TOTAL QUALITY MANAGEMENT

Sl Topic Page Number

1 Introduction 2

2 Concepts & Philosophy 6

3 Customer Satisfaction 11

4 Leadership 16

5 HR Practices in TQM 20

6 Process Management 25

7 Performance Measurement 28

8 Building & Sustaining TQM 33

9 Principles of Six Sigma 44

10 General Background of Quality 49

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Introduction to Quality

• Total – Made up of the whole(or) Complete.

• Quality – Degree of Excellence a product or service provides to the customer
in present and future.
• Management – Act , art, or manner of handling , controlling, directing, etc.
• TQM is the art of managing the whole to achieve excellence.

"TQM is a management approach for an organization, centered on quality, based on the

participation of all its members and aiming at long-term success through customer
satisfaction, and benefits to all members of the organization and to society."

Definition
TQM is composed of three paradigms:
Total: Organization wide
Quality: With its usual Definitions, with all its complexities (External Definition)
Management: The system of managing with steps like Plan, Organise, Control, Lead,
Staff, etc.

Definition
Total Quality Management (TQM) is a management strategy aimed at embedding
awareness of quality in all organizational processes.

Explanation
TQM requires that the company maintain this quality standard in all aspects of its
business.
This requires ensuring that things are done right the first time and that defects and waste
are eliminated from operations.

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History of Quality Assurance
 Skilled craftsmanship during Middle Ages
 Industrial Revolution: rise of inspection and separate quality departments
 Early 20th Century: statistical methods at Bell System
 Quality control during World War II
 Post-war Japan: evolution of quality management
 Quality awareness in U.S. manufacturing industry during 1980s: from “Little Q”
to “Big Q” - Total Quality Management
 Malcolm Baldrige National Quality Award (1987)
 Disappointments and criticism
 Emergence of quality mgmt in service industries, Govt,health care, and education
 Evolution of Six Sigma
 Current and future challenge: keep progress in quality management alive

Defining Quality
• Perfection
• Fast delivery
• Providing a good, usable product
• Eliminating waste
• Doing it right the first time
• Delighting or pleasing customers
• Total customer service and satisfaction
• Compliance with policies and procedures

Formal Definitions of Quality

 Transcendent definition: excellence
 Product-based definition: quantities of product attributes
 User-based definition: fitness for intended use

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 Value-based definition: quality vs. price
 Manufacturing-based definition: conformance to specifications

Total Quality in Organizations

• Marketing and sales personnel are responsible for determining the needs and
expectations of consumers.
• Product design and engineering functions develop technical specifications for
products and production processes to meet the requirements determined by the
marketing function.
• A purchasing agent should not simply be responsible for low-cost procurement,
but should maintain a clear focus on the quality of purchased goods and materials.
• Poor quality often results from time pressures caused by insufficient planning and
scheduling.
• Both technology and people are essential to high-quality manufacturing.

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• Poor quality often results from time pressures caused by insufficient planning and
scheduling.
• Manufacturing processes must be capable of producing output that meets
specifications consistently.
• The purposes of final product inspection are to judge the quality of
manufacturing, to discover and help to resolve production problems that may
arise, and to ensure that no defective items reach the customer.
• Service after the sale is one of the most important factors in establishing customer
perception of quality and customer loyalty.
• Finance and accounting
• Quality assurance
• Legal services

Differences between manufacturing and service organizations

• Customer needs and performance standards are difficult to quantify in
services.
• The production of services often requires a high degree of customization.
• The output of many services is intangible, unlike manufactured goods.
• Services are produced and consumed simultaneously.
• Customers must often be involved and present during the performance of the
service process.
• Services are more labor intensive, where manufacturing is more capital intensive.
• Many service organizations handle large numbers of transactions.

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 CONCEPTS & PHILOSOPHIES
Traditional Growing Quality World-Class
Management Awareness ofManagement Quality
Practices Quality System Management
• Senior leaders’ job • Senior leaders’ job • Senior leaders’ job • Senior leaders’ job
is to maintain the is to ensure that is to define and is to develop vision
status quo by quality problems manage change and encourage
preventing change are brought to toward a quality innovation and
• Managers oversee mgt.’s attention mgt. system change.
departments or • Managers oversee • Managers guide • Managers facilitate
functions. dept./functions to departments/ func- departments/ func-
stop external tions toward quality tions efforts to
failures prevention/appraisa reach stretch goals
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• Senior leaders• Senior leaders• Senior leaders and• Senior leaders
develop goals and develop goals in lower level managers develop mission and
pass down to lower consultation with develop goals and vision on which stretch
levels middle managers resolve through give goals are based and
• Goals are zero-sum• Goals are based on and take. use a catchball
game - loser for every incentives for highest• Goals are based on process to deploy
winner individual performers mutual trust and team• Goals are cascaded
efforts with individual and
team rewards for
accomplishment
• Customers are• Customers needs are• Customers are• Customers are
outsiders in the the focus of marketing surveyed to determine insiders in the domain
domain of marketing and sales satisfaction of design, production,
and sales • Customers have some• Customers/suppliers and marketing
• Customers have no impact on product are consulted in• Customers have a
impact on product design product design major impact on
design • Complaints are taken decisions product design
• Complaints are only as a signal of quality• Complaints are• Complaints are only a
reacted to problems handled system- part of a complete
• Customer/supplier atically and used for customer
dialogs on quality product/process management process
sometimes occur improvement
• Control is achieved by• Control is achieved by• Control is achieved by• Control is achieved by
pre-established somewhat flexible cooperative team alignment with goals
inflexible responsive responsive patterns efforts to improve• Information is
patterns • Information is processes interlinked and is
• Information is generally considered• Information is considered to be
generally considered to be confidential, but considered to be openly available
to be secret available widely available to unless proprietary or
those inside the personally sensitive
organization

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Traditional Growing Quality World-Class
Management Awareness ofManagement Quality
Practices Quality System Management
• People are an • People often have • People should be
interchangeable valuable unique encouraged to work • People shoul d
commodity skills and should be in teams to solve be empowered to
• Adversarial rewarded for indivi- problems work individually
relation-ship dual contributions • Cooperative and in teams to
between union (if • Consultative relationships meet individual and
one exists) and relationship between union and organizational goals
management between union and management need • Relationships
• Hierarchical management to be developed between union and
“chimney” • “Chimney” • “Chimney” management based
structures prevent structures need to structures virtually on full partnership
teamwork between be reduced to eliminated to • Cross-functional
functions. permit teamwork enhance teamwork teams and project
• Performance appraisal between functions. between functions. structures virtually
and reward systems• Performance appraisal• Performance appraisal eliminate hierarchy.
place people in a and reward systems and reward systems• Performance appraisal
competitive need modifi-cation to modified by team and reward systems
environment. reduce competitive and/or goal-based replaced by team,
environ-ment reward systems goal, and knowledge-
based reward systems
• Processes are • Processes are • Reorganization of • Processes are
seen as a collection seen as a collection processes of some seen as a system of
of separate, of separate units, in separate units, out interdependent sub-
specialized units, in a functional of the functional processes linking
a functional hierarchy, but hierarchy, is seen the organization to
hierarchy. cross-functional as advantageous customers and
• Suppliers are activities require a • Suppliers are suppliers
pitted against each coordinative consulted for critical• Suppliers are partners
other to obtain the mechanism. design information with their customers.
lowest price • Suppliers are and given support Goal is to have few
selected, based on in efforts to develop suppliers and
performance to obtain improved products establish long-term
better quality and and services relationships
service at an
acceptable price
• Results are • Results are • Results are stated • Results are stated
primarily stated primarily stated in in financial, market, as a “balanced
financially financial and operating, quality scorecard”
• Any negative market terms “metrics” •Benchmarking and
deviation is a cause • Any negative • Any negativehistorical comparisons
for corrective action deviation is a cause deviation is a causeare used for setting
and search for a for corrective action for correction aftergoals, tracking, and
scapegoat some investigation,improvement.
and development of • Any negative
a new “tracking” deviation is a cause
measure, if for investigation
required using existing goals
and metrics before
any corrective
action is taken

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Deming’s 14 Points
1.Create a Statement of Purpose. Originally, in Deming’s earlier version, commitment to
aims and purposes of the organization by senior leaders was something that might or
might not be made clear to employees throughout the organization. In the newer version,
Deming urged that it be “published” to all employees.
2.Learn the New Philosophy. Again, the older version suggested that it was primarily the
job of management to adopt the new philosophy and provide leadership for change. The
new version emphasizes the need for communication of values, expectations, customer
focus, and learning as a key area for everyone.
3. Understand Inspection. In the old version, it appeared that Deming wanted to end
inspection (although a closer reading showed that he did not advocate ending all
inspection). The newer version suggests the need to develop appropriate measurement
plans and to understand where measurement should and should not be used.
4.End Price Tag Decisions. The new version makes the simple statement, without
prescribing how this should be done, as the old version did.
5.Improve Constantly. This statement is a simplification of his old version of this point,
as are the points 6, 7, 8, 10, 12, 13, and 14. He seemed to be willing to let the statements
speak for themselves, rather than drawing out their implications or results. Thus it is
obvious (he might say) that continuous improvement is to be done so that it will increase
quality and reduce costs.
6.Institute Training. Recognizes the critical importance of training.
7.Teach and Institute Leadership. The new version states that leadership should be
taught, as well as instituted.
8.Drive Out Fear and Innovate. The new version of this point expands the emphasis to
include developing trust and innovation, which is an interesting confluence. Deming
implies that when fear is driven out, it is replaced by trust, which then can create a
climate for innovation.
9.Optimize the Efforts of Teams and Staff. This point has been broadened considerably to
imply that teamwork is the activity required to deploy and optimize the aims and
purposes of the organization. The older version indicated that the need for teamwork was
related to removing barriers between departments so that problems could be foreseen and
solved. This is not negated in the new version, but a vertical dimension is introduced, to
complement the horizontal dimension.
10.Eliminate Exhortations. Once again, Deming simplifies the old wording, to eliminate the (to
him) obvious statements.
11.Eliminate Quotas and MBO; Institute Improvement; and Understand Processes. Deming saw
no need for work standards, quotas, and management by objectives approaches. He assumed that
if everyone was working constantly toward process understanding and quality improvement, that
there would be no need to exhort workers to work harder to meet numerical goals.
12.Remove Barriers. This is a simplification of his previous point, which had two parts to cover
workers and managers.
13.Encourage Education. This point is similar to point 6, but takes a broader view that education,
as well as training, is essential for all employees.

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14.Take Action. This is the role of leadership, but everyone has to be involved in the
transformation process.

