Asia Pacific Management Review (2002) 7(3), 349-380
Validation of A Model of Total Quality
Management Performance Measurement Systems
in the UK
Hsin Hsin Chang* and Dave A Sinclair**
（received January 2002; revision received March 2002; accepted May 2002）
The research design based on the grounded theory approach of total quality management
(TQM), and using 14 case studies analysis, was found to be appropriate in studying performance
measurement (PM). The validation of a model based on the actual performance measurement
systems in use at 115 TQM and non-TQM organizations in the UK. Performance
measurements in TQM organizations suggest that must be widened to include concepts such as
TQM performance assessment, the measurement of team performance, information technology
challenge, suppliers-customers satisfaction and relationship, and reward and recognition.
Future research is needed to clarify the definitions used, and to gain input from academics and
practitioners in the fields of organizational behavior, technology management, strategic
management, and all associated disciplines.
Keywords: Deming Cycle (PDAC Cycle), Total Quality Management, Performance
Measurement System, Technology Challenge, Reward and Recognition
1. Introduction
Performance measurement (PM) has been identified as a key agent in
any attempts to manage organizational change [1, 6, 12, 18, 35, 38, 45, 63,
68]. Since the introduction of total quality management (TQM) frequently
requires a change in organizational culture and management style, PM can be
seen to either inhibit or facilitate the introduction of TQM. Several authors
have suggested the need for research into PM [6, 7, 15, 24, 36, 41, 66].
There has, been little empirical research into PM. Research into PM
commonly involves “manufacturing” and “service” organizations of the
development of case studies and surveys [12, 20, 22, 23, 29, 42, 48, 51, 57,
70, 71]. Several authors suggest that TQM is one of a range of factor
influencing the need for PM systems to meet the specific demands of
organizations, which have implemented TQM [6, 8, 18, 39,65, 68].
*
**
Corresponding author:
(1) Department of Business Administration, National Cheng Kung University, Tainan City
(2) Graduate School of Business Administration, National Chiayi University, Chiayi City
+886-911751861; e-mail: [email protected]
Management Centre of Bradford, England, UK
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Hsin Hsin Chang and Dave A Sinclair
The model developed on the basis of the analysis of the case study data
needed to be validated for its practical applicability. It was decided that this
would be best achieved by the use of a postal survey of both TQM and nonTQM organizations in the UK. All previous fieldwork had involved the
study of TQM based PM. The aim of the survey were:
(1) The abbreviations of TQM organizations that have implemented TQM,
and non-TQM organizations have not yet implemented TQM.
(2) Any model of TQM based PM systems should provide clears linkages
between PM, benchmarking, and quality costing. However, no such
model of TQM based PM exists in the literature, and neither has there
been any empirical research into the nature of TQM based PM in the UK
organizations.
(3) The model is tested a survey for this study, in order to confirm that the
model is in use at organizations that have implemented TQM from Chang
et al [9] in the previous research represents an exploratory study of PM in
TQM organizations.
(4) The literature on PM in services is less well developed than that for
manufacturing. This study concentrates on the development of PM
system suitable for manufacturing and services on TQM and non-TQM
organizations.
(5) Since the majority of the respondent organizations in the survey would
probably not be described as “best practice,” the survey would show how
widely applicable the model is to TQM organizations. It may also
suggest a “two-tier” approach to PM within TQM organizations – best
practice as opposed to partial integration of TQM.
(6) Compare PM in TQM and non-TQM organizations. This would allow
some conclusions to be drawn about the changes made in PM systems
when organizations implement TQM.
2. Total Quality Management and Performance Measurement Systems
2.1 Total Quality Management (TQM)
Deming encouraged the Japanese to adopt a systematic approach to
problem solving and continuous improvement, which he called the Shewhart
cycle, but is more commonly know as the PDAC (Plan, Do, Check, Act) or
Deming cycle. Deming also gave the Japanese “Fourteen Points of
Management”, and identified four deadly sins. Hutchins [38] suggests that
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Hsin Hsin Chang and Dave A Sinclair
Deming’s contribution to Japanese industry was to “present the ideas in a
simple way which could be meaningful right down to production worker
levels.” The Japanese recognized Dr Deming’s contribution to their quality
efforts, and in 1951 established the Deming Prize, the most prestigious
quality control award in Japan [38, 44,52].
TQM is a management philosophy that has developed incrementally
over time, and continues to do so. TQM has been adopted by many
companies and appears to have gained widespread acceptance in both the
academic and business communities [5, 13, 20, 33, 46, 70]. Several authors
suggest that PM can play a major role in the success or failure of
organizational change programs [6, 12, 19, 39], and TQM in particular [3, 37,
65, 66].
As a consequence, PM is commonly included in literature on TQM [16,
25, 54, 62]. There are several different gurus, and many “disciples” and
consultants offering advice on implementing TQM. It is vital to develop a
company specific approach since TQM can only be planned and driven by
senior management of the organization [3, 4, 43, 53, 55, 57, 67]. In the
following section, the development and core concepts of PM are discussed.
2.2 Performance Measurement (PM) Systems
McNair et al [52] state that the purpose of PM systems is to “integrate
organizational activities across various managerial levels and functions.”
The need to integrate measures is also suggested by Hronec [37], who defines
a PM system as a “tool for balancing multiple measures (cost, quality, and
time) across multiple levels (organization, processes and people).”
Meyer [51] states that the design of any PM system “should reflect the
basic operating assumptions of the organization it supports.” Fizgerald et al
[23] and Gregory [29] suggest that an effective PM system “should consist of
not only the traditional financial and cost accounting criteria used by upper
management, but also tactical performance criteria that are used to assess the
firm’s current level of competitiveness and direct its efforts in attaining a
desired competitive position.”
Easton and Jarrell [20] stress the need for PM systems to focus attention
on continuous improvement. Green et al [30] suggest that PM systems
should “target the value-added activities of the company.” The link between
between strategies, actions and measures, developed by Brockett [6], Dixon
et al [19], Kueng [45], Roethlein [60], Scott [64], and, Zhang [71] suggest
that unless companies adapt their measures and measurement systems to
facilitate the introduction of TQM, implementation will fail to reap the
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Hsin Hsin Chang and Dave A Sinclair
expected benefits.
PM is thus a potential obstacle to TQM.
2.3 A Framework of TQM Based Performance Measurement
The developed a framework expands the concept of measurement, both
in terms of the areas within the management of organizations that are covered,
and also in the inclusion of aspects of the management process that may
appear to be unrelated to the concept of measurement by Chang et al [9].
This study includes 14 companies of PM, and each case study organization
has implemented TQM, although the level of integration of TQM in each
case varies in the UK. The case studies were therefore divided into two
groups “manufacturing” and “service” achievement of organizational
objectives. Of these organizations:
(1) Seven are manufacturers organizations: Elida Gibbs, ICL, BOC UK
Gases, Aeroquip, Coca Cola Schweppes Beverages, Kodak, and Shell
Chemicals UK Limited.
