The TQM philosophy of management is customer-oriented. All members of a total quality management (control) organization strive to systematically manage the improvement of the organization through the ongoing participation of all employees in problem solving efforts across functional and hierarchical boundaries.
TQM incorporates the concepts of product quality, process control, quality assurance, and quality improvement. Consequently, it is the control of all transformation processes of an organization to better satisfy customer needs in the most economical way. Total quality management is based on internal or self-control, which is embedded in each unit of the work system (technology and people). Pushing problem solving and decision-making down in the organization allows people who do the work to both measure and take corrective action in order to deliver a product or service that meets the needs of their customer.
Managers and experts disagree about how to effectively apply TQM to their organizations. Some advise that customer satisfaction is the driving force behind quality improvement; others suggest quality management is achieved by internal productivity or cost improvement programs. In other applications, TQM is considered a means to introduce participative management.
The Japanese, in general, concentrate on customer satisfaction with a focus on understanding customer needs and expectations.
Until very recently Americans in general have emphasized the “cost of non-conference”, and the importance of employees meeting the agreed upon requirements for each process. Leopold Vansina, president and founder of the International Institute of Organizational and Social Development, cautions that such efforts are based on the (faulty) assumption that processes and tasks that lead to the desired quality are already understood. However, he states, control of the production process will not likely help a business increase its market share when the product or service does not meet customer requirements.
In the late 1970’s to mid-1980’s U. S. companies were seeking ways to survive in an environment of back-to-back recessions; deregulation; a growing trade deficit; low productivity; downsizing; and an increase in consumer awareness and sophistication. Ford Motor Company had operating losses of 3.3 billion between 1980 and 1982. Xerox, which had pioneered the paper copier, saw its U.S. market share drop from 93% in 1971 to 40% in 1981. Attention to quality was seen as a way to combat the competition.
Examples Of Early Success
o Florida Power & Light (FPL) reduced customer complaints by 60% and improved reliability of electric services to customers by 40% in 1983. In 1987, the firm was rated by 156 utility CEO’s as the best managed utility in the nation.
o In its remittance banking or lock-box business, First Chicago’s accuracy rate is nearly three times the industry average.
o Xerox has started to regain its market share in copiers from the Japanese.
o Ford now has one of the most popular cars purchased by Americans, the Taurus
Many of the TQM concepts originated with the work of Dr. W. Edwards Deming, the American statistician, who guided the Japanese industry’s recovery after World War II and who formed many of his ideas during World War II when he taught American industries how to use statistical methods to improve the quality of military products.
While the Japanese listened to Deming American industry did not. For nearly two decades, before and after World War II, American businesses were preeminent. In this period of little foreign competition, American management methods were unchallenged and in hindsight, costly practices of traditional hierarchy took hold.
Meanwhile, industrial leaders in Japan, burdened with a reputation for poor quality, invited Dr. Deming to teach them his methods. Deming urged them to find out what their customers wanted, then study and improve the design and production processes until the quality of their product was unsurpassed. He urged a new style of management that shifts the focus from profits to quality.
He reasoned that employees could learn how to monitor, control and continually improve their work processes and systems with the application of a scientific approach. With the collective attention of people to their work processes and their interdependency, they are better able to produce products that meet customer expectations. With total quality control (TQM), decisions are based on data gathered with scientific tools and approaches. Products and services are improved by improving how the work gets done (the methods) instead of what is done (the results).
Deming pointed out what he saw as flaws in the traditional model of “management by objectives” which emphasizes a chain of command in which objectives are translated into work standards or quotas. He cautioned that with MBO the performance of employees is guided and evaluated according to numerical goals. As a result, workers, managers and supervisors get caught up in protecting themselves. Looking good overshadows a concern for the customer or the organization’s long-term success. Employees, desperate to meet quotas, lose sight of the larger purpose of work. A common example is when sales people are pushed to boost business and make promises production can’t keep.
With the change in focus, the roles of workers and managers are reformed. A manager’s role is to enable employees to do the best job possible foreseeing and eliminating barriers that get in the way. Workers learn to apply the expertise they have gained working with processes and customers on a daily basis
Deming predicted the Japanese adoption of these methods would put their products in demand throughout the world in five years. He was wrong; within four years the Japanese had gained large shares of some markets.
The emerging quality movement in the United States represents significant paradigm shifts in company cultures and business operations. Typically, the culture of the United States is characterized by the paradigm of “rugged individualism”. Our history reflects the contribution of many revered individuals. This model of the world sees people as both the source of and resolution of problems. In this paradigm, solutions to problems might be seen as fixing people (i.e., training employees to improve their attitudes). In this view, the survival of a company may rest in calling upon the right “star performer”, like Lee Iacocca. Whereas quality control emphasizes that organization survival is contingent upon the effectiveness of the systems of the organization.
In quality management there is a rule of thumb called the 85/15 Rule which suggests the root causes of 85% of organizational problems is faulty systems and that few problems are the result of the behaviors of employees. This philosophy may meet opposition in many companies where the current policies, procedures and systems are more traditional. That is holding each individual accountable instead of viewing the systems in which they work as the producer of quality.
