CHAPTER THREE

"Managing Human Resources for Total Quality"

LEARNING OBJECTIVES

CHAPTER OUTLINE

• What is quality and why is it important?
• What is Total Quality Management [TQM]?
• Why is TQM important?
• The significance of Human Resources in TQM
• The role of the HR Department in TQM

The increasing competition and the enhanced customer requirements that modern organisations face throughout the world today demand the development and adoption of innovative strategies. Traditional levers of competitive success - product and process technology, protected or regulated markets, easy access to financial resources, and economies of scale -

in our days have become less powerful as sources of competitive advantage. These developments necessitate the adoption of a different mindset for considering issues of management and strategy. Under the pressure of intense international competition, modern organisations of the world are discovering the strong and lasting relationship between quality and profitability and adopt many of the concepts of Total Quality Management [TQM].

QUALITY DEFINED

'Quality' is a familiar word to us all; however, it has a variety of uses and meanings. In a non-technical qualitative sense may be referred to as 'comparative sense' or 'degree of excellence' [e.g. top quality, high quality, quality performance, quality of communications, etc]. In a quantitative sense, for example in manufacturing, quality is defined in terms of non-conforming parts per hundred [ i.e. some defined degree of imperfection]. Yet, the simplest and most usually adopted definition is the one focusing on adding value to the product/service. In this sense, quality is defined as the attributes of a product and/or service which, as perceived by the customers , make the product/service attractive to them and gives them satisfaction¹.

Eight dimensions of quality are identified by pioneers in the field of TQM, such as Deming, Crosby, Juran and Garvin²:

• Performance. A product' s primary operating characteristic [ i.e. a television set's picture clarity.
• Features. Supplements to a product's basic functioning characteristics [e.g. power windows on a car].
• Reliability. A probability of not malfunctioning in a specific period.
• Conformance. The degree to which a product's design and operating characteristics meet established standards.
• Durability. A measure of product life.
• Serviceability. The speed and ease of repair.
• Aesthetics. How a product looks, feels, tastes and smells.
• Perceived quality. As seen by customers.

Satisfying customer expectations, and understanding and anticipating their needs , are the crux of TQM, which concerns itself with effective and efficient management, with having totally satisfied customers who come back for more of the same product/service.

WHY IS QUALITY IMPORTANT ?

An increasing number of CEOs now firmly believe that if quality is right, everything else will follow. Quality is considered of extreme importance, since³:

• Quality is all-pervasive. Quality in TQM is a broader concept, encompassing not only product, service and process quality improvements but also those relating to costs and productivity, and people involvement and development. It is also a relatively low-risk strategy, and has the added advantage that it is totally focused on satisfying customer needs. No matter how good an organisation's innovation, technology, marketing efforts, financial and pricing policies, if the product and service quality do not meet customers' expectations it will lose market share.

• Quality increases productivity. Despite arguments of some CEOs and senior managers that cost, productivity and quality improvements are alternative objectives, there has been plenty of evidence that shows that improving quality will improve productivity and reduce costs and in turn shall lead to more satisfied customers and thus increased profitability⁴.

• Quality leads to better performance in the market place. According to recent empirical data⁵ it has been found that companies with large market shares are those whose quality is relatively high, whereas companies with small market shares are those whose quality is relatively low.

• Quality means improved business performance. Kano et al⁶ found that the financial performance of companies who followed quality improvement programmes, in terms of earnings rate, productivity, growth rate, liquidity and net worth was above the average in their industry.

• The cost of non-quality is high. Based on a variety of companies, industries and situations it is being claimed that the cost of quality [ or to be more precise, the cost of not getting it right the first time] ranges from 5 to 25 percent of an organisation's annual sales turnover⁷.

• The customer is king. In today's markets, customer requirements are becoming increasingly more rigorous and their expectations of the product/service in terms of its conformance, reliability, durability, interchangeability, performance, features, appearance, serviceability, environment- and user-friendliness, safety, etc. are also increasing. At the same time, it is likely that the existing competition will be improving and new and lower cost competitors may emerge in the market place; consequently, the process of quality improvement needs to be continuous and involve everyone in the company.

WHAT IS TOTAL QUALITY MANAGEMENT ?

Total Quality Management is a systematic and coordinated companywide effort to continuously improve the quality of a firm's products and services, so that these products and services meet their customers needs and expectations⁸. This means that a company following a quality improvement programme changes its operations to focus on the customer, to seek continuous improvements in its operations, to involve employees in decision making in matters affecting them and to empower them to implement these decisions successfully.

