Instruments of economic management of a service activity include budgeting the incomes and expenditures, setting objectives for the productivity of the most important operations; follow-up, measurement and reporting of all of these; and comparing the reported statistics to the agreed objectives.
Productivity Standards are a handy instrument when setting targets. They define the productivity of normal good pace of work, measured as work hours per unit of service given, under various circumstances. These standards can then be used in work planning and possibly for defining work incentives or salaries. The statistics to base the standard on can be obtained either from the service producer's own files, or in co-operation between several producers.
Management by objectives is an arrangement where each employee agrees with his or her superior on the objectives for the next period's work in advance. The objectives are mostly economic. In this way the supervisor can clearly express which aspects in the activity are important from the company's point of view, and the employee gets more freedom in planning how the work is done. This arrangement persuades both parties to contemplate the purpose of the work and the means that are most effective to fulfil the agreed goals.
Management by objectives became very popular at the end of 20 century. Its weak point is that it is too easy to overlook the quality of the work and other such goals that cannot easily be measured, which means that these goals should receive the special attention of any researcher that assists in developing a system of management by objectives.
Quality systems
Many large industries today have a quality system, a special arrangement for the task of defining and steering the quality of the activity.