(2) Seven are service organizations: NatWest Life Assurance, MercuryCom,
BC Related Services, Girobank, American Express in the UK, N&P
Building Society, and Royal Mail.
In order to facilitate analysis, the case studies are further sub-divided
via a subjective assessment of the overall effect of PM on their organization,
determined by the interviewees. As stated in Chang et al [9], measurement
must form part of a wider management process, since measurement data that
is collected. The five elements of a framework of TQM based organizations
PM from 14 case study organizations in the UK that have been identified in
Figure 1 and as follows:
(1) Strategy development and goal deployment: including mission/vision,
strategic, critical success factors (CSFs) and key performance indicators
(KPIs).
(2) Process management and measurement: including input, in-process and
output measures, process management, performance reviews,
management control systems, performance measures, continuous
improvement management of internal and external customer-supplier
relationships, the use of management control systems, and target setting.
(3) Performance appraisal and management: including performance appraisal
and performance management.
(4) “Break-point” performance assessment: including internal and external
benchmarking, self-assessment against quality award criteria, and quality
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Hsin Hsin Chang and Dave A Sinclair
costing.
(5) Reward and recognition of individuals, teams and external supplier.
The first three “elements” of the model correspond to the levels of PM
suggested by Globerson [28] and later by Ahire [1], Davidson et al [18],
Hamada [34], Killingsworth [43], Roethlein [60], and Rummler and Brache
[61]. Reward and recognition systems are not developed in the same way as
the rest of the model because: (1) reward and recognition is the result of PM
in the first three levels of the model (i.e. is an out of PM); (2) the processes of
reward and recognition were not clearly identified in the case studies.
Reward and recognition has been identified as a separate aspect of the PM
system model, it is an integral output of PM.
1. TQM Strategy Development and Goal Deployment
- Strategic Management
- Communication
- Performance Measure
2. Process Performance and Management
- Process Management
- Performance Reviews
- Performance Measures
- Continuous Improvement
- Customer- Supplier Relationship
- Management Control Systems
- Target Setting
3. Performance Appraisal
and Management
4. Break-Point Assessment
5. Reward and Recognition of TQM-PM Systems
Figure 1. A Framework of TQM Organizations Performance Measurement
(Adopt from Chang et al [9])
3. Definition of TQM Performance Measurement System “Terms” from
Case Study Organizations
Definitions of TQM and PM have been chosen as the most appropriate
of those found in the literature [1, 6, 9, 12, 23, 24, 29, 33, 39, 42, 45, 46, 51,
54, 58, 65, 67] have been developed where no appropriate definition exists.
The following terms are specific to each level of the model of TQM
performance measurement systems:
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Hsin Hsin Chang and Dave A Sinclair
3.1 Level 1: Strategy Development and Goal Deployment
The case organizations use similar approaches in strategy development
and goal deployment. The main differences between the organizations
appear to lie in the detail and clarity of the strategic plans developed, and
how well they are deployed throughout the organization. Of key importance
in the deployment process appears to be the clear assignment of
responsibility for the implementation of action plans, and performance
against CSFs and KPIs. This proved successful at Kodak, Mercury and
NatWest Life.
(a) CSFs are “for any business, the limited number of areas in which results,
if they are satisfactory, will ensure successful competitive performance
for the organization” [54, 59].
(b) KPIs are the actual measures used to quantitatively assess performance
against the CSFs. There should be at least one KPI for each CSF.
In Figure 2, the approach to PM at the organizational level identified at
the case study organizational and integrated to form Level 1 of the TQM
performance measurement system model is similar to those identified by
other authors. The prime differences in the TQM model concern the nature
of the measurements, and the recognition of the strategy development and
goal deployment process as a PDCA cycle (or Deming cycle). The use of a
PDCA cycle at the organizational level fits into the TQM approach of
continuous improvement. Continuous improvement at the organizational
level concerns the improvement of strategic planning and management of the
organization as a whole.
A final point about PM at the organizational level relates to the use of
IT. The use of EIS, ERP, SCM, and CRM systems at the organizational
level has suggested by many authors (for example Chase et al [10], Choi and
Eboch [12], Davidson et al [18], Easton and Jarrell [20], Lummus and Robert
[47], Samson and Terziovski [62], and Sommerville [65]). The use of
information system was associated with quick response for measurements
frequency and reporting for example at Coca Cola and American Express.
NatWest Life Assurance had implemented EIS and CRM systems at the time
of the survey.
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Hsin Hsin Chang and Dave A Sinclair
Stakeholders:
Customers
Employees
Shareholders
Community
Assign
Responsibility
Identify
Critical
Success
Factors
(CSFs)
Identify
Stakeholder
Requirements
Develop
Mission/
Vision
Statemenet
Analysis
Organiza.
and
Environm.
Identify
Organizational
Capability
Set
Targets
for
KPIs
Compare
Require.
and
Capability
Develop
Action
Plans:
Straegic
and
Operation
Define
Key
Performance
Indicators
(KPIs)
Performance
Management
and
Appraisal
Implement
Action
Plans
(Manage
Processes)
Reward
and
Recognise
Performance
Measure
Performance
vs
KPIs
Feedback 1
(Based on
Meaurement
Frequency)
Feedback 2
(Annual Review)
Figure 2. Performance Measurement System Model Level 1:
Strategy Development and Goal Deployment
3.2 Level 2: Process Management and Measurement
Process management and measurement is suggested that process PM
should include measures of inputs, process, and outputs. In Figure 3,
outputs from a supplier (internal or external) form the inputs to the next
customer. It is therefore only necessary to define process and output
measures:
(a) Process measures “monitor the activities of a process and motivate people
within a process.” [37, 65, 70]
(b) Output measures “report the results of a process, often to management,
and are used to control resources” [8, 33, 37] The key difference
between process and output measures are that process measures relate to
activities, whilst output measures relate to the results of activities.
At the case study organizations there were great differences between the
levels of management of processes, as opposed to management of functions.
Cross-functional PM is vital component of the removal of “functional silos,”
and the consequent potential for sub-optimization and failure to take account
of customer requirements [8, 32, 56, 70]. The success of PM at process
level was depend on the degree of management of process with crossfunctional teams set up to manage process improvement, and the degree of
clarity of the deployment of strategic of information technology and
management objectives.
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Hsin Hsin Chang and Dave A Sinclair
Assign
Management
Systems
CUSTOMERS
Develop
Mission/
Vision
Statemenet
Indentify
Key
Process
Activities
Core Business Processes
Assign
Redponsiblity
Identify
Customer
Requirements
Compare
Require.
and
Capability
Define
Process
Performance
Measures
(PPMs):
Inputprocessoutput
Reward and
Recognise
Performance
Develop
process
Action
Plans
Set
Targets
Measure
Performance
vs
PPMs
Operate
Process
Identify
Organizational
Capability
Feedback 1
Feedback 2
Deploy
Deploy
Deploy
Deploy
Sub-Processes
Figure 3. Performance Measurement System Model Level 2: Process
Management and Measurement
3.3 Level 3: Performance Appraisal and Management
In Figure 4, the aim of performance appraisal and management is to
develop an integrated approach to the management of individuals and teams.
