Quantitative research in Total Quality Management
By Navroz Surani
May 07 - 13, 2001
It has now been over two decades since the core ideas of
Total Quality Management (TQM) set forth mainly by Edward Deming, Joseph Juran
and Krori Ishikawa gained significance and acceptance in the management field.
TQM philosophy has not only been confined to industrial settings but has
gradually spread to in health care organizations, educational institutions, and
not for profit organizations as well as to in many public bureaucratic
organizations in many parts of the world.
A TQM programme consists of a set of powerful interventions
aimed at improving the capacity of an organization to compete successfully on
the basis of cost, dependability and flexibility. Quality has been seen as a key
element of competitiveness.
TQM has evolved beyond its roots in statistics and quality
control functions. Many practitioners have considered it to be a framework of
"excellent management." Its main themes are a data-based approach to
problem solving, a strong emphasis on organizational and behavioural
considerations, a customer- oriented, market- sensitive approach to designing
and delivering both products and services and a desire for continual improvement
(Rao, et al 1996).
The strategy of TQM is rooted in four interlocking
assumptions about quality, people, organizations, and the role of senior
management. The first assumption states that quality is less costly to an
organization than is poor workmanship. A fundamental premise of TQM is that the
cost of poor quality (such as inspection, rework, lost customers and so on) is
far greater than the cost of developing processes that produce high quality
products and services.
The second assumption is about people. Employees naturally
care about the quality of work they do and generally have the initiative to
improve their work so long as they are provided with tools and training that are
needed for quality improvement and management pays attention to their ideas.
The third assumption is that organizations are systems of
highly interdependent parts, and the central problems they face invariably cross
traditional functional lines which require a system to address the problems
collectively by representatives of all relevant functions.
The fourth assumption concerns senior management. Quality is
viewed as ultimately and inescapably the responsibility of top management.
Quality improvement must be backed by management support and commitment.
In spite of some earlier successes, TQM in recent year has
become controversial. Its worth is being challenged and argued. People have
started to express mixed opinions about the usefulness of this theory and its
effects on improving organizations' performance. There appears to be a lack of
clarity as to what constitutes TQM and what are its measurable outcomes.
A review of the literature on this subject reveals that its
profile is unbalanced with a strong predominance of descriptive writings based
on case studies, anecdotal evidence and personal experiences of practitioners.
The field is devoid of major empirical research.
While several institutions have been established to promote
quality all around the world (The American Society for Quality, Malcolm Baldrige
Award for Quality, National Institute of Standard and Technology USA, Juran
Institute of Quality and Deming Prize) it appears that assessment of the success
of this philosophy has largely been based on qualitative aspects of outcome.
Very few quantitative studies have been conducted which establish a relationship
between TQM implementation and company's performance through measurable
This literature review is an attempt to unfold some of the
quantitative research undertaken in this field and to study specifically what
factors lead to implementation of TQM by an organization, what are the key
factors for a successful implementation and what are the measurable outcomes
which can demonstrate the usefulness of this philosophy for an organization.
Who adopts total quality management?
TQM is regarded as a new model of work organization but not
all firms have embraced this new concept. A review of the literature indicates
that an overarching purpose for adopting TQM is for the firm to be more
competitive and to supply goods and services which are attractive to the
Taking a lead from the phenomenal success achieved by
Japanese organizations, several organizations in other parts of the world
implemented quality principles and methods in their work settings to achieve the
necessary competitive advantage.
Osterman (1994) has identified key factors which prompt
organizations to adopt quality management principles (referred to in the study
as flexible work practices) at their work places. The study shows that about 35%
of private sector establishments with 50 or more employees appear to have made
substantial use of flexible work organizations including TQM. This result is
consistent with Lawler, Mohrman, and Ledford's (1992) investigation of quality
programmes in Fortune 1000 firms.