TQM 's philosophy, stressing continuous improvement, may be briefly described by stating its seven broad principles/components⁹:

• A focus on the customer or user of a product or service, ensuring that the customer's needs and expectations are satisfied consistently.
• Active leadership from top executives to establish quality as a fundamental value to be incorporated into a company's management philisophy.
• Quality concepts [e.g. statistical process control or computer-assisted design, engineering, and manufacturing] that are thoroughly integrated throughout all activities of a company.
• A quality culture established and reinforced by top executives, that involves all employees in contributing to quality improvements.
• A focus on employee involvement, teamwork and training at all levels in order to strengthen employee commitment to continuous quality improvement.
• An approach to problem solving that is based on continually gathering, evaluating and acting on facts and data in a systematic manner.
• Recognition of suppliers as full partners in the quality management process.

WHY IS TQM IMPORTANT ?

Traditionally, organisations used to view innovation as having to do only with technology. Nowadays, the concept of innovation has been enlarged to encompass the way organisations do their business. There is much innovation today in the way the companies compete. To meet the challenges of the global economy, successful companies have been eliminating unnecessary layers of management, empowering front-line employees, becoming more responsive to their customers and seeking constantly to improve the products they make, the services they provide and the people they employ. Organisations in the 1990s have no choice but to embrace TQM: either they continually improve quality or they go out of business.

THE ROLE OF HUMAN RESOURCES AND AND HUMAN RESOURCE MANAGEMENT IN TQM

The adoption of TQM philosophy requires a drastic change in the organisational culture of a company: A fundamental change in the way individuals and groups approach their work and their roles in the organisation - that is, from an environment of distrust and fear of reprisal to one of openness and trust, where creativity and flourish; from working as individuals to working as teams; from protection of organisational turfs to the breakdown of departmental barriers; from an autocratic management style of direction and control to a softer style of team leader and coach; from power concentrated at the top to power shared with employees; from a focus on results to a focus on continuous improvement of the processes that deliver the results; and finally, a change from making decisions based on gut-feel to an analytic, fact-based approach to management¹⁰. This cultural transformation has significant implications for human resource management, as shown in Tables 3.1 and 3.2.

Table 3.1 "Impact of HRM systems of changing from traditional practices to TQM", Cascio, p. 19

Table 3.2 "The changed HR practices", Schuler, p. 562

THE ROLE OF THE HR DEPARTMENT IN TQM

The role of the HR Department in improving quality can be considerable. Broadly, it can¹¹:

• Assist in the formulation of the firm's strategic direction and needs.
• Identify the human resource philosophies or culture consistent with the business needs.
• Develop and implement policies and activities consistent with the culture.
• Ensure that the quality improvement process is consistent with the other human resource activities.

The HR department can play a significant role in the change process by establishing a specific programme that is responsible for dealing with the change. This programme can involve¹²:

• Establishing a senior HR council and executive operating committee
• Naming a major initiative that rallies all employees to the change
• Developing a leadership programme that ensures that the change clearly includes the top management [ a senior management development programme].

Additionally, within the HR department there can be further division of roles and responsibilities. This often involves clarifying the relationship between the corporate-level HR department and the business unit - level departments. Taking a proactive stance, the corporate-level department can¹³:

• Assist senior managers in formulating change
• Become a model of change
• Develop and guide divisional human resource departments
• Change organisational structure
• Serve as a clearinghouse
• Serve as trainer for other HR staff
• Do benchmark analysis
• Develop HRIS [Human Resource Information System] capacity
• Audit competencies

CASE

Don English serves as a corporate vice president at Bancroft enterprises. Don is planning to become the chief executive officer of Bancroft, or some other firm of similar or larger size, within the next five or seven years. He thinks he can achieve this if he remains in Human Resources and does an outstanding job. He will have to be outstanding by all standards, both internal and external to the firm.

During a moment of relection, Don begins to scribble some notes on his desk pad. In the middle is Bancroft. To its left are its suppliers and to its right are its customers. In his head are all the TQM human resource practices that he is so familiar with. Don wonders: How can he help Bancroft experience the excitement of making significant gains in quality improvement? He now seeks your advice in exactly what to do and how to go about doing it.

QUESTIONS

What would you advice Don? Why?

SOURCE: Randall S. Schuler, New York University.

Click here to send your answer

NOTES