Performance appraisal and management includes the two linked elements of
performance management and performance appraisal:
(a) Performance management is “a systematic, data-oriented approach to
managing people at work that relies on positive reinforcement as the
major way to maximize performance.” [17, 55]
Performance
management refers to the management of individuals and teams on a
frequent and ongoing basis (daily time period).
(b) Performance appraisal is “the process by which organizations establish
measures and evaluate individual employees’ behavior and
accomplishments for a finite period of time.” [35, 60] Performance
appraisal refers to the formal planning and review of activities of
activities and behavior of individuals, usually on an annual basis, with a
view to deterring compensation and promotion.
The performance appraisal system was probably the least successfully
implemented element of the PM system model so far discussed. Appraisal
systems appear to motivate individuals to achieve process and personal
development objectives, but not to perform in teams. One of the key
problems the appraisal process is the frequency of measurement, which could
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Hsin Hsin Chang and Dave A Sinclair
be increased, but no organizations suggested that they would do so.
Assign
Responsibility
Process
and/or
Organizational
Identify
Requirements
- Process
- Personal
Analyse
Job
Activities
Asses
Performance
Plan
Tasks
Give
Feedback
Performance
Management
System
Performance Appraisal
System
Define
KPIs
Compare
Skill and
Requirement
Identify
Current
Skills
- Process
-Personal
Perform
Tasks
Set
Targets
Plan
Activities
Perform
Tasks
(Process
and
Development)
Measure
Performance
vs KPIs
(Performance
Appraisal)
Reward
and
Recognise
Performance
Feedback
Figure 4. Performance Measurement System Model Level 3: Performance
Appraisal and Management
3.4 Level 4: “Break-Point” Performance Assessment
Break-point performance assessment can be defined as the
measurement of any performance criteria that is intended to identify
significant gaps in current performance, and thereby motivate activities to
improve performance so as to reduce or eliminate the gap. Break-point
assessment techniques generate targets for future performance, and also
identify activities that should be taken to meet the target. Break-point
assessment includes both internal (within the organization) and external
(involving sources outside the organization) measurement techniques.
In Figure 5, the use of break-point assessment techniques varied greatly
amongst the case study organizations. It is hypothesized that the difference
between TQM and non-TQM organizations is the desires of TQM
organizations to use such innovative techniques in order to achieve
breakthroughs in performance improvement. The use of the techniques as
outlined differs from most authors in two respects:
(a) The integration of break-point assessment techniques into the overall
performance management process.
(b) The recognition that such techniques can move from being “break-point”
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Hsin Hsin Chang and Dave A Sinclair
techniques to being simple another measurement technique at the
organization or process levels. This was the case with for example
benchmarking at ICL, quality costing at Barclays CRSD, and customer
satisfaction and relationship surveys at all case study organizations.
CHOOSE
ASSESSMENT
TECHNIQUE:
Measure
Performance
vs KPIs
- Organization
-Process
Identify
Need for
Assessment
Cost of Quality
Activity-Based Costing
Internal Benchmarking
Self-assessment
Business Process
Re-engineering
Internal
FEEDBACK
RESULTS INTO
PLANNING AND
TARGET-SETTING
PROCESS
Perform
Assement
Choose
Assessment
Mode
CHOOSE
ASSESSMENT
TECHNIQUE:
External Assessnebt
Competitive Benchmarking
Competitor/Market Analysis
Customer Surveys
Quality Fnction Deployment
External
Figure 5. Performance Measurement System Model Level 4: “Break-Point”
Performance Assessment
3.5 Level 5: Reward and Recognition System
Reward and recognition are the financial and non-financial
consequences given as a result of superior performance. Reward or
recognition must be based on measured superior performance. Both reward
and recognition can be awarded to individuals, teams, department, processes
or an organization a whole. (Daniels and Rosen [17], Kanji [39], and Samson
and Terziovsk [62] refer to as “positive reinforcement”)
(a) Rewards are the financial consequences given as the result of measurably
superior performance.
(b) Recognition includes all non-financial consequences given as the result of
measurably superior performance. Recognition includes the use of
awards, publicity, and congratulation.
The reward and recognition systems within the case study organizations
were generally neither clearly documented nor integrated into an overall
system. Thus whilst parts of the systems may be documented (e.g. awards
to suppliers, appraisal system financial rewards, and ICL’s reward system),
there appeared to be a lack of clarity and coordination of the approaches.
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This is perhaps surprising, giving the emphasis placed on such approaches in
TQM. Reward and recognition is included in the TQM performance
measurement system model, since it would appear that all the case study
organizations have attempted to innovate in this area.
4. Research Design
4.1 Survey Design
The level of PM system model for TQM organizations developed in
section 3. It was decided that, in order to maximize the response rate,
respondents would be asked questions requiring the minimum level of data
entry. The aim survey were:
(1) To identify those aspects of performance perceived as being of long-term
competitive importance in TQM organizations. It was assumed that the
goal of TQM meeting and exceeding customer requirements by the
effective management of processes.
(2) To identify those aspects of performance, which in the opinions of the
respondents, are most emphasized in their organizations’ current PM
systems. It was hypothesized that the implementation of TQM would be
reflected in organization’s emphasis on TQM objectives in their PM
systems.
(3) To identify whether in fact organizations that have implemented TQM
have made changes to the measures of performance emphasized in their
measurement systems, such that there is a match between the
communicated goals of TQM, and the measures of performance used.
This research has been designed 8 sections including: (1) Background
Information (2) Development of the PM System, (3) Process Management, (4)
Uses of PM, (5) PM and Performance Appraisal, (6) No-Financial PM
Techniques, (7) Opportunity Identification and Management, and (8) Future
plans.
4.2 Sample Selection
Postal survey of performance measures – this survey, based on the work
of Dixon et al [19], and later replicated by Gregory [29], involved a survey of
the effectiveness of PM for TQM. Validation of the PM system model – this
involved the use of a postal questionnaire to survey the elements of PM
systems. The sample of questionnaires were sent to 500 manufacturing and
service organizations in the UK, and use the corporate membership of the
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European Foundation for Quality Management (EFQM) by sample selection.
Analysis of the data from this survey allowed the model will be refine in the
light of evidence from a wider sample of firms for future research.
It was not possible to ensure that the sample of organizations included a
balance of TQM and non-TQM organizations, since this information is not
documented. It should also be remembered that there is little agreement on
which organizations can truly be defined as “total quality” even then they
claim to have implemented TQM.