ISO 9000 :
has been controversial for a number of reasons. It was “imposed” by the European Union
as an attempt to provide standardization for all suppliers doing business within
any of the EU countries. However, it was complicated, expensive, and time
consuming to develop, qualify for, and maintain. Perhaps the most troubling
drawback was that an ISO 9000 organization could still produce poor quality
products.

The ISO 9000:2000 revision addressed a number of the more controversial issues
by incorporating eight quality management principles, as follows:

• Customer focus
• Leadership
• Involvement of people
• Process approach
• System approach to management
• Continual improvement
• Factual approach to decision making
• Mutually beneficial supplier relationships

ISO 9000:2000 has been structurally changed and simplified. At the same time it places
much more emphasis on quality management concepts, as contrasted with
procedural correctness of the previous ISO 9000 standard.

The key requirements of ISO 9000 include:

• Quality management system

• Management responsibility
• Resource management
• Product realization
• Measurement, analysis and improvement

Yes, every company should be involved in development and improvement of their

quality management system in each of these five areas. If not, how can
performance management take place?

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Motorola & 6 Sigma
Motorola pioneered the concept of Six Sigma as an approach to measuring product and
service quality. The late Bill Smith, a reliability engineer at Motorola, is credited
with originating the concept during the mid-1980s and selling it to Motorola’s
CEO, Robert Galvin. Smith noted that system failure rates were substantially
higher than predicted by final product test, and suggested several causes,
including higher system complexity that resulted in more opportunities for failure,
and a fundamental flaw in traditional quality thinking. He concluded that a much
higher level of internal quality was required and convinced Galvin of its
importance.
The core philosophy of Six Sigma is based on some key concepts:
• Thinking in terms of key business processes and customer requirements
with a clear focus on overall strategic objectives.
• Focusing on corporate sponsors responsible for championing projects,
supporting team activities, helping to overcome resistance to change, and
obtaining resources.
• Emphasizing such quantifiable measures as defects per million
opportunities (dpmo) that can be applied to all parts of an organization:
manufacturing, engineering, administrative, software, and so on.
• Ensuring that appropriate metrics are identified early in the process and
that they focus on business results, thereby providing incentives and
accountability.
• Providing extensive training followed by project team deployment to
improve profitability, reduce non-value-added activities, and achieve cycle
time reduction.
• Creating highly qualified process improvement experts (“green belts,”
“black belts,” and “master black belts”) who can apply improvement tools
and lead teams.
• Setting stretch objectives for improvement.

The recognized benchmark for Six Sigma implementation is General Electric.

The efforts by General Electric, driven by former CEO Jack Welch, brought
significant media attention to the concept and made Six Sigma a very popular
approach to quality improvement. In the mid-1990s, quality emerged as a
concern of many employees at GE. Jack Welch invited Larry Bossidy, then CEO
of AlliedSignal, who had phenomenal success with Six Sigma, to talk about it at a
Corporate Executive Council meeting. The meeting caught the attention of GE
managers and Welch. To ensure success, GE changed its incentive compensation
plan so that 60 percent of the bonus was based on financials and 40 percent on Six
Sigma, and provided stock option grants to employees in Six Sigma training. In
their first year, they trained 30,000 employees at a cost of $200 million and got
back about $150 million in savings. From 1996 to 1997, GE increased the
number of Six Sigma projects from 3,000 to 6,000 and achieved $320 million in

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 productivity gains and profits. By 1998, the company had generated $750 million
in Six Sigma savings over and above their investment, and would receive $1.5
billion in savings the next year.
CUSTOMER SATISFACTION
Customer contact requirements are measurable performance levels or expectations that
define the quality of customer contact with representatives of an organization. These
might include technical requirements such as response time (answering the telephone
within two rings), or behavioral requirements (using a customer’s name whenever
possible). Customer needs and expectations form the basis of measurable contact
requirements. They are important because companies must communicate these
requirements to all customer-contact employees, they must then be used to maintain the
consistency and effectiveness of their standards, and companies must continually
reinforce their standards. Additionally, many customer-contact employees depend on
internal customers for support, who also must understand the role they play in meeting
the requirements. Finally, companies must generally implement a process for tracking
adherence to the requirements and providing feedback to the employees to improve their
performance.

Expected quality is true customer needs and expectations, that is, what the customer
assumes will be received from the product. Actual quality is the outcome of the process
and what is delivered to the customer. Perceived quality is actual quality minus expected
quality. If the amount of actual quality provided is equal to or more than the expected
quality, the customer perceives positive satisfaction. If the amount of actual quality
provided is less than the expected quality, the customer perceives negative or dis-
satisfaction.

The dimensions of quality

a) Performance: a product’s primary operating characteristics. Using an
automobile as an example, these would include such things as acceleration,
braking distance, steering, and handling.
b) Features: the “bells and whistles” of a product. A car may have power
options, a tape or CD deck, antilock brakes, and reclining seats.
c) Reliability: the probability of a product’s surviving over a specified period of
time under stated conditions of use. A car’s ability to start on cold days and
frequency of failures are reliability factors.
d) Conformance: the degree to which physical and performance characteristics
of a product match pre-established standards. A car’s fit and finish and
freedom from noises and squeaks can reflect this.
e) Durability: the amount of use one gets from a product before it physically
deteriorates or until replacement is preferable. For a car this might include
corrosion resistance and the long wear of upholstery fabric.
f) Serviceability: the speed, courtesy, and competence of repair work. An
automobile owner might be concerned with access to spare parts, the number
of miles between major maintenance services, and the expense of service.

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 g) Aesthetics: how a product looks, feels, sounds, tastes, or smells. A car’s
color, instrument panel design, control placement, and “feel of the road,” for
example, may make it aesthetically pleasing.

The key dimensions of service quality include:

a. Reliability: the ability to provide what was promised, dependably and

accurately. Examples include customer service representatives responding
in the promised time, following customer instructions, providing error-free
invoices and statements, and making repairs correctly the first time.
b. Assurance: the knowledge and courtesy of employees, and their ability to
convey trust and confidence. Examples include the ability to answer
questions, having the capabilities to do the necessary work, monitoring
credit card transactions to avoid possible fraud, and being polite and
pleasant during customer transactions.
c. Tangibles: the physical facilities and equipment, and the appearance of
personnel. Tangibles include attractive facilities, appropriately dressed
employees, and well-designed forms that are easy to read and interpret.
d. Empathy: the degree of caring and individual attention provided to
customers. Some examples might be the willingness to schedule deliveries
at the customer’s convenience, explaining technical jargon in layperson’s
language, and recognizing regular customers by name.
e. Responsiveness: the willingness to help customers and provide prompt
service. Examples include acting quickly to resolve problems, promptly
crediting returned merchandise, and rapidly replacing defective products.

Steps in designing effective customer surveys include:

• Determine the purpose
• Address who should conduct the survey
• Define the sample frame
• Select the appropriate survey instrument
• Design proper questions with proper wording
• Develop measurable service characteristics (when applicable)
• Design a reporting format and data entry methods

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Kano’s Model

Kano suggested three classes of customer requirements:

• Dissatisfiers: requirements that are expected in a product or service. In an

automobile, a radio, heater, and required safety features are examples, which are
generally not stated by customers but assumed as given. If these features are not
present, the customer is dissatisfied.

• Satisfiers: requirements that customers say they want. Many car buyers want a
sunroof, power windows, or anti-lock brakes. Although these requirements are
generally not expected, fulfilling them creates satisfaction.

• Exciters/delighters: new or innovative features that customers do not expect. The

presence of unexpected features, such as a weather channel button on the radio or
separate rear-seat audio controls that allow children to listen to different music
than their parents, leads to high perceptions of quality

Good customer relationship management depends on the quality of training of customer-

contact personnel. Many companies begin with the recruiting process, selecting those
employees who show the ability and desire to develop good customer relationships.
Companies committed to customer relationship management ensure that customer-
contact employees understand the products and services well enough to answer any
question, develop good listening and problem recovery skills, and feel able to handle
problems. As mentioned several times, The Ritz-Carlton Hotel Company is one of the

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“benchmark” organizations for training customer contact employees. Empowering
employees allows them to make decisions on their own to satisfy customers, who dislike
being transferred to a seemingly endless number of employees to obtain information or
resolve a problem.

CRM software is designed to help companies increase customer loyalty, target their most
profitable customers, and streamline customer communication processes. A typical CRM
system includes market segmentation and analysis, customer service and relationship
building, effective complaint resolution, cross-selling goods and services, order
processing, and field service. CRM helps firms gain and maintain competitive advantage
by:

• Segmenting markets based on demographic and behavioral characteristics

• Tracking sales trends and advertising effectiveness by customer and
market segment
• Identifying which customers should be the focus of targeted marketing
initiatives with predicted high customer response rates
• Forecasting customer retention (and defection) rates and provides
feedback as to why customers leave a company
• Studying which goods and services are purchased together, leading to
good ways to bundle them
• Studying and predicting what Web characteristics are most attractive to
customers and how the Web site might be improved

The major methods of gathering customer information include:

*0 Comment cards and formal surveys--These are easy ways to solicit information
on customer satisfaction and perceptions of the importance of various quality
dimensions. However, only a small percentage of customers regularly respond to
such surveys.

*1 Focus groups--A focus group is a panel of individuals (customers or non-

customers) who answer questions about a company's products and services as
well as those of competitors. Focus groups offer a substantial advantage by
providing the direct voice of the customer to an organization. A disadvantage
of focus groups is their higher cost of implementation compared to other
approaches.

*2 Direct customer contact--In customer-driven companies, top executives

commonly visit with customers personally. This approach also works well
with the rank-and-file employees.
*3 Field intelligence--Any employee who comes in direct contact with customers
can obtain information simply by engaging in conversation, observing, and
listening to customers. The effectiveness of this method depends on a culture
that encourages open communications with superiors.

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 *4 Study complaints--These allow companies to learn about product failures and
service problems. The downside, of course, is that you hear of customer
dissatisfaction only after the fact.

