The "quality experts" are pushing companies to make

basic changes in recruiting, training, performance appraisals, and merit-pay systems.

But before HR executives can become change agents, they may have to take a hard look
at practices within their own departments.

Total Quality-Oriented
Human Resources
Management
DAVID E. BOWEN EDWARD E. IAWLER III

ow iir^portant are human resources is-
H sues irk creating quality-oriented organi-
zations? H^re is Tom Peters' take on the peo-
ple-side of quality improvement:
TQJVI often looks suspiciously like
the latest act in a long-running farce
called Rjevenge of the Number Nerds.
Bui| the numbers nuts, despite (or
becaus^ of) the massive Baldrige appli-
cation |(Malcolm Baldrige National
Quality!Award—or "MBNQA," as one
correspondent lovingly labeled it), do
not get it. Real participative manage-
ment, Baldrige categories notwith-
standing, is about elusive characteris-
tics such as dignity and worth, much
more th^n computer-aided suggestion
trackingi systems. Real customer loyal-
ty is as much or more about listening,
listening and then listening harder still
than it is about zero-variance manufac-
turing processes.
One major focus in the quality movement
is on upgrading technical systems. This atj
tention to process, product, and informatioirj
technology (and the accumulation of nume:r j
ical evidence to document quality upgrade;^
in these areas) is necessary—and often yields
quality improvement. But it may not be thd
key variable in the quality equation. John E |
Condon, immediate past chairman of thd
board, the American Society for Quality Cori-|
trol, said it succinctly: "People really do make
quality happen." i
Senior executives across the United States!
apparently share this belief in the human re-j
sources side of the quality equation. Considerl
the results of a Gallup survey of executive
perceptions on a range of competitive issues,
conducted for the American Society for Qual-
ity Control. The Gallup Organization inter-
viewed some 615 senior executives, 307 rep I
resenting Fortune 1000 companies, tHe
remainder from smaller firms. '•
The executives most frequently cited
quality (service and product) and productivi-
ty as the key competitive issues facing them, j

29

David E. Bowen is associate professor of
management, business programs, at Arizona
State University-West. Previously, he was
witii tine Sciiool of Business Administration
at the University of Southern Caiifornia.
His research, consuiting, and executive
education interests include: (1) human re-
source management practices in service
organizations, (2) managing customers, (3)
service strategy, culture, and quality, and
(4) international human resource manage-
ment practices. His articles have appeared
in Academy of Management Review,
Journal of applied Psychology, Sloan
Management Review, Human Resource
Management Journal, and Journal of Busi-
ness Research. He has co-authored fwo
books, Service Management Effectiveness
(Jossey-Bass, 1990) and Advances in
Services Marketing and Management (JAI
Press, 1992). He serves on the editorial
review boards of the Academy of Manage-
ment Review and Human Resource
Management Journal. He received his Ph. D.
from Michigan State University.
30
Asked to rate the relative effectiveness of
eight different methods for improving quali-
ty, the participants gave top weight to employ-
ee motivation (85 percent rated it highly effec-
tive); Change in corporate culture came in a close
second (82 percent); followed by employee ed-
ucation (74 percent); process control (53 per-
cent); expenditures on capital equipment (45 per-
cent); more control of supplies (36 percent); more
inspections (29 percent); and improved adminis-
trative support (28 percent). Clearly, executives
are convinced that human resources issues
are the most important.
The Baldrige Award (despite Peters'
bashing) also highlights the importance of hu-
man resources. "Human Resource Utiliza-
tion" is one of the award's seven examination
categories and is weighted with 150 points of
the total 1,000. It states:
This category examines the effective-
ness of the company's efforts to devel-
op and realize the full potential of the
workforce, including management,
and to maintain an environment con-
ducive to full participation, quality
leadership, and personal and organi-
zational growth.
This is consistent with the emphasis that
most total quality management (TQM) advo-
cates place on employee involvement as an
important part of any total quality effort. The
other categories are "Leadership" (100
points); "Information and Analysis" (70
points); "Strategic Quality Planning" (60
points); "Qualit}' Assurance of Products and
Ser\'ices" (140 points); "Quality Results" (180
points); and "Customer Satisfaction" (300
points).
Quality guru W. Edwards Deming also
focuses directly on human resources issues in
his widely cited "fourteen points" for quality
improvement. While the exact wording of
the fourteen points has changed over the
years, the following HR-related directives al-
ways appear: (ii) institu te training on the job,
(b) break down barriers between departments
to build teamwork, (c) drive fear out of the
workplace, (d) eliminate quotas on the shop
floor, (e) create conditions that allow employ-
ees to have pride in their workmanship, in-
cluding abolishing annual reviews and merit
ratings, and (f) institute a program of educa-
tion and self-improvement.