The findings of the study confirm that the following
variables are positively associated with the adoption of innovative work
practices including TQM:
A market with international competition;
A high skill technology;
Workers oriented values;
A high road business strategy emphasizing service; quality, and variety of
products rather than low costs;
Being part of a larger organization
The study using data on 694 U.S. establishments identified
some key independent variables, and with the application of estimation theory (Logit
model, Indexation and principal components and Ordered probit model) determined
the overall characterization of the establishment in terms of its stage of
implementation of TQM.
Interestingly, this study identifies that neither the
pressure of union presence nor the pressure to turn to short- term profits has
any influence on the introduction of quality management practices. This is a
very significant finding because there are practitioners who believe that union
presence in the work place is a potential hurdle in introducing programmes like TQM.
While the above study indicates that smaller firms are more
likely to adopt TQM, a study by Barron & Gjerde (1996) shows that the
concept is more readily embraced by larger firms who have a bigger financial
base and a lesser turnover of its employees. Their study, which is based on the
development of a production model, predicts that the firms which place higher
value on quality (as measured by Tobins Q), have greater proportions of total
defects that are introduced by in-house workers, are more likely to adopt TQM.
The factors highlighted in this study appear to be "reactionary type"
as compared to taking a proactive strategy towards implementing quality
What are the key success factors?
As decision makers become more involved in implementing TQM,
questions are raised about which practices are essential for its successful
implementation. A review of the literature highlights a significant trend. Most
of the companies reporting successful implementation, and duly supported by
empirical research, have in one way or the other adopted the famous Deming
Quality Management Theory. Deming, who first introduced quality principles to
Japanese on large scale has over the years condensed his philosophy into the
following 14 points, which have become the action items for top management in
adopting TQM. The points which captures Deming philosophy are as follows:
1.Create constancy of purpose towards improvement of
products and services;
2. Learn the new philosophy;
3. Cease dependence on inspection of product to achieve quality;
4. Buy materials only if the suppliers has a quality process;
5. Use statistical methods to find troubled spots and constantly improve
6. Institute modern aids to training on the job;
7. Institute modern methods of supervision;
8. Drive out fear;
9. Breakdown barriers between departments;
10. Eliminate numerical goals;
11. Review work standards to account for quality;
12. Remove barriers that rob people of their pride of workmanship;
13. Institute a vigorous programme for training people innew skills;
14. Create a structure in top management that will push the above 13
A study conducted by Anderson, Rungtusanatham and Devaraj
(1995) empirically examines the Deming management method by developing
constructs of the theory and operationalizing them using measurement standards
developed by a world class manufacturing research project team. The study, which
initially converted the Deming theory into seven constructs (Visionary
Leadership, Internal / External Cooperation, Learning, Process Management,
Continuous improvement, Employee fulfilment and customer satisfaction),
empirically explores the strength of the relationship between constructs by
applying path analysis using actual data collected from manufacturing practices
of 41 plants in the United States.
The outcome of the study shows significant impact of
visionary leadership on both internal / external cooperation as well as learning
and organizational development. The study also highlights that the process
management significantly affects continuous improvement as well as employee
fulfilment and its impact on customer satisfaction.
Another study conducted by Flynn, Schroeder and Sakakibara
(1995) on the subject attempts to establish relationship of specific quality
management practices to quality performance. Their study identifies five core
infrastructure practices: Customer Relationships, Suppliers Relationship, Work
Attitudes, Workforce Management and Top Management support. By comparing these
practices with core quality concepts like product design and statistical quality
control and feedback, the study concludes that of all the variables, top
management support was found to be most critical. This aspect is also an
integral part of the Deming philosophy.
Deming's principles are again highlighted in a study
conducted by Coyle- Shapiro. (1999) The research, conducted in UK manufacturing
setting, identifies employee participation as well as style of management to be
the key factors for the success of TQM. The study suggests that supervisors have
a positive role to play in getting into TQM, and if employees are fully
participating the efforts bring fruitful results. The study also demonstrates
that the traditional "direct and control" manner of supervision, or
for that matter the "Taylorism" management style, is not at all
conducive for the successful implementation of this concept. Moreover the study
shows that greater the employees participation in the TQM efforts, the greater
will be the perceived benefits.
