University of Bahrain
College of Business Administration
MGT 433 Total Quality Management
Chapter 1
Introduction to Quality and
Performance Excellence
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Outline
• Explain the concepts of quality and performance
excellence
• Provide reasons why they are important
• Provide a brief history of the “quality revolution”
• Describe quality in manufacturing, service, health
care, education, and government
• Explain the principles and practices of quality and
performance excellence
• Discuss relationships of quality with
organizational models in management theory
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Defining Quality
Perfection
Fast delivery
Providing a good, usable product
Consistency
Eliminating waste
Doing it right the first time
Delighting or pleasing customers
Total customer service and satisfaction
Compliance with policies and procedures
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Formal Definitions of Quality
• The totality of features and characteristics
of a product or service that bears on its
ability to satisfy given needs – American
Society for Quality
– Fitness for use
– Meeting or exceeding customer
expectations
– Conformance to specifications
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Performance Excellence
• An integrated approach to organizational
performance management that results in
– delivery of ever-improving value to
customers and stakeholders, contributing
to organizational sustainability,
– improvement of overall organizational
effectiveness and capabilities, and
– organizational and personal learning.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Importance of Quality
• THE buzzword among business in the
1980s and 1990s
• Quality problems still abound in many
industries, such as automotive
• Consumer expectations are high
• “We’ve made dependence on the quality
of our technology a part of life” – Joseph
Juran
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
History of Quality Assurance
(1 of 3)
• 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
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
History of Quality Assurance
(2 of 3)
• 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
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
History of Quality Assurance
(3 of 3)
• Emergence of quality management in
service industries, government, health care,
and education
• Evolution of Six Sigma
• Current and future challenge: maintain
commitment to performance excellence
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Future Influences
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Globalization
Social responsibility
New dimensions of quality
Aging population
Health care
Environmental concerns
21st century technology
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Quality Dimensions in
Manufacturing
• Performance – primary operating characteristics
• Features – “bells and whistles”
• Reliability – probability of operating for specific
time and conditions of use
• Conformance – degree to which characteristics
match standards
• Durability - amount of use before deterioration or
replacement
• Serviceability – speed, courtesy, and competence of
repair
• Aesthetics – look, feel, sound, taste, smell
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Quality Dimensions in Services
• Time – how much time must a customer wait?
• Timeliness – will a service be performed when
promised?
• Completeness – Are all items in the order
included?
• Courtesy – do frontline employees greet each
customer cheerfully?
• Consistency – are services delivered in the same
fashion for every customer, and every time for the
same customer?
• Accessibility and convenience – is the service easy
to obtain?
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Differences Between Manufacturing
and Services
• Customer needs and performance standards are often difficult
to identify and measure
• The production of services typically requires a higher degree of
customization
• The output of many service systems is intangible
• Services are produced and consumed simultaneously
• Customers often are involved in the service process and present
while it is being performed
• Services are generally labor intensive
• Many service organizations must handle very large numbers of
customer transactions.
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
New Frontiers of Quality
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Health care
Education
Government
Not-for-Profits
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Principles, Practices, and Techniques
• Principles are the foundation of the
philosophy
• Practices are activities by which the principles
are implemented
• Techniques are tools and approaches that help
managers and employees make the practices
effective
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Principles of Total Quality
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Customer and stakeholder focus
Process orientation supported by
continuous improvement and learning
Employee engagement and teamwork
Management by fact
A strategic focus on quality as a source of
competitive advantage
Visionary leadership
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Customer and Stakeholder Focus
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Customer is the principal judge of quality
Organizations must build relationships
with customers and increase customer
engagement
Organizations must understand customer
needs and obtain feedback
Customers are internal and external
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Customer-Focused Practices (1 of 2)
• Identify the most important customer groups and
markets
• Understand both near-term and longer-term
customer needs and expectations (the “voice of
the customer”) and employ systematic processes
for listening and learning
• Understand the linkages between the voice of the
customer and design, production, and delivery
processes, and innovate product offerings
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Customer-Focused Practices (2 of 2)
• Create an organizational culture and manage
customer relationships
• Develop effective complaint management processes
• Measure customer satisfaction, engagement, and
dissatisfaction and use the information for
improvement
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Process Orientation
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A process is a sequence of activities that is
intended to achieve some result
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Cross-functional Perspective
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Process-Focused Practices
• Identify vital work processes that relate to an
organization’s core competencies
• Determine key work-process requirements
• Design and innovate work processes to meet all
requirements
• Minimize overall costs associated with
inspections, tests, and process or performance
audits and prevent defects and errors
• Implement work processes and control their dayto-day operation
• Improve work processes to achieve better
performance
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Continuous Improvement and
Learning
Incremental and breakthrough improvement
– enhancing value to the customer through new and improved
products and services;
– improving productivity and operational performance through
better work processes and reductions in errors, defects, and
waste;
– improving flexibility, responsiveness, and cycle time
performance; and
– improving organizational management processes through
learning
• Learning – why changes are successful
through feedback between practices and
results
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Cycle
1.