TOTAL QUALITY:
OPPORTUNITY OR THREAT
FOR HR MANAGEMENT?
The importance of the HR side of the quality
equation provides HR departments with a
golden opportunity. Quality can be the
"business issue" that truly brings senior man-
agers and IJR execs together to move from Edward E. Lawler III is a professor of
just HRM to strategic HRM. A major role in management and organization at the
the quality improveinient effort puts HR in a University of Southern California. In 1979,
position to contribute directly and visibly to he founded (and became director of) the
the bottom line, to add value to the compa- university's Center for Effective Organizations.
ny's products and services in the same way He has consulted with more than 200
that other functions, such as sales, account- organizations and four national govern-
ing, and production, add value. And liR can ments on such issues as employee
gain the heightened status that accompanies involvement, organizational change, and
a documented contribution to the organiza- compensation. As fhe author of more fhan
tion's performance. 200 articles and 20 books, he is widely
Many quality corisultants, however, are recognized as a contributor to the fields of
not comfortjable about giving HR executives organizational development and organiza-
and their staffs a strong hand in the quality tional behavior. His most recent books
improvement effort. As quality guru Philip include High Involvement Management,
Crosby observes: Strategic Pay (Jossey-Bass, 1990),
Employee Involvement and Total Quality
Most HR execs are still tied up in being Management {Jossey-Bass, 1992), and
a regulatory agency. Many times they The Ultimate Advantage (Jossey-Bass,
act like robots. . .. There are two de- 1992).
partments behind the times One is
HR, the lother is purchasing. There are
enlightened people trying to change
this, but most HR execs are their own
worst enemy. It's a case of "Physician,
heal thyself."
This may explain why few companies
have turned to the HR department to lead
their quality improvement efforts. Instead,
the leadership role usually falls to a newly
formed unit. A number of reasons may ex-
plain this. jFirst, many senior managers do
not understand "holistic quality improve-
ment" well pnough to appreciate the critical
role of human resources issues in improving
quality. Second, most HR functions are so
 specialized and cut off from the rest of the
organization that department members lack
the breadth of perspective necessary for to-
tal quality. Indeed, these specialists may
view the demands of a full-scale quality im-
provement as a threat to their well-defined,
well-guarded domains. Even though the
number of top HR executives who report to
their CEOs or attend board meetings is in-
creasing, this still is not the case in many or-
ganizations. Blocked access denies HR peo-
ple the opportunity to view the company's
overall competitive position. Third, HR de-
partments are frequently autocratic and hi-
erarchical, with strict definitions of re-
sponsibility and authority. The participative
approach, so necessary for an effective qual-
ity improvement effort, can be a tough sell to
an autocratic department.
Afinalreason for HR's minor role in qual-
ity improvement stems from its own low self-
esteem. There are people in HR, itself, who
feel threatened by the request to assume a
leadership position on an important business
issue. They may view themselves as power-
less, second-class citizens who really do not
know the business. Regrettably, they are of-
ten right. As a result, senior managers may
conclude that the human resources issues in-
volved in TQM are too important to be left to
the human resources department.
Should the TQM effort be run by the HR
department, or by a separate TQM office? It is
a tough call, and we can only suggest what
not to do. Do not have separate programs^an
HR and TQM department acting indepen-
dently. The more effecfive approaches create
one integrated program that stresses employ-
ee involvement and total quality manage-
ment. In these programs, the HR organizafion
needs: (1) to be redesigned so that the HR
function itself practices what is known about
quality management, and (2) to insfitute hu-
man resources management practices that
support TQM effectiveness throughout the
organization.
In what follows we describe how to ac-
complish these two objectives, creating what
might be called total quality-oriented human
resources management (TQHRM).
32
REDESIGNING THE HRM
DEPARTMENT TO FIT TQM PRINCIPLES
How should the HRM function define its mis-
sion and organize itself to truly become qual-
ity oriented? Exhibit 1 presents a typical list-
ing of TQM principles. Putting these
principles to work within the HRM depart-
ment provides a first step toward that goal.
Quality Work the First Time. As is true
throughout the organizafion, the emphasis on
quality in the HR department must come from
the top. The senior HR execufive must truly
care that the department delivers only quality
services, and this caring must shine through all
actions and decisions—^instilling a passion for
quality among staff members. The HR execu-
five must support his or her staff by giving
them the fime needed to "do it right the first
time"—even when Hne maitagers are pressing
for a qtiidcfix.He or she must find ways of re-
warding HR employees who trtily do quality
work. And HR managers must insist that less-
than-quality work be redone. Nothing leaves
the department unfil it is done right.