Customer Focus at Amazon.com

Amazon’s CRM software helps in multiple ways to gain market share and maintain
competitive advantage over their rivals. The list of the characteristics that make up their
vision of customer service points to numerous features that are hard to duplicate in
conventional websites or store chains. For instance, Amazon:
• has deep selection that is unconstrained by shelf space.
• turns their inventory 19 times in a year.
• personalizes the store for every customer.
• trades real estate for technology
• displays customer reviews critical of their products.
• allows customers can make a purchase with a few seconds and one click.
• puts used products next to new ones so customers can choose.
• shares their prime real estate, their product detail pages, with third parties,
and, if they can offer better value, they let them
• adopts leading-edge technology for the company’s website
• has served customer needs by being one of the early
pioneers to develop software for “collaborative filtering” of
customer data

Thus, the firm demonstrates the advantages of their CRM approach through exploiting
technology, as characterized in the text:
• Segmenting markets based on demographic and behavioral characteristics,
• Tracking sales trends and advertising effectiveness by customer and
market segment,
• Identifying which customers should be the focus of targeted marketing
initiatives with predicted high customer response rates,
• Forecasting customer retention (and defection) rates and provides
feedback as to why customers leave a company,
• Studying which goods and services are purchased together, leading to
good ways to bundle them, and
• Studying and predicting what Web characteristics are most attractive to
customers and how the Web site might be improved,

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 LEADERSHIP & STRATEGY

Leadership is the ability to positively influence people and systems under one’s authority
to have a meaningful impact and achieve important results. It implies the right to exercise
authority and the ability to achieve results. Strong leadership is necessary to successfully
implement a quality process. Leaders may seek to motivate employees and develop
enthusiasm for quality with rhetoric, but taking strong, decisive, and personal action to
implement quality changes makes a bigger impression on employees.

The leadership system refers to how leadership is exercised throughout the organization,
and includes both formal and informal mechanisms for leadership development. It
requires the elements of: 1) clear values that reflect stakeholder requirements and set high
expectations for performance and improvement; 2) a means of building loyalty and
teamwork based on the shared values, encouraging initiative and risk-taking, and
subordinating organization to purpose and function; and 3) a mechanism for leaders to
engage in self-examination and improvemen

The criteria requires information about how senior leaders carry out their roles in
developing strategy and reviewing performance, developing leaders within the
organization, and creating an organization that is capable of adapting to changing
opportunities and requirements. In addition, the criteria ask how senior leaders review
organizational performance and capabilities through its performance measurement system
and use review findings to drive improvement and change.

Strategic Planning focuses on drivers of customer satisfaction, customer retention, and

market share that lead to higher competitiveness, profitability, and business success. The
category is divided into two sections, labeled as Strategy Development and Strategy
Deployment. Strategy Development requires applicants to outline how they create a view
of the future that takes into account the market factors in which they compete and the
process of “how” they compete. Strategy Deployment seeks information about specific
action plans that a company develops, how they are deployed, and a projection of
performance. The Strategic Planning category requirements are intended to encourage
strategic thinking and action, but do not imply that formalized plans or planning systems
must be developed.

ISO 9000-2000 has placed increased emphasis on leadership. The entire section on
Management Responsibility is concerned with the role of leadership in driving a quality
system. Other specific responsibilities are spelled out in detail in other clauses of the
standards. Strategic planning is not addressed as broadly in ISO 9000 as it is in the
Baldrige criteria, but the standards do require that top management ensure that quality
objectives are established at relevant functions and levels within the organization, that

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they be measurable and consistent with the quality policy, that planning be carried out in
order to meet quality system requirements and the quality objectives, and that the
integrity of the quality management system is maintained when changes are planned and
implemented.

Leadership is one of the most fundamental values of Six Sigma. Driving organizational
change to create and sustain a Six Sigma culture simply cannot be done without strong
leadership. In other words, Six Sigma cannot be an add-on or a “flavor of the month.” It
must become the way business is done in organizations that adopt it. Leaders in Twenty-
first Century organizations are finding that not only must they move from hierarchically
structured organizations to learning organizations, but also they must then take the next
step of moving from learning organizations to teaching organizations.

Mission,Vision & Values

The purpose, or mission, of the organization is a statement of "why the organization is in
business." In the past, the purpose of the organization was frequently stated in terms of
products or services produced or profitability to stockholders. TQ-focused firms are now
stating their purpose in terms of their customer focus and their commitment to strive for
higher levels of quality.

The vision statement is a statement of guiding values, principles, and direction of

expected growth of an organization or some segment of it, and is generally developed by
key managers and others who are responsible for planning and carrying out that vision.
Vision statements may be developed at any level within the organizational hierarchy from
top to bottom. This is a very worthwhile activity, as long as the statements are
coordinated so as to fit with those of the next higher level and the overall organization's
vision.

Values, or guiding principles, guide the journey to that vision by defining attitudes and
policies for all employees, which are reinforced through conscious and subconscious
behavior at all levels of the organization. The mission, vision, and guiding principles
serve as the foundation for strategic planning. Top management and others who lead,
especially the CEO, must articulate them. They also have to be transmitted, practiced,
and reinforced through symbolic and real action before they become "real" to the
employees, and the people, groups, and organizations in the external environment that do
business with the firm.

Traditional & Emerging Leadership theories

Traditional leadership theories are based on four common perspectives:
a) The trait approach--Involves discerning how to be a leader by examining
the characteristics and methods of recognized leaders.
b) The behavioral approach--Attempts to determine the types of leadership
behaviors that lead to successful task performance and employee
satisfaction.

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 c) The contingency approach--Holds that there is no universal approach to
leadership. Rather, effective leadership behavior depends on situational
factors (i.e. who is leading, who is led, and what is the situation) that may
change over time.
d) The role approach--Suggests that leaders perform certain roles depending
on the situation.

These theories have implications for total quality in that they provide different views of
how leaders lead. They also help to understand how these theories have evolved to the
present. The older views suggest that perspectives on quality management may benefit
from looking at what other leaders do, but they also contain an implied warning that there
is no one best way that can be incorporated into every organization. Thus, if effective
leadership behavior depends on situational factors i.e. who is leading, who is led, and
what is the situation, that may change over time, the TQ leader needs to determine the
leader, led and situational variables in his/her own part of the organization, and find out
what works. Likewise, in the role approach--where leaders must perform certain roles
depending on the situation, the TQ leader establishes what roles need to be filled within
his/her own organization, not some other successful one.

Emerging theories--Enhance or extend current theory by attempting to answer questions

raised, but not answered, by traditional contingency approaches. For example,
Attributional Theory states that leaders' judgment on how to deal with subordinates in a
specific situation is based on their attributions of the internal or external causes of the
behaviors of followers. One of the most widely used merging theories is Emotional
Maturity Theory. It is based on the premise that too much attention has been placed on
the rational side of leadership in leadership research. The author of the theory, Daniel
Goleman, states that emotionally intelligent leaders must develop characteristics of 1)
self-awareness, 2) self-regulation, 3) motivation, 4) empathy, and 5) social skill. Such
characteristics and skills are not generally captured in performance evaluation systems.
Self-management and interpersonal skills are as essential to managerial success as
rational skills are. The implications for a total quality system are that without self-
management skills, it is difficult to inspire and motivate peers and subordinates into
developing and supporting an integrated leadership system and long-range plans for the
organization. Without interpersonal skills, it is difficult for managers to work on building
rapport among customers, suppliers, and others outside the organization that are needed
to establish long-term effectiveness.

Five core leadership skills exhibited by effective leaders, as described by Byrd, are
vision, empowerment, intuition, self-understanding, and value-congruence.
Leaders are visionaries, anticipating and striving for the future, not reaching back into the
past. They empower and encourage employees to participate in quality improvement
efforts, and develop cross-functional teamwork and customer-supplier partnerships. They
must be willing to follow their own intuition and make difficult decisions that will help
the organization to be successful. They must be able to identify their own strengths and
weaknesses, and understand their relationships with employees and within the

18
organization. Value-congruence occurs when leaders integrate their basic assumptions
and beliefs about the nature, mission, and relationships of the organization into the
company's management system. Specifically, values include trust and respect for
individuals, openness, teamwork, integrity, and commitment to quality. Increasingly,
values relating to corporate governance and ethics are also being scrutinized more
carefully than ever by employees, stockholders, and the public.

The leading practices of top managers in TQ-based operations include:

• Managers create a strategic vision and clear quality values--revolving
around customers, both external and internal--that serve as a basis for
business decisions at all levels of the organization.
• Managers set high expectations, and motivate employees to do things
they (the employees) do not believe they can do.
• Managers demonstrate substantial personal commitment and
involvement in quality, often in a missionary-like fashion. By
"practicing what they preach," they serve as role models for the entire
organization.
• Managers integrate quality values into daily leadership and
management.
• Managers sustain an environment for quality excellence.

The leading practices for firms that do effective strategic planning include:
*0 Top management and employees all actively participate in the planning process.
*1 They use customer wants and needs to drive the strategy.
*2 They involve suppliers in the strategic planning process.
*3 They have well-established feedback systems for continuous measurement
and re-evaluation of the planning process.

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 HUMAN RESOURCES PRACTICES
The traditional norm in many industries over the years has been the formal, contractual
approach to human resources management. It is identified with the "labor relations" (with or
without union involvement) and "industrial engineering" perspectives, within the framework
of the personnel management systems. It has emphasized a hierarchical, top-down,
management-focused, productivity-driven, individualistic work culture. It has frequently led
to rigid work rules, labor unrest, and a "we-versus-they" mind-set as management and labor
attempted to get or keep the upper hand.

However, the TQ/HRM approach has been used recently by many small, medium, and a few
large firms to develop a more cooperative, productive, flexible, and innovative work
environment. It emphasizes a culture with wide spans of control, bottom-up decision-
making, featuring leadership-focused, quality-driven, team-based activities. This approach is
in the spirit of the "human relations approaches," although it does not deny the necessity of
developing human resource, industrial engineering and labor relations systems to meet
organizational needs.

Managers in a TQ-based organization must look for new employees displaying enthusiasm,
resourcefulness, creativity, and the flexibility to learn new skills rapidly. Meeting and
exceeding customer expectations begins with hiring the right people. Thus, good
interpersonal skills are also necessary. Customer-focused employees should exhibit
calmness under stress, optimism, initiative, and a people-orientation, the ability to listen
well, and the ability to analyze, prevent, and solve problems.

Career development is also changing because of TQ. As managerial roles shift from
directing and controlling to coaching and facilitating, managers who must deal with
cross-functional problems benefit more from horizontal movement than from upward
movement in narrow functional areas. Thus, career development expands learning
opportunities and creates more challenging assignments rather than increasing spans of
managerial control."Human resource management (HRM) encompasses those activities
designed to provide for and coordinate the human resource of an organization...”Human
resource functions include determining the organization's human resource needs; recruiting,
selecting, developing, counseling, and rewarding employees; acting as a liaison with unions
and government organizations; and handling other matters of employee well-being."

Human resource managers still perform the traditional tasks of "personnel management,"
such as: interviewing job applicants, negotiating contracts with unions, keeping time cards

20
on hourly employees, and teaching training courses, but the scope and importance of their
area of responsibility has changed dramatically. These managers are taking on a strategic
role in their organizations. They're also being required to plan for the development of the
corporate culture, as well as day-to-day operations involved with maintenance of HRM
systems. In organizations that are committed to a Total Quality philosophy, both the process
and content of the human resource department -- the way that it carries out its mission and
responsibilities -- is rapidly changing.

