An evaluation of total quality management in the
chemical industry
by
TITUS MACHUENE BOLOKO
(Student number 20990626
)
M
in
i-dissertation submitted in partial fulfilment of the requirements
for the degree Master in Business Administration at the North-West
University, Potchefstroom Campus
Supervisor: Mr. H.M. Lotz
November 2009 Potchefstroom
ABSTRACT
Globally, there are great efforts made by organisations to improve effectiveness and systems to remain competitive in ever-changing business markets. Total quality management (TOM) has become a philosophy that most companies adopt once they reach a state where it would like to have a system where all efforts are made to satisfy customers or add value to customer experiences. An investigation was done at a South African chemical company to ascertain if important philosophies (continuous improvement, customer focus and winning with people) of TOM, which are found to be related to some of the company values, are taken seriously at all levels of the company. The company received a number of complaints from customers about the quality of service and goods supplied and it is of utmost importance to investigate if the concept of TOM is practiced effectively by this company since the implementation of the TOM programme.
The study conducted has shown that the company understands the concept of quality and the impact of quality on customer satisfaction. TOM is useful when it is implemented at all levels in a company and was indeed found to be implemented on all company levels in this company. Management support, employee improvement, employee empowerment, process improvement, training and development, cleanliness and organisation, teamwork as well as customer focus are the TOM practices that were found to be highly rated within the company. Responses showed that management communication should be improved to ensure that everyone in the organisation is fully informed about all developments. From the results, it was concluded that the foundation of effective TOM is being practiced by the company except in a few minor cases and, therefore, more focus should be placed on those cases.
Key terms: Total quality management (TOM), management support, efficiency, measurement of TOM, TOM culture audit, chemical industry.
ACKNOWLEDGEMENTS
• I would like to express my sincere appreciation to my supervisor, Henry Lotz, for his guidance, encouragement and support.
• I would like to thank the South African chemical company under study for allowing me to conduct research on the company, the staff for their patience, support and understanding as well as fruitful discussions we had.
• I would like to thank my parents for their support, encouragement and understanding. Thanks to my family, brothers and sister for being there for me in the time when I needed support. How can I ever forget my friends? People like you are those that one never forgets.
CONTENTS
Abstract
Acknowledgements List of tables
List of figures
List of abbreviations
CHAPTER 1: INTRODUCTION
1.1 INTRODUCTION
1.2 RATIONALE OF THE STUDY 1.3 PROBLEM STATEMENT 1.4 OBJECTIVES OF THE STUDY 1.4.1 Primary objective
1.4.2 Secondary objectives 1.5 SCOPE OF THE STUDY 1.6 RESEARCH METHODOLOGY 1.7 STUDY LIMITATIONS
1.8 LAYOUT OF THE STUDY 1.9 CONCLUSION
CHAPTER 2: TOTAL QUALITY MANAGEMENT
2.1 INTRODUCTION TO QUALITY 2.1.1 Definitions
2.1.2 Importance of quality
2.1.3 Relevance of quality to organisations 2.2 TOTAL QUALITY MANAGEMENT (TQM) 2.2.1 History of TQM
2.2.2 TQM practices 2.2.3 Vision and TQM
2.3 ORGANISATIONAL CULTURE
2.4 BUSINESS PROCESS REENGINEERING
IV Page ii iii VII viii ix
1
1 2 2 3 3 3 4 4 5 6 67
7 7 9 9 9 9 10 12 13 14CONTENTS (continued
)
2.5
MEASUREMENT OF TQM EFFECTIVENESS2.6
HUMAN RESOURCE ASPECTS OF TQM2.6.1
Job involvement2.6.2
Empowerment2.6.3
Teamwork2.6.4
Leadership commitment2.6.5
Training and development2.6.6
Culture change2.6.7
Customer satisfaction 2.6.7.1 Quality measurement2.6.8
Continuous improvement2.6.8.1 History and evolution of continuous improvement 2.6.8.2 Lean manufacturing
2.6.8.3 Six sigma
2.6.8.4 Balanced Scorecard 2.6.8.5 Hybrid methodology
2.6.9
Reward and recognition2.6.10
Organisational communication2.6.11
Organisational learning2.7
OBSTACLES TO IMPLEMENTING TQM2.8
CRITICISM OF TQM2.9
CONCLUSIONCHAPTER 3:
RESEARCH METHODOLOGY AND RESULTS
3.1
INTRODUCTION TO QUALITY3.2
RESEARCH METHODOLOGY3.3
STUDY RESULTS3.3.1
Demographic information3.4
DISCUSSION3.4.1
Top management support3.4.2
Customer focus3.4.3
Employee involvement v Page15
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29 29 30 30 3131
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42
CONTENTS (continued)
3.4.4
Employee empowerment3
.
4.5
Training and development3.4.6
Reward and recognition3.4.7
Teamwork3.4.8
Process improvement3.4.9
Communication3.4
.
10
Cleanliness and organisation3
.