What is called "scrap and rework" on the
shop floor has a counterpart in HR manage-
ment. If a bonus system or orientation pro-
gram needs to be redesigned because em-
ployees could not understand it, this is clearly
"rework."
The HR department might usefully track
the time it takes to do each piece of rework,
then compute the percentage of total produc-
five time spent on rework tasks. As HR acfiv-
ifies are repeated, staff members can analyze
the patterns and identify the causes of poor
quality. This parallels the cause-and-effect
analysis techniques often applied on the shop
floor.
Focus on the Customer. Quality means
more than doing things right the first time; it
meansfirstchoosing to do the right thing. The
HRM department that succeeds in eliminat-
ing rework may become more efficient, but
that does not guarantee it will be more effec-
tive. It may be doing the wrong things... and
doing them very well.
[Doing the right thing (effecfiveness) is a
matter of satisfying customer requirements.
 EXHIBIT 1
PRINCIPLES OF TOTAL QUALITY MANAGEMENT

1. Quality Work the First Time

2. Focus on the Customer
3. Strategic, Holistic Approach to Improvement
4. Continuous Improvement as a Way of Life
5. Mutual Respect and Teamwork

This translates into making HR departments Finally, data-based decision making is

more servicte-oriented, and less production-
oriented. Ffroduction-oriented HR depart-
ments are driven more by their own internal
technologies and pet programs than by cus-
tomer nee4s. Production-oriented depart-
ments carfy on-the-shelf inventories of
canned supervisory skills training programs,
or they mass produce the same trait-based ap-
praisal ratir^g forms for all departments, to cite
two examples.
A servi^ce-driven HR department func-
tions like ja high-quality service firm—^a
world-class jresort, a gourm^et restaxirariit, or an
eUte consuj^ting firm. These firms thrive on
satisfying clients. They emphasize the intan-
gibles, customize their offerings to different
clients, and involve their clients in decisions
that affect ijhe services rendered. HRI4 must
learn to thifive on satisfying its clients (e.g.,
line managers). Services need to be offered
that fulfill the unique and changing needs of
different grpups of managers and employees.
This arb:ues for more co-design and co-
production of services between the HR staff
and clientsJ as when HR staff and line man-
agers work! together to develop and teach a
training program. It also implies that the HR
department should be composed primarily of
generalists who act as client executives, rather
than staffed with specialists who have a nar-
row view of the business and champion their
various "product lines" (say, MBO or cafete-
da-styie berjiefit plans). In sum, service-orient-
ed HR deplartments get close to their cus-
tomers and] encourage them to help set the
department agenda.
critical to quality. In this spirit, the HRM de-
partment needs to collect data from line man-
agers and others on how well it is doing. Sur-
veys, focus groups, and other ways oi
listening must keep HRM saturated witlt
client information. In addition, external
benchmarking data are critical to keeping tlie
HR department aware of how its perfoi-^
mance compares to that of world-class orga-i
nizations.
Strategic, Holistic Approach to Improve-^
ment. Quality improvement may require
changes in mission, structure, job design j
management practices, and every other facelj
of the HR organization. Transamerica Lifd
Companies, Los Angeles, recently overhauleci
its HR function in a way that exemplifies a
strategic, holistic approach to LnprovemeriiJ
The process began by asking the employees
(customers) served whether HR was doing a,
good job. The majority revealed that they did
not know what services HR offered or how to access^
them. Next, researchers surveyed the HR stcfi'fl
itself, asking them what interfered with theiii
service to customers. Responses indicated
that HR jobs were so narrowly defined tha'^
people could not see how their work fit into
the big picture.
As Transamerica reorganized to betteis
serve internal customers, it created more chal-
lenging work in HR. An advisory committed
consisting of HR managers and lijne represen--
tatives helped guide the change. Guidance
also came from surveying other companies
known for effective HR organization (an ap--
plication of "benchmarking").

33
 The HR staff now has several cross-func-
tional teams (e.g., people from employee rela-
tions, employment, and compensation) re-
sponsible for key processes and customers. In
addition, the department operates a special
HR service team trained to provide one-stop
customer service by answering 80 percent of
the diverse array of questions that come into
the department. These teams are being cross-
trained to become generalists.
For the first time, HR people are being
asked to join strategic planning meetings, and
they now maintain ongoing contact with cus-
tomers. Overall, the HR function serves as a
model for innovative work design for the rest
of the company.
Continuous Improvement as a Way of
Life. A popular tenet in TQM is that continu-
ous improvement must be ingrained as a value
in the corporate culture. In other words, it
must become part of "how we do things
around here," to use one popular definition of
culture.
