CURRENT ISSUE IN MANAGEMENT
he Fiscal Cliff Explained
“Fiscal cliff” is the popular shorthand term used to describe the conundrum that the U.S.
government will face at the end of 2012, when the terms of the Budget Control Act of
2011 are scheduled to go into effect.
Among the changes that were set to take place at midnight on December 31, 2012 were
the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for
workers), the end of certain tax breaks for businesses, shifts in the alternative minimum
tax that would take a larger bite, a rollback of the "Bush tax cuts" from 2001-2003, and
the beginning of taxes related to President Obama’s health care law. At the same time,
the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go
into effect. According to Barron's, over 1,000 government programs - including the
defense budget and Medicare are in line for "deep, automatic cuts." Of the two, the tax
increases were seen as the larger burden for the economy.
The Fiscal Cliff Deal
Three hours before the midnight deadline on January 1, the Senate agreed to a deal to
avert the fiscal cliff. The Senate version passed two hours after the deadline, and the
House of Representatives approved the deal 21 hours later. The government technically
went "over the cliff," since the final details weren't hashed out until after the beginning of
the New Year, but the changes incorporated in the deal will be backdated to January 1.
The Congressional Budget Office estimates that current plan includes $330.3 in new
spending during the next ten years, and it will increase the deficit by $3.9 trillion in that
time period despite raising taxes on 77.1% of U.S. households. Bloomberg reports,
"More than 80 percent of households with incomes between $50,000 and $200,000
would pay higher taxes. Among the households facing higher taxes, the average
increase would be $1,635, the policy center said. A 2 percent payroll tax cut, enacted
during the economic slowdown, is being allowed to expire as of (December 31)." The
payroll tax, which was reduced to 4.2% in 2011 and 2012, returns to 6.2% in 2013. This
is expected to take about $120 billion out of the economy, which should have a negative
impact of about seven-tenths of one percent on GDP growth.
The deal also gives U.S. taxpayers greater certainty regarding the alternative minimum
tax, and a number of popular tax breaks - such as the exemption for interest
on municipal bonds - remain in place.
Did the Deal Accomplish Anything?
The fiscal cliff agreement is good news to some extent, although it shouldn't be ignored
that lawmakers had 507 days (since the August, 2011 debt ceiling agreement) to
address this problem, but still came down to the final hours before they were able to
reach a solution - an unnecessary, self-inflicted burden on the economy and financial
markets. What's more, the agreement addressed only the revenue side (taxes) but
postponed any discussion of spending cuts for another two months. Also, it's important
to keep in mind that higher taxes were the most important element of the cliff, and taxes
are in fact going up as part of the deal. While the problem is therefore "solved" in the
sense that the debate is over, a portion of the concerns related to the cliff indeed came
to fruition. And on a longer-term basis, the cliff deal did little to address the country's
debt load - which currently stands at $16.4 trillion and counting.
The 2012 Fiscal Cliff Debate
In dealing with the fiscal cliff, U.S. lawmakers had a choice among three options, none
of which were particularly attractive:
They could have let the policies scheduled for the beginning of 2013 – which features
a number of tax increases and spending cuts that are expected to weigh heavily on
growth and possibly drive the economy back into a recession – go into effect. The
plus side: the deficit would have fallen significantly under the new set of laws.
They could have cancelled some or all of the scheduled tax increases and spending
cuts, which would have added to the deficit and increased the odds that the United
States would face a crisis similar to that which is occurring in Europe. The flip side of
this, of course, is that the United States' debt would have continued to grow.
They could have taken a middle course, opting for an approach that would address
the budget issues to a limited extent, but that would have a more modest impact on
growth. This is ultimately the course lawmakers choice in the agreement reached on
December 31, 2012.
The fiscal cliff was a concern for investors and business since the highly partisan nature
of the political environment made a compromise difficult to reach. Lawmakers had well
over a year to address this issue, but Congress – mired in political gridlock – put off the
search for a solution until the eleventh hour, rather than seeking to solve the problem
In general, Republicans wanted to cut spending and avoid raising taxes, while
Democrats sought a combination of spending cuts and tax increases. The agreement
currently on the table raises tax rates to 39.6% from 35% on individual with income of
more than $400,000 and on couples with incomes of more htan $450,000. It also lets
the 2% payroll tax cut expire and delays spending cuts for another two months. The
likely outcome of these changes is that economic growth will be pressured modestly,
but the country will not face the severe economic downturn it would have if all of the
laws related to the fiscal cliff had gone into effect.