Postal surveys are not ideally suited to the study of PM, given the wide
range of areas of measurement within organizations, and the consequent
difficulty in finding any one individual who will have all the requisite
knowledge to complete the questionnaire. Ahire [1], Brockett [7], Chang et
al [9], Davidson et al [18], Kanji [40], Killingsworth [44], and Zhang [71]
were suggested that quality managers, with their organization-wide viewpoint,
would prove to be the most knowledge individuals in the field of PM.
Consequently it was decided to address the questionnaires to the quality
manager. However, in the introductory letter, it was suggested that the
respondent should be someone with sufficient knowledge of PM to complete
the questionnaire.
This obviously has implications for introducing bias into the respondent
sample, since it can be argued that TQM organizations are such more likely
to have positions such as “quality manager.” However, it was decided that
he need to achieve a high response rate, and ensure of the questionnaire
required such individuals to be chosen.
4.3 Respondent
In total 115 usable responses were returned, giving a response rate of
23%. Of these 99 organizations (86%) had implemented TQM, whilst 16
(14%) had non-TQM process. The division between manufacturing and
services was almost even, with 58 manufacturers and 57 services responding.
Table 1 shows the division of respondents by use of TQM and by industry
sector.
The division of TQM and non-TQM organizations by industry was
almost even. Of the 99 TQM organizations, 51 (44%) were manufacturers,
and 48 (42%) were services. The average experience of use of TQM was 10
years. The vast majority of organizations (77 or 81%) had more than five
years experience of TQM, although 30 organizations had at least ten years’
experience of TQM. Manufacturers had on average 4 more years more
experience of TQM than services, with 15 years compared to 11 years. Of
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the 16 non-TQM organizations, 7 (6%) were manufacturers, and 9 (8%) were
services.
Table 2 shows the responses by respondent position. Since the
questionnaire was addressed to “the quality manager,” it is not surprising that
the majority of respondents (77 or 67%) represented the quality function. At
TQM-organizations 65 (65.7%) of respondents represented quality, and 12
(75%) of non-TQM organizations were represented by quality managers.
This is suggests that the a priori assumption about bias in the sample was not
true in terms of the respondent population. The only group of respondents
not represented in both TQM and non-TQM organizations was human
resources, all of who represented TQM organizations.
Table 1. Responses by Industrial Sector
Industrial Sector
Manufacturers
TQM
51 (44%)
Non-TQM
7 ( 6%)
Total
58 (50%)
Services
48 (42%)
9 ( 8%)
57 (50%)
Total
99 (86%)
16 (14%)
115 (100%)
Table 2. Responses by Respondent Position
Position
Sales/Marketing
Production/Operations
Quality
Human Resource
Other
Total
TQM
5 ( 5%)
9 ( 9%)
65 (66%)
8 ( 8%)
12 (12%)
99 (86%)
Non-TQM
1 ( 6%)
2 (12%)
12 (75%)
0 ( 0%)
1 ( 6%)
16 (14%)
Total
6 ( 5%)
11 (10%)
77 (67%)
8 ( 7%)
13 (11%)
115 (100%)
5. TQM Performance Measurement System from Data Analysis
5.1 Level 1: Strategy Development and Goal Deployment
In the first section of the questionnaire, respondents were asked to
identify which of a number of strategic management practices had been
implemented by their organization.
The hypothesis was that TQM
organizations were likely to have implemented a wider range of the formal
strategic management practices identified at the case study organizations.
Responses were in the form of “done” (organization has completed this
activity) “planned” (organization plans to undertake this activity) and “no
plans” organization has no plans to undertake this activity). The results are
summarized in Table 3, shows that from the production of a mission/vision
statement, TQM-organizations in the sample are approximately twice as
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Hsin Hsin Chang and Dave A Sinclair
likely as non-TQM organizations to have implemented the strategic planning
practices identified in the case study organizations.
Table 3. Strategic Planning Activities by Use of TQM
Strategic Activities
Industrial
Sector
Manufacturer
Service
Mfg.
Strategy
Service
Mfg.
Action plans
Service
Mfg.
CSFs
Service
Mfg.
Measures for CSFs
Service
Mfg.
Targets for CSFs
Service
Mfg.
Responsibility for
CSFs
Service
Mfg.
Cascade Strategic
Objectives
Service
Key：
：
Mfg.: Manufacturer
Mission
TQM
Organizations
(%)
Done
Plan
98
91
78
74
65
65
61
57
47
40
49
36
49
51
59
53
2
4
22
13
29
20
20
22
27
31
29
31
27
22
29
29
Non-TQM
Organizations
(%)
No
Done
Plans
0
4
0
13
6
15
18
22
27
29
22
33
25
27
12
18
Plan
89
91
44
36
44
30
33
20
22
20
22
10
33
10
22
40
11
0
33
36
22
40
22
30
22
30
22
20
11
20
22
20
Overall (%)
No
Done
Plans
0
9
22
27
33
30
44
50
56
50
56
70
56
70
56
40
97
91
72
67
62
59
57
50
43
36
45
31
47
44
53
51
Plan
No
Plans
3
4
24
18
28
23
21
23
26
31
28
29
24
22
28
27
0
5
3
16
10
18
22
27
31
33
28
40
29
35
19
22
y
Mission: Developed a publicized mission statement
y
Strategy: Developed a strategic plan to achieve the mission
y
Action Plans: Developed action plans to implement strategy
y
Critical Success Factors (CSFs): Developed set of CSFs
y
Measures for CSFs: Defined measures for each CSF (KPIs)
y
Responsibility: Defined responsibility for CSFs
y
Cascade strategic objectives: Cascaded strategic objectives throughout the Organization.
The figures for TQM manufacturers and services are very similar. For
non-TQM companies, manufacturers are more likely to have developed a
strategy, action plans and CSFs, but services are more likely to cascade
strategic objectives. Respondents were then asked to give more details about
the CSFs used by their organization. Respondents were first asked to
identify the factors included in tier organization’s set of CSFs. Factors
included are shown in Table 4.
The sample size was much lower for the questions related to CSFs,
since only 54% of all organizations had developed a set of CSFs. Seventyone TQM organizations responded to both of these questions, and 8 nonTQM organizations. This compares to 56 TQM organizations and 5 non-
362
Hsin Hsin Chang and Dave A Sinclair
TQM organizations to have actually developed CSFs.
The other
respondents (15 TQM organizations and 3 non-TQM organizations) represent
organizations that have planned to develop a set of CSFs.
The majority of TQM manufacturers include all CSFs, although
flexibility, innovation, social/environmental performance and safety are
included by between 70 and 80% of the companies. All other variables are
included by at least 87% of TQM manufacturers. Non-TQM manufacturers
show a similar pattern, despite the small sample size (5 companies). TQM
services show a similar pattern to manufacturers, although productivity is
included by less than 70% of companies. All CSFs apart from customer
satisfaction are similar TQM manufacturers and service. Again non-TQM
services show a similar pattern, despite the very well small sample size (3
companies).