5
CONCLUSIONCHAPTER4:
CONCLUSIONS AND RECOMMENDATIONS
INTRODUCTION
4.1
4.2
4.3
4.4CONCLUSIONS AND RECOMMENDATIONS FUTURE RESEARCH CONCLUSION
REFERENCES
APPENDIX 1
Vl Page 4446
47
48
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51
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54
56
56
56
58
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63
LIST OF TABLES
Page Table 2.1: Differences between traditional and quality management 12
Table 2.2: Differences between in-focused and customer-focused
companies 26
Table 3.1: Top management support calculated mean 39
Table 3.2: Response percentages on top management support 40
Table 3.3: Customer focus calculated mean 41
Table 3.4: Response percentages on customer focus 41
Table 3.5: Employee involvement calculated mean 43
Table 3.6: Response percentages on employee involvement 43
Table 3.7: Employee empowerment calculated mean 44
Table 3.8: Response percentages on employee empowerment 45
Table 3.9: Training and development calculated mean 46
Table 3.10: Response percentages on training and development 46
Table 3.11: Reward and recognition calculated mean 47
Table 3.12: Response percentages on reward and recognition 48
Table 3.13: Teamwork calculated mean 49
Table 3.14: Response percentages on teamwork 49
Table 3.15: Process improvement calculated mean 50
Table 3.16: Response percentages on process improvement 51
Table 3.17: Communication calculated mean 52
Table 3.18: Response percentages on communication 52
Table 3.19: Cleanliness and organisation calculated mean 53 Table 3.20: Response percentages on cleanliness and organisation 54
LIST OF FIGURES
Page
Figure 2.1: A four-tier system of total involvement in quality
management 19
Figure 2.2: The culture audit process for TQM implementation 24
Figure 3.1: Age groups 37
Figure 3.2: Departments where respondents are employed 37
Figure 3.3: Level of employment 38
Figure 3.4: Years of employment at the company 38
Figure 3.5: Qualifications 39
Figure 3.6: Top management support to TQM 40
Figure 3.7: Customer focus 42
Figure 3.8: Employee involvement 44
Figure 3.9: Employee empowerment 45
Figure 3.10: Training and development 47
Figure 3.11: Reward and recognition 48
Figure 3.12: Teamwork 50
Figure 3.13: Responses on process improvement 51
Figure 3.14: Communication 53
Figure 3.15: Cleanliness and organisation 54
ASQ BPR Cl DMAIC FMEA PDCA SPC TQM
LIST OF ABBREVIATIONS
American Society for Quality
Business Process Reengineering
Continuous Improvement
Define objectives, Measure performance, Analyse opportunities, Improve performance, & Control performance
Failure Mode and Effect Analysis
Plan-Do-Check-Act
Statistical Process Control
Total Quality Management
CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION
All over the world, organisations are faced with continuous changes. Changes bring, amongst others, major challenges everyday to organisations on how to remain competitive in ever-changing market conditions. When everything changes, customer preferences and taste towards goods/services also change posing threats or shifting goalposts for organisations serving them. To respond effectively to these imposed changes the concept of total quality management (TOM) is often adopted within organisations. South African organisations are not immune to global changes and must also adopt world-class techniques to stay competitive. According to Karia and Asaari (2006:30), TOM has become an essential management philosophy for improving quality and productivity in organisations.
Quality itself is broadly defined as the ability of a product or service to consistently meet or exceed customer expectations. According to Stevenson (2002:470), TOM is a philosophy that involves everyone in an organisation in a continual effort to improve quality and achieve customer satisfaction. The success of a total quality management programme in any organisation is achieved through combined efforts from everyone in the organisation. Chase, Aquilano and Jacobs (2001 :270) define continuous improvement as a philosophy that entails the improvement of all factors related to the process of converting inputs into outputs on an ongoing basis. One important aspect of TQM is customer satisfaction, which according to Stevenson (2002:470), entails ascertaining what customers want. This might involve the use of surveys, focus groups, interviews or any communication medium where the aim is to ensure that the customer views and needs are embraced. In short, Anjard (1998:238) emphasises that when TQM is effectively implemented it empowers all people in an organisation to do their best and fully satisfy or exceed all customer needs.
1.2 RATIONALE OF THE STUDY
Amongst other reasons for this choice of study, the following are aspects identified the need to take on a study of TQM at a chemical company in Gauteng, South Africa:
• There is a lack of understanding of the concept of quality by individuals in many
organisations. This shortage of knowledge contributes to the negative earnings of
the organisation as a result of product deficiencies or poor service delivery.
• The question of how serious quality is taken at all levels needs constant scrutinising in an organisation. (Many organisations invest in TQM and spend too little time on employee involvement, engagement and empowerment which are the core pillars of TQM) (Chase et al., 2001 :272).
• Do all employees understand and are they eager to be involved in continuous
product/service improvement? (Continuous improvement is an important part of
TQM and it is important to investigate if it is embraced as a critical success factor of the company.) (Chase et al., 2001 :272).
• Everyone in the selected chemical company should be equipped with the right knowledge to correctly perform their jobs the first time, and to produce products or services that are able to meet or exceed customer needs.
• Customer satisfaction is an important aspect of TQM and little time is often dedicated to it. The study will show how much the selected chemical company spend time on it.
All the points listed above were major reasons leading to this choice of study and, as a result, was investigated fully to ascertain if the selected chemical company in the Gauteng Province of South Africa complies with TQM practices. The study particularly
sought to address most of the listed factors and provided relevant recommendations.
1.3 PROBLEM STATEMENT
A blue-chip chemical company in Gauteng Province was selected for this study because this company has received a number of complaints from customers about the quality of service and goods supplied. It is therefore of utmost importance to determine if the
concept of TQM is embraced by the company since its implementation. The company spent time and money having to deal with the consequences of complaints received. The problem required further investigation. The aim was to identify the root causes, and later give recommendations on how the problem can be dealt with.
Among other reasons, the following were assumed to be major reasons for the company under study not being able to meet or exceed customer needs:
• Lack of implementation of TQM on all levels of the company; • Lack of employee engagement, empowerment, and training; • No proper support for continuous improvement; and
• Less feedback-seeking done by the company as far as customer satisfaction is concerned.
The company spent time solving customer complaints rather than focusing on critical issues such as core business.
1.4 OBJECTIVES OF THE STUDY
1.4.1 Primary objective
The primary objective of this study was twofold. Firstly, to investigate if everyone at the company under study has embraced the concept of TQM and secondly to investigate if the important philosophies (continuous improvement, customer focus and winning with people) of TQM, which were found to be related to some of the company values, are taken seriously at all levels of the company.
1.4.2 Secondary objectives
The secondary objectives of this study were to investigate:
• The current TQM system and ascertain whether continuous improvement, people involvement and customer satisfaction have reached acceptable levels;
• The extent to which employees are involved, engaged and empowered to do their jobs;
• If systems and procedures are always improved to ensure that business operations are running as they should;
• If customers' complaints are taken seriously and investigated in a satisfactory manner; and
• To investigate if customer satisfaction surveys and studies are done by the company.
1.5 SCOPE OF THE STUDY
The study focused mainly on the importance of TQM in the selected chemical company.
The company selected has customers all over the world and it is important that it operates according to world-class standards to ensure that it meets and/or exceeds
customer needs.