Yun Lin (1998) has established a relationship between
employee empowerment and successful implementation of quality management
practices. Empowerment (to authorize or delegate) has been studied by developing
a matrix of four dimensions (leaders, employees, culture and management
practices) along with '7S' framework of key organizational factors, (strategy,
structure, systems, styles, skills, sub-ordinate goals, staff). Based on data
collected from a U.S. subsidiary in Taiwan and empirical testing the impact of
empowerment on quality, the findings shows a strong relationship between
empowerment and quality management. The empowerment concept is also present in
Deming's philosophy where he recommends that management should drive out fear
from the workplace.
Organizational culture has been studied by Klein Masi, and
Weidner (1995). The study classifies the culture into three styles —
constructive, passive and aggressive, each style having its own behavioural
norms. The study involved 823 members of 159 different organizations and
measured the organizations culture, its control structure, its service quality
and the employee performance. The presence of a constructive culture (where
employees are encouraged to interact with one another and work in team setting)
showed a direct and positive relationship with the successful implementation of
TQM. While this study is a good improvement in that it shows how culture can be
made to bring about the change, however the criteria used to measure quality
through employees' own perception is questionable. Klein et al. also suggest
that TQM programmes are not just "off the shelf" items which can be
bought and installed. Their implementation requires a complete change in
philosophy and the establishment of constructive culture where people can work
together in teams.
Benson, Saraph and Schroeder (1995) have approached the
subject through the organizational context factors and have identified a
relationship between quality management and organizational factors. The study
defines these factors as managerial knowledge, corporate support for quality,
past quality performance, company type and rate of product and process change.
The finding shows that the organization's response to quality initiatives is
directly related to the quality contexts.
While developing a framework of quality management research,
Rao, Solios, and Raghunathan(1999), studied TQM success variables through the
measurement instruments. The study developed 13 dimensions for quality
management along with operational indicators based on managerial perceptions.
Data from five different countries (USA, China, Mexico, Taiwan, India) on the
operational measures indicated the predictive validity. The constructs developed
in this study were: top management support, employee training, employee
involvement, supplier quality, customer orientation, quality citizenship,
quality information availability, quality information usage, benchmarking,
strategic quality planning, product process design, internal and external
quality results. All these constructs showed a direct relevance towards
improving the quality. It is noteworthy that most of these constructs show great
similarity with the Deming management method and his 14 points.
The criteria used to measure quality success to determine the
prestigious Malcolm Baldrige award winners (leadership, information and
analysis, strategic quality planning, human resource utilization, quality
assurance and customer satisfaction) also forms the part of the variables as
described under the Deming methodology.
What are the measurable outcomes?
This section of the review aims to address a very basic and
fundamental question i.e. what has been the impact of TQM on actual firms'
performance? Many studies claim to show that companies have benefited largely
from a focus on events such as winning a quality award or achieving some form of
certification/recognition. Very few empirical studies have been undertaken to
demonstrate the real impact of this philosophy on firm's key financial and other
Easton and Jurrell (1998) have examined the impact of TQM on
the performance of 108 firms that begun TQM implementation between 1981 and
1991. While recognizing TQM as a critical competitive strategy, the researchers
agree to the point that there is a growing controversy regarding the
effectiveness of TQM. In their study, the performance of selected firms which
adopted TQM was assessed by examining the unexpected changes in financial
performance for a five-year period following the beginning of deployment of TQM.
The performance was measured through both the accounting variables (net income
and sales) as well as stock returns. The study was largely focused on
identifying the companies excess unexpected performance if any over the period
of five years and comparing the same with the unexpected performance of those
control companies that did not implement TQM. The excess unexpected performance
was attributed to TQM efforts.