Philip Crosby, despite his reservations
about HR. executives, believes that "HR
should be the architect of corporate culture."
It should be the charge of HR departments to
build values and practices supporting contin-
uous, incremental improvement in quality
throughout the organization. And that em-
phasis must be applied with equal force with-
in the HR department itself. For example, a
small gain of, say, 4 percent in client satisfac-
tion with this year's performance appraisal
process needs to be highly valued—even if it
comes on top of an already high rating (e.g.,
75 percent of the customers indicated they
were "highly satisfied" with last year's pro-
cess). These small gains need to be valued as
much as, say, the successful completion of a
high-level executive search. Over time, the
cumulative impact of endless small improve-
ments transforms the department.
Mutual Respect and Teamwork. W. Ed-
wards Deming talks about driving fear out of
the workplace. Much of this fear is tied into
the control and hierarchy-dominated fabric of
many organizations. The "workers" fear the
"bosses," and this fear distracts from high-
quality, collaborative work. If HR is to cham-
34
pion such issues as employee involvement
and cooperation throughout the organiza-
tion, it must first champion them internally.
In many organizations, HR is now
preaching the importance of supervisors "em-
powering" their employees by giving them
more responsibility, autonomy, and partici-
pation in decision making. In one organiza-
tion, however, a reluctant supervisor re-
sponded with, "Why should I stick my neck
out and be democratic with my people when
the HR people manage their shops as if they
were each Attila the Hun?" When it comes to
the issue of empowerment, HR must practice
what it preaches.
TOTAL QUALITY-ORIENTED
HRM PRACTICES
Once the HRM department has learned to
make quality a way of life within its own
function, it can assume an expanded role:
supporting TQM throughout the organiza-
tion. A long history of research—stretching
back much further than the current interest in
TQM—has focused on the relationship be-
tween product (and service) quality and a
number of HR practices and systems. There is
no question, however, that the current fasci-
nation vvith quality has brought this relation-
ship into sharper focus. A number of areas in
particular—^including selection processes, de-
velopment and training, and reward sys-
tems—can have a significant impact on qual-
ity performance. As we shall discuss next, the
practices recommended by advocates of total
qualit}' management fit much of what is
kiiown about the relationship between HRM
practices and quality. Together, the historical
research and the recommendations on "best
quality practices" make a strong case for
changing the way matiy HR management
systems are designed and operated.
Selection
For decades, research in the field has validat-
ed various selection devices (ability tests, per-
sonality tests, interviews, and the like) as in-
dicators of a how a candidate will perform on
the job, in both productivity and quality. The
current focus on total quality management,
however, has brought a new dimension into
play. Ability testing, in particular, needs to be
viewed differently. Organizations that adopt
a total quality management approach require
individuals who are keen problem solvers
and who can perform the t}rpe of mathemati-
cal work demanded by statistical process con-
Deming and others in the TQM movement have
been outspoken in their criticism of performance
appraisal practices These practices focus too
much on the individual....
trol, Pareto ianalysis, and the like. These abili-
ties need to; be tested for during the selection
process, to ensure that the candidate has the
capacity to learn and apply these methods.
Many Japanese companies that manufac-
ture in the United States place great impor-
tance on the whole selection process. For these
firms, the process is a long one, with high stan-
dards and a much greater emphasis on giving
employees a realisfic preview of what work
wiU be like. The importance of this is very
much corroborated by research findings,
which show that realistic job previev/s help
produce a sfable workforce thatfitsthe organi-
zafional culture. Interestingly, the pracfices in
these Japanese plants are very similar to those
now used in plants that have adopted the
high-involvement approach to management.
Because of the emphasis on group pro-
cesses in total quality management (sugges-
fion systems, work teams, etc.), selection tac-
tics must identify candidates who can
funcfion well in group settings. This has led to
a number of new selecfion activifies, including
interviews by teams and the use of assessment
centers. One company. Motorola, shows ap-
plicants video tapes of problem-solving
groups in action and asks them how the)'
would respond to a particular quality issue.
Concern for selecting capable employees
is not new, and current practices do not differ
greatly from the traditional HR focus. What is
perhaps different is the emphasis on a quality-
oriented organization culture as the desired out-
come of selection. This goal requires organi-
zations to commit more resources to the
selection process itself, and to structure thej
process differently so that it includes a realis-^i
tic preview of expected behaviors and en-l
courages self-selection.
