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Total Quality Management is an organization-wide commitment to infusing quality into every activity through continuous improvement.(1) After World War II, Japan began evolving its distinctive business quality model. By the 1970s, real differences in product quality had become obvious, and consumers were expecting higher standards in the products they purchased. The competitive world was changing, but American managers were not equipped to understand how quality, especially as practiced by Japanese firms, could be a factor in their decreasing market share of sales.
There were several reasons for this phenomenon. After World War II, getting product out the door through mass production was paramount. Not much had changed in manufacturing when the economy shifted from a war time economy to a civilian based product economy. In large production runs some level of poor quality was inevitable and acceptable. The trick was to catch poor quality before it was shipped, or if that failed, then quality problems would be handled through offering service contracts. Quality was considered a lower-level, end-of-the-line function. Product quality was simply not a high priority for management.
By the early 1980s, standard information reporting systems did not bring quality performance to the attention of top management. Quite often, data on customer satisfaction and competitor analysis was not even collected. In addition, the American manufacturing dominated the immediate postwar period, which was made possible by the destruction of the industrial base of all major competitors. Most countries in Europe had most of their industries destroyed by the war and were not in a position to do any manufacturing. This lead American managers to a false conclusion that they knew how to effectively manage. Quality was not a topic that was taught at most business schools at the time. This newer version of quality management required skills such as including employee involvement and training, which were not developed as part of existing practices at the time. American managers by the late 1970s were in a state of denial that quality was a major competitive factor or products made in Japan were qualitatively better. They quickly blamed other factors such as cheaper labor costs and Japanese government support of Japanese industries. This did not prevent American businesses from calling for more protection from the Federal government. The 1980 NBC Television News Special, "If Japan Can, Why Can't We?" brought the issue to public attention and dumped the issue of inferior American product quality into the nation's lap. In the early 1980s, American businesses could no longer deny the problem and many businesses began forays into the realm of quality. For example this is when Ford Motor Company brought out a huge campaign throughout the company to support its new advertising slogan, "Quality is job # 1".
The initial efforts for American industry to learn about quality were slow being developed and confused in execution for various reasons. There was little information available in English about Japanese quality management techniques at the time. American managers, many of whom were veterans from WWII, had a cultural chauvinism towards the Japanese and did not believe they could learn anything from the Japanese. What was meant by the term "quality" was also unclear to them. Without some way of defining this new approach to quality management, American managers were faced with even more confusion.
During the 1980s and through the 1990s, there was a continuum of competing techniques such as quality circles, SPC, benchmarking, competing gurus such as Deming, Juran, and Crosby, and competing theories like service quality, ISO, and re-engineering. There was a dissonance of advice, definitions, and procedures. There were no clear-cut easy answers, which added to their frustration. Not only did it mean that American quick fixes were of no value, it also meant that it would take time and effort to create, test, and install quality management practices. There was no silver bullet to resolve the problem. Even amid the chaos of the 1980s, American managers were in a learning phase. Florida Power and Light (FPL) fully committed to adopting TQM early and began learning relationships with Kansai Electric and other Japanese companies who were non-competitors in Japan. By 1985, FPL's work in TQM was gaining attention and from 1985-88, about 2,500 managers per year mostly from Fortune 1000 firms visited FPL. Florida Power and Light became a learning source and a model for the rest of American industry. Hewlett Packard was another firm that began a successful TQM learning cycle early on. For HP, its Japanese subsidiary (YHP) spurred management concern for quality and became the source for transferring TQM practices to the American parent. The 1970s actively involved YHP in quality practices in Japan. YHP was concerned about the high failure rate of HP products that were coming into Japan and they regularly complained about product failures to HP-USA. Shortly after 1982, HP began to draw on YHP's experiences through periodic manager visits to Japan, quality circles and use of a Japanese quality expert. A continued commitment to Total Quality Management led to two new approaches: the use of a Quality Maturity System (QMS) and then the adoption of Hoshin management techniques. By the mid-1990s, HP's worldwide benchmarking studies showed HP parity but not an advantage. This then led to HP's "Quality One on One" approach, which included measurements of customer loyalty.
By the late 1980s, a reasonably extensive and helpful infrastructure had been developed to support TQM in American business. In addition to quality consultants, there was a variety of professional associations, government interventions, joint government-private initiatives, industry sponsored organizations, community organizations, regional associations, universities, independent research organizations and other organizations that were now active and involved. Some examples of organizations included the American Society for Quality; GOAL/QPC, a group in Lowell, Massachusetts that began translating and publishing data on the Japanese best practices, the Conference Board's Quality Councils that served upper executives; and the Baldrige Award. The Baldrige award provided a growing pool of trained TQM examiners and inspired state and local award programs.