Teams in HR
Teams go through several very predictable phases of development called forming, storming,
norming and performing. Forming is when the team is introduced, meets together, and
explores issues of their new assignment. Storming occurs when team members disagree
on team roles and challenge the way that the team will function. The third stage, norming,
takes place when the issues of the previous stage have been worked out, and team
members agree on roles, ground-rules, and acceptable behavior when doing the work of
the team. Stage four, performing, is the productive phase of the life cycle when team
members cooperate to solve problems and complete the goals of their assigned work. The
adjourning phase is when the team wraps up the project, satisfactorily completes its
goals, and prepares to disband or move on to another project.

Ten ingredients for a successful team:

(1) Clarity in team goals-- a team must agree on a mission, purpose, and goals.
(2) An improvement plan --A plan guides the team in determining schedules and mileposts
by helping the team decide what advice, assistance, training, materials, and other resources
it may need.
(3) Clearly defined roles --All members must understand their duties and know who is
responsible for what issues and tasks.
(4) Clear communication --Members should speak with clarity, listen actively, and share
information.
(5) Beneficial team behaviors --Teams should encourage members to use effective skills and
practices to facilitate discussions and meetings.
(6) Well-defined decision procedures --Teams should use data as the basis for decisions and
learn to reach consensus on important issues.
(7) Balanced participation --Everyone should participate, contribute their talents and share
commitment to the team's success.
(8) Establish ground rules --The group outlines acceptable and unacceptable behavior.
(9) Awareness of group process --Team members exhibit sensitivity to nonverbal
communication, understand group dynamics, and work on group process issues.

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(10) Use of the scientific approach --With structured problem-solving processes, teams can
more easily find root causes of problems.

QUALITY CIRCLES

Quality circles are small groups, ranging from 4 to 15 members.

(1) Eight members are considered the norm.

(2) All members come from the same shop or work area. This gives the circle its identity.
(3) The members work under the same supervisor, who is a member of the circle.
(4) The supervisor is usually, though not always, the leader of the circle. As leader, he or
she moderates discussion and promotes consensus. The supervisor does not issue orders or
make decisions. The circle members, as a group, make their own decisions.
(5) Voluntary participation means that everyone has an opportunity to join.
(6) Circles usually meet once every week on company time, with pay, and in special
meeting rooms removed from their normal work area.
(7) Circle members receive training in the rules of quality circle participation, the mechanics
of running a meeting and making management presentations, and techniques of group
problem solving.
(8) Circle members, not management, choose the problems and projects that they will work
on, collect all information, analyze the problems, and develop solutions.
(9) Technical specialists and management assist circles with information and expertise
whenever asked to do so. Circles receive advice and guidance from an adviser who attends
all meetings but is not a circle member.
(10) Management presentations are given to those managers and technical specialists who
would normally make the decision on a proposal.

Overcoming Resistance to change

Keys to overcoming resistance to change, that are more often held more by managers than
by first-line employees, are early involvement by all parties, open and honest dialogue, and
good planning. Managers must believe in workers and their ability to contribute. Workers,
of course, must believe that managers will support the change and help them to learn new
skills required to be effective contributors. Managers must also show commitment to the
practices of EI, such as training, rewards, and recognition. Some specific suggestions
include:

• Design the change process to include significant management involvement in its

implementation.
• Create significant dissatisfaction with the status quo, stimulating a need for
change (For many companies, the crisis is already present).
• Provide support to raise comfort levels with the new concepts.

22
 • Be consistent in the pursuit of participative management, continuously modeling
the desired behavior.
• Be intolerant of insubordination, and deal immediately and decisively with
flagrant resisters.

The HRM practices used by leading TQ companies include:

• Integration of human resource plans with strategic objectives and action
plans to fully address the needs and development of the entire workforce.
• Job design of work to promote organizational learning, innovation, and
flexibility with changing business needs.
• Development of effective performance management systems, compensation,
and reward and recognition approaches to support high performance and
motivate employees.
• Promotion of cooperation and collaboration through teamwork.
• Empowerment of individuals and teams to make decisions that affect quality
and customer satisfaction
• Extensive investments in training and education
• Maintenance of a work environment conducive to the well-being and growth of
all employees
• Monitoring the extent and effectiveness of human resource practices and
measuring employee satisfaction as a means of continuous improvement

Key practices that lead to effective employee recognition and rewards include:
a. Giving both individual and team awards.
b. Involving everyone, including both front-line employees and senior management.
c. Tying rewards to quality based on measurement objectives, rewarding for
behavior, not just results.
d. Allowing peers and customers to nominate and recognize superior performance.
e. Publicizing team and individual recognition extensively.
f. Making recognition fun.

In managing quality, it is important to separate individual compensation, i.e. pay and

promotion, from the performance appraisal. One way to do this is through gainsharing,
where all employees, regardless of rank, share savings equally. Another way to separate
compensation from performance is to have pay tied closely to the acquisition of new skills.
This can be done within the context of a continuous improvement program in which all
employees are given opportunities to broaden their work-related competencies.

Team incentives, gain sharing, and pay for skills should not be installed if individualized
measures, such as bonus systems and individual incentive systems are left in place. If
management is not willing to spend resources in training employees so that they can
continuously improve their skills, then they might as well not install such innovative pay

23
systems. Management needs to be very careful about sending “mixed messages” when they
design their reward systems.

Employee Involvement (EI) refers to participative team approaches currently being applied
to problem solving and decision-making in various organizations. These approaches involve
transforming the culture of the entire organization to tap the creative energies of all
employees. EI allows individuals "to discover their own potential, and to put that potential
to work in more creative ways....People develop in themselves pride in workmanship,
self-respect, self-reliance, and a heightened sense of responsibility."
The team concept, which the Japanese called "quality control circles," was developed and
put into practice in the U.S. and other countries (such as Germany in the 1800's at the Zeiss
Company) long before Kaoru Ishikawa started circles in Japan. Also, the idea of team
approaches to problem-solving has been used successfully for many years in a few
pioneering American companies, such as Lincoln Electric, Maytag, and Procter and
Gamble. The "roots" of employee involvement teams come from an interdisciplinary blend
of behavioral psychology/sociology, engineering, and management science concepts that
contribute to its richness and diversity.
EI offers many advantages over traditional management practices, including:
(1) replacing the adversarial mentality with trust and cooperation.
(2) developing the skills and leadership capability of individuals, creating a sense of mission
and fostering trust
(3) increasing employee morale and commitment to the organization
(4) fostering creativity and innovation, the source of competitive advantage
(5) helping people understand quality principles and instilling them into the corporate culture
(6) allowing employees to solve problems at the source immediately
(7) improving quality and productivity

Empowerment simply means giving people authority and power to make decisions, gain
greater control over their work, and thus more easily satisfy customers. Successful
empowerment of employees requires that:
• Employees are provided education, resources and encouragement.
• Policies and procedures are examined for needless restrictions on the ability of
employees to serve customers.
• An atmosphere of trust is fostered rather than punishment for failure.
• Information be shared freely rather than closely guarded as a source of control and
power.
• Workers feel their efforts are needed for the success of the organization.
• Managers given support and training to adopt a "hands off" leadership style.
• Employees are trained in the amount of latitude they are allowed to take.
• Managers relinquish some power, but also obtain new responsibilities for hiring and
developing people capable of handling empowerment, for encouraging risk-taking, and
for recognizing achievements.
High performance work refers to work approaches used to systematically pursue ever-higher
levels of overall organizational and human performance. Flexibility, innovation, knowledge
and skill sharing, alignment with organizational directions, customer focus, and rapid
response to changing business needs and marketplace requirements characterize high
performance work. Organizations may be viewed at three levels: the individual level, the

24
process level, and the organizational level. High-performance work at the individual level
should enable effective accomplishment of work activities and promote flexibility and
individual initiative in managing and improving work processes. This may be accomplished
via extensive employee involvement, empowerment, and training and education. At the
process level, cooperation, teamwork, and communication are key ingredients. At the
organizational level, compensation and recognition, and attention to employee well-being
through health, safety, and support services are major factors for outstanding performance.
Management through sound motivational principles and practices such as recruitment and
career development, performance appraisal, and continual evaluation and improvement of
HRM practices is required for organizational success.
PROCESS MANAGEMENT
Processes need to be repeatable (the process must recur over time) so that enough data
can be gathered to show useful information. They must also be measurable so that
patterns about the process performance can be made clear. This ability to "predict"
performance then leads to ability to detect out-of-control conditions and helps in the
search for improvements. Meeting these two conditions ensures that sufficient data can
be collected to reveal useful information for evaluation and learning that lead to
improvement and maturity.

Categories of processes - value creation processes and support processes. Four major sub-
processes of those categories are: 1) design processes, 2) production/delivery processes, 3)
support processes, 4) supplier and partner processes.

Process management involves planning and administering the activities necessary to

achieve a high level of performance in a process, identifying opportunities for improving
quality and operational performance, and ultimately, customer satisfaction. Processes
typically fall into two categories - value creation processes and support processes

A basic approach to designing value-creating or support processes might involve the one
developed by Motorola, with steps of: 1) Identifying the product or service; 2) identifying
the customer; 3) identifying the supplier; 4) identifying the process; 5) Mistake-proofing
the process; and 6) developing measurements and controls, and improvement goals.

Value creation processes (sometimes called core processes) are those important to
“running the business” and maintaining or achieving a sustainable competitive advantage.
They drive the creation of products and services, are critical to customer satisfaction, and
have a major impact on the strategic goals of an organization. Value creation processes
typically include design, production/delivery, and other critical business processes. The
ultimate value of the product, and hence, the perceived quality to the consumer, depends
on both these types of processes. Support processes are those that are important to an
organization’s value creation processes, employees, and daily operations. They provide
infrastructure for value creation processes but generally do not add value directly to the
product or service. Their three key components are design, control and improvement of
business processes. The importance of process management to businesses lies in its focus
on prevention of defects and errors, and elimination of wasteful procedures, resulting in

25
better quality and improved company performance through shorter cycle times and faster
customer responsiveness. Supplier and partner processes are generally types of support
process and describe how supplier and partner relationships are managed, for instance,
how performance requirements are communicated and ensured, mutual assistance and
training, etc.