Development and Training
This is a major feature of all total quality main-i
agement programs. Typically, the training]
covers problem-solving technologies, prob-|
lem analysis, statistical process control, ancij
quality measurement—a reach that goes farj
beyond specific job skills. Predictably, organi-|
zafions that use problem-solving groups andj
teams also conduct extensive training irij
group process and group decision making. Fi-
nally, quality programs often call for exten-1
sive training programs for managers, to sensi-
tize them to the importance of quality, the
cost of poor quality, and the power of their
behavior to influence the quality of products
and services.
In many respects, a strong emphasis on
training is exactly what human resource pro-
fessionals have been urging for decades. In
many cases, however, they have been unsuc-l
35i
 cessful in getting organizations to commit
heavily to such an endeavor. International
analyses of training costs show that U.S. cor-
porations spend less on training than do their
Japanese and European counterparts. There
are some indicafions that this is, in fact, chang-
ing—-and the change is long overdue. Motoro-
la and IBM stand out as two companies that
have made particularly strong commitments to
training. Both encourage extensive training for
all employees, mandafing a specified number
of days annually for aU employees.
A strong emphasis on training is also con-
sistent with the high-involvement manage-
ment approaches that have been advocated
for decades. Again, research has clearly
shown that if employees at lower levels are to
make decisions, they need not only job skills
but also team-work skills and decision-mak-
ing skills, as well as skill in managing their
time and the company's resources.
In many respects, total quality efforts rec-
ognize the significant value that HR can add
by increasing the skill level of the employees
in the organization. This value is enhanced if
the HR department approaches training
needs with a customer service focus, thus be-
coming a partner in the total quality manage-
ment effort.
Career Development
Historically, the career development prac-
tices of most large organizations have sup-
ported linear careers—i.e., career paths that
move up the hierarchy through a single
function. Assessment centers, management
development programs, and a wide range of
relatively sophisticated practices have made
this path the desired route, ostensibly to in-
sure that the senior managers in an organi-
zation are talented, knowledgeable individ-
uals. These hierarchical practices need to be
changed significantly.
In order to understand the work flow of
an organization, employees need a systems ori-
entation, a view of the whole that includes the
horizontal relationships between processes.
Understanding the horizontal flow requires
cross-functional experience; improving the
36
flow often means putting more power and de-
dsion-making authority in the hands of indi-
viduals at lower levels of the organizafion.
The career implications of this approach
are significant. As a starfing point, the systems
orientation argues for greater emphasis on
cross-functional career moves and, in some
cases, purely horizontal reassignments. This
type of career move has characterized
Japanese organizations for decades, but rep-
resents a significant departure for American
organizations. Interestingly, the same recom-
mendations that apply here fit with both an
emphasis on total quality management and
an emphasis on high-involvement manage-
ment. Both focus attention on horizontal
flows and work designs. Understanding and
managing these, in turn, require individuals
to gain a picture of the whole as well as ex-
perfise in particular functions.
Performance Management
Individual performance appraisal is basic to
the human resource management systems of
most large corporations. Performance ap-
praisals are used to determine reward levels,
to validate tests, to aid career development, to
improve communications, and to facilitate
understanding of job dufies. Deming and oth-
ers in the TQM movement, however, have
been outspoken in their criticism of the per-
formance appraisal practices typical of most
corporations. Deming and his colleagues
point out that these practices focus too much
on the individual—and often try to assign
blame for qualit}' problems to individuals.
Deming argues that most quality problems
are the product of systems and processes.
Thus, focus on individuals is counterproduc-
tive,, in that it diverts attention from the root
(i.e., systemic) causes of poor quaUty.
Deming calls for totally scrapping indi-
vidual performance appraisal systems, par-
ficularly those that are based on management
by objectives or that encourage competition
within the organization. In many respects,
his recommendations tend to be consistent
with the Japanese orientation toward collec-
tive responsibility.
 Performance appraisal, then, represents
the most sigtuficant area of conflict between
current and recommended practices. For ex-
ample, companies frequently try to solve
quality problems by putting more emphasis
on quality-related measures in the individual
performance appraiscil process. Although this
is easily accommodated within an organiza-
tion's existing performance management sys-
tem, it is sfill individual appraisal, and thus at
odds with TQM philos
Moreover, Job-based pay systems tend to reward
individuals for moving up the organizational
hierarchy.. .directly counter to the emphasis on
horizontal movement....
Complete abandonment of individual
performance management represents a
much more significant paradigm shift, one
that, in faci{, few organizations are willing to
make. But ijf the goal is simply to align a sys-
tem more: closely with the principle of
shared responsibility for quality, a total shift
may not bei necessar],^. For example, the per-
formance inanagement system can focus
strongly on developing skills and abilities
necessary tjo perform well and, as such, di-
rectly suppbrt collective responsibility. In ad-
dition, performance ratings do not have to
be competjitive; individuals can compete
against atisolute standards rather than
against each other.