The emphasis placed on each CSF by the respondent organizations.
The small sample size of non-TQM (8 in total) makes it difficult to draw
conclusions about the differences between TQM and non-TQM organizations.
TQM organizations emphasize customer satisfaction and relationship,
delivery and employee development more highly then non-TQM
organizations. Non-TQM organizations emphasize financial performance,
flexibility, innovation and safety more highly than TQM organizations.
Emphasis on quality, productivity and social/environmental performance is
similar in TQM and non-TQM organizations.
For manufacturing organizations, the ranking of CSFs in order of
emphasis is quite similar for both TQM and non-TQM organizations, with
customer satisfaction and relationship, quality and financial performance
going in the top three for both groups. For services, the ranking is
somewhat different between TQM and non-TQM organizations. Only
delivery occurs in the top three of both sets of organizations. As for TQM
manufacturers, TQM service rank customer satisfaction and quality in the top
three most emphasized CSFs. Non-TQM services place less emphasis on
customer satisfaction and quality, these being replaced by financial
performance and delivery.
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Hsin Hsin Chang and Dave A Sinclair
Table 4. Strategic Activities: Inclusion, Emphasis, and CSFs (ANVOA)
Strategic Activities
Quality
TQM
Industrial
Sector
Num. Rati. P-Value
Mfg.
Services
Customer Satisfaction/ Mfg.
Relationship
Services
Financial Performance Mfg.
Services
Productivity
Mfg.
Services
Delivery
Mfg.
Services
Flexibility
Mfg.
Services
Innovation
Mfg.
Services
Social/Environmental Mfg.
Performance
Services
Employee Development Mfg.
Services
Safety
Mfg.
Services
25
28
35
33
35
31
33
22
36
29
27
21
29
20
26
16
32
28
28
24
4.6
4.7
4.8
4.8
4.8
4.2
4.5
4.0
4.4
4.6
4.0
4.0
4.0
3.3
3.5
3.4
3.8
4.1
4.2
4.2
0.041 *
0.023 *
0.000 **
0.000 **
0.026 *
0.445
0.011 **
0.603
0.000 **
0.041 *
0.026 *
0.367
0.025 *
0.000 **
0.572
0.661
0.471
0.059 *
0.040 *
0.031 *
Non-TQM
Num. Rati.
5
3
5
3
5
3
5
2
5
1
4
1
4
2
4
1
5
3
4
3
4.6
4.7
4.6
4.3
4.8
5.0
4.4
4.0
4.2
5.0
4.3
5.0
4.5
3.0
3.5
4.0
3.6
3.3
4.5
4.7
P-Value
0.044 *
0.000 **
0.000 **
0.000 **
0.000 **
0.000 **
0.001 **
0.071
0.115
0.002 *
0.091
0.392
0.000 **
0.012 **
0.464
0.280
0.271
0.173
0.061
0.004 **
Overall
Num. Rati.
40
31
40
36
40
34
38
24
41
30
31
22
33
22
30
17
37
31
32
27
4.6
4.7
4.8
4.8
4.8
4.4
4.5
4.0
4.4
4.6
4.0
4.0
4.1
3.2
3.5
3.4
3.7
4.0
4.2
4.2
P-Value
0.050 *
0.020 *
0.000 **
0.000 **
0.011 *
0.036
0.010 **
0.203
0.034 *
0.021 *
0.026 *
0.177
0.018 *
0.001 **
0.582
0.481
0.921
0.062
0.340
0.104 *
Num.: Number of organizations, Rati.: Rating,
*： Significant (95%), **： Very Significant (99%)
ANVOA (analysis of variance) was conducted to examine the
relationships between composite variables representing strategic activities to
TQM and non-TQM in manufacturers and services, as show in Table 4. The
variables significantly related to integration in TQM and non-TQM
organizations, include the quality, customer satisfaction and relationship, and
innovation, but not for social Performance, environmental performance, and
employee development.
Respondents were then asked to identify the purposes for which PM is
used in their organization.
The use varied from measurement of
organizational performance to measurement of individual performance.
Overall, in Table 5 TQM organizations use measurement more widely for
most of the purposes than non-TQM organizations. TQM organizations use
measurement significantly more widely in the areas of overall company
performance, process/functional performance, continuous improvement, and
benchmarking and opportunity identification. Use of measurement for tem
performance, individual performance and goal alignment are similar for
TQM and non-TQM organizations.
TQM manufacturers use measurement more widely for all purposes
shown in Table 5 then non-TQM manufacturers. TQM manufacturers
particularly use measurement more widely for measuring process and
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Hsin Hsin Chang and Dave A Sinclair
individual performance, goal alignment, continuous improvement,
benchmarking and opportunity identification.
TQM and non-TQM
manufacturers use measurement similarly for measuring overall company
performance and team performance. TQM service use measurement more
widely than non-TQM services for measuring overall company and
process/functional performance and benchmarking, but similarly for the other
possible uses.
In TQM organizations, both manufacturers and services use PM
similarly, expect for continuous improvement and benchmarking, for which
PM is used more by manufacturers than service. In non-TQM organizations,
the differences between service and manufacturers are more marked.
Manufacturers use measurement at the company and process/functional
levels and benchmarking more than services. Non-TQM services use
measurement more than manufacturers for performance management, goal
alignment, continuous improvement, and opportunity identification.
ANVOA was used to examine the relationship between the composite
use of non-financial measurement variables and TQM use and non-TQM.
The results of ANVOA for manufacturing and service are shown in Table 5,
including overall company performance, process and function performance,
and continuous improvement. Only goal alignment was significant in TQM
but not in non-TQM use.
Table 5. Uses of Non-Financial Performance Measurement
Use of Non-Financial
Measurement
Industr.
Sector
TQM Use
Num.
(%)
P-Value
Non-TQM Use
Num.
(%)
Overall Use
P-Value Num.
(%)
P-Value
Overall Company
Performance
Mfg.
33
(65)
0.014 *
6
(86)
0.042 *
42
(72)
0.022 *
Services
36
(78)
0.027 *
5
(56)
0.046 *
38
(67)
0.038 *
Process/ Function
Performance
Mfg.
40
(78)
0.010 ** 5
(71)
0.045 *
45
(78)
0.039 *
Services
34
(71)
0.031 *
5
(56)
0.050 *
39
(68)
0.035 *
Mfg.
Services
30
26
(59)
(54)
0.078
0.095
5
6
(71)
(67)
0.281
0.275
35
32
(66)
(56)
0.145
0.100
Team Performance
Individual
Performance
Goal Alignment
Continuous
Improvement
Benchmarking
Opportunity
Identification
Mfg.