Benchmarking is measuring an organization’s process performance against that of best-in-

class organizations, no matter what the industry, determining how they achieve their
performance levels, and using the information to improve on the organization’s own targets,
strategies, and implementation. Benefits include:

*0 The best practices from any industry may be creatively incorporated into a
company's operations.
*1 Benchmarking is motivating. It provides targets that have been achieved by
others. Resistance to change may be lessened if ideas for improvement come
from other industries.
*2 Technical breakthroughs from other industries that may be useful can be
identified early.
Benchmarking broadens peoples' experience base and increases knowledge. To
be effective, it must be applied to all facets of a business.

However, mere competitive comparison is not adequate for benchmarking purposes,

since a company may be so competitive that they find that they have a slight edge in
various practices and are the industry leader. Thus, by concentrating only on
competitors, it may not learn about ideas and practices from outside the industry that
allow it to surpass the best within its industry and achieve truly distinctive
superiority.

Leading process management practices include:

*3 Translating customer requirements into product and service design requirements,
taking into account linkages between product design requirements and
manufacturing process requirements, supplier capabilities, and legal and
environmental issues.
*4 Ensuring that quality is built into products using appropriate engineering and
quantitative tools
*5 Effective management of the product development process to enhance cross-
functional communication, reduce product development time, and ensure trouble-
free introduction of products and services.
*6 Defining and documenting important production/delivery and support processes,
and managing these as important business processes.
*7 Defining performance requirements for suppliers, ensuring that requirements are
met, and developing partnering relationships with key suppliers and other
organizations.

26
 *8 Controlling quality and operational performance of all key business processes,
using systematic methods to identify significant variations in operational
performance and output quality, determine root causes, make corrections, and
verify results.
*9 Continuously improving processes to achieve better quality, cycle time, and
overall operational performance.
*10 Innovating to achieve breakthrough performance using such approaches as
benchmarking and reengineering.

Key design practices include: 1) analyze all design requirements to assess proper
dimensions and tolerances, 2) determine process capability, 3) identify and evaluate possible
manufacturing quality problems, 4) select manufacturing processes that minimize technical
risks, and 5) evaluate processes under actual manufacturing conditions.

AT&T bases its methodology on the following principles:

*11Process quality improvement focuses on the end-to-end process.

*12The mind-set of quality is one of prevention and continuous improvement.
*13Everyone manages a process at some level and is simultaneously a customer and a
supplier.
*14Customer needs drive process quality improvement.
*15Corrective action focuses on removing the root cause of the problem rather than on
treating its symptoms.
*16Process simplification reduces opportunities for errors and rework.
*17Process quality improvement results from a disciplined and structured application of
the quality management principles.

Cycle time refers to the time it takes to accomplish one cycle of a process-- for instance,
the time a customer orders a product to the time that it is delivered, or the time to
introduce a new product. Reductions in cycle time serve two purposes. First, they speed
up work processes so that customer response is improved. Second, reductions in cycle
time can only be accomplished by streamlining processes to eliminate non-value-added
steps such as rework. This forces improvements in quality by reducing the potential for
mistakes and errors as well as reducing costs. Thus, cycle time reductions often drive
simultaneous improvements in organization, quality, cost, and productivity.

Six Sigma projects generally cut across organizational boundaries and require the
coordination of many different departments and functions. Like all other projects, they
require good project management to ensure that the organization’s resources are used
efficiently and effectively. Some key processes that are necessary to implement Six
Sigma include:
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 • Project selection and definition
• Financial review
• Training
• Leadership for project leaders
• Project leader mentoring
• Certification for Six Sigma specialists
• Project tracking and reporting
• Information management and dissemination

The Six Sigma DMAIC process is a systematic approach to improvement that involves
Defining, Measurement, Analysis, Improvement, and Control steps in the process. These
are closely related to typical project planning steps of:

1. Project definition. Define the project, its objectives, and deliverables.

Determine the activities that must be completed and the sequence required to
perform them.
2. Resource planning. For each activity, determine the resource needs: personnel,
time, money, equipment, materials, and so on.
3. Project scheduling. Specify a time schedule for each activity.
4. Project tracking and control. Establish the proper control methods to be used
for tracking progress. Develop alternative plans in anticipation of problems in
meeting the planned schedule.
Flexibility refers to the ability to adapt quickly and effectively to changing requirements.
This might mean rapid changeover from one product to another, rapid response to
changing demands, or the ability to produce a wide range of customized services.
Flexibility might demand special strategies such as modular designs, sharing components,
sharing manufacturing lines, and specialized training for employees. It also involves
outsourcing decisions, agreements with key suppliers, and innovative partnering
arrangements. Of course, it is also a requirement for a TQ culture in an organization.

Reengineering has been defined as “the fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in critical, contemporary measures of
performance, such as cost, quality, service, and speed.” Reengineering's incremental
improvement and breakthrough improvement are not incompatible, but rather are
complementary approaches that fall under the TQ umbrella; both are necessary to remain
competitive. It has been suggested that TQ support is needed for successful reengineering.
Reengineering alone is often driven by upper management without the full support or
understanding of the rest of the organization, and radical innovations may end up as failures.
The TQ philosophy encourages participation and systematic study, measurement and
verification of results that support reengineering efforts.

28
PERFORMANCE MEASUREMENT & STRATEGIC
INFORMATION MGMT
Any measurement is subject to error, and, as a result, the credibility of data can be
suspect. A measure is valid if it measures what it says it measures. Reliability of a
measurement refers to how well the measuring instrument--manual instruments,
automated equipment, or surveys and questionnaires--consistently measures the “true
value” of the characteristic. Measurement reliability in manufacturing demands careful
attention to metrology, the science of measurement.

Traditionally, measuring reductions in quality-related costs through COQ was the

principal method of documenting the benefits of quality. However, this approach only
focuses on the internal view of quality. More attention has been paid recently to the
external view – accounting for increases in revenues associated with improved customer
satisfaction. Balancing quality costs against expected revenue gains has become known
as ROQ – return on quality. ROQ is based on four main principles.

1. Quality is an investment
2. Quality efforts must be made financially accountable
3. It is possible to spend too much on quality
4. Not all quality expenditures are equally valid

Organizations need performance measures for three reasons:

• To lead the entire organization in a particular direction; that is, to drive

strategies and organizational change
• To manage the resources needed to travel in this direction by evaluating
the effectiveness of action plans
• To operate the processes that make the organization work and
continuously improve

Other reasons for measurement, in general, are:

• If you don’t measure results, you can’t tell success from failure
• If you can’t see success, you can’t reward it – and will probably end up
rewarding failure
• If you can’t recognize failure, you can’t correct it.

29
A company's efforts are wasted if collected data are not available to the right employees
when needed. In most companies, data are accessible to top managers and others on a
need-to-know basis. In TQ-focused companies, quality-related data are accessible to
everyone. Many companies accomplish this through on-line computer networks
supplemented by local processing capabilities.

Measurement is the act of quantifying the performance dimensions of products, services,

processes, and other business activities.

To determine useful process-level performance measures and indicators, one may use the
following steps:

• Identify all customers of the system and determine their requirements and
expectations.
• Define the work process that provides the product or service.
• Define the value-adding activities and outputs that compose the process.
• Develop performance measures or indicators.
• Evaluate the performance measures to insure their usefulness.

Data related to quality, customers, and operational performance support both operational-
level decision making and strategic planning. Data can be analyzed using many different
types of descriptive statistical techniques and charts to identify trends over time, compare
performance among business units, and show comparisons with key benchmarks. The
capabilities of today’s spreadsheet and database software, such as Microsoft Excel and
Access, make this simple to do by nearly any employee. However, volumes of data
acquired at the process level, while useful for daily operations, generally are not
appropriate for senior executive review. Organizations need a process for transforming
data, usually in some integrated fashion, into information that top management can
understand and work with. For instance, some companies develop an aggregate customer
satisfaction index (CSI) by weighting satisfaction results, market share, and gains or
losses of customers.
The key categories of results measures are divided into six sets:
1. Customer
2. Financial and market
3. Human resource
4. Supplier and partner performance
5. Organizational effectiveness.
6. Governance and social responsibility

Relevant measures and indicators of an organization’s performance as viewed by

customers include direct measures of customer satisfaction and dissatisfaction, customer
retention, gains and losses of customers and customer accounts, customer complaints and

30
warranty claims. Other indicators of customer satisfaction include measures of perceived
value, loyalty, positive referral, and customer relationship building. Customer satisfaction
should be measured over three areas at a minimum: product quality, service quality, and
cycle times.

Financial measures are generally tracked by senior leadership to gauge overall company
performance and are often used to determine incentive compensation for senior
executives. Measures of financial performance might include revenue, return on equity,
return on investment, operating profit, pre-tax profit margin, asset utilization, earnings
per share, and other liquidity measures. Marketplace performance indicators could
include market share, measures of business growth, new product and geographic markets
entered, and percentage of new product sales as appropriate.

HR measures can relate to employee well-being, satisfaction, training and development,

work system performance, and effectiveness. Examples include safety, absenteeism,
turnover, and employee satisfaction. Other measures might include the extent of training,
training effectiveness, and measures of improvement in job effectiveness.

Key measures of supplier performance are quality, delivery and service, and price.
Quality might be measured by defect rates, complaints, functional performance,
reliability, and maintainability.

Organizational effectiveness includes measures and indicators of design, production,

delivery and support process performance. Examples of common measures are cycle
times, product and service quality, production flexibility, lead times, setup times, time to
market, product/process yields, and delivery performance.

Governance and social responsibility should be systematically measured and monitored

to maintain an ethical organization that is a good citizen in its communities. Measures
and indicators may be related to organizational accountability, stakeholder trust, and
ethical behavior. They include measures of regulatory/legal compliance, financial and
ethics review results, and measures of community service, such as volunteer hours and
presentations to educational or civic groups. Key financial measures that are tied
strongly to corporate governance include those found in income statements, balance
sheets, as well as distributions of stock and stock options, and management stock
purchase and sales activity.

Effective performance measures that are aligned with business strategy are driven by
factors that determine what is important to the success of the business. These include:
1. the nature of a company’s products and services
2. major markets
3. principal customers and their key quality and performance requirements
4. organizational culture; its purpose, mission, and vision
5. capabilities and core competencies, such as facilities and technologies

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 6. supplier and partnering relationships
7. regulatory environment
8. position in market and competitive environment
9. principal factors that determine competitive success, such as product
innovation, cost reduction, or productivity growth
10. current business directions, such as new product and market changes and new
business alliances

Examples of common measures for organizational effectiveness are cycle times, product
and service quality, production flexibility, lead times, setup times, time to market,
product/process yields, and delivery performance.

