What Do You Do When Your Organization Isn’t Ready for TQM?

Lincoln H. Forbes

In today’s challenging economic climate, many Organizations have come to recognize that improved quality I3 an essential ingredient for success. Many may want to jump on the total quality management bandwagon, but are not ready or willing to invest either the time or the signijkant resources that a lQMprogram typically requires. 7E.s article discusses strategies for improving quality in that type of environment.

Lincoln H. Forbes, P.E., is supervisor of quality engineering and post occupancy evaluation for the jkilities consmution program of Dade County Public Schools in Miami, Fl0t.h. He has served the Institute of I n d w a l Engineers as a division director and chapterpresidkt and is currently a member of the Special Productivity F’qjects Committee, on which he serves as an examiner for the Institute’s Annual Award for Excellence in Productivity Improvement. He is also a member of ASQC.

T otal quality management (TQM) requires a major commitment that many organizations are unwilling to make. The prevailing wisdom is that TQM can take anywhere from five to ten years to implement

fully. Furthermore, it has to have an underpinning of employee trust and involvement. But over the last four years most companies have adopted a bunker mentality to cope with an ongoing recession and a sluggish recovery. The massive layoffs, restructurings, downsizings, rightsizings, and other types of organizational changes that have occurred in the workplace in that time have not been conducive to the implementation of any long-term quality programs.

The Deming Prize and the Malcolm Baldrige National Quality Award criteria provide an excellent foundation for TQM, although few companies have the commitment to tackle all the issues they cover. The Deming Prize Committee, located in Japan, considers ten major categories of accomplish- ment regarding quality improvement and emphasizes the process and results. Three of the ten categories focus on the process--analysis, standardization, and control-and the “results” category examines the estimation of both tangible and intangible results. The Baldrige Award criteria have four main segments: a driver, a system, measures of progress, and a goal, for which a total of 1,OOO points is awarded. The Deming Prize does not have a fixed scoring system but emphasizes the process and, to a lesser extent, the results, in keeping with Deming’s philosophy. The Baldrige Award puts major emphasis on the goal of customer satisfaction- that is, 300 of the total 1,000 points--and is less process-oriented than the Deming Prize, which could have the disadvantage of encouraging a short- term focus on results.

Despite these differences, the criteria can spark improvement at any organization that tries to address them. While several US. organizations

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Many organizations have had negative experiences with TQM.

have gained a competitive edge by vying for these prizes, they require so much commitment that many organizations may easily rationalize a reluctance to even try.

DIFFICULTIES WITH TQM IMPLEMENTATION

example : Many organizations have had negative experiences with TQM. For

Douglas Aircraft, a subsidiary of McDonnell Douglas Corp., embarked on a quality program in 1989, and reportedly trained 8,000 employees in TQM techniques, which was in itself a major commitment. Within two years, however, their program unravelled, largely because industry problems had forced exten- sive layoffs, causing in turn a breakdown in labor-management relations. The Wallace Company, an oil supply operation based in Houston, was a past winner of the Malcolm Baldrige Award, but also became a casualty of industry-related problems, eventually fiing for Chapter 11 bankruptcy protection. On the positive side, many customers continued to do business with Wallace because of the perceived high quality of their service. Florida Power and Light Company (FPL) had the distinction of being the first U.S.-based company to win the Deming Prize, but at the cost of an ensuing management shakeup that severely curtailed their quality improvement program. N o one can question the level of FPL's prior commitment to quality-their program evolved over a period of at least seven years-yet their profitability (accounting practices aside) did not reflect improve- ment in step with their winning the award, although service quality was obviously enhanced, and a new corporate direction resulted. Subsequent analyses of the FPL experience have identified several culpable factors, especially a sentiment that the pursuit of the award required extensive documentation and cultural adjustments that led to a lowering of employee morale. Ongoing difficulties have eventually caused FPL to contemplate a cut in shareholder dividends.