32
(63)
0.357
4
(57)
0.166
36
(62)
0.154
Services
31
(64)
0.880
7
(78)
0.730
38
(67)
0.631
Mfg.
Services
29
23
(57)
(48)
0.023 *
0.026 *
2
6
(29)
(67)
0.330
0.276
31
29
(53)
(51)
0.045 *
0.024 *
Mfg.
41
(80)
0.000 ** 3
(43)
0.008 ** 44
(76)
0.001 **
Services
28
(58)
0.025 *
5
(56)
0.044 *
33
(58)
0.039 *
Mfg.
Services
27
15
(53)
(31)
0.030 *
0.091
3
2
(43)
(22)
0.039 *
0.138
30
17
(52)
(30)
0.022 *
0.131
Mfg.
41
(80)
0.660
5
(71)
0.520
46
(79)
0.619
Services
35
(73)
0.005 ** 8
(89)
0.035 *
43
(75)
0.044 *
Num.: Number of organizations, Rati.: Rating, *： Significant (95%),
365
Hsin Hsin Chang and Dave A Sinclair
**： Very Significant (99%)
5.2 Level 2: Process Management and Measurement
Respondents were asked to identify which aspects of processes have
been identify which aspects of processes have been identified, defined and
documented. Responses where are in the form of done, planned, and no
plans. The results are shown in Table 6. TQM organizations are more
likely to have mapped and documented all aspects of processes than nonTQM organizations. This is particularly the case in manufacturing.
Table 6. Process Documentation and Identification
Process Definition
Core Processes
Industrial TQM Orgs. (%)
Sector
No
Mfg.
Service
Sub- Processes
Mfg.
Service
Process owners
Mfg.
Service
Suppliers and customers Mfg.
Service
Customer Require.
Mfg.
Service
Measure. Point
Mfg.
Service
Key Process Measures
Mfg.
Service
Measure. Frequency
Mfg.
Service
Performance Target
Mfg.
Service
Feedback Loops
Mfg.
Service
Non-TQM
Orgs. (%)
Overall (%)
No
No
Done Plan
Done Plan
Done Plan
Plans
Plans
Plans
84
78
74
47
74
56
61
48
67
66
71
51
71
60
71
42
74
60
61
62
14
9
14
33
20
27
27
30
25
18
22
29
16
22
20
36
22
22
27
24
2
9
12
20
6
18
12
23
8
16
6
20
12
18
8
22
4
18
12
13
67
82
33
50
56
60
44
20
56
40
56
50
56
40
56
30
67
40
56
60
0
9
11
10
11
10
22
30
11
40
11
0
11
30
11
30
22
20
11
0
33
9
56
40
33
30
33
50
33
20
33
50
33
30
33
40
11
40
33
40
81
79
67
47
71
56
59
43
66
61
69
51
69
56
69
40
72
56
60
62
12
9
14
29
19
24
26
30
22
22
21
24
16
24
19
35
22
22
24
20
7
12
19
24
10
20
16
28
12
17
10
14
16
20
12
25
5
22
16
18
The differences between TQM and non-TQM services are less marked.
Identification of core and sub-processes, process owners, measurement points
and feedback loops is very similar in TQM and non-TQM services. TQM
services are more likely to have identified customers and suppliers, customer
requirements, performance measures, frequency of measurement and
performance targets than non-TQM services.
TQM manufacturers have identified all aspects of processes except for
customer requirements and feedback loops more widely than TQM services.
In non-TQM organizations, services have more widely identified core and
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Hsin Hsin Chang and Dave A Sinclair
sub-processes, process owners and feedback loops.
Respondents were asked to identify those individuals responsible for
developing measures, setting performance targets, and for actually measuring
performance. It should be noted that the responses are not mutually
exclusive, is different people can be responsible for the same aspect of PM
(perhaps for different measures). The results are shown in Table 7. TQM
organizations responsibility for defining measures and measuring
performance rests with process owners and their immediate superiors to a
greater extent than for non-TQM organizations. In non-TQM organizations,
responsibility of measurement rests to a greater extent with higher
management. In both TQM and non-TQM organizations, third parties are
rarely responsible for any aspects of non-special PM. The results suggest the
development of PM at TQM organizations is a more bottom-up, participative
process than at non-TQM organizations, where the process appears to be
more top-down.
Table 7. Responsibility for performance measurement
TQM Organizations
Non-TQM
Responsibility
for PM
Deve. (%) Target (%) Meas. (%) Deve. (%) Target (%) Meas. (%)
Process owner
Immediate
superior
Higher
management
Third party
44
(48)
26
(29)
52
(57)
5
(28)
3
(17)
7
(39)
37
(41)
45
(50)
39
(43)
4
(22)
6
(33)
6
(33)
33
(37)
53
(59)
26
(29)
11
(61)
10
(56)
7
(39)
11
(12)
9
(10)
13
(14)
1
(6)
0
(0)
2
(11)
Deve.: Development,
Meas.: Measurement
5.3 Level 3: Performance Appraisal and Management
Respondents were asked to identify which of a range of performance
management techniques are used in their organization. It should be noted
that this includes the use of PM in the reward and recognition of teams and
individuals, since it was decided that this was the most appropriate section of
questionnaire to include reward and recognition. The results are shown in
Table 8. TQM organizations use PM in performance appraisal, performance
management, and linking people and processes more widely than non-TQM
organizations.
TQM and non-TQM organizations use PM in team
management and reward and recognition in similar proportions.
Manufacturers and service use PM for all techniques in similar proportions.
TQM manufacturers us PM for all purposes more widely than nonTQM manufacturers, expect for reward and recognition, which is more
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Hsin Hsin Chang and Dave A Sinclair
frequent at non-TQM manufacturers.
TQM services use PM more
frequently than for all purposes except for team management, for which PM
is used more frequently by non-TQM services.
Table 8. Performance Management Techniques
Performance
Management
Techniques
Performance
Appraisal
Performance
Management
Indust.
Sector
Mfg.
Service
Mfg.
Service
Mfg.
Team Management
Service
Mfg.
Reward and
Recognition
Service
Mfg.
Link Process and
People
Service
TQM Organs. (%) Non-TQM (%)
Overall (%)
No
No
No
Done Plan
Done Plan
Done Plan
Plans
Plans
Plans
85
9
7
64
9
27
81
9
11
84
10
6
78
11
11
83
10
7
25
4
71
13
13
75
23
5
72
27
7
67
10
20
70
24
9
67
43
29
29
25
13
63
40
26
33
46
28
26
60
0
40
48
23
29
45
22
33
63
25
13
47
23
30
57
7
37
40
0
60
54
5
41
49
29
22
13
25
63
44
28
28
37
22
41
20
20
60
34
21
45
5.4 Level 4: “Break-Point” Performance Assessment
5.4.1 Internal Techniques
Respondents were asked to identify which of a range of break-point
assessment techniques were used by their organization. The techniques
chosen are amongst those suggested in the literature [10, 18, 31, 47], and also
those found at the case study organizations [3, 8, 37]. Table 9 shows the
internal break-point assessment techniques used. TQM organizations
generally use the range of internal break-point assessment techniques more
widely than non-TQM organizations, particularly quality costing, selfappraisal, business process reengineering, and process capability analysis.