Finally;! in participative and team-based
organjzatic^ns, peers can become involved in
the appraiskl process, and individuals can be
evaluated (in how much they contribute to
team JDerformance and how much they co-
operate. Tl^is, in turn, can help reinforce the
emphasis o|n collective responsibility and on
the horizorital relationships that are needed
to get indiv|lduals to own systems and coUec-
tive results. These methods are rapidly be-
coming common in companies using high-
involvement management and team-based
approaches.
Overall, there seems to be little quesfion
that performance management practices
need to change significantly if quality is to be
part of the organizafion's culture. Clearly, tra-
ditional performance appraisal systems are
more supportive of individual excellence and,
perhaps high levels of individual perfor-
mance than they are of a systems-oriented foi
cus on quality. Regardless of an organizai
tion's decision—^to abandon individual}
performance appraisal, or to modify the sysi
tem to gain a better fit with the emphasis on
quality—^the organization wiU need to makd
significant changes. The human resource
management department should lead thi$
change process.
Pay Systems
Most pay systems have likewise focused or(
individuals. Job descripfions speU out what an^
individual is to do, job evaluation systems
suggest how much the job is worth (and thus
how much the individual is to be paid), ancij
merit pay increases reflect how well the indi-j
vidual has done the job. Again, there is j^
strong, direct conflict between these tradin
tional practices and the TQM emphasis ori
collective responsibility, horizontal relafion-^
ships, and horizontal learning.
The first conflict is in the area of job deA
scripfions and pay based on job worth. These!
approaches suggest that an individual's ac-
countabilities and responsibilities are limit-
ed to the tasks that he or she regularly per-
forms. Job descriptions, for example, define
precisely what an individual is—and is
not^accountable for. In contrast, much of
the emphasis in the total quality manage-
ment literature is on flexibility, and on re-
sponsibility for an entire production or
service process.
Moreover, job-based pay systems tend to
reward individuals for moving up the organi-
zafional hierarchy. This is directly counter to
an emphasis on horizontal movement, and on
developing skills related to both upstream
and downstream processes.
Interestingly, the body of writing on to-
tal quality management contains little discus-
sion of new approaches to pay that are more
congruent with TQM. (For an exception to
this rule, see Richard Schonberger's "Total
Quality Management Cuts a Broad Swath,"
also in this issue.) Advocates of the high-in-
volvement management approach, however,
have suggested substituting skill-based pay
for job-based pay. In essence, these systems
pay individuals for what they can do by bas-
ing increases on the acquisition of new skills
and knowledge. The skills may relate to ei-
ther horizontal or vertical processes. The log-
ic is that individuals with this broader knowl-
edge will be more effective problem solvers,
and thus make a greater contribution to qual-
ity. Overall, skill-based pay would seem the
better fit.
Individual merit pay systems place a
strong emphasis on individual performance,
almost always creating a competitive situa-
tion among employees. (To give a higher in-
crease to one employee, managers must take
money from another employee in the form of
a lower increase.) Not surprisingly, quality
management programs have emphasized
abandoning individual-based merit increase
systems. Typically, however, they have not
suggested an alternative.
'n-iis dearth of ideas in the area of pay sys-
tems contrasts sharply with the emphasis on
gainsharing plans, profit-sharing plans, and
stock ownership plans that is present in much
38
of the writing on employee involvement and
participative management. This body of liter-
ature emphasizes pushing rewards for collec-
tive performance throughout the organiza-
tion and creating a financial reason for
employees to be involved in the business and
make performance improvements.
In the United States, where rewards for
performance are a major cultural value, it is
important to create reward systems that not
only reward quality improvements but also
create a team environment and a group orien-
tation. Creating organizations that focus on
collecfive pay-for-performance is a major chal-
lenge for human resource management de-
partment. The evidence on gainsharing plans,
profit-sharing plans, and other collecfive pay-
for-performance plans strongly suggests that
these tactics work only when they are com-
bined with strong communication programs
and relatively high levels of employee in-
volvement.
The implication of this for the human re-
sources function is clear. Not only is it im-
portant to support the design of group,
plant, and organizational-wide pay-for-per-
formance plans, it is also critical to develop
appropriate training arid communication ac-
tivities. In the absence of ongoing training
and communication, these prograrrts may
simply end up as extra costs that produce
few advantages.
Perquisites
Most large organizations tend to be highly
stratified. Some stratification is required by
law, but much of it occurs—quite simply—^be-
cause organizations operate hierarchically.