The Worst-Case Scenario
If the current laws slated for 2013 had become law, the impact on the economy would
be dramatic. While the combination of higher taxes and spending cuts would reduce the
deficit by an estimated $560 billion, the CBO also estimated that the policy would have
reduced gross domestic product (GDP) by four percentage points in 2013, sending the
economy into a recession (i.e., negative growth). At the same time, it predicted that
unemployment would rise by almost a full percentage point, with a loss of about two
A Wall St. Journal article from May 16, 2012 estimated the following impact in dollar
terms: “In all, according to an analysis by J.P. Morgan economist Michael Feroli, $280
billion would be pulled out of the economy by the sunsetting of the Bush tax cuts; $125
billion from the expiration of the Obama payroll-tax holiday; $40 billion from the
expiration of emergency unemployment benefits; and $98 billion from Budget Control
Act spending cuts. In all, the tax increases and spending cuts make up about 3.5% of
GDP, with the Bush tax cuts making up about half of that.” Amid an already-fragile
recovery and elevated unemployment, the economy was not in a position to avoid this
type of shock.
The Term "Cliff" is Misleading
It's important to keep in mind that while the term “cliff” indicated an immediate disaster
at the beginning of 2013, this wasn't a binary (two-outcome) event that would have
ended in either a full solution or a total failure on December 31. There were two
important reasons why this is the case:
1) If all of the laws went into effect as scheduled and stayed in effect, the result would
undoubtedly be a return to recession. However, the chances that such a deal wouldn't
be reached were slim despite the length of time it took to come to an agreement.
2) Even if the deal did not occur before December 31, Congress had the options to
change the scheduled laws retroactively to January 1 after the deadline.
With this as background, it's important to keep in mind that the concept of "going over
the cliff" was largely a media creation, since even a failure to reach a deal by December
31 never ensured that a recession and financial market crash would occur.
The Next Crisis
Unfortunately, the fiscal cliff isn't the only problem facing the United States right now. At
some point in the first quarter, the country will again hit the "debt ceiling" - the same
issue that roiled the markets in the summer of 2011 and prompted the automatic
spending cuts that make up a portion of the fiscal cliff. To learn more about this issue,
see my article What is the Debt Ceiling? A Simple Explanation of the Debate and Crisis.
Project Portfolio Management (PPM) is the centralized management of processes,
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Different open source and commercial technology software can provide a critical,
enabling platform for PPM.
Definition of 'Portfolio Management'
The art and science of making decisions about investment mix and policy, matching
investments to objectives, asset allocation for individuals and institutions, and balancing
Portfolio management is all about strengths, weaknesses, opportunities and threats in
the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many
other tradeoffs encountered in the attempt to maximize return at a given appetite for
The Washington Accord
The Washington Accord, signed in 1989, is an international agreement among bodies
responsible for accrediting engineering degree programs. It recognizes the substantial
equivalency of programs accredited by those bodies and recommends that graduates of
programs accredited by any of the signatory bodies be recognized by the other bodies
as having met the academic requirements for entry to the practice of engineering.
Identify 3 topics that need to be discussed in the class.
Multi-millionaire in the Philippines
LT holdings – Lucia Tan
JG holdings – John Gokongwei
Vermont Holdings – Manny V. Pangilinan
Ayala land – Ayala
Mega World – Andrew Tan
Globalize scenario – topics to be chosen.
Collaboration in workplace
Built to last
The leadership difference by
Good to great by Jim Collins
The Toyota way by
The art of war
Who moved my cheese?
48 Laws of Power
Changes of the topics/trend of the chosen topics
Total quality management - is zero defect whether products or service.
Dr. W. Edwards Deming
Dr. Deming's Ideas Dr. Deming's famous 14 Points, originally presented in Out of
the Crisis, serve as management guidelines. The points cultivate a fertile soil in
which a more efficient workplace, higher profits, and increased productivity may
Create and communicate to all employees a statement of the aims and purposes
of the company.