Activity-based costing is used in similar proportions by TQM and non-TQM
organizations. Quality costing and process capability analysis is more
widely used by manufacturing companies and services.
The other
techniques are used in similar proportions by manufacturing and services.
TQM manufacturers use activity-based costing and self-appraisal in
similar proportions to non-TQM manufacturers, but use the other techniques
much more widely. TQM services use all techniques except for process
capability analysis more wield than non-TQM services.
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Hsin Hsin Chang and Dave A Sinclair
Table 9. Internal Break-Point assessment Techniques
Break-Point
Assessment
Techniques
Activity- based
costing (ABC)
Cost of quality
Self- appraisal
Business process
reengineering
Process capability
analysis
Indust.
Sector
Mfg.
Service
Mfg.
Service
Mfg.
Service
Mfg.
Service
Mfg.
Service
TQM Organs. (%) Non-TQM (%)
Overall (%)
No
No
No
Done Plan
Done Plan
Done Plan
Plans
Plans
Plans
56
33
11
49
29
22
50
29
21
60
20
20
59
30
11
59
29
13
44
22
33
27
53
20
29
48
22
90
0
10
46
24
30
54
21
27
67
33
0
35
31
35
40
31
29
80
10
10
44
28
28
50
25
25
68
22
11
47
27
27
50
24
26
80
10
10
61
26
13
64
23
13
63
67
22
11
16
20
28
55
17
15
60
20
20
11
74
71
16
13
5.4.2 External Techniques
Table 10 shows the external break-point assessment techniques used by
the respondent organizations.
As for internal techniques, TQM
organizations generally use all external break-point assessment techniques
more widely than non-TQM organizations.
Manufacturers use all
techniques apart from customer surveys more widely than services. TQM
manufacturers use all techniques part form competitor/market analysis more
widely than non-TQM manufacturers. TQM services use all techniques
more widely the non-TQM services.
Table 10. External Break-Point assessment Techniques
Break-Point
assessment
Techniques
Indust.
Sector
Competitor/market Mfg.
analysis
Service
Benchmarking
Mfg.
Service
Customer surveys Mfg.
Service
Quality function
Mfg.
deployment
Service
TQM Organs. (%) Non-TQM (%)
Overall (%)
No
No
No
Done Plan
Done Plan
Done Plan
Plans
Plans
Plans
84
8
8
89
0
11
85
7
9
54
15
30
20
20
60
48
16
36
43
35
22
22
0
78
40
30
31
30
28
41
20
10
70
29
25
26
67
18
14
56
0
44
66
16
19
67
9
24
60
0
40
66
7
27
25
20
55
0
11
89
21
19
60
11
11
78
0
0
100
9
9
82
5.4.3 Level 5: Reward and Recognition System
In order to get a picture of the measurement “culture” within the
respondent organizations, respondents were asked to rate how strongly they
agreed with a range of statements on PM, when applied to their organization.
The results are shown in Table 11. Respondents agreed more widely with
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Hsin Hsin Chang and Dave A Sinclair
all statements that non-TQM organizations. Manufacturers and services rate
all aspects similarly, except for the need for measurement to trigger
improvement, which manufacturers rated as much more important than
services.
TQM manufacturers rated people involvement, the need to link
measurement to processes, the need to link measurement to goal development,
the need to have a mixture of team and individual elements, and the need for
relative not absolute measurement more highly then non-TQM manufacturers.
TQM-services, rated all elements similarly to non-TQM services, apart from
the need to include both hard and soft aspects of measurement, which they
rated as more important than non-TQM services.
Table 11. Perceptions of performance measurement
Performance measurement Industrial
TQM
(PM)
Sector Rating P-Value
People involvement
Mfg.
4.5
0.019 *
Service
4.5
0.037 *
Linked to processes
Mfg.
4.7
0.010 **
Service
4.5
0.051 *
Trigger improvement
Mfg.
4.7
0.089
Service
4.2
0.095
Linked to goal development Mfg.
4.3
0.120
Service
3.9
0.330
Mix of individual and team Mfg.
4.1
0.437
elements
Service
4.0
0.528
Include both “hard” and
Mfg.
4.0
0.001 **
“soft” aspects
Service
3.9
0.024 *
Relative not absolute
Mfg.
4.0
0.014 *
Service
3.9
0.050 *
*： Significant (95%),
Non-TQM
Rating P-Value
4.0
0.140
4.5
0.026 *
4.3
0.007 **
4.3
0.029 *
4.6
0.031
4.0
0.165
3.7
0.597
4.0
0.610
3.7
0.800
4.0
0.746
4.0
0.000 **
3.5
0.033 *
3.4
0.022 *
3.6
0.062
Overall
Rating P-Value
4.4
0.034 *
4.5
0.047 *
4.6
0.016 **
4.4
0.031 *
4.7
0.078
4.1
0.095
4.2
0.357
3.9
0.810
4.0
0.329
4.0
0.541
4.0
0.000 **
3.9
0.025 *
4.0
0.050 *
3.8
0.091
**： Very Significant (99%)
Respondents were asked to rate the effectiveness of PM within their
organizations – the level of goal alignment at different hierarchical levels,
and the degree of support of PM in achieving organizational objectives. The
results are shown in Table 12. TQM organizations rated higher on all
aspects of effectiveness than non-TQM organizations, and manufacturers
rated all aspects slightly higher than services. The only significant
difference appears to be in the difference between YQ and non-TQM
organizations’ overall rating of PM.
Composite PM was calculated by perceptions and rating and the
importance of the PM. ANVOA was used to examine the relationship
between the composite use of perceptions and rating of PM variables and
TQM use and non-TQM. The results of ANVOA for manufacturing and
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Hsin Hsin Chang and Dave A Sinclair
service are shown in Tables 11 and 12, including People involvement, Linked
to processes, and Include both “hard” and “soft” aspects significant
relationship to PM, but not relative absolute for the service in non-TQM
organizations.