It follows that the traditional management practices of managing-by-objectives (MBO) with a hierarchy of objectives and standards that are passed down in the organization from the top, is another paradigm. The quality philosophy with a shift in focus from internal results to customer expectations is another view of the business world.
Leaders will not turn quality into a competitive advantage if they behave as if TQM is a simple technique that can be bought and introduced within a traditional management framework. Vansina cautions us that installing an elaborate quality assurance system will not lead to employee commitment to quality. Such efforts are based on the assumption that processes and tasks that lead to the desired quality are already understood. A consequence may be employees feeling pushed into compliance without understanding the criteria or challenging their effectiveness. Importantly, expectations and market demands change as do the technology, materials and/or knowledge utilized.
In light of the above, the impact of the traditional paradigms on current policies, procedures, and systems in organizations is likely strong. Implementing Employee Involvement (E.I.), systems will require commitment from top management as well as from all employees. That commitment may often involve a change in attitudes. It will also involve the management of change in the organization. Guiding the change process requires an understanding of the present organizational cultures, attitudes, structures and systems.
The philosophy that TQM is customer-oriented and its goal is to satisfy the customer seems straightforward. However, the expectations and needs of the customer may not be clearly expressed or well defined and may be difficult to measure. Measurement of attitudes as well as systems is required if the ultimate appreciation of quality lies with the customer’s subjective comparison as suggested by Deming and other experts.
The literature offers some clarification. Yoji Akao addressed this issue by distinguishing three basic classes of customer wants:
1. What customers say they want. Customer demands are frequently translated into specifications without exploring their meaning in regard to how the product or service will be used. Neglecting to explore how the customer intends to use the product or service can lead to poor or improper design.
2. The customer’s expected quality consists of expectations the customer does not verbalize because they assume them to be evident: such as the product must be safe. Extensive interviews may not even elicit these expectations. Yet, customers will be dissatisfied if the product or service does not meet these assumed expectations. Even so, if the expectations are built into the product, customers will hardly notice. These expectations are so provasive that the customer takes them for granted.
3. Exciting quality consists of attributes of the product or service contributed by the supplier. The customer may not expect them as characteristics, but they recognize them as improvements and like them. For example, a car with an electrical system that shuts off the headlights when the ignition is turned off, even when the driver forgets, has such an attribute. A customer will appreciate that safeguard many times over and appreciate the manufacturer’s foresight while driving and owning the automobile.
Another potential difficulty in the measurement of satisfaction is an appreciation of the differences between the nature of work in manufacturing and in the service sector. In the service sector, customer’s overall appreciation of quality depends on both product quality and the quality of the service process. Vansina defines the service process as “the wholeness of the transactions between the service agent and the customer resulting in the selection, delivery, and/or consumption of the product.”
The purpose of this study shall be to identify the framework by which the complex phenomenal of Total Quality Management in consonants with effectiveness of Customers Satisfaction in a service sector like Banking.
It is important to avoid equating quality improvement with quality assurance. Quality assurance is a system of activities designed to ensure production that meets pre-established requirements. It gives the customer a guarantee of quality by measuring product conformance with process and performance specifications. Quality improvement refers to all efforts directed to increase effectiveness and efficiency in meeting accepted customer expectations.
It is a continuous process to achieve a better understanding of the market; to innovate products and processes; to manage and distribute material and products; and to provide service to customers. The success of quality improvement is based on the understanding of every member of the organization concerning the needs of their customers (internal and external). Maintenance of that understanding requires continuing dialogue and negotiation with the customer and measurement of one’s products and services against the customer expectations.
Customers and suppliers are both inside (internal) and outside (external) the organization. People in and out side organizations that provide input to the steps in a process are “suppliers” and those who use products or service are “customers”. Thus, employees in one phase of a work process are customers of the employees who produced the goods or services used by them in their work processes. Sales employees are customers of the marketing research employees. The marketing research employees are customers of statisticians and computer information systems employees who are assisting them and maintaining computing capacity for use in analyzing data. Employees within the organization receive work passed through their systems from other employees, the “internal” suppliers.
Therefore, each employee is a customer of preceding employees; and each has customers, the people to who receive the results of his or her work. Likewise, the people outside the organization who sell materials, information or services to be used by employees are “external” suppliers. A company’s external customers purchase a product or service and contribute to profits. They must ultimately be satisfied if the business is to survive.
A popular slogan of the quality movement is “quality begins with the customer.” The premise being if customers are the people who receive our work then only they can tell us what they want and how they want it. The quality that comes out of a process is affected by the quality of what goes in and what happens at every step along the way. It follows that we must build quality into every step, process, and system to produce quality in the outcome. To do this, we must collaborate with internal and external suppliers and communicate with internal and external customers to determine their needs.
Attainment of quality in products and services at competitive prices requires an emphasis on doing the right things (products and services that reflect target features based on the needs of intended customers) and doing the right things right (using efficient processes).