over time. At first we talk about Quality Control, the first stage in Quality management that is based on inspection techniques applied to Production. Later, Quality Assurance is born, a phase that seeks to guarantee a continuous level of quality of the product or service provided. Finally, what is known today as Total Quality is reached, a business management system closely related to the concept of Continuous Improvement and which includes the two previous phases.The fundamental principles of this management system are the achievement of the full satisfaction of the needs and expectations of the client (internal and external); development of a continuous improvement process in all the activities and processes carried out in the company (implementing continuous improvement has a beginning but not an end); total commitment of the management and active leadership of the entire management team; participation of all members of the organization and promotion of teamwork towards Total Quality Management; supplier involvement in the Total Quality system of the company, given its fundamental role in achieving Quality in the company; Identification and Management of the Key Processes of the organization, overcoming the departmental and structural barriers that hide these processes;management decision-making based on data and objective facts about management based on intuition. Information management dominion.
The philosophy of Total Quality provides a global conception that encourages Continuous Improvement in the organization and the involvement of all its members, focusing on the satisfaction of both internal and external customers. We can define this philosophy as follows: Quality Management (the governing body is fully committed) (customer requirements are understood and assumed exactly) Total (every member of the organization is involved, including the customer and the supplier, when this may be possible).
Total Quality is a strategy that seeks to guarantee, in the long term, the survival, growth and profitability of an organization, optimizing its competitiveness, through: the permanent assurance of customer satisfaction and the elimination of all types of waste. This is achieved with the active participation of all staff, under new leadership styles; Being the strategy that well applied, responds to the need to transform the products, services, processes, structures and culture of companies, to ensure their future. To be competitive in the long term and to achieve survival, a company will need to prepare with a global approach, that is, in international markets and not just in regional or national markets. Well, being excellent at the local level is no longer enough;to survive in today's competitive world you have to be on the world stage. Successfully adopting this strategy requires the organization to implement a process of permanent improvement. The process of converting ordinary people into excellent workers is facilitated if new hires are able to incorporate people who show skills and attitudes compatible with the proposed change. For this, the selection process should not only be limited to identifying specific skills and evaluating technical knowledge and experience that are required for a certain position, but also to finding people with creative and leadership capacity, versatility to perform more than one function, ability to work team up,ability to communicate and interact and ability to improve and recognize mistakes etc.
This way of proceeding, different from the traditional one, implies designing a more demanding but more interesting profile since it must consider aspects related to the values of the company, oriented towards Total Quality. that in the past have not been considered, with exceptions. In the context of Total Quality, it is recommended that the selection of new personnel is preferably made for positions at the operational level, and that positions of greater responsibility be covered with promotions and promotions of the company's own personnel. It is important that managers participate in the interviews and ask questions that make it possible to appreciate the degree of identification with the desired attitudes.Once the selection is concluded, the induction process comes, which consists of making the new staff aware of the main aspects of the organization's culture, such as: vision, mission, values and quality policies. This, if possible, should be explained by the top manager as organizations that have been implementing Total Quality processes usually do.
At this stage, the selected persons must receive all the general information related to the company, about the quality process, their rights and duties, the specific functions and responsibilities of their position, the expected rotation of positions, etc. They should be introduced to who your co-workers will be, so that you get to know your internal customers and suppliers. It is necessary to invest the necessary time in this Induction process so that the new worker gets involved and acquires the initial commitment and a favorable attitude towards Total Quality is obtained from him. For a good Induction work, the company must organize and prepare in advance all the documentation that is required for this purpose, including audiovisual media, booklets, job rotation plan, etc.
It is necessary for the company to adequately structure its Quality Training Plan, aimed at all levels of the organization, whose objectives must correspond to the strategic objectives of the organization. The preparation of this Plan must be in charge of the body in charge of promoting and supporting the implementation of the Total Quality process, and must have the approval of the Quality Committee or Council, which exercises leadership throughout the organization. The training objectives must explain what the Total Quality process is and what it consists of; promote the adoption of quality culture values; develop leadership skills and abilities for continuous quality assurance and improvement. For the Training Plan it is necessary to have the participation of the Advisor.The first training actions should be aimed at Senior Managers, having to cover topics such as the Philosophy of Quality, with emphasis on the strategic aspect, the topics of Leadership, Teamwork Techniques, Techniques for Structured Problem Solving and later others. more advanced techniques. All must be trained in the philosophy, methodologies and techniques of Total Quality, but in the middle and operational levels the emphasis on the strategic level should be less; rather, more attention should be paid to Improvement Techniques.Techniques for Structured Problem Solving and later other more advanced techniques. All must be trained in the philosophy, methodologies and techniques of Total Quality, but in the middle and operational levels the emphasis on the strategic level should be less; rather, more attention should be paid to Improvement Techniques.Techniques for Structured Problem Solving and later other more advanced techniques. All must be trained in the philosophy, methodologies and techniques of Total Quality, but in the middle and operational levels the emphasis on the strategic level should be less; rather, more attention should be paid to Improvement Techniques.