This study sought to indicate the role and the importance of a TQM programme in a chemical company. It also indicated how much value the chemical company can add if this programme is implemented well and run effectively. To achieve the scope of the study completely, the study further sought to understand the level of employee engagement, empowerment, and training. The concept of continuous improvement in the selected chemical company was investigated to determine how effectively it has been implemented. Lastly, investigations were done in the selected company to determine if customer satisfaction feedback is done properly as required by TQM.
1.6 RESEARCH METHODOLOGY
A basic research process was followed, which started with the introduction of the problem accompanied by clarification of the problem. A literature review was done to search for present knowledge of the study subject in order to structure the research problem. After clarifying the problems, assumptions and concepts, a research design was followed, and in this case, structured questionnaires were used. This was followed by data collection, data analysis, interpretation, conclusions and recommendations.
A brief description of the research design is presented below. TOM was measured using the following instruments: top management commitment, employee involvement, continuous improvement, employee empowerment, and customer focus and satisfaction. A number of issues were investigated under top management's involvement including, amongst others, whether top management has a clear vision when dealing with quality issues. A five-point scale system was used to measure the items. Employee involvement and empowerment were analysed to determine if the concept of TOM is embraced; these were also measured on a five-point scale system. In order for the company to meet customers' changing needs it is important to have continuous improvement is a pivotal aspect of TOM and this was also measured on a five-point scale system. Because there is no business without customers, customer focus and satisfaction were also measured. The five-point Likert-scale as measuring system was used throughout, and had the following scores: not satisfactory (1 ), somewhat satisfactory (2), unsure (3), satisfactory (4) and very satisfactory (5).
Questionnaires were distributed among staff members, ranging from operating employees; junior management, middle management, to top management for completion at the selected companies. Information collected using the questionnaires was statistically analysed and conclusions made based on the results.
1.7 STUDY LIMITATIONS
The study mainly focused on the selected chemical company in Gauteng Province.
Conclusions and recommendations made cannot be generalised to all chemical companies in Gauteng and/or in South Africa. The success of the study also depended on the honesty of the respondents and if some respondents, felt intimidated and filled out the questionnaires wrongly, the consequences are that the conclusions made from the data may not reflect the true situation in the chemical company selected. The study was conducted on a selected chemical company. Although similar companies may have similar (or different) problems, it is important to note that the conclusions made in this study cannot be generalised and employed as is in other similar companies.
1.8 LAYOUT OF THE STUDY
The first chapter introduces the research project (what TQM is all about, what
dimensions of TQM were studied and what influenced the choice of this study). A detailed outline and clarification of the objectives of the study and the methodology on how these objectives were achieved are given in this chapter.
Chapter 2 mainly presents a detailed background on the philosophy of TQM and its impact on organisations if it is implemented correctly. The third chapter describes the
methodology on how the study was conducted. This entails the design of the
questionnaire, sample design and size, and data processing and analysis. Chapter 4 entails a detailed discussion of the results together with recommendations.
1.9 CONCLUSION
Quality is most often defined as the ability of a product or service to consistently meet or exceed customer expectations. All over the world, organisations are working hard to
change the ways of business and delivering services to customers. TQM is a
management philosophy that aims to ensure that all resources (human and material) within an organisation are used in the most effective way to achieve the objectives of the organisation.
The next chapter provides the literature review on TQM.
CHAPTER 2
TOTAL QUALITY MANAGEMENT
2.1 INTRODUCTION TO QUALITY
Many quality definitions revolve around the identification and satisfaction of customer needs and requirements. All over the world, organisations are working hard to change the ways of business and delivering services to customers. Customers' perception of evaluating products and needs are also changing, driving companies to find ways of ensuring that they move with the times and match ongoing customer needs. Gill (2009:530) states that in any product, quality is meant to ensure that the customer expectations are taken into consideration and that future customer needs are also known, and that planning is done to meet the expectations.
Wan Edura Wan Rashid (2009:471) defines functional quality as the manner in which service is delivered to the customer. As an example in a health care setting, patients usually rely on functional aspects (facilities, cleanliness, quality of hospital food, hospital personnel's attitudes) rather than technical aspects, when evaluating service quality. Wan Edura Wan Rashid (2009:471) further defines technical quality as the basis of technical accuracy and procedures. In the health care context, it is based on the technical accuracy of the medical diagnoses and procedures, or the compliance of professional specifications. Technical quality also refers to the competence of the staff as they go about performing their routines. Qin et a/. (2009:391) emphasise that customer satisfaction is an important dimension of quality. Furthermore, customers who are not satisfied with the service cannot be expected to have a good relationship with the service provider. This is why most companies place more emphasis on quality.
2.1.1 Definitions
Quality is most often defined as the ability of a product or service to consistently meet or exceed customer expectations. Lillrank (2002:691) classifies quality definitions found in the literature to be divided into four categories: excellence, value for money, conformity to requirements and meeting or exceeding customer requirements. Lillrank further emphasises that excellence-based definitions include the idea that products or services
may include elements that are perceived as superior, which are often very subjective,
hard to measure and confuse quality with product segments or grades. The most widely used definitions from the American Society for Quality and more recently ISO 9000 -2000, are based on customer satisfaction, which may be achieved not only through conformance to requirements but through some inherent characteristics of the product or service, and the way it is presented and delivered to the customers (Barnes, 2009).
Tari (2005: 182) explains in detail studies conducted by various quality gurus as follows:
1. Deming, a statistics professor, underlined the use of statistical techniques for quality control and proposed his 14 principles to improve quality in organisations based on the following ideas: leadership, an improvement philosophy, the right production from the beginning, training for managers and employees, internal communication aimed at eliminating obstacles for cooperation, and suppression of quantitative objectives.
2. Juran, who taught the Japanese companies how to improve quality of goods, pointed out the importance of both technical and managerial aspects, and identified three basic functions of the quality management process: planning,
organising and control, as the stages of quality improvement.
3. Ishikawa emphasised the importance of training, the cause and effect diagram for problem solving, and quality circles as a way to sustain continuous improvement.
4. Crosby defined 14 steps for quality improvement, including top and intermediate management commitment, quality measurement, evaluation of quality costs,
corrective action, training, a zero-defect philosophy, objective setting and employee recognition.