Adapt to the new philosophy of the day; industries and economics are always
Build quality into a product throughout production.
End the practice of awarding business on the basis of price tag alone; instead, try
a long-term relationship based on established loyalty and trust.
Work to constantly improve quality and productivity.
Institute on-the-job training.
Teach and institute leadership to improve all job functions.
Drive out fear; create trust.
Strive to reduce intradepartmental conflicts.
Eliminate exhortations for the work force; instead, focus on the system and
(a) Eliminate work standard quotas for production. Substitute leadership methods
(b) Eliminate MBO. Avoid numerical goals. Alternatively, learn the capabilities of
processes, and how to improve them.
Remove barriers that rob people of pride of workmanship
Educate with self-improvement programs.
Include everyone in the company to accomplish the transformation.
The first of the 14 Points charges management with establishing continual improvement
through the redefinition of the company's purposes. Quite simply, the company must
survive, compete well, and constantly replenish its resources for growth and
In the fifth point, Dr. Deming states that only a commitment to a process of continual
improvement truly rewards. A company cannot expect to ignite and feed a quality
revolution from which it will prosper for all time. Instead, it must adopt an evolutionary
philosophy; such a philosophy prevents stagnation and arms the company for the
uncertain future. Part of the evolutionary mentality is to abandon practices that, despite
their obvious short term benefits, ultimately detract from the company's effectiveness.
Point number four specifically warns against this scenario: the purchasing department of
a company consistently patronizes those vendors who offer the lowest prices. As a
result, the company often purchases low quality equipment. Dr. Deming urges
companies to establish loyal ties with suppliers of quality equipment.
Point five condemns mass inspection procedures as inefficient; a product should be
monitored by the workers, throughout the assembly process, to meet a series of quality
standards. In the long term, the use of better equipment and a more intense workeroriented method of inspection will markedly improve productivity and lower costs. In
order to accomplish these goals, a company must develop a consistent, active plan that
involves its entire
Cooperation- Dr. Deming based his new business philosophy on an ideal of
cooperation. In order to fulfill its own potential, a company must harness the power of
every worker in its employment; for that reason, the third point bars shoddy
workmanship, poor service, and negative attitudes from the company.
Theory of Profound Knowledge -- In order to promote cooperation, Deming espouses
his Theory of Profound Knowledge. Profound knowledge involves expanded views and
an understanding of the seemingly individual yet truly interdependent elements that
compose the larger system, the company. Deming believed that every worker has
nearly unlimited potential if placed in an environment that adequately supports,
educates, and nurtures senses of pride and responsibility; he stated that the majority-85 percent--of a worker's effectiveness is determined by his environment and only
A manager seeking to establish such an environment must:
eliminate tools such as production quotas and sloganeering which only alienate workers
from their supervisors and breed divisive competition between the workers themselves.
form the company into a large team divided into sub-teams all working on different
aspects of the same goal; barriers between departments often give rise conflicting
employ sensible methods such as rigorous on-the-job training programs.
In the resulting company, workers better understand their jobs--the specific tasks and
techniques as well as their higher value; thus stimulated and empowered, they perform
The ideas of W. Edwards Deming may seem common or obvious now; however, they've
become embedded in our culture of work. Dr. Deming's ideas (and personal example) of
hard work, sincerity, decency, and personal responsibility, forever changed the world of
management. "It is not enough to just do your best or work hard. You must know what
Biography As the sun rose on the 20th century, a baby was born to the Deming family
in a small town in Iowa. W. Edwards Deming would become a colossus of modern
management thinking. He would live through most of the century, and have a
The Demings moved from Iowa to Wyoming, and in 1917, Edwards entered the
University of Wyoming. To fund his education, he worked as a janitor. He graduated in
1921, and went on to the University of Colorado, where he received a M.S. in physics
and mathematics. This led towards a doctorate in physics from Yale University.