And the allocafion of perquisites and benefits
reinforces the hierarchy. Organizations can
do little about the fact that some employees
have to be on a nonexempt, overtkne-pay ba-
sis while others are exempt. However, they
can do a lot about who has access to parking
lots, dining rooms, and office space. The prin-
ciple of collecfive responsibility strongly sug-
gef^ts that organizations need to be much
more egalitarian in their personnel and hu-
man resource management practices. This
point also is highly consistent with the em-
phasis found in employee involvement pro-
grams on non-hierarchial allocation of
perquisites^ status symbols, and a host of oth-
er organizational rewards.
Perquisites are the trappings that go with a
posifion, and in that sense they are simply sym-
bolic and cultural. But, in some respects, the is-
sue goes beyond this. Allocating rewardls based
on hierarchy can influence how strongly indi-
viduals are; motivated to seek advancement.
Upward mobility is highly attracfive in em orga-
nizafion where "the group at the top" is expect-
ed to direct Ithe organizafion, assume account-
ability for results, and enjoy the perquisites.
Again, we see a sharp conflict with the principle
of a broad based, mulfilevel responsibility for
quality. Arriong other things, the hierarchy en-
courages infjlividuals to listen to people because
they are in a {position of power, rather than because
they have greater expertise. It also sends a message
to individuals at lower levels in the organiza-
fion: "Sit back and wait for people at the top to
take acfion and solve the problem."
One final point about status symbols and
perquisites. They tend to create an environ-
ment in wtiich communication channels are
easily clogged, especially when communica-
fions need to move across funcfional and hi-
erarchial leyels. Differences in office space, ac-
cessibility, and visible rewards can block the
kind of communication flow and work rela-
tionships tl^at are needed to produce systems
thinking and solufions.
Labor Relations
Historically, labor relations in the United
States have been adversarial, parfially because
U.S. labor laws were designed to support col-
lective bargaining. There is little doubt that
adversarial; relafionships are the anfithesis of
the shared responsibility needed to produce
high-quali<j5^ products and services. This is
particularly true if the union/management
agreements are based on large bureeiucratic
contracts, carefully specified jobs and ac-
countabilififes, and elaborate grievance proce-
dures. There is little room for generating the
kind of participation, problem solving, and
systems solufions that quality management
programs emphasize.
Advocates of employee involvement ar-
gue for labor/management relafionships that
make unions "partners" in the organizafion's
success and regard them as "crifical players" iiri
helping the organizafion achieve its goals—re-
lafionships much more compatible with total
quality management efforts. The union also
assumes responsibility for quality, thus creat-
ing opportunity for more systems thinking
and more creafive problem solving. These re-
lafionships also help create a dimate in which
employees parficipate in many of the impor-
tant decisions affecting quality. In the absence
of union support for employee problem solv4
ing and union/employee parficipafion in im-'
provement groups, there is a danger that em-
ployees will not trust the process, and that tlie
union will ultimately reject the acfivifies tliai;
are part of the total quality program.
Human resources departments clearly
have a central role to play in moving union re*
lationships into a partner mode. More than
any other part of the organizafion, the human
resources funcfion deals on a day-to-day basis
with the union. It also, of course, handles col-
lecfive bargaining and indeed, historicall]?],
has gained considerable power in organiza-
tions because it does so. It needs to play a mei*
jor role in restructuring the collective bar+
gaining process, turning an adversarial
process into one that is more problem-solving
and vision oriented. Unfortunately, HR de+
partments somefimes resist this change be*
cause they see it as eroding their power and
influence. In fact, it may have quite the oppbr
site effect if a more effective labor managie+
ment relafionship is created.
A posifive example of this change is repH
resented by the Saturn Corporafion's cooperf
afive labor/management relationship. There]
the contract has been shortened to just a ie\i
pages of general philosophy about how the
union and management relate. It clearly stated
that the company and its union are partneirs
in this venture and that the role of union \i
one of facilitafing employee's involvement iiri
the running of the business and in producing
a high-quality product.
39
Communication
Feedback about quality and informafion
about the strategy and direcfion of the orga-
nizafion are critical to all quality-improve-
ment programs. The human resources man-
agement systems in an organizafion need to
be structured so that they encourage the open
flow of information related to quality and
business results throughout the organizafion.
The human resources department, of course,
is just one component in the organizafion that
needs to support this approach. Nevertheless,
because of its presence throughout the orga-
nizafion and its crifical role in many of the ba-
sic systems that regularly impact on employ-
ees, it needs to play a major role in supporting
widespread communication of performance
results, objectives, and strategic plans. This
orientafion is a notable contrast to the histor-
ical practices in many large organizafions.