Recent studies by Ernst and Young suggest that organizations have wasted millions of dollars in implementing TQM systems that have not only not improved productivity, but have actually hampered it. An earlier Arthur D. Little survey of 500 companies found that only 36 percent felt that TQM played a major role in improving their competitiveness. Other analysts argue that productivity is no longer a primary measure of the economy, but that speed and flexibility are now more important for competitiveness. In addition, they state that there is often a high cost to U.S. companies that seek to use the Japanese continuous improvement philosophy because of

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In some organizations workers have initiated quality improvement at the shop-floor level.

the traditional U.S. preference for short-term, intensive efforts. Too often, TQM been treated as a panacea when, in fact, it cannot

resolve deeply rooted problems that affect an organization’s mission and long-term ,strategies. There is also evidence that many TQM programs suffer from weaknesses in harnessing employee creativity. Idea generation is often constrained to one phase of the quality-improvement process and evaluation to another. If inadequately trained, peer evaluators may lack the insight needed for a scientific, objective appraisal of others’ ideas. Too often, also, there is a tendency to “fix what is broken” instead of revolutionizing defective processes.

NOT ALL ORGANIZATIONS ARE READY FOR TQM The proliferation of literature, seminars, and organizational interest on

the subject of TQM gives the impression that much of the United States now sees TQM as a cure-all. On the other hand, the declining participation in the Malcolm Baldrige National Quality Award program-76 entrants in 1993, down from 106 in 1991-may point to a growing disaffection with TQM. The fact is that some organizations do not have an appropriate climate for TQM to be implemented.

The major downsizing that has occurred in many companies during the past several years has created an uncertain climate among surviving employees. It is difficult to foster trust and cooperation in that environment. Much of the downsizing has resulted in the termination of older, more knowledgeable employees, eliminating a major source of quality-improve- ment ideas. They have been increasingly replaced by a contingency, or “throwaway,” workforce, which now contains growing numbers of highly skilled professionals and executives.

In many organizations there has been an ongoing rift between management and labor. Many supervisors were cast in an autocratic mold, with the belief that workers were supposed to “do, not think.” And because of past experience, many workers suppress their initiative, since they doubt that efforts beyond prevailing “standards” will yield commensurate benefits. Finally, some industries such as construction have not enjoyed a broad application of TQM techniques, and therefore they lack successful models that can be emulated.

Not every company that now practices TQM started with a corporate commitment to the principle. Ideally, management should be the initiator of TQM, based on corporate commitment, and implement it top down. In some organizations workers have initiated quality improvement at the shop-floor level, out of their own professional pride. Management noticed what they were doing at a later stage in the game and jumped on the TQM bandwagon. In such cases, it is to management’s credit that they did not obstruct employees’ efforts in the formative stages. Several companies now have TQM programs because major customers required them, although few will admit to this fact.

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Points are lost if productivity is gained at someone else’s expense.

ON THE ROAD TO TQM Several companies have had programs in place that are not classical

TQM programs but that use TQM techniques to varying degrees. The following are examples that can serve as a model for alternative ap- proaches.

Lincoln Electric’s Incentive System The Lincoln Electric Company, based in Cleveland, Ohio, was founded

in 1895, and has been a long-established market leader in the area of welding products and electric motors, with plants in Canada, Latin America, Europe, and Japan.

Lincoln’s highly successful management system has been the subject of many books. Their famous incentive system, which reportedly origi- nated at least 20 years before the Japanese established quality circles, is based on three Rs-recognition, responsibility, and reward. Long before the terms TQC and TQM existed, Lincoln Electric held fast to the philosophy that “every worker is a manager and every manager is a worker”; success results from producing more and more of a progressively better product at lower prices; and every employee’s position and level of compensation are determined by his or her contribution to overall productivity.

A comprehensive merit rating system evaluates plant employees and administrators every six months on these factors: the actual amount of work accomplished; the quality of work; the degree of self-management; ideas submitted; and cooperation. Importantly, points are lost if productivity is gained at someone else’s expense.

Although Lincoln Electric has strong evidence that financial incentives work, they recognize that as they globalize, they need to tailor incentives to specific economic and cultural conditions. Management really cares about employees and shows this by breaking down barriers in a way that many corporations may find difficult to imitate. For example, management mixes with workers in the cafeteria and there are no executive autos or reserved parking spaces.