5. Lastly, Fiegenbaum described the notion of total quality based mainly on leadership and an understanding of the aspects of quality improvements, a commitment to incorporate quality in the firm's practices, and the participation of the entire workforce, the objective being the reduction of quality costs.
2.1.2 Importance of quality
Bend ell et a/. (1995:44) argue that the importance of quality as an objective is now widely recognised throughout the world. As a result of increasing customer demands and the removal of barriers of trade, inefficient suppliers or suppliers of low quality goods or services will find it difficult to survive. According to Stevenson (2002:403), the degree to which a product or service successfully satisfies its intended purpose has four determinants, which are listed below:
• Design;
• How well it conforms to the design; • Ease of use; and
• Service after delivery.
2.1.3 Relevance of quality to organisations
According to Peters (1999:6), quality management originated from two ideas about how
to run organisations better. The first idea revolved around customers. If companies could determine what its customers like, they could deliver it the same way every time. Customers will come back to purchase such products and services, and will also tell others about these products and services. The second idea that companies need to explore is efficiency. If companies can figure out the most efficient way to produce a product or service and stop wasting time, materials, replacing poor quality goods or delivering unsatisfactory services, that company will be more successful.
2.2 TOTAL QUALITY MANAGEMENT (TQM)
2.2.1 History of TQM
Total quality management (TQM) as defined by Mohrman et a/. (1995:26) is an
approach to managing organisations, which emphasises the continuous improvement of
quality and customer satisfaction. It entails the application of systematic tools and
approaches for managing organisational processes with these ends in mind (continuous
improvement of quality and customer satisfaction), and involves the establishment of 9
structures such as quality improvement teams for maintaining focus and enacting organisational improvement processes.
Lau and Tang (2009:41 0) define TOM as the management philosophy and company practices that aim to harness the human and material resources of an organisation in the most effective way to achieve the objectives of the organisation. TOM is further explained as a management-led process to obtain the involvement of all employees, in the continuous improvement of the performance of all activities, as part of the normal business to meet the needs and satisfaction of both the internal and external customers.
Anjard (1998:238) further explains TOM as a visionary, cultural movement which represents recognition of a management philosophy that encourages employees to share responsibility for delivering quality services and products. Lau and Anderson (1997:85) explain what each abbreviated letter in TOM means as follows:
• The T-component of TOM: TOM implies a total, company-wide commitment to quality and calls for everyone, including suppliers, to be responsible for quality and involved in all the efforts to maintain or upgrade their work.
• The Q-component of TOM: The major goal of quality management is to meet and exceed customer expectations. Internal customers are as important as external customers. Continuous improvement should be integrated into the management of all systems and processes. Effective training should also teach and empower all employees to understand and solve quality related problems.
• The M-component of TOM: The broad nature of TOM efforts requires commitment of top management to the process. Top management is responsible for creating clear and visible values and to integrate these values into strategic business plans. TOM requires that all employees are to be involved and as a result it is important to reshape the organisational culture that supports it.
2.2.2 TQM practices
Karia and Asaari (2006:30) define TOM practices (what an organisation does to demonstrate its commitment to TOM) as a set of practical measures such as:
• continuous improvement;
• meeting customer requirements; 10
• reducing rework; • long-range thinking;
• increased employee involvement and teamwork; • process redesign, competitive benchmarking; • team-based problem solving;
• continuous monitoring of results; and • closer relationship with suppliers.
The above involves the combined efforts of all members of the organisation - from senior management to shopfloor employees. Mohrman at a/. (1995:26) emphasise that the key to TOM is the definition of quality as meeting customer requirements, and a belief that the organisational capability to deliver quality is enhanced by continuously improving the capacity of the work processes of the organisation to deliver value to customers.
Mohrman et a/. (1995:26) further explain that many TOM practices originated from Japan, where it began with a simple notion of quality circles (groups of employees trained in the use of problem-solving and statistical process control techniques who were asked to generate improvements in work processes). Karia and Asaari (2006:30) emphasised that effective TOM environments allow all employees to participate in achieving organisational goals. TOM is based on the assumption that the employees who are closest to the daily operating procedures are in the best position to understand
and improve the quality of those procedures. It aims to create the environment in which
positive relationships exist between managers and employees and in which people feel motivated to do their best.
Barnhoorn (1995: 13) summarises the differences between the traditional and a quality management-orientated organisation in table 2.1.
Table 2.1: Differences between traditional and quality management
TRADITIONAL QUALITY MANAGEMENT
Collection of separate entities Systems in interdependent processes People treated as a commodity with no People grow and develop through active
contribution contribution
Adherence to specifications I standards, Product/services beyond customer absence of defects, no innovation expectations- innovation required
Managers rule departments/functions Management creates an environment of interdependent systems
Performance/reward based on Reward systems recognise contribution to competitive environment team and co-operation
Control is achieved by rules Control is achieved by shared beliefs, values, knowledge, purpose
Motivation is to avoid failure Leadership style encourages people to make meaningful contributions
Source: Barnhoorn (1995: 13).
2.2.3 Vision and TQM
Groth (1995:55) explains that many organisations subscribe to or actively pursue TQM and if a clear and well-defined vision of the organisation does not exist, TQM efforts will yield desirable results by accident rather than by design. It is further emphasised that for organisations to achieve desired end results, its vision and TQM philosophy must offer goal, direction and significance. Groth (1995:55) further summarised the practical effect of TQM principles as being:
• A focus on customers' needs; • A focus on problem prevention; • Continuous improvement;
• Training employees in ways to improve quality; and • Applying the team approach to problem solving.
Anjard (1998:238) reiterates that for an organisation to be successful in implementing TQM the leaders of that organisation must:
• Have a clear TQM vision; • Have models of the vision;
• Clearly define departmental TQM criteria;
• Encourage involvement and empower employees; • Lead, coach and mentor; and
• Be change agents.
Managers will be expected to work hard at defining what their vision is, both as individuals and as a management team. The senior management team will be viewed as the ones who are ultimately responsible and accountable for the success and failure of a TQM programme. Ultimately, managers need to be empowered to create their vision, openly discuss this, and link their actions and behaviour to the TQM effort. Anjard (1998:238) explains that senior managers should attempt to attend all training sessions as participants and, later, as coaches to the process.