From physics, Dr. Deming gravitated towards statistics. The U.S. Census Bureau hired
Dr. Deming in 1940, just at the time that the Bureau shifted its procedure from a
complete count to a sampling method. Upon completion of the 1940 census, Deming
began to introduce Statistical Quality Control into industrial operations. In 1941, he and
two other experts began teaching Statistical Quality Control to inspectors and
Dr. Deming started his own private practice in 1946, after his departure from the Census
Bureau. For more than forty years his firm served its clientele--manufacturers,
telephone companies, railways, trucking companies, census takers, hospitals,
governments, and research organizations. As a professor emeritus, Dr. Deming
conducted classes on sampling and quality control at New York University. For over ten
The teachings of Dr. Deming affected a quality revolution of gargantuan significance on
American manufacturers and consumers. Through his ideas, product quality improved
and, thus, popular satisfaction. His influential work in Japan--instructing top executives
and engineers in quality management--was a driving force behind that nation's
economic rise. Dr. Deming contributed directly to Japan's phenomenal export-led
growth and its current technological leadership in automobiles, shipbuilding and
electronics. The Union of Japanese Science and Engineering (JUSE) saluted its teacher
with the institution of the annual Deming Prize for significant achievement in product
quality and dependability. In 1960, the Emperor of Japan bestowed on Dr. Deming the
Stateside, the American Society for Quality Control awarded him the Shewhart Medal in
1956. In 1983, Dr. Deming received the Samuel S. Wilks Award from the American
Statistical Association and election to the National Academy of Engineering. President
Reagan honored him with the National Medal of Technology in 1987, and, in 1988, the
National Academy of Sciences lauded him with the Distinguished Career in Science
award. He was inducted into the Automotive Hall of Fame in 1991.
Dr. Deming was a member of the International Statistical Institute. He was elected in
1986 to the Science and Technology Hall of Fame in Dayton. From the University of
Wyoming, Rivier College, the University of Maryland, Ohio State University, Clarkson
College of Technology, Miami University, George Washington University, the University
of Colorado, Fordham University, the University of Alabama, Oregon State University,
the American University, the University of South Carolina, Yale University, Harvard
University, Cleary College, and Shenandoah University, Dr. Deming received the
degrees L.L.D. and Sc.D. honorius causa. From Yale University, he won the Wilbur
Lucius Cross Medal, and the Madeleine of Jesus from Rivier College.
Dr. Deming authored several books and 171 papers. His books, Out of the
Crisis (MIT/CAES, 1986) and The New Economics (MIT/CAES, 1994) have been
translated into several languages. Myriad books, films, and videotapes profile his life,
his philosophy, and the successful application of his worldwide teachings.
W. EDWARDS DEMING'S FOURTEEN PRINCIPLES OF
1. Create constancy of purpose towards improvement of product and service,
with the aim to become competitive, stay in business, and to provide jobs.
2. Adopt the new philosophy. We are in a new economic age. Western
management must awaken to the challenge, must learn their responsibilities, and
take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for
inspection on a mass basis by creating quality into the product in the first place.
4. End the practice of awarding business on the basis of price tag. Instead
minimize total cost. Move towards a single supplier for any one item, on a long
term relationship of loyalty and trust.
5. Improve constantly and forever the system of production and service, to
improve quality and productivity, and thus constantly decrease costs.
6. Institute training on the job.
7. Institute leadership (see point 12.) The aim of leadership should be to help
people and machines and gadgets to do a better job. Leadership of management
is in need of overhaul, as well as leadership of production workers.
8. Drive out fear so that everyone may work effectively for the company.
9. Break down barriers between departments. People in research, design, sales,
and production must work as a team, to foresee problems of production and in
use that may be encountered with the product or service.
10. Eliminate slogans, exhortations, and targets for the work force that ask for
zero defects and new levels of productivity.
11a. Eliminate work standards (quotas) on the factory floor. Substitute
11b. Eliminate management by objective. Eliminate management by numbers,
numerical goals. Substitute leadership.
12a. Remove barriers that rob the hourly worker of his right to pride of
workmanship. The responsibility of supervisors must be changed from sheer
numbers to quality.
12b. Remove barriers that rob people in management and in engineering of their
right to pride in workmanship. This means inter alia, abolishment of the annual or
merit rating and of management by objective, management by the numbers
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The
transformation is everybody's job.
W. EDWARDS DEMING'S SEVEN DEADLY DISEASES
1. Lack of constancy of purpose to plan product and service that will have a
market and keep the company in business, and provide jobs.