Labor-Management Conunittees The Wohlert Company in Michigan is one of many companies that have

successfully used labor-management committees to obtain joint commit- ment and mutual understanding. A manufacturer of gearwheels and flywheels, Wohlert was hard-hit by the recession of the 70s, and by 1981 had experienced 31 straight months of financial losses. Through the efforts of a labor-management committee, they turned the company around, reducing overhead and finally becoming profitable by the mid-1980s.

Wohlert implemented these steps by mutual agreement between management and labor:

Joint assessment of the present state

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Like TQM, reengineering

management’s involvement, but to a far greater extent.

=@=stop

Joint development of a future vision Commitment to joint change Opening of two-way communication (Wohlert’s president, Ken Patenge, addressed employees on all three shifts, and gave them handouts that explained the process.) Formation of a labor-management committee, with meaningful representation Establishment of concrete ground rules for such items as the timing of the meetings, decision rules, size of the quorum, and evaluation measures Definition of purpose and goals, in writing Maintenance of two-way communication (A joint labor-manage- ment newsletter was published. Wohlert made its books open to anyone and listened to input from all employees.) Group skills assessment and training Monitoring of the committee’s progress, twice yearly, using the feedback to keep their program on track

Reengineering Reengineering is the name given to a new combination of techniques

that have been used for many years, especially in rapidly changing fields, such as the information industry. In their book Reinventing the Co7poru- tion, Michael Hammer and James Champy describe reengineering as involving the fundamental rethinking and radical design of business processes “to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.” Whereas TQM is based on broad organizational participation to make gradual enhancements to products and services for customers and suppliers over a period of several years, reengineering allows for radical changes in organizational structure to make quantum leaps in perfor- mance.

A recent survey of U.S. manufacturers by the Grant Thornton consult- ing firm found that 95 percent of midsize industrial companies have reengineered a portion of their operations, and 30 percent claim to have reengineered their entire businesses over the past three years. Like TQM, reengineering requires top management’s involvement, but to a far greater extent. While TQM empowers employees at all levels to make operational decisions, reengineering needs the total commitment of senior executives to focus on an organization’s core competencies, its very reasons for existence, and desired outcomes in order to withstand the political and cultural upheavals that inevitably follow. Outsiders often improve the process, as insiders tend to want to maintain the status quo. Some experts recommend that change be accomplished by placing people in new roles in an organization, with new responsibilities and relationships, on the underlying assumption that individuals behave according to their roles; this approach is frequently used in reengineering. Several versions of

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Studies indicate that reengineering needs to have breadth and depth to accomplish meaningful and lasting improvements.

reengineering have emerged, such as process reengineering, business process engineering, and organizational reengineering, that seem to be differentiated primarily by the scope of the activities involved. A typical reengineering model has five stages: a clear statement of what needs to be done; a renewed vision, or operating model; an identification of an organization’s core processes; process redesign; and the implementation of the new design.

Studies indicate that reengineering needs to have breadth and depth to accomplish meaningful and lasting improvements. Processes need to be broadly identified with tangible factors, such as cost and customer value, not just superficial factors, and the process redesign must be integrated with the deepest levels of the organization in terms of core values, structure, technologies, and accountability.

Hallmark Cards, Inc., has successfully applied reengineering in shifting from highly diversified plants to the production of specific product lines in focused factories. One product line used to be generated in as many as four plants in different cities, requiring a cycle time of 24 days in 1991. By redesigning processes and having production staff interact directly with designers and sales staff, for example, the product cycle time was reduced to only 11 days. Whereas the prior focus of the plant was to fill orders, the resulting direct communication with stores and internal and external customers created a new customer focus that translated into improved service and higher profits. Reengineering has paved the way for TQM approaches at Hallmark, and the company has gradually shifted its focus to employee involvement and empowerment to continually improve the new processes.

Public Sector Applications Metropolitan Dade County in Florida has been taking cautious but

positive steps in laying down an infrastructure of performance orientation and measurement that may serve as a basis for future quality-related efforts. According to Patrick O’Connor, director of Audit and Management Services, an in-house consulting group, his department serves as a catalyst toward quality. While urgent political issues receive priority attention, a number of carefully orchestrated steps have been taken to promote quality:

The County Commission appointed a citizens’ group, drawn from industry, civic groups, business, and academia, to identify innovative ways to deliver the highest level of service possible for the available taxes. Quality-oriented annual objectives have been included in the county’s budget document.