Within a decade of the airing of the NBC News Special, something of a coherent American approach to Total Quality Management had emerged and by the mid-1990s, quality was becoming less of an issue. There were the new TQM tools that helped identify and root out production problems. There was also a new infrastructure in place that provided helpful quality resources, education and contacts. Top management had come to accept the importance of quality in its operations.
American firms learned a lot about quality in a slow and indirect manner. The learning process was incremental and unplanned, building slowly but gaining a head of steam. "There is a lesson to be learned from the personal and cultural blinders that made learning TQM problematic. At every turn, attitudes of self-satisfaction, arrogance, denial, and contempt worked to delay and dilute the learning process. When an entire class of managers unconsciously shares hubris and cultural chauvinism across industries, humility and curiosity suffer, making advances in understanding is difficult at best."(2) Although businesses were acting individually to deal with the quality issues, they were constrained by a lack of contacts and resources. As a result it became a game in survival of the learning fittest.
The philosophy of TQM involves increasing customer satisfaction, lowering cost and teamwork to achieve these goals. Teams of employees are empowered with the ability to make decisions that will attain high quality standards. Managers and employees are given the ability and are expected to collaborate across functions and departments within the organization. Everyone within the organization is expected to identify areas for improvement, no matter how small the improvement. The idea here is that the people in the trenches, closest to the front lines know how to do their jobs and are the ones who because of their familiarity with their jobs know best how to improve functions to achieve total customer satisfaction.
A fundamental principle of the Total Quality Management (TQM) philosophy is an intense focus on customer satisfaction. Focus on the customer enables the firm to recognize changing market conditions and effect appropriate change. Hence, the relationships between productivity and quality go beyond operational efficiency and incorporate the uncertain and dynamic nature of the competitive environment in which the smaller firm participate and excel in."(3) "Managers of high-performance companies understand the impact of quality on organizational performance. They realize that quality has the ability to make two simultaneous and positive impacts on financial performance. Initiating quality improvements lowers operating costs and draws the loyalty of customers who are willing to pay more for a better product, thus creating higher profit margins."(4)
Quality control is no longer the responsibility of a specialized department, but an integrated function of each employee's job description no matter how low on the totem pole. TQM decentralizes the approach of control within the organization.
The Western notion of there being an "acceptable quality level", or in other words, a certain percentage of defects is tolerable and acceptable which is usually statistically determined is removed. The Eastern notion is that all defects are unacceptable, plus all actions that will achieve this ideal are acceptable and must be carried out to achieve this goal. Each day is another day to strive towards achieving this goal and all employees are expected to participate in providing input, insight and suggestions that will achieve this goal.
Employees are trained to think and act in terms of prevention of problems and actively provide solutions. Employee participation and employee ownership is stressed within the organizational culture. The goal here is to have zero defects.
Many techniques are used by organizations to achieve the goals of TQM. Quality circles, empowerment, benchmarking, outsourcing, standards for reduced cycle time, and continuous improvement are on the most common methods used in companies subscribing to the TQM philosophy.
Quality Circles
According to Edward E. Lawler III and Susan A. Mohrman, "Quality circles are groups of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting the quality of their work."(5) The quality circles meet during the workweek to identify problems and to work on solutions. They are empowered with the ability to collect data and take surveys within the workplace to work towards resolution of the problems. The reasoning behind these quality circles is that the people who actually do the job know what problems they encounter in their day to day functions and are the people who can make suggestions as to how to improve their production.
This method was first adapted in the Japanese work place where employee teams would gather before opening work hours and would meet to discuss problems and solutions involving quality control. The Japanese work ethic was completely different from Western work ethics at the time and the employee felt committed to their companies and that the quality of their work was a reflection on their own personal ethics. Once the West was seeing the effects in quality of Japanese products due to these philosophies and in order to compete, the West began to analyze their methods and began to adapt then into their own organizations.
Empowerment
Empowerment and taking ownership by the employees is the key to TQM being effective within an organization whether it is in manufacturing or in customer service in the service industries. Employee input is essential to continuous improvement and has to be performed on a daily basis. "For example, there was a company assembling stock components with a pneumatic screwdriver," explains Michael Alles. "Every once in a while, there would be fluctuations in air pressure that would cause the driver to slip and scrape the product. An engineer or a manager might propose to monitor fluctuations in air pressure - a complex and expensive control-systems solution. In this instance, a worker came up with a new idea: Simply use a screw nail whose slots don't extend to the edges, so the screwdriver can't slip from the screw head. That's working smarter," says Alles.(5) Management also has to relinquish some of its power to the employees for TQM to be effective. "Processes and worker attitudes also play a role. Many people seem to think that workers don't care about quality," observes Arthur M. Schneiderman, an independent consultant on process management based in Boxford, Massachusetts. "Quite the contrary, I believe that workers want to make defect-free products. However, systems that we create prevent that from happening. One of those archaic systems is the separation of production and inspection, which is further exacerbated by unnecessary inventory."(7) In Schneiderman's view, management structures on the plant floor are the most critical element. Low inventory processes can help only if there is attendant process change. Companies as a result end up reducing staff and layers of management and also shift some of the responsibility to their suppliers and other outside organizations.