Product and service quality indicators focus on the outcomes of manufacturing and
service processes. A common indicator of manufacturing quality is the number of
nonconformities per unit, or defects per unit. Because of the negative connotation of
“defect” and its potential implications in liability suits, many organizations use the term
nonconformity; however, quite a few still use defect. In this text, both terms are used
interchangeably to be consistent with current literature and practice. In services, a
measure of quality analogous to defects per unit is errors per opportunity. Each
customer transaction provides an opportunity for many different types of errors.

Nonconformities per unit or errors per opportunity are often reported as rates per
thousand or million. A common measure is dpmo--defects per million opportunities.
Thus, a defect rate of 2 per thousand is equivalent to 2,000 dpmo. At some Motorola
factories, quality is so good that they measure defects per billion!

Many organizational effectiveness measures focus on process (both core and support)
performance. Process data can reflect defect and error rates of intermediate operations,
and also efficiency measures such as cost, cycle time, productivity, schedule
performance, machine downtime, preventive maintenance activity, rates of problem
resolution, energy efficiency, and raw material usage.

Organizational effectiveness measures may also include measures of regulatory/legal

compliance and public responsibility.

Data at the individual level provide workers with information to continually evaluate and,
if necessary, correct the performances of machines and processes. At the process level,
data collected through systematic measurement describe process performance and
identify areas for improvement. At the organizational level, quality and operational
performance data, along with relevant financial data, provide the basis for strategic
planning and decision making

32
 Building and Sustaining Total Quality
Organizations
Ten ways to sell the TQ concept:
(1) Learn to think like top executives who are paid, after all, to satisfy the concerns of three
key groups of stakeholders: customers, investors, and employees.
(2) Position quality as a way to address the priority goals of these three groups of
stakeholders.
(3) Align your objectives with those of senior management. If the organization’s goal is to
reduce cycle time, show how your program will reduce cycle time. If the goal is to
increase market share, show how your plan will do that.
(4) Make your arguments as quantitative as possible.
(5) When approaching top management, make your first pitch to someone who is likely to be
sympathetic to your proposal.
(6) Focus on getting an early win, even if it’s a small one.
(7) Be sure your efforts won’t be undercut by corporate accounting policies that may
exaggerate the costs of quality or fail to recognize its full financial benefits.
(8) Develop allies – both those who are internal and can lend credibility to your position and
those who are external and can tell how quality improved the bottom line at their
organizations.
(9) Develop metrics for return on quality (see Chapter 8), so you can show that your efforts
are paying off.
(10) Never stop selling quality.

TQ-supportive corporate culture can be made permanent. These include:

• Making involvement in TQ a required part of people's
responsibility. Making it voluntary implies that it is less important
than things that are required.
• Using the existing organization to implement TQ. Special task
forces and committees can disband; TQ should be part of the
permanent organization.
• Ensuring everyone spends at least one hour per week working on
quality issues.
• Enforcing this rule gets people accustomed to the idea of devoting
time to quality and keeps other priorities from crowding out TQ.
• Changing the measurement and information systems. Without
appropriate measurements and information systems, quality cannot
become a fabric of the organization.

33
A clear understanding of the differences between traditional and TQ-oriented
organizations can help to avoid many of the problems that firms face when trying to
implement TQ, as well as defining the changes necessary to establish a TQ culture.
Some of these key differences are summarized in the following list.

a. Organizational structures: Traditional management views an

enterprise as a collection of separate, highly specialized individual
performers and units, linked within a functional hierarchy. TQ views
the enterprise as a system of interdependent processes, linked
laterally, over time, through a network of collaborating (internal and
external) suppliers and customers.
b. Role of people: Traditional management views people as a
commodity, virtually interchangeable, and to be developed based on
the perceived needs of the enterprise. TQ views people as the
enterprise’s true competitive edge. Every person is a process manager,
presiding over the transformation of inputs to outputs of greater value
to the enterprise and to the consumer.
c. Definition of quality: In traditional management, quality is the
adherence to internal specifications and standards. In TQ, quality is
defined in a positive sense as products and services that go beyond the
present needs and expectations of customers. Innovation is required.
d. Goals and objectives: In traditional management, the functional
provinces are in a zero-sum game in which there must be a loser for
every winner. People do not cooperate unless it serves their own or
their unit’s best interests. In TQ, self-interest and the greater good are
served simultaneously by serving one’s customers. Cooperation takes
the place of competition.
e. Knowledge: In traditional management, quality embodies knowledge
applicable only to manufacturing and engineering. In TQ, quality
embodies knowledge applicable to all the disciplines of the enterprise.
f.Management systems: In traditional management, managers oversee
departments or functions or collections of individuals. Quality
problems occur when individual people or departments do not do their
best. In TQ, managers oversee interdependent systems and processes
and exercise managerial leadership through participative management.
Quality results from the enterprises’ systems and individuals working
together. People working in the system cannot do better than the
system allows (recall the Red Bead experiment).
g. Reward systems: In traditional management, performance appraisal,
recognition, and reward systems place people in an internally
competitive environment. This environment reinforces individualism
to the detriment of teamwork. In TQ, reward systems recognize
individual as well as team contributions and reinforce cooperation.
h. Management’s role: Once the organization has found a formula for
success it is reluctant to change it. Management’s job, therefore, is to

34
 maintain the status quo by preventing change. In TQ, the environment
in which the enterprise interacts constantly changes. Management’s
job is to provide the leadership for continual improvement and
innovation in processes and systems, products, and services.
i. Union-management relations: In traditional management, the adversarial
relationship between union and management is inevitable. In TQ, the
union becomes a partner and a stakeholder in the success of the
enterprise. The potential for partnership and collaboration is
unlimited, particularly in meaningful involvement of employees in
process improvement.
j. Teamwork: In traditional management, hierarchical “chimney” structures
promote identification with functions and create competition, conflict,
and adversarial relations between functions. In TQ, managers and
structures facilitate teamwork and team development across the entire
enterprise.
k. Supplier relationships: In traditional management, suppliers are pitted
against each other to obtain the lowest price. In TQ, suppliers are
partners with their customers. Having fewer suppliers and establishing
long-term relationships achieves the aim of lower prices, innovation
and improvement.
l. Control: In traditional management, control is achieved by pre-
established inflexible responsive patterns laid down in the book of
rules and procedures. In TQ, control results from shared values and
beliefs, as well as knowledge of mission, purpose, and customer
requirements.
m. Customers: In traditional management, customers are outside the
enterprise and within the domain of marketing and sales. In TQ,
everyone inside the enterprise is a customer of an internal or external
supplier.
n. Responsibility: In traditional management, the manager’s job is to do
the subordinates’ planning, and inspect the work to make sure the
plans are followed. In TQ, the manager’s job is to manage his or her
own process and relationships and to be a coach and facilitator rather
than a director.
o. Motivation: In traditional management, people are motivated to do
what they do to avoid failure and punishment, rather than contribute
something of value to the enterprise. In TQ, managers provide
leadership rather than overt intervention in the processes of their
subordinates, who are viewed as process managers rather than
functional specialists. People are motivated to make meaningful
contributions to what they believe is an important.
p. Competition: In traditional management, competition is inevitable and
inherent in human nature. In TQ, competitive behavior--one person
against another or one group against another--is not a natural state.

35
 Several key principles are necessary for effective implementation of Six Sigma:

• Committed leadership from top management.

• Integration with existing initiatives, business strategy, and performance
measurement.
• Process thinking.
• Disciplined customer and market intelligence gathering.
• A bottom-line orientation.
• Leadership in the trenches.
• Training.
• Continuous reinforcement and rewards.

Self-assessment is the holistic evaluation of processes and performance. The “self” part
of the term means that it should be conducted internally rather than simply relying on an
external consultant. An organization should make a critical self-assessment of where it
stands, in relation to its quality commitment that can help identify strengths and areas for
improvement and determines what practices will yield the most benefit. At a minimum, a
self-assessment should address the following:
a.Management involvement and leadership. To what extent are all levels of
management involved?
b.Product and process design. Do products meet customer needs? Are products
designed for easy manufacturability?
c.Product control. Is a strong product control system in place that concentrates on
defect prevention, before the fact, rather than defect removal after product is made?
d.Customer and supplier communications. Does everyone understand who the
customer is? To what extent do customers & suppliers communicate with each other?
e.Quality improvement. Is a quality improvement plan in place? What results have
been achieved?
f.Employee participation. Are all employees actively involved in quality
improvement?

36
g.Education and training. What is done to ensure that everyone understands his or her
job and has the necessary skills? Are employees trained in quality improvement
techniques?
h.Quality information. How is feedback on quality results collected and used?

Most self-administered surveys, however, can only provide a rudimentary

assessment of an organization’s strengths and weaknesses. The most complete way to
assess the level of TQ maturity in an organization is to evaluate its practices and
results against the Malcolm Baldrige National Quality Award criteria by using trained
internal or external examiners, or by actually applying for the Baldrige or a similar
state award and receiving comprehensive examiner feedback. Understanding one’s
strengths and opportunities for improvement creates a basis for evolving toward
higher levels of performance.

Senior managers must ensure that their plans and strategies are successfully
executed within the organization. The ten managerial roles, defined by Mintzberg,
that leaders must play include (1) figurehead, (2) leader (3) liaison, (4) monitor, (5)
disseminator, (6) spokesperson, (7) entrepreneur, (8) disturbance handler, (9) resource
allocator, (10) negotiator. The importance of each role is contingent on the
environmental and organizational factors that face managers who must lead, i.e. the
industry or environment surroundings of the organization, its age and size, etc.

Senior managers' responsibilities include the following tasks:

• Ensure that the organization focuses on the needs of the customer.

• Cascade the mission, vision, and values of the organization throughout the
organization.

• Identify the critical processes that need attention and improvement.

• Identify the resources and tradeoffs that must be made to fund the TQ activity.

• Review progress and remove any barriers to progress.

• Improve macro processes in which they are involved, both to improve the
performance of the process and to demonstrate their ability to use quality tools for
problem solving.

37
Middle managers often find themselves monitoring progress, disseminating
information and suggestions between local and distant line, staff, and outside experts,
and acting as a spokesperson inside and outside the firm. Technology development
requires that managers constantly scan the environment to be aware of technological
developments that may threaten or enhance the operations of the company. Systems
and process integration means optimizing the system to meet strategic goals such as
customer service, and using tools of quality measurement and continuous
improvement. Samuel suggests that transforming middle managers into change agents
requires a systematic process that dissolves traditional management boundaries and
replaces them with an empowered and team-oriented state of accountability for
organizational performance. Middle managers must also show that they support total
quality, by listening to employees as customers, creating a positive work
environment, implementing quality improvements enthusiastically, challenging
people to develop new ideas and reach their potential, setting challenging goals and
providing positive feedback, and following through on promises. These changes are
often difficult for middle managers to accept.