2.3 ORGANISATIONAL CULTURE
The management/culture of an organisation is the most important determinant of success and is one of the most ignored when process changes are proposed. According to Anjard (1998:238), the research done on top quality companies reveals that the following factors are the key to successful TQM implementation:
• Empowerment; • Team work;
• Collaborative management; • Involvement in quality; • Continuous learning;
• Everyone trained in quality tools; • Strong human resource policies; and • Respect for the individual.
All these are the basis of the culture of the leading quality organisations. Implementing a culture change in any organisation is more difficult than implementing any other change in an organisation. Anjard (1998:238) defines culture as a set of shared values and beliefs that guides the behaviour of managers and employees, and defines what behaviours and actions are desirable and acceptable. To design culture, it is important to decide what values are preferred, and this value clarification should also start with a TQM strategy and proceeding with what should be happening within the organisation for that strategy, to be successful.
2.4 BUSINESS PROCESS REENGINEERING
Total quality management (TQM) and business process reengineering (BPR) are the two most popular change mechanisms used by organisations. Valentine and Knights (1996:78) explain that both TOM and BPR have many common ideas and goals which, amongst others, encourage employee empowerment, teamwork, quality, change, and a focus on the customer. TQM is also regarded as a people-focused management system that aims at continually increasing customer satisfaction while continually lowering real costs. Reengineering is the rapid and radical redesign of strategic, value-added business processes - and the systems, policies and organisational structures that support them- to optimise the work flows and productivity in an organisation. According to Salegna and Fazel (1996:6), the major philosophical difference between TQM and BPR can be summarised as follows:
• The amount of time the change takes; • The extent of the change; and
• The level of the organisational hierarchy at which the change process is managed and controlled.
As opposed to TQM, changes in BRR are not only fast but they are also drastic. The organisational level at which the change is managed and controlled is also different in BPR compared to TQM programmes. BPR programmes are monitored at higher levels of the organisational hierarchy whereas the responsibility for control of the change
process is pushed to lower levels of hierarchy in TQM organisations. Both techniques emphasise managerial support.
Salegna and Fazel (1996:6) further emphasise that TQM and BPR use different sets of tools to achieve organisational change and improvement of goals. BPR tools and techniques originate from different disciplines, including systems design and modelling, operations research, industrial engineering, management information systems, human resource management, and organisational change management.
2.5 MEASUREMENT OF TQM EFFECTIVENESS
It is important to have relevant information on customers, suppliers, competitors, products/services, and processes to be in a position to make quality improvements. The collection and communication of quantifiable data on the company-specific aspects of quality can be regarded as the central building block of a successful TQM. Lau and Anderson (1997:85) state that quality management programmes often generate more enthusiasm than tangible improvement. This tendency often partly lies in a failure to link programmes and results. What is needed is the articulation of quality goals in quantitative, measurable performance targets linked to specific dates. According to most of the quality experts (including Feigenbaum, Deming, Juran and Ishikawa), attaining quality goals through a process of continuous improvement over time depends critically upon a firm's ability to define, in specific performance terms, what it means by quality and then measure the performance variables objectively. According to Lau and Anderson (1997:85), the central focus of effective TQM programmes becomes the design and operation of the underlying measurement systems, and several critical factors need to be considered in the design phase.
Lau and Anderson (1997:85) further explain that measurement systems underlie the ability to communicate meaningfully about what quality means. Only quantitative measurements can provide a high level of precision for discussing quality information across all functional areas, which will facilitate a better organisational response to rapid changing customer needs. An effective, comprehensive measurement system will also establish a common language for communication and mutual understanding. Lau and Anderson (1997:85) further that adopting a clear quality measurement also allows
specific goals to be established and specific results to be forecasted. In most cases, financial performance data are inadequate to address the progress made in quality
improvement. Once goals are set and forecasts are prepared the use of measurements
provide feedback on the progress made towards achieving the goals. The measurement
process will also give faster identification of quality problems and intervention to solve the problems, greatly facilitating the company's overall product and/or service quality objectives.
Lau and Anderson (1997:85) concludes by emphasising that specific quality
measurements should form the basis for employee reward and motivational
programmes, further integrating the TQM programme into the company. TQM
programmes often attempt to align the attainment of quality goals to employee rewards
and compensation.
2.6 HUMAN RESOURCE ASPECTS OF TQM
2.6.1 Job involvement
Dimitriades (2000: 117) describes employee involvement within a TQM environment as a conceptualised process aimed at achieving broad employee interest, and participation
and contribution in the process of quality improvement. This refers specifically to
employees, and they are encouraged and enabled to involve themselves in the
improvement work beyond their routine work responsibilities and initiatives towards
self-management. Employee involvement in quality management can take various forms
including participation and contribution to continuous improvement, which is linked to reward (monetary or recognition). According to Boon eta/. (2007:939), to successfully
implement the TQM programme in an organisation, it is important to incorporate human
resource strategies into TQM.
2.6.2 Empowerment
Erstad (1997:325) describes empowerment in a workplace as a means for enabling
employees to make decisions, and as a personal phenomenon where individuals take
responsibility for their own actions. The first part of the definition relates to how
management facilitates and implements the empowerment culture, while the second part focuses more on the importance of the individual in truly successful applications of empowerment. Klagge (1998:558) states that the following points define the notion of empowerment:
• To delegate authority to those who have positional power;
• To increase accountability amongst lower levels;
• To develop problem solving capabilities in the people at lower levels;
• To help all employees reach their full potential; and
• To have the positive impacts of empowerment spill over into employees' lives.
Employee empowerment is not necessarily meant to give positive results to employees, but the organisation that empowers its employees also benefits to a certain extent. There are notable employee benefits that come with empowerment, and the following are key benefits (Kiagge, 1998:548):
• Improved motivation;
• Increased personal strength;
• Added accountability;
• Increased personal power and sense of self-efficacy; and
• Increased abilities to achieve full personal potential.
The major negatives of empowerment come from the organisation and its managers.
Klagge (1998:548) highlights the organisational negatives to empowerment as the
following:
• Requires significant effort to implement the organisational changes;
• Requires substantial investment in training which may or may not pay off;
• Requires the organisation to develop and delineate new power bases for
management and employees; and
• Requires the organisation to provide new competencies to all members,
management and employees alike.