By using and comparing the results of the surveyed firms with
the controlled portfolio of the firms, the study has taken care of any
unexpected changes that may be due to exogenous factors which affect future
performance of the firm. The findings of the study show that those firms that
implemented TQM (event firms) performed better on various accounting variables
as indicated by the ratios of net income to sales, net income to assets,
operating income to sales and operating income to assets. The study also
revealed that the improvement is greater in the later years (three to five
years) than in the earlier years.
Consistent with the accounting variables, the cumulative
returns indicate improved long-term performance for TQM firms with stronger
results. For the full sample studied, the median excess cumulative return was
21.2% in year five.
Richard et al. (1995) studied TQM outcomes in 61 hospitals in
USA and found that it was positively linked was greater perceived patient
outcomes and greater human resource development. Interestingly, their findings
show that large size hospitals experience lower clinical efficiency with regards
to higher charges and higher length of stay due to more bureaucratic culture
that serves as a barrier to quality implementation. The study also revealed that
those hospitals with quality focus experience shorter length of stay and lower
charges for selected clinical procedures, which both ultimately helped in
enhancing customer satisfaction and revenue generation. While the study made a
good attempt to describe the benefits of TQM for a healthcare setting, its
findings are based on a very diverse group of hospitals with a small sample
size, which makes the generalization little difficult.
In a study conducted by National Institute of Standard and
Technology, (USA), the financial/stock market performance of the winners of the
prestigious Malcolm Baldrige awards has been compared with comparable
organizations classified under Standard and Poor 500 companies. The findings
revealed that the award- winning companies outperformed S&P 500 companies by
5.8 to 1 during the period 1988 to 1999. This analysis shows that award-winning
companies are doing far better on the stock price, which is reflective of their
competitive advantage, and excellent performance for which quality management
may have played an important part.
Prospects for future research
TQM philosophy can help an organization improve itself and,
in the process serve better its community and its members. If TQM is to prosper
in the future, researchers will have do a thorough job of highlighting the
mechanisms through which TQM practices realize their effects. There is still
plenty of room for additional research based learning on how this theory and
practice could be improved. It appears from the literature review that many
organizations have actually implemented a portion of what actually Deming Juran
and others originally laid out.
Few attempts have been made to synthesize a framework for
measuring quality management process. There is a need to first agree on common
sets of measurable instruments and then apply those in measuring the success of
quality. The absence of a commonly accepted measurement yardstick is a potential
hurdle in the development and further growth of this philosophy.
While researchers have made a good attempt to monitor success
of TQM by studying the stock prices of firms which implemented TQM, it appears
that this criterion is too simplistic and may lead to inappropriate conclusions.
Stock prices, as we know fluctuate due to several reasons, some of which are
beyond the control of the management. Researchers must endeavour to identify
other more relevant and appropriate measures to study the impact of TQM on
With the globalization of businesses, researchers will have
to answer many conceptual and practical questions regarding the future success
of TQM. For example, how can a global corporation deal with diversity of
customer requirements? Is it really possible to empower quality management to
all functions in a global setup?
In summary, if TQM is to maintain a prominent place in
management literature, its rhetorical excesses will have to be replaced with
concrete measurable outcomes of its usefulness, and the researchers will have to
do a better job of illuminating the mechanisms through which TQM practices
realize their full impact. The future for TQM though uncertain looks bright.
Navroz Surani is an accomplished Human Resource Professional
who has spent over 19 years in this field. He currently holds the position of
Director Human Resources at the Aga Khan University in Karachi.
Navroz holds an MBA and LLB from University of Karachi and
has recently obtained a Masters in Industrial Relations from the Queen's
University in Canada, with specialization in human resource management.
Navroz has delivered several presentations and lectures in
the areas of human resource management all over the country. He has been an
Hon.visiting faculty member at Greenwich University and has been a guest speaker
at IBA,, Szabist Institute, Asian Management Institute, and Commecs, as well as
at many other organizations. He is a member of the Society of Human Resource
Management, U. S.A.