Organizations also have to include a feedback loop for their customers who are usually provided in the form of questionnaires that allow the consumer to voice their opinions by asking particular questions and leaving a place for hand written comments and are taken quite seriously. At Micro Center each department within the store maintained a crisis/customer dissatisfaction team. Its primary function was to follow up on poor customer satisfaction report cards when received from home office. The process involved telephone contact, provided that the customer had checked on the card that it was okay to call them, or in the event that the customer did not want to be called, a follow up letter was sent out to determine why the customer was dissatisfied and what measures could be taken in order to satisfy the customer.
Benchmarking
Xerox (a recognized leader in TQM) defines benchmarking as, "The continuous process of measuring products, services and practices against the toughest competitors or those companies recognized as industry leaders."(8) Analysis of the organization from top to bottom is the key to benchmarking. The organization should begin with its mission statement and do a complete assessment of its current procedures and determine those areas that need improvement. The second thing that should be done is to take an analytical look at companies that have succeeded with TQM, and to determine how those successes can be implemented into their own organization. "According to Deming, higher quality leads to less rework, lower costs, higher productivity, lower prices, and increased market share. Measures such as proportion of defects, the percentage of products needing rework, the total cost of quality, and the defect rate relative to competitors are the more common type of archival quality outcome indicators mentioned in the literature."(9)
Outsourcing
Quality can be improved through outsourcing, which is the contracting out some of the company's in-house functions to a vendor with high quality standards in that particular area. By farming out activities, organizations can save costs on employee benefits, salaries and free up their employees to more focused tasks that will aid towards the goal of reducing defects and improving quality. It allows managers and employees to focus more on functions that will increase quality elsewhere throughout the organization. What is key here is the importance of first establishing a dialogue between suppliers and buyers so that all parties clearly understand each others needs and expectations.
Reduced Cycle Time
Richard L. Daft defines cycle time as, "The steps taken to complete a company process."(10) The simplifying of processes and breaking down barriers, increasing communication across departments, and the removal of unnecessary steps, empowering the employees with the ability to make decisions, and managers having confidence in their employees to do the right thing all enable TQM to succeed. "Smaller companies can be even more successful at soliciting employee support and involvement because there are fewer management layers to permeate and fewer people to convince of the benefits."(11)
By reducing cycle time the overall performance of the company is thereby improved. By utilizing work flow diagram charts, the search for unnecessary duplicate functions, and through the use of computer automation many unnecessary steps can be removed and processes streamlined, thereby increasing quality throughout the organization.
Continuous Improvement
Continuous improvement is defined as "The implementation of a large number of small, incremental improvements in all areas of the organization on an ongoing basis."(12) Japanese companies with great success carried out this practice and allowed their employees to contribute by initiating changes in their own job activities. Little improvements applied all the time have the greatest probability of success.
One company I worked for gave us this empowerment after about a year of unsuccessfully trying to implement change. The problem is that neither the supervisors nor the managers really had any idea of how each process affected the next process. We were production welders responsible for the manufacture of marine oil coolers and heat exchangers. As our skills increased in building the units, we became more involved in doing all the processes involved in building the heat exchangers. From the raw materials to the finished product we began to learn and teach each other what particular steps could be eliminated and which steps were crucial in making other steps in the process much easier and faster in the assembly, finishing, welding and testing phases of the products. We were also given authority to lead and instruct the shop helpers who were less skilled in the machine processes. We could then teach them when things were not quite right what was causing the problems and how to rectify them. Some of the adjustments were very simple, such as knowing when a cleaning acid was no longer being effective and needed to be changed. Some changes were not as obvious, such as making tubing just an 1/8 shorter which would allow us to weld the units more quickly, or changing a wire brush on a machine at regular intervals would aid the soldering process to improve cleanliness.
"TQM is a major organizational change that requires a transformation in the organization's culture, processes, strategic priorities, and beliefs, among others in order for the philosophy to be effective."(13) Total Quality Management is extremely difficult to achieve in real work place because and is more of an ideal to strive for. You've heard it before and here it comes again, it's an imperfect world and to expect perfection from it is just an ideology, a goal to strive for but physically not achievable.