2. Emphasis on short-term profits: short-term thinking (just the opposite of
constancy of purpose to stay in business), fed by fear of unfriendly takeover, and
by push from bankers and owners for dividends.
3. Personal review systems, or evaluation of performance, merit rating, annual
review, or annual appraisal, by whatever name, for people in management, the
effects of which are devastating. Management by objective, on a go, no-go basis,
without a method for accomplishment of the objective, is the same thing by
another name. Management by fear would still be better.
4. Mobility of management; job hopping.
5. Use of visible figures only for management, with little or no consideration of
figures that are unknown or unknowable.
6. Excessive medical costs.
7. Excessive costs of liability.
Philip Crosby: The Fun Uncle of the Quality Revolution
"Do It Right the First Time"
Dr. Deming and Dr. Juran were the great brains of the quality revolution. Where Phil
Crosby excelled was in finding a terminology for quality that mere mortals could
understand. His books, "Quality Without Tears" and "Quality is Free" were easy to read,
so people read them. He popularized the idea of the "cost of poor quality", that is,
Like Frederick Taylor, Philip Crosby's ideas came from his experience on an assembly
line. He focused on zero defects, not unlike the focus of the modern Six Sigma Quality
movement. Mr. Crosby was quick to point out, however, that zero defects is not
something that originates on the assembly line. To create a manufacturing process that
has zero defects management must set the tone and atmosphere for employees to
follow. If management does not create a system by which zero defects are clearly the
objective then employees are not to blame when things go astray and defects occur.
The benefit for companies of such a system is a dramatic decrease in wasted resources
Mr. Crosby defined quality as a conformity to certain specifications set forth by
management and not some vague concept of "goodness." These specifications are not
arbitrary either; they must be set according to customer needs and wants.
Four Absolutes of Quality Management
1. Quality is defined as conformance to requirements, not as 'goodness' or
2. The system for causing quality is prevention, not appraisal.
3. The performance standard must be Zero Defects, not "that's close enough".
4. The measurement of quality is the Price of Nonconformance, not indices.
Philip Crosby was Born in West Virginia in 1926. After serving in WWII and the Korean
War he has worked for Crosley, Martin-Marietta and ITT where he was corporate vice
president for 14 years. Philip Crosby Associates, Inc., founded in 1979, was his
management consulting firm that served served hundreds of companies. Since retiring
in 1991 he has founded Career IV, Inc., Philip Crosby Associates II, Inc. and the Quality
College. Phil Crosby died in August, 2001, but his legacy will live on in better quality in
Here's an encomium from W. Noel Haskins-Hafer, a teacher of quality improvement: 'He
was one of the warmest and most focused people I ever had the pleasure to meet and
his common-sense approach will be missed by many.'
As an educator John Dewey revolutionized educational techniques and beliefs.
His teachings emphasize learning through doing and experiencing. Also, his
explorations of the roles of thinking and reflection have shaped the face of
education in the twentieth century. During his time many philosophers criticized
his works for being too radical, and often claimed his attempts to clarify issues
merely complicated them all the more. Dewey's theory of knowledge radically
differed from the views of his contemporaries who saw knowledge as a product
of thought. Dewey felt, however, that thought stemmed from humans' interactions
with their environments, much as Charles Darwin believed organisms evolved as
a result of their surroundings. And as thought stems from environmental
interactions, it is knowledge that guides the interaction according to Dewey. He
also wrote extensive studies on the the process of inquiry and reflection. He
outlined the steps organisms take from experiencing a "problematic situation," to
reflection of possible solutions, and finally implementing a solution. This
reflective process is essentially how organisms learn: through reflection and
experience. Some of Dewey's inspirational quotes:
"Education is not a preparation for life. Education is life itself."
"Every great advance in science has issued from a new audacity of the
"Failure is instructive. The person who really thinks learns quite as much from his
failures as from his successes."
A brilliant educator and philosopher, John Dewey was born in the fall of 1859 in the
Vermont town of Burlington. Later recognized as "The Father of Modern Education" he
attended school in Vermont and graduated from the University of Vermont in 1879. After
teaching high school in Pennsylvania and graduating from John Hopkins University
graduate philosophy department he went on to teach at the University of Chicago.