2.
3.
4.
Planning
Execution of plans
Assessment of progress
Revision of plans based upon assessment
findings
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Employee Engagement and Teamwork
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Engagement – workers have a strong emotional bond
to their organization, are actively involved in and
committed to their work, feel that their jobs are
important, know that their opinions and ideas have
value, and often go beyond their immediate
responsibilities for the good of the organization
Empowerment – having the authority to make
decisions
“A sincere belief and trust in people”
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Engagement-Focused Practices
 Understand the key factors that drive workforce
engagement, satisfaction, and motivation
 Design and manage work and jobs to promote
engagement
 Create an environment that ensures and improves
workplace health, safety, and security
 Develop an effective performance management system
 Assess workforce engagement and satisfaction
 Assess workforce capability and capacity needs
 Make appropriate investments in development and
learning
 Manage career progression and succession planning
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Teamwork
• Vertical—teamwork between top
management and lower-level employees.
• Horizontal—teamwork within work groups
and across functional lines (often called crossfunctional teams).
• Interorganizational—partnerships with
suppliers and customers
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Management by Fact
• Organizations need good performance measures to
drive strategies and change, manage resources, and
continuously improve
• Data and information support analysis at all levels
• Typical measures: customer, product and service,
market, competitive comparisons, supplier,
employee, cost and financial
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Data-Driven Practices (1 of 2)
• Select, collect, align, and integrate data and
information for tracking daily operations and
overall organizational performance
• Select and ensure the effective use of
comparative data and information
• Review organizational performance and
capabilities
• Translate organizational review findings into
priorities for continuous and
• breakthrough improvement
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Data-Driven Practices (2 of 2)
• Make needed data and information available and
accessible
• Ensure that hardware and software are reliable,
secure, and user-friendly
• Ensure that organizational data, information, and
knowledge are accurate, reliable, timely, secure,
and confidential
• Manage organizational knowledge
• Keep performance measurement systems,
hardware, and software current with business
needs and directions
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategic Focus
• Organizations must make long-term
commitments to its stakeholders
• Quality should drive strategic plans along with
financial and marketing objectives
• Long-term organizational sustainability and
competitiveness are key strategic issues
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategic-Focused Practices (1 of 2)
• Understand the organization’s operating
environment
• Understand the competitive environment
• Gather and analyze relevant data and information
(SWOT)
• Develop and refine a systematic approach for
conducting strategic planning
• Develop and align short-term action plans with longterm strategic objectives
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategic-Focused Practices (2 of 2)
• Derive the human resource plans required to
accomplish longer-term strategic objectives
• Identify key measures or indicators for tracking
progress on action plans
• Determine the organization’s core competencies
• View the work performed within the organization as
a system
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Visionary Leadership
• Leadership is the responsibility of top
management
• Senior leaders should be role models for the
entire organization
• An organization cannot sustain quality
initiatives without strong leadership
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Leadership Practices (1 of 2)
• Setting organizational vision and values and deploying
them through the organization’s leadership system
• Demonstrating a commitment to organizational values
• Promoting an organizational environment that fosters,
requires, and leads to legal and ethical behavior
• Creating a sustainable organization
• Creating an environment for organizational
performance improvement
• Creating an environment for organizational and
workforce learning
• Personally participating in succession planning
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Leadership Practices (2 of 2)
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Communicating with and engaging the entire workforce
Encouraging frank, two-way communication
Taking an active role in reward and recognition programs
Creating a focus on action to accomplish the organization’s
objectives
Reviewing performance
Creating and balancing value for customers and other
stakeholders
Evaluating their own performance to improve
Contributing to supporting and strengthening key
communities
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TQ and Agency Theory
• Agency relationship: a concept in which one
party (the principal) engages another party
(the agent) to perform work
• Key assumption: individuals in agency
relationships are utility maximizers and will
always take actions to enhance their selfinterests.
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Contrast With TQ
(1 OF 2)
• TQ views the management system as one based on
social and human values, whereas agency theory is
based on an economic perspective that removes
people from the equation.
• Agency theory propounds the belief that people are
self-interested and opportunistic and that their rights
are conditional and proportional to the value they
add to the organization. TQ suggests that people are
also motivated by interests other than self, and that
people have an innate right to be respected.
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Contrast With TQ (2 OF 2)
• Agency theory assumes an inherent conflict of
goals between agents and principals, and that
agent goals are aligned with principal goals
through formal contracts. In TQ, everyone in
the organization shares common goals and a
continuous improvement philosophy, and goals
are aligned through adoption of TQ practices
and culture.
• TQ takes a long-term perspective based on
continuous improvement, whereas agency
theory focuses on short-term achievement of
the contract between the principal and agent.
• TQ leaders provide a quality vision and play a
strategic role in the organization; leaders in
agency theory develop control mechanisms and
engage in monitoring.
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TQ and Organizational Models
Dr. Mahnmood Asad
MGT433
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.