Table 12. Rating of performance measurement
Performance
measurement
Industrial
Sector
Individual goals aligned
Mfg.
with processes
Service
Sub-processes aligned with Mfg.
core processes
Service
Core processes aligned with Mfg.
mission
Service
Overall rating of
Mfg.
performance measurement Service
TQM
Rating P-Value
4.2
0.078
4.5
0.095
4.2
0.000 **
4.0
0.026 *
4.5
0.023 *
4.2
0.029 *
4.0
0.030 *
3.7
0.118
Non-TQM
Rating P-Value
4.0
0.357
3.7
0.880
3.5
0.014 *
4.0
0.027 *
4.0
0.010 **
4.0
0.031 *
3.4
0.078
3.2
0.081 *
*： Significant (95%),
**： Very Significant (99%)
Overall
Rating P-Value
4.1
0.023 *
4.1
0.026 *
3.8
0.000 **
4.0
0.028 *
4.3
0.030 *
4.1
0.048 *
3.9
0.660
3.6
0.045 *
6. Development A Model of TQM Performance Measurement System
The use of a PDCA (Deming) cycle at the organizational level fits into
the TQM approach of continuous improvement. Continuous improvement at
the organizational level concerns the improvement of strategic planning and
management of the organization as a whole. The overall PM system model
can be shown as a series of complementary PDCA cycle, as shown in Figure
6. The actual linkages between the levels of the model are shown in the
discussions of each level individually. It should be remembered that each
cycle operates at a different frequency, and within each cycle there will be
individual cycles for each measure. The frequency of the cycle is dependant
on organizational level, frequency and criticality of the measurement.
6.1 Level 1: Strategy Development and Goal Deployment
Analysis of the data on PM related to the strategy development and goal
deployment level of the PM system model identified clear differences
between TQM and non-TQM organizations. TQM organizations are more
likely to have formal strategic management processes based on the use of
CSFs and associate KPIs then non-TQM organizations. It should be
remember that in Bemowski and Stratton [4], Chang et al [9], Kanji [40], and
Samson and Terziovski [62], it was found that such formal strategic control
processes were associated with more effective PM systems. The tentative
conclusion that can be drawn from the above analysis is therefore that OM
systems in TQM organizations are likely to be more effective than in non-
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Hsin Hsin Chang and Dave A Sinclair
TQM organizations.
6.2 Level 2: Process Management and Measurement
The overall conclusions from the data at the process/functional level are
that TQM organizations are more likely to manage and measure process
performance, and use a wider range of measures of performance than nonTQM organizations. There appears to be some measurement of flexibility,
innovation and time-based performance, quality, delivery and customer
satisfaction remain the most widely used performance measures. This
agrees with the findings of Choi and Eboch [12], Longenecker [46], Owlia
[55], and Zemke and Wood [70] suggest that quality and customer
satisfaction will continue to be the primary basis of competition in the 1990s.
6.3 Level 3: Performance Appraisal and Management
TQM organizations appear to use PM more widely than non-TQM
organizations in the management of individuals. This supports the findings
from case study organizations [9], and also those found by Bemowski and
Stratton [4], Chase et al [10], Hackman and Wagerman [37], Kanji [39], and
Schneir et al [63], who suggest that performance management is of vital
importance in the management of TQM organizations.
6.4 Level 4: “Break-Point” Performance Assessment
In Tables 9 and 10 show that TQM organizations use break-point
assessment techniques more widely than non-TQM organizations. The case
study organizations appeared to be innovate in their use of break-point
assessment techniques, driven by identified requirements to improve
performance, as shown by PM at the organizational and process levels.
6.5 Level 5: Reward and Recognition System
All groups of organizations rated overall effectiveness of PM lower
than alignment at each level. This suggests that the effectiveness of PM
cannot simply measure by goal alignment. In fact the model itself shows
the effectiveness of PM us due to a wide range of factors.
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Hsin Hsin Chang and Dave A Sinclair
Level 1: Organization
Goal and Strategy
Act
Plan
Check Do
Level 2: Process Management and Measurement
Act
Plan
Check Do
Level 3: Performance Appraisal and
management
Act
Act
Plan
Check
Do
Level 4:
Break-Point
Assessment
Techniques
Plan
Check Do
Level 5: Reward Recognition
and Systems
Figure 6.
Development A Model of TQM Performance Measurement
7. Conclusion
The model developed was based on best practice PM identified by the
case study organizations. The key finding of the research was the
development of a PM system model that should be implemented by
organizations that have introduced TQM. The model reflects an
amalgamation of the approaches used by a range of TQM organizations in
PM:
(1) Strategic management and goal deployment appeared to be the
identification of a set of CSFs and associated KPIs. These factors
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(2)
(3)
(4)
(5)
should be derived from the organization’s mission, and represent a
balanced mix of stakeholders. Action plans over both the short and
long term should be developed, and responsibility clearly assigned for
performance.
Successful PM at the process level is the identification and translation of
customer requirements and strategic objectives into an integrated set of
process and strategic objectives into an integrated set of process
performance measures.
PM at the individual level was found to be a combination of performance
appraisal and performance management. A major drawback with
performance appraisal systems was found to be the lack of integration of
performance appraisal with other aspects of the PM process.
Break-point performance assessment techniques are used by TQM
organizations to identify improvement opportunities, and to motivate
performance improvement. TQM organizations use a wide range of
such techniques due to their innovation in PM, and the drive for
continuous improvement.
Reward and recognition of PM systems were found to be less well
understood than other aspects of the model. It was found, that rewards
were commonly given on the basis of performance appraisal, despite the
acknowledged weaknesses in many appraisal systems.
TQM
organizations were found to provide non-financial recognition to
suppliers, departments, teams and individuals based on measured
superior performance.
The survey was designed to examine some elements of the model.
Despite the lack of statistical significance due to the small number of nonTQM organizations responding in PM at TQM and non-TQM organizations:
(1) TQM organizations use a wider range of formal strategic management
techniques than non-TQM organizations. In fact TQM organizations
appear to use non-financial PM much more widely than non-TQM
organizations at the organizations level.
(2) TQM organizations mange processes more than non-TQM organizations.
(3) TQM organizations use a wider range of performance measures at the
process level than non-TQM organizations.
(4) TQM organizations use a wider range of break point assessment
techniques than non-TQM organizations.
(5) TQM organizations use non-financial PM for more purposes than nonTQM organizations. As such they generally use “fact-based”
management more widely than non-TQM organizations.
(6) PM in TQM organizations appears to be more effective than in non-TQM
organizations.
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It is possible for non-TQM organizations to develop effective PM
systems. The nature of PM systems at TQM organizations is different from
non-TQM organizations. Also, it appears that TQM organizations are more
innovative and flexible, and more likely to develop a truly effective PM
system than non-TQM organizations. In particular, the need to integrate
strategic objectives, customer requirement, process capability and individual
involvement is seen as vital for effective TQM based PM systems. The
model developed allows for the introduction of an integrated PM system,
whereby all level of the organization, and all measurement are focused on the
continuous improvement of processes toward increased customer satisfaction
and relationship.
Flexibility in the face of changing competition and customer
requirements is vital if PM is to remain supportive, and not become an
inhibitor to organizational change [6, 10, 12, 23, 29, 33, 39, 46, 54, 65].
The model therefore incorporates regular reviews of the measurement
process at all levels, in order to ensure measurement is modified in line with
changes in the competitive environment.
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