2.6.3 Teamwork
Teams and teamwork are increasingly becoming an important element of productivity and employees' job involvement in a workplace. Dimitriades (2000: 117) defines a team as a small number of people with complementary skills who are committed to a shared purpose, collective performance goals and a common approach for which they hold themselves mutually accountable. Boon et a/. (2007:940) emphasises that teamwork facilitates the meeting of affiliate needs within the workplace and is directly connected to job involvement. The authors elaborate by stating that participation in teamwork, continuous learning and flexibility are major factors for success within organisations in achieving a partnership between workers and managers.
Dimitriades (2000:118) states that there are two main types of teams in TQM, namely, policy deployment teams and the task teams. Policy deployment teams include quality councils, process quality teams and quality improvement teams who are concerned with shaping, planning and implementing quality goals, policy and strategy. The sole purpose of the policy deployment team is to determine the relevance of every function and everyone's day-to-day job in terms of the organisation's quality goals and associated action plans. Dimitriades (2000: 119) explains further that deployment teams review and discuss changes in light of top management's quality vision with the aim to clarify organisational purpose and how this translates to quality tasks.
Task teams often comprise problem-solving and self-managed teams. Dimitriades (2000: 118-120) explains that problem-solving teams are often the most common types of teams in TQM, whose main objective is to improve quality by solving specific quality problems facing the organisation. Dimitriades (2000: 118) describes total involvement in quality by a four-tier system shown in figure 2.1.
Figure 2.1: A four-tier system of total involvement in quality management
Inter- Team Individual Organisational
Organisational Involvement Involvement Involvement Development
Customer Quality council Job Collective
Supplier Process quality enrichment Extrinsic Partnership ----+ teams Suggestion ----+ Rewards
I+-
Quality improvement schemes ~ Qualit circlesSource: Dimitriades (2000:117).
2.6.4 Leadership commitment
Management involvement is important in ensuring the success of a TQM programme. Anjard (1998:240) describes an effective TQM manager to have the following key traits:
• Clear TQM vision;
• Able to model the vision; • Clear departmental criteria;
• Encourages involvement and empowerment; • Leads, coaches and mentors; and
• Changes championship.
As already mentioned in the empowerment section, most managers are sceptic about employee empowerment, and for the TQM programme to be effective managers must begin to see themselves as facilitators, coaches and empowered employees. Anjard (1998:238) believes that managers should expect to work hard at defining what their vision is, both as individuals and as the collective management team. Senior management are the ones that are deemed the most accountable for the success or failure of a TQM programme. A sense of commitment by managers to the TQM programme is needed by publicly giving feedback to team members and walking the talk. One way of showing commitment is by being visible at TQM sessions by first participating, and later acting as a coach.
Anjard (1998:241) elaborates that it is of the utmost importance for managers to encourage, involve and empower employees. Lau and ldris (2001 :52) suggest that managers need to set aside resources such as time, training and money, to provide for orientation towards the improvement of quality and innovation. Managers are also responsible for creating the environment that encourages innovation, pride of work,
open horizontal and vertical communication, information and resource sharing, and
cross-department co-operation. Lau and ldris (2001 :53) further reiterate that
management should, as far as they could, remove barriers to performance,
innovativeness and quality, while employees are encouraged to contribute to
improvements in processes and systems.
Vouzas and Psyhogios (2007:65) urge that beyond management's commitment and
support to TQM, an open and democratic, participative type of management style is desired to ensure success of the TQM programme. Organisational culture is known to
influence employees' actions as well as reference points, and alters their actions in and perceptions of all aspects of their work including quality. As a result, managers must be able to assess the culture and evaluate its role in the TQM programme's success.
Vouzas and Psyhogios (2007:64) explain that quality cultures nurture high-trust social
relationships, and it develops a shared sense of membership as well as a belief that continuous improvement is for the good of everyone within an organisation. This seems to be agreeing with what Lau and ldris (2001 :51) emphasise, in that, all levels of
management must have commitment in treating people with trust, openness and
honesty as these have a potential to multiply the strength of the organisation, because people will feel at home and empowered to take direction, make decisions, and initiate
changes. The management systems that will be in place within the organisation will help
everyone to accept responsibility and exercise leadership in that barriers will be eliminated and decision-making will be effective.
2.6.5 Training and development
Training and development have been recognised as essential to the implementation of TQM. Lau and ldris (2001 :54) urge that an educational and training process for all
employees is required for the successful implementation of TQM, with the objective of
achieving the following:
• Continuous improvement; • Enhancing empowered workers; • Flexibility;
• Employment stability; and • Meeting future needs.
Boon et a/. (2007:942) explain that training and development leads to the increase in employees' job involvement and benefit, an increase in commitment towards the organisation and strengthening of organisational competitiveness. It is believed that a successful training and development programme would create more favourable employee attitudes, loyalty, and help employees in their personal development and job involvement. Furthermore, Boon (2007:944) stressed the importance of training and development for continuous improvement and updating and improvement, identifying one source of human motivation at work as intrinsic motivation, and involvement, growing, learning and developing oneself.
The education and training process recognises that trained personnel are experts in their area of specialisation. As such, they communicate objectives and fully involve people in the process of changing their behaviour regarding their jobs. According to Lau and ldris (2001 :55), the education and training approach is based on the principles of behaviour change in an organisation rather than merely a process of fact transfer regarding specific technology. Erstat (1997:329) remarks that, for TQM to be successful there is a need to shift away from controlling to enabling in order for employees to contribute more. This will require new management skills to ensure that employees are then managed in a particular way rather than in the traditional management way.
Erstat (1997:330) further explains that the first stage of employee training to ensure that TQM is successful is to analyse the current employee capabilities and identify areas of improvement where the employees need help to realise their full potential. Once this step is thoroughly completed, coaching techniques by senior managers to get employees to work beyond their present capabilities, are imperative. Lastly, the commitment of the employees is obtained through the sharing of visions and values. It is equally important for organisations to involve employees in the conceptual stages of TQM to ensure that support is received from the beginning.
Lau and ldris (2001 :51) emphasises that ongoing education and training is used by
many organisations to refine and improve the business tools such as team-based
technologies, just-in-time (JIT), total quality control (TQC) and manufacturing resource
planning system.