The work force implements quality policies. This requires ownership that goes
beyond empowerment and gives employees the right to a voice in deciding what
needs to be done and how to do it. It is based on a belief that what is good for the
organization is also good for the individual and vice-versa.
Labor's role is first to recognize the need for changing its relationship with
management and then to educate its members as to how cooperation will affect the
organization. This information includes what its members can expect, and how
working conditions and job security might change. At the same time, management
must realize that the skills and knowledge of all employees are needed to improve
quality and meet competitive challenges. Management must be willing to develop a
closer working relationship with labor and be ready to address union concerns and
cultivate trust.

Numerous barriers to successfully implementing total quality in organizations

include:
• Lack of consistent top management support.
• Inadequate knowledge and understanding about TQ
38
 • Fear and resistance to change.
• Lack of a long-term focus.
• Politics and turf battles.
• Employee apathy.
• Inadequate planning.

The Total Quality Leadership Steering Committee, a group of high-level executives,

academics and consultants, investigated mistakes that were frequently made.They
generally revolve around:
• Seeing TQ as a “program,” not a process
• Failure to tie in TQ to the strategy, structure, systems, and reward
processes
• Failure to change the culture in order to empower employees,
remove barriers, and “cast out “fear.”
• Training not properly addressed
• Too much or too little measurement
• Failure to clearly define and properly separate the responsibilities
of individuals, teams and systems designers

Management practices in TQ oriented organizations differ considerably from those in

traditional organizations, as pointed out in the text. The following might be used to move
from the traditional to the TQ-focused organization.
Organizational structures: To change from the traditional management view of the
enterprise as a collection of separate, highly specialized individual performers to the
TQ view of the enterprise as a system of interdependent, linked processes, cross-
functional projects might be developed, involving teams. Initially, the teams would be
composed of company employees from several different departments. In later projects
suppliers, then customers could be added.
Role of people: To change from the traditional management view of people as a
virtually interchangeable commodity, to the TQ view of people as the enterprise’s true
competitive edge, each one presiding over the transformation of inputs to outputs of
greater value to the enterprise and to the consumer, a “skunk works” project might be
developed. A new product team could be established, given some resources and then
encouraged to develop an entirely new product concept, such as what IBM did when it
had a team to develop the PC.
Definition of quality: To change the traditional managers’ concept of quality as the
adherence to internal specifications and standards to the TQ view of quality as being
built into innovative products and services that go beyond the present needs and
expectations of customers, a new or revised “high quality” product would have to be
developed by a product champion, such as the Saturn automobile.

39
Goals and objectives: In traditional management, the functional provinces are in a
zero-sum game in which there must be a loser for every winner. To change to the TQ
concept, where cooperation replaces self-interest and the greater good is served
simultaneously with serving one’s customers, a product manager would have to
establish such a quality system within his/her division.
Knowledge: From a traditional organization, where quality embodies knowledge
applicable only to manufacturing and engineering, a manager or CEO would have to
go to a Baldrige conference or tour a Baldrige winner’s establishment to hear and see
first-hand how total quality embodies knowledge applicable to all the disciplines of the
enterprise.
Management systems: A traditional manager or CEO would have to go to a Baldrige
conference or tour a Baldrige winner’s establishment to hear and see first-hand how
the total quality concept brings understanding that quality problems do not frequently
occur when individual people or departments do not do their best. Instead in TQ
organizations, managers oversee interdependent systems and processes and exercise
managerial leadership through participative management. Quality results from the
enterprises’ systems and individuals working together. People working in the system
cannot do better than the system allows.
Reward systems: A traditional HR manager would need to be convinced and to
convince top management to change the performance appraisal, recognition, and
reward systems to a TQ-oriented reward system that recognizes individual as well as
team contributions and reinforce cooperation.
Management’s role: A manager in a traditional organization would need to be given an
incentive (or to see a crisis) in order to change from maintaining the status quo to the
TQ focus, which requires that the enterprise constantly change to meet environmental
demands. The manager’s job would have to be redefined, so as to provide the
leadership for continual improvement and innovation in processes and systems,
products, and services.
Union-management relations: In traditional management, the adversarial relationship
between union and management is inevitable. To change to a TQ focus, with the union
as a partner and a stakeholder in the success of the enterprise would mean extensive
work on the part of labor and management to build relationships of trust, such as Ford
Motor Company did in the mid-1980’s.
Teamwork: As suggested in #2, teams would have to be established, trained, and
rewarded to overcome the traditional hierarchical “chimney” structures that promote
identification with functions and create competition, conflict, and adversarial relations
between functions. The TQ approach would require management development and
establishing structures to facilitate teamwork and team development across the entire
enterprise.
Supplier relationships: To establish a TQ approach, suppliers would have to be
encouraged to become partners with their customers, instead of being pitted against
each other to obtain the lowest price. It could start with a few suppliers with which the

40
 company was interested in establishing long-term relationships with the aim of
attaining lower prices, innovation and improvement over time.
Control: To develop the TQ approach, control based on shared values and beliefs, as
well as knowledge of mission, purpose, and customer requirements would have to be
established in one or two departments, facilities, or product lines. This would replace
the pre-established inflexible responsive patterns laid down in a book of rules and
procedures.
a. Customers: The TQ concept, where everyone inside the enterprise is a
customer of an internal or external supplier would have to be
established in one or two departments, facilities, or product lines.
b. Responsibility: To overcome the traditional management idea of the
manager’s job to plan for the subordinates, and to inspect the work to
make sure the plans are followed, projects, probably developed by
teams, would have to be established. Management training would
have to be done to develop managers who manage his or her own
process and relationships, while acting as a coach and facilitator,
rather than a director, of the teams.
c. Motivation: To develop a TQ approach, people would have to be
motivated to make meaningful contributions to what they believe is an
important. To change to a TQ focus, much would have to be done like
Ford Motor Company did in the mid-1980’s, to develop employees as
partners and stakeholders in the success of the enterprise. It would
require extensive work on the part of employees and management to
build relationships of trust.
d. Competition: In traditional management, competition is inevitable and
inherent in human nature. In TQ, competitive behavior--one person
against another or one group against another--is not a natural state. If
all of the above-suggested training and development in teamwork
were done, the competitive urge would subside.

A concise summary of the principles on which modern, high-performing TQ

organizations are built and managed is given in the set of Core Values and Concepts that
form the basis for the Baldrige criteria. In a site visit to a TQ organization, you would
see most of these values and concepts exemplified. In most cases, you would not have an
opportunity to perform a site visit at a non-TQ company. If you did, you would tend to
see the opposite conditions in many places throughout the organization. These are the
Baldrige process explanations of Core Values and Concepts
1. Visionary Leadership
2. Customer Driven Excellence
3. Organizational and Personal Learning
4. Valuing Employees and Partners
5. Agility
6. Focus on the Future

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 7. Managing for Innovation
8. Management by Fact
9. Social Responsibility
10. Focus on Results and Creating Value
11. Systems Perspective

Interested readers are referred to the detailed Baldrige Criteria, available on the Internet
at http://www.quality.nist.gov. Just to give some understanding of the degree to which the
values and concepts are integrated into the criteria, the first three core values are
described in the Baldrige materials as follows:

Visionary Leadership

An organization’s senior leaders should set directions and create a customer focus, clear
and visible values, and high expectations. The directions, values, and expectations should
balance the needs of all your stakeholders. Your leaders should ensure the creation of
strategies, systems, and methods for achieving excellence, stimulating innovation, and
building knowledge and capabilities. The values and strategies should help guide all
activities and decisions of your organization. Senior leaders should inspire and motivate
your entire workforce and should encourage all employees to contribute, to develop and
learn, to be innovative, and to be creative. Senior leaders should be responsible to your
organization’s governance body for their action and performance. The governance body
should be responsible ultimately to all stakeholders for the ethics, vision, actions, and
performance of your organization and its senior leaders.

Senior leaders should serve as role models through their ethical behavior and their
personal involvement in planning, communications, coaching, development of future
leaders, review of organizational performance, and employee recognition. As role
models, they can reinforce ethics, values and expectations, while building leadership,
commitment, and initiative throughout your organization.

Customer-Driven Excellence

An organization’s customers judge quality and performance. Thus, your organization

must take into account all product and service features and characteristics and all modes
of customer access that contribute value to customers. Such behavior leads to customer
acquisition, satisfaction, preference, referral, retention and loyalty, and to business
expansion. Customer-driven excellence has both current and future components:
understanding today’s customer desires and anticipating future customer desires and
marketplace potential.

Value and satisfaction may be influenced by many factors throughout your customers’
overall purchase, ownership, and service experiences. These factors include your
organization’s relationships with customers, which help build trust, confidence, and
loyalty.Customer-driven excellence means much more than reducing defects and errors,
merely meeting specifications, or reducing complaints. Nevertheless, reducing defects
and errors and eliminating causes of dissatisfaction contribute to your customers’ view of

42
your organization and thus are also important parts of customer-driven excellence. In
addition, your organization’s success in recovering from defects and mistakes (“making
things right for the customer”) is crucial to retaining customers and building customer
relationships.

Customer-driven organizations address not only the product and service characteristics
that meet basic customer requirements but also those features and characteristics that
differentiate products and services from competing offerings. Such differentiation may be
based upon new or modified offerings, combinations of product and service offerings,
customization of offerings, multiple access mechanisms, rapid response, or special
relationships. Customer driven excellence is thus a strategic concept. It is directed toward
customer retention, market share gain, and growth. It demands constant sensitivity to
changing and emerging customer and market requirements and to the factors that drive
customer satisfaction and retention. It demands anticipating changes in the marketplace.
Therefore, customer-driven excellence demands awareness of developments in
technology and competitors’ offerings, as well as rapid and flexible response to customer
and market changes.

Organizational and Personal Learning

Achieving the highest levels of business performance requires a well-executed approach
to organizational and personal learning. Organizational learning includes both continuous
improvement of existing approaches and adaptation to change, leading to new goals
and/or approaches. Learning needs to be embedded in the way your organization
operates. This means that learning (1) is a regular part of daily work; (2) is practiced at
personal, work unit, and organizational levels; (3) results in solving problems at their
source (“root cause”); (4) is focused on sharing knowledge throughout the organization;
and (5) is driven by opportunities to effect significant change and to do better. Sources
for learning include employees’ ideas, research and development (R&D), customers’
input, best practice sharing, and benchmarking.

Organizational learning can result in (1) enhancing value to customers through new and
improved products and services; (2) developing new business opportunities; (3) reducing
errors, defects, waste, and related costs; (4) improving responsiveness and cycle time
performance; (5) increasing productivity and effectiveness in the use of all resources
throughout your organization; and (6) enhancing your organization’s performance in
fulfilling its societal responsibilities and its service to your community as a good citizen.