Taxpayers have recognized efforts for increasing employee effective- ness. Dade County employees now understand that the organization cares and wants to empower them to become more effective. A pay-for-

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organizations that have successful TQM Prol3=ms can probably adopt the IS0 series with relative ease.

performance program is being evaluated to determine its impact on employee effectiveness. A special investment fund has been established to bankroll quality-improvement proposals that have a payback of four years or less. A recent successful proposal involved the automated switching of auditorium lights, reducing energy costs with a payback of less than one year. At the same time, other successful employee-based programs, such as the employee suggestion program, are being reviewed to encourage even wider participation.

The Patent and Trademark Office (PTO) of the U.S. Department of Commerce recently embarked on a path to make the radical changes that are needed to overhaul government bureaucracy. The burgeoning technol- ogy of the 1980s spawned a patenthademark application workload that was beginning to deluge a workforce of 4,000 employees, especially because of the extensive paperwork required by the traditional processes. A 1992 feasibility study identified potential savings of hundreds of millions of dolIars in printing costs and thousands of staff positions. Top-level support from the secretary of commerce set the stage for business process reengineering. Two areas were selected: the application and registration process and the trademark examination process. The procedures were radically revamped, and an innovative program was established that will allow trademark examining attorneys to work from their homes several days a week.

OTHER STRATEGIES FOR I " G QUACITYTHINKING As the examples above show, some organizations have addressed

obstacles to the quality process and at the same time created a foundation for further development. The following programs can also serve as vehicles for improving quality awareness in organizations. In particular, they involve individuals who need to work as a team to achieve a desired end and therefore are predisposed to the quality process.

IS0 Registration This has become a prerequisite for competing in the international

arena, as it sets uniform standards for quality systems and performance levels for both suppliers and customers. IS0 9000 is composed of five levels of standards numbered 9000 through 9004 that are progressively more involved. The first is merely a guideline for selecting and using quality management and quality assurance standards; the highest level, I S 0 9004, is a guideline for quality management and quality system elements. Organizations that have successful TQM programs can probably adopt the I S 0 series with relative ease. Those that have not may use IS0 registration as a tool for self-assessment and quality awareness that may pave the way to initiating a TQM program.

Industry/Academia Partnerships Networking with a local university that has an industrial engineering

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Suggestion programs need to be continually renewed and improved to hold employee interest.

curriculum is most appropriate, as many companies around the country interact with such institutions to share mutually beneficial information. Furthermore, top management may see this as a form of commendable public service, whereas they might be reluctant to call in a consultant. This academiahdustry link should receive high-level visibility. The department chair should be encouraged to request that any program that is set up be included on top management’s agenda for ongoing review and evaluation. A study should be implemented to assess areas of need (with top management’s concurrence), and the use of TQM-related techniques should be encouraged and communicated.

Suggestion Award Pmgrams These are a staple of employee involvement programs. Unfortunately,

too many organizations have a decaying sign in the parking lot that reads “Employee of the Month.” Suggestion programs need to be continually renewed and improved to hold employee interest. One idea is to rotate the membership of the selectiodjudging panel to include previous award winners. This provides a steady stream of new blood who will take pride in keeping the program attractive and relevant. Such a step also conveys a sense of democracy and trust in the employees.

Management of Innovation Technology management is an excellent vehicle for introducing TQM

concepts. Many organizations manage innovation as a separate function or entity, allowing established lines to continue until a transition to the new technology becomes appropriate.

These are several factors critical to the success of technological innovation. One of them is the appointment of a project champion whose mission is to see a project through at all costs. The project champion is required to promote necessary communication, collaboration, and consen- sus between unlikely groups, such as research and development and marketing managers, so that they will use concurrent engineering ap- proaches to shorten product development time frames. A Project Cham- pion who can attribute the success of a project to the use of TQM principles can speak eloquently for the adoption of TQM elsewhere.