Finally, he moved to New York to teach at Columbia University where he spent the
remainder of his professional life. John Dewey died at the age of 92 on June 1, 1952
John Dewey (Internet Encyclopedia of Philosophy)
Frederick Herzberg: Exploring What Motivates Us
Any good manager knows that happy, satisfied workers will generally perform better
than those who don't feel as satisfied. However, managers have always had differing
During the 50's and 60's, a man named Fredrick Herzberg decided to carefully study
and research the key factors affecting a worker's performance. During his research, he
found that certain factors tended to cause a worker to feel unsatisfied with his or her job.
These factors seemed to directly relate to the employee's environment such as the
physical surroundings, supervisors and even the company itself. He developed a theory
According to his theory, for a worker to be happy and therefore productive, these
environmental factors must not cause discomfort. Although the elimination of the
environmental problems may make a worker productive, it will not necessarily motivate
him. The question remains, "How can managers motivate employees?" Many managers
believe that motivating employees requires giving rewards. Herzberg, however, believed
that the workers get motivated through feeling responsible for and connected to their
work. In this case, the work itself is rewarding. Managers can help the employees
connect to their work by giving them more authority over the job, as well as offering
direct and individual feedback.
Kaoru Ishikawa: One Step Further
Kaoru Ishikawa wanted to change the way people think about work. He urged managers
to resist becoming content with merely improving a product's quality, insisting that
quality improvement can always go one step further. His notion of company-wide quality
control called for continued customer service. This meant that a customer would
continue receiving service even after receiving the product. This service would extend
across the company itself in all levels of management, and even beyond the company
to the everyday lives of those involved. According to Ishikawa, quality improvement is a
continuous process, and it can always be taken one step further.
With his cause and effect diagram (also called the "Ishikawa" or "fishbone" diagram) this
management leader made significant and specific advancements in quality
improvement. With the use of this new diagram, the user can see all possible causes of
a result, and hopefully find the root of process imperfections. By pinpointing root
problems, this diagram provides quality improvement from the "bottom up." Dr. W.
Edwards Deming --one of Isikawa's colleagues -- adopted this diagram and used it to
teach Total Quality Control in Japan as early as World War II. Both Ishikawa and
Deming use this diagram as one the first tools in the quality management process.
Ishikawa also showed the importance of the seven quality tools: control chart, run chart,
histogram, scatter diagram, Pareto chart, and flowchart. Additionally, Ishikawa explored
the concept of quality circles-- a Japanese philosophy which he drew from obscurity into
world wide acceptance. .Ishikawa believed in the importance of support and leadership
from top level management. He continually urged top level executives to take quality
control courses, knowing that without the support of the management, these programs
would ultimately fail. He stressed that it would take firm commitment from the entire
hierarchy of employees to reach the company's potential for success. Another area of
quality improvement that Ishikawa emphasized is quality throughout a product's life
cycle -- not just during production. Although he believed strongly in creating standards,
he felt that standards were like continuous quality improvement programs -- they too
should be constantly evaluated and changed. Standards are not the ultimate source of
decision making; customer satisfaction is. He wanted managers to consistently meet
consumer needs; from these needs, all other decisions should stem. Besides his own
developments, Ishikawa drew and expounded on principles from other quality gurus,
including those of one man in particular: W. Edwards Deming, creator of the Plan-DoCheck-Act model. Ishikawa expanded Deming's four steps into the following six:
Determine goals and targets.
Determine methods of reaching goals.
Engage in education and training.
Check the effects of implementation.
Take appropriate action.
Ishikawa. K., (Lu. D. J. trans.), 1985, What is Total Quality Control?, PrenticeHall Inc., Englewood Cliffs, NJ.
SkyMark's Management Tools Page: Cause and Effect Diagrams
Joseph M. Juran
Joseph M. Juran made many contributions to the field of quality management in his 70+
active working years. His book, the Quality Control Handbook, is a classic reference for
quality engineers. He revolutionized the Japanese philosophy on quality management
and in no small way worked to help shape their economy into the industrial leader it is
today. Dr. Juran was the first to incorporate the human aspect of quality management
The process of developing ideas was a gradual one for Dr. Juran. Top management
involvement, the Pareto principle, the need for widespread training in quality, the
definition of quality as fitness for use, the project-by-project approach to quality
improvement--these are the ideas for which Juran is best known, and all emerged
A Lifetime of Professional and Worldwide Quality
Braila, Romania. December, 1904. The threadbare Jakob Juran family welcomes a
newborn son, Joseph Moses. Five years later Jakob leaves Romania for America. By
1912, he has earned enough to bring the rest of the family to join him in Minnesota.