Secrecy about performance results, busi-
ness plans, and major changes is the norm
for a variety of reasons. In union/manage-
ment situafions, management has assumed
that the union cannot be trusted to receive
confidential data—or that the information
would come back to haunt the company in a
collective bargaining session. Many of the
same atfitudes pertain to informafion given
to employees: They're not interested in it,
wouldn't understand it, or can't be trusted
with it. The result has been that employees
tend not to care about their company's per-
formance.
The evidence from a variety of studies
strongly suggests that if employees are going
to care about goals and performance im-
provement plans, they need to receive regu-
lar, ongoing communicafion. In addition, be-
ing part of the process that structures
communication programs also helps. The
human resources function needs to play a
role in assuring that employees receive in-
formation, have the skills to understand that
information, and, where appropriate, partic-
ipate in developing the communication pro-
grams that exist in the organizafion.
Finally, the human resources function
needs to help the organization develop in-
40
formafion about how it is doing in establish-
ing a quality culture, improving communica-
tion, and involving individuals in the busi-
ness. Atfitude surveys can facilitate this, as
can focus groups. The results of these need
to be generally distributed and, where ap-
propriate, used as the basis for problem-solv-
ing acfivifies.
CHANGE AND HR MANAGEMENT
Five themes emerge across the different qual-
ity-oriented HR pracfices, setfing them apart
from convenfional HR pracfice: (1) a focus on
the organization, rather than the job; (2) sup-
port for group performance, rather than indi-
vidual performance; (3) egaKtarianism, rather
than hierarchy; (4)change, rather than stabili-
ty; and (5) participafion, rather than com-
mand and control.
These five themes represent a radical
break with the past as far as HR manage-
ment is concerned. They demand major
changes in both the way HR departments
are run and in the type of systems they cre-
ate and operate.
Major change can be frightening, but it
can also be empowering. We believe the op-
portunity exists for HR departments to be-
come much more important in most organi-
zations if they can change the way they
operate. The pursuit of total quality can in-
spire, guide, and unify this change.
Ifyou wish to make photocopies or ob-
tain reprints of this or other
articles in ORGANIZATIONAL DYNAMICS,
please refer to the special reprint
service instructions on page 80.
 SELECTED BIBLIOGRAPHY
Tom Peters'; thoughts on TQM were excerpted
from a 1991 Tom Peters Group newsletter. Y. K.
Shetty and P. F. BuUer, "Regaining Competi-
fiveness Requires HR Solufions," Personnel (July
1990, pp. 8-12) was the source for the survey
data we repprted. Donna Brown, "HR: Eitirvival
Tool for the; 1990s," Management Review (March
1991, pp. lp-14) was the source of Crosby's
thoughts on HR execufives. Other wrifings that
stress the paramount iimportance of human re-
sources in quality include: Randall S. Schuler
and Drew L. Harris, "Deming Quality Innprove-
ment: Implications for Human Resource Man-
agement in a Small Company," Human Resource
Planning (1^91, Vol. 14 No. 3, pp. 191-207);
WiUiam F. Roth, Jr., "Quality Through People: A
Hit for HR," Personnel (November 1989, pp. 50-
52); Willian) N. Yeamans, "Building Competi-
fiveness Through HRD Renewal," Training &
Development Journal (October 1989, pp. 77-82);
Charles F. Hendrick.s and Arlene Triplett,
"TQM: Strategy for 90s Management," Personnel
Administration (December 1989, pp. 42-48);
William F. Roth, Jr., "Dos and Don'ts of Quality
Improvement," Quality Progress (August 1990^
pp. 85-87); and "A Forum for the Power of Qual-
ity," Quality Progress (February 1990, pp. 19-24).
Arfides that describe or imply how to im-
plement TQM principles within the HRM de-
partment, itself, include: Clay Carr, "Injecting
Quality into Personnel Management," Personnel
Journal (September 1987, pp. 43-51); "Transamer^
ica Rethinks HR Structure," HR Reporter; David
Bowen and Larry Greiner, "Moving from Prcw
duction to Service in Human Resources Man-
agement," Organizational Dynamics (Summer
1986, pp. 35-53); and WiUiam Kahnweiler, "HRD
and Empowerment," Training & Develofpment
(November 1991, pp. 73-76).
References that describe the HRM pracfices
associated with employee involvement and
their relationship to total quality include: Fd-
ward Lawler III, The Ultimate Advantage (San
Francisco: Jossey-Bass, 1991) and Edward
Lawler III, Susan Mohrman, and Gerald Led-
ford. Employee Involvement and Total Quality Man-
agement: Practices and Results in Fortune 1006
Companies (San Francisco: Jossey-Bass, 1992).