Training in Total Quality should seek not only the acquisition of new knowledge but also the change of attitudes and behavior. It should be borne in mind that this is not achieved only with a few lectures, it requires permanent action in which learning is reinforced with practice linked to their own work. For the training to be effective it must be theoretical-practical, use examples from the organization itself or similar, be dosed, train in what is going to be used and apply what has been learned in daily work. Through a good Personnel Training and Training Plan, we can ensure that they acquire knowledge and skills. However, this is not enough to get them involved. For people to adopt,It is necessary to create the conditions that avoid demotivation and facilitate the performance of the work.
Therefore, it is necessary, on the one hand, to physically improve the work environment by eliminating all other factors that cause demotivation, such as those referred to by Frederick Herzberg in his theory 'Hygiene and Motivation' and in which he points out: Inadequate policies, norms and procedures; Inadequate treatment by bosses towards their collaborators and among colleagues; - Unfair wages; Job instability; Inadequate control policies; Fear and search for guilty; Work overload; Inappropriate performance evaluation; Poor and cumbersome processes; Rivalries and Favoritisms, etc. The elimination of these factors although, as Herzberg says they do not motivate; However, their presence produces dissatisfaction and demotivation. Here are some actions to generate motivation and commitment:
Appreciation: It means making people important, offering them support, traveling to their jobs to greet them and appreciate their work, treating them by name, encouraging them in difficult times, thanking them for their efforts.
Sense of Belonging: Making them work as a team will make them feel motivated and committed.
Participation: To channel suggestions and improve their own work, as well as to solve problems.
Delegation and Autonomy: This is one of the most effective ways to achieve a high degree of motivation and commitment. It means giving workers to improve processes.
Recognition: It is based on the principle that there must be a difference between those who strive to do things well and those who do not. In this way, the worker's attitude of improvement is valued and his behavior in favor of quality is reinforced. Another of the points that an environment fosters is teamwork, which is used to encompass forms of collaboration that cover a very broad spectrum; from mutual help between two section chiefs who collaborate on an issue that affects their units to the joint work of a Board of Directors.
BUSINESS COMPETITIVENESS:
Interpreting Terry (2013), business competitiveness is a concept that refers to the ability of companies to produce goods and services efficiently (with declining costs and increasing quality), making their products attractive, both inside and outside from the country. Competitiveness is the characteristic of any organization to achieve its mission, more successfully than other competing organizations
Competitiveness is also the ability of a public or private organization, profitable or not, to systematically maintain comparative advantages that allow it to achieve, sustain and improve a certain position in the socio-economic environment. The term competitiveness is widely used in business, political and socio-economic circles in general. This is the reason for the broadening of the frame of reference of our economic agents who have gone from a self-protective attitude to a more open, expansive and proactive approach. Competitiveness has an impact on the way of planning and developing any business initiative, which is obviously causing an evolution in the company and businessman model.
The comparative advantage of a company would be in its ability, resources, knowledge and attributes, etc., that said company has, the same ones that its competitors lack or that they have to a lesser extent that makes it possible to obtain returns superior to those of those. The use of these concepts supposes a continuous orientation towards the environment and a strategic attitude on the part of large companies as well as small, recently created or mature companies and in general in any kind of organization. On the other hand, the concept of competitiveness makes us think of the idea "excellence", that is, with characteristics of efficiency and effectiveness of the organization. Competitiveness is not the product of chance nor does it arise spontaneously;It is created and achieved through a long process of learning and negotiation by representative collective groups that configure the dynamics of organizational behavior, such as shareholders, managers, employees, creditors, clients, by the competition and the market, and finally, the government and society in general. An organization, whatever its activity, if it wishes to maintain an adequate level of competitiveness in the long term, must use formal analysis and decision procedures sooner or later, within the framework of the "strategic planning" process. The function of this process is to systematize and coordinate all the efforts of the units that make up the organization aimed at maximizing overall efficiency. To better explain such efficiency, consider the levels of competitiveness,internal competitiveness and external competitiveness.