Benchmarking Used by such companies as Ford Motor, Xerox, Eastman Kodak, and

Motorola, this is not a new technique, but has become popular in recent years as a quality-improvement mechanism. The Malcolm Baldrige Na- tional Quality Award criteria have increasingly promoted benchmarking as a quality-improvement tool. The benchmarking process allows organiza- tions to look at other similar groups to identify the success factors of industry leaders. A firm’s strategic planning council on benchmarking outlines specific procedures and legal requirements for the process. A benchmarking exercise requires close interaction between team members

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Studies strongly suggest that employees’ commitment to an organization leads to high job satisfaction, not the other way around,

from diverse areas and has the potential to be a catalyst for the transition to quality. Although it has the advantage of being able to produce beneficial results within a few weeks to a few months, it has been described as more an art than a science and therefore needs the input of trained individuals to achieve the desired enhancements in process quality and productivity. Efforts should be made to indoctrinate the benchmarking team by training them on quality-improvement techniques so that they can fully appreciate any quality tools that are used by the competition. The team will then have a good basis for recommending quality-improvement techniques as part of the implementation of product improvements.

Incentives, Job Satisfaction, and Organizational Commitment Many organizations have used incentives to encourage improved

productivity, but these cannot succeed indefinitely without the support of a positive, nurturing work environment. An analysis of many studies in the 1980s shows a positive correlation between financial incentives and productivity that cannot be statistically validated. The incentives seemed to have no clear effect on absenteeism or employees’ length of employ- ment. Deming’s claim that “pay is not a motivator” is borne out by behavioral studies that show that employees come to accept a reward system, if it is offered, as it temporarily changes behaviors but not underlying attitudes. Furthermore, the withholding of expected rewards, as may happen with decreased profitability, is viewed as being punitive, and the competition for a limited number of rewards can create animosity between individuals.

The key to sustained high levels of employee performance is not extrinsic motivation but, rather, the intrinsic motivation based on interest in one’s own job. In fact, other studies strongly suggest that employees’ commitment to an organization leads to high job satisfaction, not the other way around. Most important, a key element in the strength of the commitment is the extent to which the organization practices its publicly stated values.

Overall, the studies indicate that the highest sustained levels of employee performance come from an environment where personal growth and exploration are encouraged through training and goal setting, and where corporate values are clearly stated and practiced.

OVERCOMING SUPERVISORY RESISTANCE TQM requires not only major corporate commitment, but also inte-

grated planning and training at all levels, especially among supervisors and mid-level managers. At the London Utilities Commission in Ontario, Canada, senior management recognized the need to improve service quality and introduced a program called Committed to Excellence about five years ago. Management had not developed a specific action plan or operating procedures, but introduced the program with logos and promo- tional aids, expecting that employee empowerment would lead to better

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The transition to

continuum and it

incrementally.

qualltyb a

has tobegin

customer service quality. Supervisors determined that employee training was needed, and this was done with employee focus groups on problem- solving techniques. In a most unexpected turn of events, the employees excluded the supervisors from focus group meetings, in order to exert their newly found freedom. In turn, the supervisors resisted employees’ problem-solving recommendations, much to the consternation of senior management. Eventually, supervisors were trained in the process and were prepared to play the role of coach to support the efforts of workers.

Velcro Corporation, a manufacturer of fastening materials, is a major supplier to the auto industry, as well as to the shoe industry. Velcro faced a major crisis in 1985 when quality problems in their production put them at risk of losing their biggest client, General Motors. Velcro rapidly began to implement a quality-improvement program, gaining the involvement of line workers. They found, however, that the mindset of their supervisors was extremely difficult to change. Supervisors were more concerned with meeting production volume quotas, as opposed to quality standards. Many were accustomed to an autocratic environment and saw participatory management as a threat to their authority. Velcro also found that many workers were receptive to training in statistical process control and other techniques, but that the supervisors felt out of their element and resisted the resulting new procedures.

Velcro addressed this problem by using younger and more quantita- tively trained supervisors to serve as “carriers” to start a “quality infection.”