Employees’ success depends increasingly on having opportunities for personal learning

and practicing new skills. Organizations invest in employees’ personal learning through
education, training, and other opportunities for continuing growth. Such opportunities
might include job rotation and increased pay for demonstrated knowledge and skills. On-
the-job training offers a cost-effective way to train and to better link training to your
organizational needs and priorities. Education and training programs may benefit from
advanced technologies, such as computer-and Internet-based learning and satellite
broadcasts. Personal learning can result in (1) more satisfied and versatile employees

43
who stay with the organization, (2) organizational cross-functional learning, and (3) an
improved environment for innovation.

Thus, learning is directed not only toward better products and services but also toward
being more responsive, adaptive, and efficient— giving your organization marketplace
sustainability and performance advantages.

PRINCIPLES OF SIX SIGMA

A defect, or nonconformance, is any mistake or error that is passed on to the customer.

A unit of work is the output of a process or an individual process step. A common
measure of output quality is defects per unit (DPU), computed as Number of defects
discovered/Number of units produced, and in Six Sigma metrics, defects per million
opportunities (dpmo) = DPU × 1,000,000/opportunities for error. A six-sigma quality
level corresponds to at most 3.4 dpmo.

Virtually every instance of quality problem solving falls into one of five category

1. Conformance problems are defined by unsatisfactory performance by a well-specified

system. Users are not happy with the system outputs, such as quality or customer
service levels. The system has worked before, but for some reason it is not
performing acceptably. The causes of deviations must be identified, and the system
restored to its intended mode of functioning.

2. Unstructured performance problems result from unsatisfactory performance by a

poorly specified system. That is, the task is non-standardized and not fully
specified by procedures and requirements. An example would be poor sales. No one
right way of selling a product means the problem cannot be cured by enforcing
standards that do not exist. Unstructured problems require more creative approaches to
solving them.

3. Efficiency problems result from unsatisfactory performance from the standpoint of

stakeholders other than customers. Typical examples are cost and productivity
issues. Even though the quality of the outputs may be acceptable, the system’s
performance does not achieve internal organizational goals. Identification of
solutions often involves streamlining processes.

4. Product design problems involve designing new products that better satisfy user needs
– the expectations of customers that matter most to them. In Six Sigma, those vital
characteristics are called “critical to quality,” issues or CTQs.

5. Process design problems involve designing new processes or substantially revising

existing processes. The challenge here is determining process requirements, generating
new process alternatives, and linking these processes to customer needs. Techniques such
as benchmarking and reengineering, are useful tools for process design.

44
The recognized benchmark for Six Sigma implementation is General Electric. GE’s Six
Sigma problem solving approach (DMAIC) employs five phases:

a) Define (D)
i) Identify customers and their priorities.
ii) Identify a project suitable for Six Sigma efforts based on business
objectives as well as customer needs and feedback.
iii) Identify CTQ’s (critical to quality characteristics) that the customer
considers to have the most impact on quality.
b) Measure (M)
i) Determine how to measures the process and how is it performing.
ii) Identify the key internal processes that influence CTQ’s and
measure the defects currently generated relative to those processes
c) Analyze (A)
i) Determine the most likely causes of defects.
ii) Understand why defects are generated by identifying the key
variables that are most likely to create process variation.
d) Improve (I)
i) Identify means to remove the causes of the defects.
ii) Confirms the key variables and quantify their effects on the
CTQ’s.
iii) Identify the maximum acceptable ranges of the key variables and a
system for measuring deviations of the variables.
iv) Modify the process to stay within the acceptable range.
e) Control
i) Determine how to maintain the improvements.
ii) Put tools in place to ensure that the key variables remain within the
maximum acceptable ranges under the modified process.

Note that this approach is similar to the other quality improvement approaches we
discussed and incorporates many of the same ideas. The key difference is the emphasis
placed on customer requirements and the use of statistical tools and methodologies

Problems can usually be categorized in one of three ways: structured, semi-structured, or

ill structured. This classification is determined by the amount of information available
about the problem. For structured problems, complete information about the problem—
what is happening, what should be happening, and how to get there—is available. Ill-
structured problems, on the other hand, are characterized by a high degree of fuzziness or
vagueness. Semistructured problems fall somewhere in between. The usefulness of these
classifications lies in their ability to prescribe a problem-solving approach. Structured
problems generally can be solved using routine, programmed decision-making

45
techniques. Ill-structured and semistructured problems require more creative solutions
and hence, a systematic process to find these solutions.

Some of the tools and approaches used for “lean” operations in organizations include: the
5S’s; visual controls; efficient layout and standardized work; pull production; single
minute exchange of dies (SMED); total productive maintenance; source inspection; and
continuous improvement. Six Sigma is a useful and complementary approach to lean
production where the concepts might be used in combination, in order to reduce cycle
times, streamline an order entry processes, or drill down to the root causes of the
problems and identify solutions. Because of their similarities, many industry training
programs and consultants have begun to focus on “Lean Six Sigma,” drawing upon the
best practices of both approaches. Both are driven by customer requirements, focus on
real dollar savings, have the ability to make significant financial impacts on the
organization, and can be used in non-manufacturing environments.
However, lean and Six Sigma concepts are different. They attack different types of
problems. Lean production addresses visible problems in processes, for example,
inventory, material flow, and safety, while Six Sigma is more concerned with less visible
problems, for example, variation in performance. Another difference is that lean tools are
more intuitive and easier to apply by anybody in the workplace, while many Six Sigma
tools require advanced training and expertise of Black Belt or Master Black Belt
specialists, or consultant equivalents. The concept of the 5S’s is easier to grasp than
statistical methods.

Several key principles are necessary for effective implementation of Six Sigma:

a) Committed leadership from top management.

b) Integration with existing initiatives, business strategy, and performance
measurement.
c) Process thinking.
d) Disciplined customer and market intelligence gathering.
e) A bottom-line orientation.
f) Leadership in the trenches.
g) Continuous reinforcement and rewards.

46
The tools used in Six Sigma efforts have been around for a long time. What is unique
about Six Sigma is the integration of the tools and methodology into management
systems across the organization. The topics covered may be categorized into seven
general groups:

• Elementary statistical tools (basic statistics, statistical thinking, hypothesis

testing, correlation, simple regression)
• Advanced statistical tools (design of experiments, analysis of variance,
multiple regression)
• Product design and reliability (quality function deployment, failure mode and
effects analysis)
• Measurement (process capability, measurement systems analysis)
• Process control (control plans, statistical process control)
• Process improvement (process improvement planning, process mapping,
mistake proofing)
• Implementation and teamwork (organizational effectiveness, team assessment,
facilitation tools, team development)

The DMAIC process for a registration process design/improvement

should begin with customer needs and expectations (expected
quality), and end with what the customer sees and believes the quality
of the product to be (perceived quality). These might include
characteristics as follows:

Attributes Technical Requirements

Convenience Time, dates, internet,

phone
Speed Process standards
Costs Fees
Accuracy Error prevention
Empathy Understanding/willingness of
personnel to solve problems

Expected quality needs to be considered in the Define stage based on

what the customer assumes will be received from the process as a
reflection of the customer's needs. The university must focus on the key
dimensions that are reflected in specific customer needs. If these
expectations are not identified correctly or are misinterpreted, then the
47
final product will not be perceived to be of high quality by customers. For
registration, this will typically involve availability of classes, timeliness of
the process, time required to complete the process, etc.

Technical requirements determine the design quality of the product. Process designers' must
Measure and Analyze not only the technical requirements for providing and registering
students for courses, but also perceptions of their needs, which may differ from what is
feasible. Other “customers” of the process also have some CTQ issues that registration
process designers must be aware of. For instance, while the "average" student might need
general courses, curriculum majors may need “in depth” or specialized courses. If
registration process designers never have an opportunity to interact with customers
(students, academic department administrators, faculty), the probability that they will not
understand or will misinterpret the expected delivery requirements and expected quality is
greatly increased.

After the registration process design is transferred to people or organizational units

responsible for delivering the service, poor attention to customer needs can affect the
perceived quality. For example, if the system is not designed to assure conformance to
the technical specifications, then the actual quality produced may not be the same as the
design quality. The equation that relates these different levels of quality is: perceived
quality = actual quality - expected quality. These characteristics must be taken into
account when the Improve and Control phases are completed.

Admission processes have many of the same process considerations as registration.

However, the needs of certain stakeholders, such as potential students and parents of
students, must also be taken into account.

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 GENERAL QUALITY INFORMATION

List of CMM-5 Certified Companies in India

 Cognizant Technologies
 Infosys Technologies
 Larsen & Turbo Infotech Limited
 Mastek Limited
 NIIT, Software Solutions
 Patni Computer Systems Limited

49
  Satyam Computer Services Limited.
 Sonata Software Limited
 Syntel
 Siemens Information Systems Limited
 Tata Consultancy Services
 Tata Elxsi Limited
 Tata Interactive Systems
 Wipro Technologies
 Software Paradigms International (SPI)
Indian Deming Application Prize Winners

Year Company

1998 Sundaram Clayton Ltd. (India)- SCL

2001 Sundaram Brake Linings Ltd. (India)

2002 TVS Motor Company Ltd. (India)

2003 Brakes India Ltd., Foundry Division (India)

Mahindra and Mahindra Ltd., Farm Equipment Sector (India)

Rane Brake Linings Ltd. (India)

Sona Koyo Steering Systems Ltd. (India)

2004 Lucas-TVS Ltd. (India)

SRF Ltd., Industrial Synthetics Business (India)

2005 Krishna Maruti Ltd., Seat Division (India)

Rane Engine Valves Ltd.(India)

Rane TRW Steering Systems Ltd., Steering Gear Division (India)

2007 Asahi India Glass Limited, Auto Glass Division (India)

Rane (Madras) Limited (India)

2008 TATA Steel

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Malcolm Baldrige National Quality
Award

• 1.0 Leadership (110 points)

• 2.0 Strategic Planning (80 points)
• 3.0 Customer and Market Focus (80 points)
• 4.0 Information and Analysis (80 points)
• 5.0 Human Resource Focus (100 points)
• 6.0 Process Management (100 points)
• 7.0 Business Results (450 points)

Elements of TQM
• Continuous improvement
• Competitive benchmarking
• Employee empowerment
• Team approach
• Decisions based on facts
• Knowledge of tools
• Supplier quality

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 • Champions
• Quality at the source

Basic Quality Tools

• Flowcharts
• Check sheets
• Histograms
• Pareto Charts
• Scatter diagrams
• Control charts
• Cause-and-effect diagrams
• Run charts

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