Despite this hopeful emigration and American opportunities, the family continues in
Young Joseph Juran demonstrates his affinity for knowledge; in school, his level of
mathematical and scientific proficiency so exceeds the average that he eventually skips
the equivalent of four grade levels. In 1920, he enrolls at the University of Minnesota,
the first member of his family to pursue higher education. By 1925, he had received a
B.S. in electrical engineering and is working with Western Electric in the Inspection
Department of the famous Hawthorne Works in Chicago. The complexity of this
enormous factory, manned by 40,000 workers, presents Juran with his first challenge in
In 1926, a team of Quality Control pioneers from Bell Laboratories brought a new
program to Hawthorne Works. The program, designed to implement new tools and
techniques, required a training program. From a group of 20 trainees, Juran became
one of two engineers for the Inspection Statistical Department, one of the first of such
By 1937, Juran was the chief of Industrial Engineering at Western Electric's home office
in New York. His work involved visiting other companies and discussing methods of
quality management. During WWII, Juran's temporary leave of absence from Western
Electric stretched through four years. During that time, he served in Washington, D.C.
as an assistant administrator for the Lend-Lease Administration. He and his team
improved the efficiency of the process, eliminating excessive paperwork and thus
hastening the arrival of supplies to the United States' overseas friends. Juran finally left
Washington in 1945, but he didn't return to Western Electric. Rather, he chose to devote
As early as 1928, Juran had written a pamphlet entitled "Statistical Methods Applied to
Manufacturing Problems." By the end of the war, he was a well-known and highlyregarded statistician and industrial engineering theorist. After he left Western Electric,
Juran became Chairman of the Department of Administrative Engineering at New York
University, where he taught for many years. He also created a thriving consulting
practice, and wrote books and delivered lectures for American Management
Association. It was his time with NYU and the AMA which allowed for the development
of his management philosophies which are now embedded in the foundation of
American and Japanese management. His classic book, the Quality Control Handbook,
first released in 1951, is still the standard reference work for quality managers. The
following table outlines the major points of Dr. Juran's quality management ideas:
Identify who are the customers.
Determine the needs of those customers.
Translate those needs into our language.
Develop a product that can respond to those needs.
Optimise the product features so as to meet our needs and
Develop a process which is able to produce the product.
Optimise the process.
Prove that the process can produce the product under
operating conditions with minimal inspection.
Transfer the process to Operations.
An Honored Theorist
The Union of Japanese Scientists and Engineers invited Dr. Juran to Japan, to teach
them the principles of quality management as they rebuilt their economy. Along with W.
Edwards Deming, his more colorful and perhaps better-known American colleague,
Juran received Second Order of the Sacred Treasure award from Emperor Hirohito of
Japan. Dr. Juran published his lectures from Japan in his book Managerial
Breakthrough in 1964. In 1979, Juran founded The Juran Institute to better facilitate
broader exposure of his ideas. The Juran Institute is today one of the leading quality
management consultancies in the world, and it produces books, workbooks, videos and
other materials to support the wide use of Dr. Juran's methods. The institute and the
consulting practice continues to thrive today. Dr. Juran worked to promote quality
management into his 90's, and only recently retired from his semi-public life. One can
obtain the papers, lectures, and tapes of Dr. Juran from The Juran Institute or other
quality management educational providers. The Juran Foundation, which he founded,
continues his work, exploring the social and industrial implications of quality
improvement while making his and others' valuable contributions more accessible.
The Juran Institute
Report Hanzel Limbo
Human Resource Management
Absentee Management –
Outsourcing – hiring people to work from them
Existence of Virtual Organization – like call center
Trust Law – against monopoly
SINTAX LAW –
Comparative Advantage Absolute Advantage – of the Philippines in Japan is Natural Resources