In the last company I worked for, Micro Center, did subscribe to TQM at the top of the organization and was also a learning organization. In the first year and a half I was with the organization the Philadelphia store was effective in meeting its goals. This was due to the management believing in us and providing us with the empowerment to make the correct decisions. The general manager was fired and in the process the operations manager moved up into the position of general manager. The new general manager's style was cut-throat and believed strongly in micro-management. One by one each of the lower managers and supervisors left, draining the human resource and talents that had made the store a major information center on computer information. The psychological impact was immense and began to trickle down through the company. In order to fill the voids left from the "brain drain", employees were promoted to the supervisor positions only to be used as "whipping boys" by the general manager. TQM was completely thrown out the window along with a lot of other ideologies that had been handed down by the home office. The top priority of the credo of the company changed from, "Take care of the customer", to "Take care of your own wallet" and so began the descending spiral. After three and a half years of total deterioration of the store, the outcome was that the general manager was given an ultimatum of, "You have one month to find a new job and we'll give you a good recommendation." The point I'm making is that if management does not subscribe and is not committed to Total Quality Management there's just no possibility of it working. Top management must take the lead in order for TQM to be a viable commitment. Someone in top management must be the "Champion" of the cause, otherwise TQM will never take effect.
(1) Richard L. Daft, "Management," 5th ed. (Orlando, FL: The Dryden Press, 2000), 653.
(2) Alan Clardy, "Management Quality Fads: How American Business Learned How to Play the Quality Game," Personnel Psychology (Summer 2001), 508-513.
(3) Donald F. Kuratko, John C. Goodale, Jeffery S. Hornsby, "Quality Practices for a Competitive Advantage in Smaller Firms," JOurnal of Small Business MAnagement (October 2001), 1.
(4) Mike Williams, Mitch Griffin, Jill Attaway, "Observations on Quality: The principles of quality," Risk Management (October 2001), 50-52.
(5) Edward E. Lawler III and Susan A. Mohrman, "Quality Circles After the Fad," Harvard Business Review, January-February 1985, 65-71; and Philip C. Thompson, "Quality Circles: How to Make Them Work in America," (New York: AMACOM, 1982).
(6)Larry Yu, "Improving Quality Just in Time," Mit Sloan Management Review, (Summer 2001), 20.
(7) E.g., Yu, 20.
(8) Howard Rothman, "You Need Not Be Big to Benchmark," Nation's Business Excellence, (December 1992), 64-65.
(9) Jaideep Motwani, "Measuring Critical Factors of TQM," Measuring Business Excellence, Bradford, (2001), 27-30.
(10) E.g., Daft, 655.
(11) E.g., Kuratko, 2.
(12) E.g., Daft, 656.
(13) E.g., Motwani, 27-30.
Clardy, Alan. "Managing Quality Fads: How American Business Learned How to Play the Quality Game," Personnel Psychology (Summer 2001).
Cohen, Steven, and Ronald Brand. Total Quality Management in Government: a practical guide for the real world, 1st ed., San Francisco, CA: Jossey-Bass, 1993.
Crosby, Philip B. Completeness: quality for the 21st century, New York, NY : Dutton, 1992.
Daft, Richard L. Management, 5th ed. Orlando, FL: The Dryden Press, 2000.
Hodgetts, Richard M. Implementing TQM in Small & Medium-sized Organizations: a step-by-step guide, New York, NY: Amacom, 1996.
Hradesky, Jack. Total Quality Management Handbook, New York, NY: McGraw-Hill, 1995.
Kuratko, Goodale, and Jeffrey S. Hornsby. "Quality Practices for a Competitive Advantage in Smaller Firms," Journal of Small Business Management (October 2001).
Lawler, Edward E. III, and Susan A. Mohrman. "Quality Circles after the Fad," Harvard Business Review, (Jan.-Feb. 1985).
Motwani, Jaideep. "Measuring critical factors of TQM," Measuring Business Excellence, Bradford, (2001).
Rothman, Howard. "You Need Not Be Big to Benchmark," Nation's Business, (December 1992).
Schmidt, Warren H., and Jerome P. Finnigan. The Race Without a Finish Line: America's quest for total quality, 1st ed., San Francisco: Jossey-Bass Publishers, 1992.
Stebbing, Lionel, and R.J. Pengelly. Quality Management for the Small Business, New York, NY: E. Horwood, 1994.
Thompson, Philip C. Quality Circles: How to make Them Work in America, New York, NY: Amacom, 1982.
Williams, Mike, Mitch Griffin, Jill Attaway. "Observations on Quality: The principles of quality," Risk Management (October 2001).
Williams, Richard L. Essentials of Total Quality Management, New York, NY: Amacom, 1994.
Yu, Larry. "Improving Quality Just in Time," Mit Sloan Management Review, (Summer 2001).
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