Internal competitiveness refers to the organizational capacity to achieve the maximum performance of available resources, such as personnel, capital, materials, ideas, etc., and transformation processes. When speaking of internal competitiveness, we get the idea that the company has to compete against itself, expressing its continuous effort to improve itself. External competitiveness is oriented to the elaboration of the achievements of the organization in the context of the market, or the sector to which it belongs. As the reference system or model is foreign to the company, it must consider exogenous variables, such as the degree of innovation, the dynamism of the industry, economic stability, to estimate its long-term competitiveness. The company, once it has reached a level of external competitiveness,It must be prepared to maintain its future competitiveness, based on generating new ideas and products and seeking new market opportunities.
Interpreting Stoner (2013), business competitiveness means a sustainable benefit for companies. It is the result of constant quality improvement and innovation. Competitiveness is strongly related to productivity: To be productive, educational services, capital investments and human resources have to be fully integrated, since they are of equal importance. Competitive reinforcement actions must be carried out to improve: The structure of the institution, the strategies, the competition between institutions, the conditions and the demand factors, the associated support services. Total quality is the key strategy for competitiveness. The world is experiencing a process of accelerated change and global competitiveness in an increasingly liberal economy,framework that requires a total change of approach in the management of organizations. In this stage of changes, companies seek to increase productivity rates, achieve greater efficiency and provide quality service, which is forcing managers to adopt participatory management models, taking the human element as a central basis, developing teamwork, to achieve competitiveness and respond in an appropriate way to the growing demand for products of the highest quality and services at all levels, increasingly efficient, faster and of better quality.which is forcing managers to adopt participatory management models, taking the human element as a central base, developing teamwork, to achieve competitiveness and respond in an appropriate way to the growing demand for high-quality products and services at all levels, increasingly efficient, faster and of better quality.which is forcing managers to adopt participatory management models, taking the human element as a central base, developing teamwork, to achieve competitiveness and respond in an appropriate way to the growing demand for high-quality products and services at all levels, increasingly efficient, faster and of better quality.
Interpreting Robbins & Coulter (2013), business competitiveness is the ability to generate the highest consumer satisfaction at the lowest price, that is, with production at the lowest possible cost. Competitiveness depends especially on the quality and innovation of the product; of the price level that depends on productivity and the differential inflation between countries. There are other factors that are supposed to have an indirect effect on competitiveness such as the quality of the product, the innovative quality of the product, the quality of the service or the corporate image of the producer.
Product quality is the ability to produce satisfiers (whether economic good or goods and services) that satisfy the expectations and needs of users. On the other hand, it also means correctly performing every step of the production process to satisfy the organization's internal customers and avoid faulty satisfiers. Its importance is based on the fact that the satisfied customer buys us again (in commercial organizations) or votes, collaborates and pays their taxes or donations with pleasure (for Government or Social Service organizations). The ability to produce more satisfiers (be they goods or services) with fewer resources. Productivity depends to a high degree on the technology (physical capital) used and the quality of the training of workers (human capital).
Higher productivity results in greater production capacity at equal costs, or lower cost at equal product. Lower cost allows for lower prices or lower budgets. Service as a component of competitiveness is the ability to treat your customers or citizens served, honestly, fairly, supportive and transparent, friendly, punctual, etc., leaving them satisfied with their relationships with the organization. Image: It is the ability of the organization to promote in the minds of many people the idea that it is the best alternative to obtain the goods or services that will satisfy their needs and expectations. Increasing international competitiveness is a central issue in the design of national socio-economic development policies.
The competitiveness of companies is a concept that refers to their ability to produce goods and services efficiently (with declining costs and increasing quality), making their products attractive, both inside and outside the country. For this, it is necessary to achieve high levels of productivity that allow increasing profitability and generating increasing income. A necessary condition for this is the existence, in each country, of a stable institutional and macroeconomic environment that transmits trust, attracts capital and technology, and a national environment (productive and human) that allows companies to absorb, transform and reproduce technology., adapt to changes in the international context and export products with greater technological addition.Such a necessary condition has characterized the countries that, in turn, have proven to be the most dynamic in world markets.
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