2.6.6 Culture change
A TQM programme requires changes to structures and systems that demand new
behaviours by individual and groups. Many of the quality consultants have always
recognised that TQM requires several years of sustained effort in order to allow culture
change. From the previous sections it has been highlighted that for TQM to be
successful it is often accompanied by the development of leadership, human skills and shared values that are consistent with the purpose of the structures and systems that are introduced.
Maughan and Anderson (2005:2) are of the opinion that the organisational structure of a
TQM business is the interconnected physical infrastructure, human relationships, traits, values, culture and patterns of work. It is further recognised that TQM organisations differ from traditional organisations in that customer satisfaction is treated with high
delicacy in TQM organisations. These differences are actually saying much about what
the culture of each organisation entails or what culture dominates in an organisation. Maughan and Anderson continue and state that traditional organisations tend to produce products and services based on its own beliefs as well as making decisions based on its own convenience.
According to Love et a/. (2003), possible reasons as to why the organisational
adaptation of TQM does not occur successfully are that leaders often make structural
and systems changes without realising culture also needs to be nurtured and integrated
with current organisational practices. Furthermore, it is suggested that continuous improvement implementations that are not underpinned by culture change might not
experience the performance improvements initially anticipated.
Love et a/. (2003) continue and explain that methods of implementing a new
organisational strategy such as TQM initiatives require different change strategies and
22
techniques at the individual, structure/systems, and culture level. An important part of the successful implementation of TOM is to review the current practices, behaviours and attitudes in the organisation and assess the fit with the TOM philosophy.
Before the implementation of TOM, management will need to determine whether a change in culture or a change in the behaviour of the organisation's employees is needed. A process for achieving effective implementation of TOM requires a set of corporate objectives and behaviours that the company requires its employees to exhibit,
as shown in Figure 2.2.
Figure 2.2 follows on next page
Figure 2.2: The culture audit process for TQM implementation
Step 1- Cultural audit J
Step 2- Cultural asset profiles I E5F5 Step 3 -Assess TQM fit I;:;-:- ---~~ ---Step 4 - Performance
Its m~nag;ment
1) Undertake culture audit at regular intervals to determine shared values and attitudes possessed by employees.
2) Determine behaviours to be expected.
~
1) Identify current values and attitudes and align with the organisational corporate goals.
2) Identify those values and attitudes that conflict with desired set of behaviours.
3) Measure organisational culture.
4) Identify performance measures as part of the culture audit process and the TOM process.
1
1) Review work practices, attitudes, and behaviours to assess the fit with TQM objectives.
2) Develop organisational and HR management strategies to reinforce behaviours, attitudes and practices with desired cultures.
3) Implement education, training, action learning and social interaction.
4) Launch TQM programme
1
1) Review work practices, attitudes, and behaviours to assess the fit with TQM objectives:
2) Develop organisational and HR management strategies to reinforce behaviours, attitudes and practices with desired cultures.
3) Implement education, training, action learning and social interaction.
4) Launch TQM programme.
Source: Love eta/. (2003, 328).
2.6. 7 Customer satisfaction
Noori and Radford (1995:6) define TQM as a philosophy and principle that advocates
four basic principles, namely intense focus on customer satisfaction, accurate
measurement of activities, continuous improvement of products and processes, and
empowerment of people. This implies that the underlying philosophies and principles of satisfying customers hold true across the national and cultural borders. Vouzas and Psyhogios (2007:62) explain customer satisfaction to be the driving force for an organisation to improving its performance. Noori and Radford (1995: 7) emphasise that customer satisfaction leads to customer loyalty, which is speculated to be crucial in long-term profitability. Loyal customers spend more, refer new customers to the organisation, and are less costly to do business with. It is more difficult to attract new customers than retaining a loyal one. It is also important to ensure that loyal customers are rewarded in order to retain them as customers. Knowing the customer preferences of products and why they prefer that product over what the competitors are offering is important information that any organisation must have to stay competitive.
Martin (1995:38) emphasises that identifying one's customers is not an easy thing to do and as a result, it is important for companies to spend a great deal of money and time in identifying who its customers are and making sure that they stay satisfied. Furthermore, it was proposed that there are two ways in which customer focus are interpreted in TQM. The first involves the organisation's attempts to satisfy the needs of the external market while the second aspect is in workers' effort to satisfy their own internal
customers. TQM principles do not recognise the legitimacy of merely following
procedure to satisfy internal and external customers. Each employee team must strive to maximise quality for their particular customers.
Lau and Anderson (1997:90) emphasise that relevant information on customers,
suppliers, competitors, products/services and processes is critical to decision-making for quality improvement. Many organisations place more emphasis on the collection and processing of data. Many managers (decision-makers) do not receive the information required to assist in the development and operation of TQM in their organisations. Therefore, collection and communication of quantifiable data on the company-specific
aspects of quality can be regarded as the central building block of a successful TQM process.
Table 2.2: Differences between in-focused and customer-focused companies IN-FOCUSED ORGANISATION CUSTOMER-FOCUSED ORGANISATION 1. Recognition is not given to staff who 1. Recognition is given to staff who balances
provide good service but to those who job efficiency with customer satisfaction. excel at accomplishing internal company
goals.
2. Staff have to focus most of their efforts on 2. Managers support their staff in doing their making their managers, rather than job well in taking care of customers' needs. customers, happy.
3. Promotion is based on seniority and 3. Promotion is based on seniority and good
favouritism rather than merit. service skills.
4. Staff, if trained at all, are trained in the 4. Training is of high priority with focus on functions of the job but rarely in the technical and interpersonal skills.
essence.
5. Departments that do not deal directly with 5. All staff know who their customers are external customers do not see themselves (internal or external) and see how they are
as responsible for customer satisfaction. part of the customer chain.
6. Decisions that affect customers are made 6. A participative management style is used
at the top and pushed down without and feedback from staff needed for key
consulting the frontline. customer issues before making decisions.
7. Short-term, bottom-line fixes always win 7. Long-term thinking is the rule rather than
out over long-term solutions. the exception.