LAYING THE GROUNDWORK FOR QUALITY Experts in the application of quality improvement techniques are quick

to point out that “quality is a journey, not a destination.” The transition to quality is a continuum and it has to begin incrementally, especially for those organizations that do not demonstrate readiness. Fortunately, virtually all organizations have change agents in their ranks who can serve as catalysts to the transition if they do the following:

Assess the organization-What is the background? Is there any history of quality/productivity efforts? Ask themselves, Is the organization in the right business, and if so, will it survive by gradually “fixing what’s broke,” or does it need the radical surgery of reengineering? Determine whether the values of the organization are clear to all, and whether they are practiced as well as preached. Analyze the nature of labor-management relationships. If these are strained, then the organization must progress in stages. Poor communication and misperceptions do not develop overnight and, by the same token, they cannot be fxed overnight. Workers are very perceptive and have a natural suspicion of any efforts to radically change the nature of labor-management relations. Efforts must be made to heal any rifts gradually.

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Mat Do Ym Do Wben Your Organization h’t Ready+ lQM?

Some organizations understand the sacdces inherent in the adoption of TQM Programs*

Identify someone who would make an appropriate champion for TQM efforts in the organization. This should be an individual who can work well with others and simultaneously get top management’s ear. Find out if existing employee-based programs can be expand- ed. Suggestion award systems can be enhanced to encourage staff to think of quality. Getting top management involved in the recognition process will create a more positive environment. Determine whether top management is concerned about a specific problem related to quality and/or cost. A task-force approach involving a cross-functional team can produce excel- lent results that will improve the awareness level on quality. See if there are resources available from industry/academia links that need to be utilized more. Make sure all employees are aware of the organization’s quality- improvement efforts and successes. A newsletter is an excellent communications vehicle. Awareness is the first step in the TQM journey and may be just the tool to spark the transformation.

CONCLUSION Change will come only to those who want to change and are willing

to make the necessary commitment. Some organizations understand the sacrifices inherent in the adoption of TQM programs and have the ingredients to engender a successful transition to quality. On the other hand, many others are simply not ready for the rigors of full-blown TQM for a number of reasons, ranging from strained labor-management relations to economy-induced inertia. Still other organizations may be so endangered that they need the radical surgery of reengineering to survive and to eventually become competitive.

Purists may very well take the position that TQM or its variants should not be attempted unless all the necessary ingredients are present, especially top management commitment. But such a textbook scenario is more the exception than the rule. In the spirit of continuous improvement, it is better for an organization to make an incremental step toward quality than to maintain the status quo. However, those small steps should be forward, not backward, and need to be carefully orchestrated by patient practitioners who can establish links between otherwise seemingly frag- mented techniques. Above all, organizations must cultivate the vision that is needed to recognize when change is needed, however uncomfortable or disruptive it may be.

With time, an appropriate strategy, and demonstrated accomplish- ment, an organization’s change agents can lead their organization out of fear and ignorance until it is able to see the light. Ideally, this light will be a beacon for progress and not a competitor’s fast-disappearing taillights. 0

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ADDITIONAL REFERENCES Edosomwan, J. “The Baldrige Award: FOCUS on Total Customer Satisfaction,” IndustHal Engtneerlng, July 1991, pp. 24, IIE Press. Hammer, M. and J. Champy, Reengtneerlng the Corporafton, Harper Collins, 1993. Krantz, T., “How Velcro Got Hookedon Quality” HunrardBusinessRarlew, Sept./Oct, 1989. Mathews, J. and P. Katel, N e w s w & , Sept. 7, 1992, “The Cost of Quality,” pp. 48-49. McClenaghan, G.R. and B. Portis. “Employee Empowerment Opportunities and Problems,” Proceedings of the Fourth International Conference on Productivity and Quality Research, Feb. 9-12, 1993 Industrial Engineering and Management Press. Schmidt, W. and J. Finnigan, fie Race Without a Ftntsh Line Jossey-Bass Publishers, San Francisco. 1992. Soin, S., Total Qualfty Conhvl EssenHak, McGraw Hill, 1992. Taylor, S. “Patent and Trademark Office Sets the Standard for Reengineering Government” Industnial Engtneerlng, April 1994, pp. 36-38, IIE Press.

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