Source: Leland and Bailey (1999: 13)
According to Leland and Bailey (1999:13), one thing that all organisations and
individuals who give great service have in common is that they have a genuine
customer-friendly attitude. By customer-friendly attitude it is meant that viewing customers as the most important part of the job and having sincere appreciation that
they choose to do business with the company. There are two distinct types of
companies, namely the in-focused company and the customer focused company. The
in-focused type organisation is mostly concerned with pleasing themselves rather than
2
6
pleasing customers while the customer-focused company is mostly concerned with maximisation of profits and finding ways on how best to serve their customers. Table 2.2 above shows the differences between in-focused and customer-focus organisations.
2.6.7.1 Quality measurement
Lau and Anderson (1997:91) state that the central focus of effective TQM programmes becomes the design and operation of the underlying measurement systems. Several factors are considered in designing a valid measurement system for TQM.
Firstly, measurement systems underlie the ability to communicate meaningfully about what quality means. Only quantitative measurements provide a higher level of precision for discussing quality information across all functional areas, which facilitate a better organisational response to changing customer needs. An effective, comprehensive measurement system will also establish a common language for communication and mutual understanding. As a result, measurements provide the basis for clear company-wide quality discussions at all levels of the organisation.
Secondly, adopting clear quality measurements also allow specific goals to be established and specific results to be forecast. Financial performance data are inadequate to address the progress made in quality improvement. Once goals are set and forecasts are prepared, the use of measurements provides feedback on the progress made towards achieving the goals. The measurement process allows faster identification of quality problems and intervention to solve the problems, greatly facilitating the organisation's overall product and/or service objectives.
Thirdly, specific quality measurements should form the basis for employee reward and motivational programmes, further integrating the TQM programme into the organisation. TQM often attempts to align the attainment of quality goals to employee rewards and compensation. The hope is that the quality measurement-compensation link will motivate employees to achieve the quality goals and this, objectively, is ultimately successful if the quality goal is objectively measurable, and the link between attaining the goal and obtaining rewards is clear and direct.
Measuring customer satisfaction is very difficult, because it is hard to measure the perceptions of millions of separate consumers. The measurement of customer service requests, feedback from sales staff, customer retention/turnover, customer surveys, and complaints are all quantifiable indicators of customer quality performance.
2.6.8 Continuous improvement
Continuous improvement (CI) is a philosophy that the quality guru, Deming, describes simply as consisting of "improvement initiatives that increase success and reduce failures" (Tari, 2005: 182). Bhuiyan and Baghel (2005:761) define continuous improvement as a company-wide process of focused and continuous incremental innovation. Barnhoorn (1995:16) reckons that achieving the highest level of quality and competitiveness requires a well-defined and well-executed approach to innovation and continuous improvement. This approach to improvement must be embedded in the way the organisation functions, which means that improvement:
• Is part of the daily work for all organisational work units; • Processes seek to eliminate problems at their source; and • Is driven by opportunities to do better.
Pycraft et a/. (2002:665) identify the following improvement techniques as these are more often used in an attempt to improve some aspects of performance in an organisation, namely:
• Statistical process control (SPC);
• Failure mode and effect analysis (FMEA); • Input-out analysis;
• Flow charts; • Scatter diagrams;
• Cause and effect diagrams; • Pareto diagrams;
• Why-why analysis; and • PDCA (Plan-Do-Check-Act).
The details of each of the above improvement techniques will not be dealt with in this study, but these are important in continuous improvement.
2.6.8.1 History and evolution of continuous improvement
Bhuiyan and Baghel (2005:762) explain that the history of continuous improvement programmes can be traced back to initiatives undertaken in several companies in the 1800s, where management encouraged employee driven improvements, and incentive programmes were set in place to reward employees that brought about positive changes in the organisation. In the late 1800s and early 1900s much attention was given to scientific management, which involved developing methods to help managers analyse and solve production problems using scientific methods based on tightly controlled time-trials to achieve proper work rates and labour rates. Grazier (1992:11) explains that the Japanese developed their own ideas, and quality control which was used initially in the manufacturing process, had evolved into a much broader term, growing into a management tool for ongoing improvement involving everyone in an organisation. As the need to continuously improve systems in an organisation, a number of continuous improvement methodologies were developed and the following are well-known, amongst others:
• Lean manufacturing; • Six sigma;
• Balanced scorecard; and
• Hybrid methodology.
2.6.8.2 Lean manufacturing
Stevenson (2002:26) explains that lean production systems are named so because they use much less of certain resources than mass production systems use - less space, less inventory, and fewer workers - to produce a comparable amount of output. This type of production uses highly skilled workforce and flexible equipment. The skilled workers in lean production systems are more involved in maintaining and improving the system than its mass production counterparts. Because lean production systems operate with lower amounts of inventory, additional emphasis is placed on anticipating
when problems might occur before they arise and avoiding these problems through proper training.
2.6.8.3 Six sigma
Eckes (2001:1) defines six sigma as a management philosophy, which attempts to improve customer satisfaction to near-perfection through focus and proper management of organisational processes. To achieve such levels of customer satisfaction, six sigma uses three critical success factors, namely, the strategic component, the tactical
component and the cultural component. Bhuiyan and Baghel (2005:765) define six
sigma as an organised and systematic method for strategic process improvement and
new product and service development that relies on statistical methods and the
scientific method to make dramatic reductions in the customer-defined defect rates. Minimising defects to the level of accepting close to zero is at the heart of the methodology, and focuses on reducing variation in all the processes of the organisation.
To achieve all these goals, the DMAIC model was developed: define objectives,
measure performance, analyse opportunities, improve performance, and control
performance.
2.6.8.4 Balanced scorecard
Bhuiyan and Baghel (2005:766) defines the Balanced scorecard method as a
methodology that translates the objectives of the organisations into measures, goals and initiatives in four different perspectives, namely, financial, customer, internal business processes, and learning and growth. A Balanced Scorecard is often used to translate an organisation's mission and vision statements into a broad set of objectives
and performance measures that can be quantifiable and appraised, and measures
whether management is achieving desired results. A Balanced Scorecard is known to
be a combination of a measurement system, a strategic management system and a
communication tool:
• Measurement system. It helps the organisation to translate its vision and strategy through the objectives and measures defined, rather than stressing on financial measures that provide little guidance.
