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Keys to Starting a TQM Program

February 1, 1993
Related Topics: Total Quality Management, Featured Article
Like other major workplace initiatives, quality improvement efforts often are established for a lot of dumb reasons, according to Roland Dumas, owner of Roberts Information Services in San Mateo, California, and a judge for the Malcolm Baldrige National Quality Awards. First, everyone else is doing it. Second, the chairman wants a Baldrige Award on the credenza before retiring. Third, slick consultants have convinced managers that a prepackaged, total-quality management program (TQM) is all they need to eliminate product defects, enhance customer satisfaction, boost productivity, cut costs and propel corporate profits into the stratosphere.

Unfortunately, it isn't that easy. Last May, The Wall Street Journal reported that two-thirds of all quality-improvement programs ultimately fail because organizations simply don't understand what quality really means or how to attain it. "Many quality-management plans simply are too amorphous to generate better products or services," writes Gilbert Fuchsberg, author of the article.

The problem is compounded by the reality that there is no right or wrong way to achieve quality. In fact, a study conducted by the American Quality Foundation, a New York City-based think tank, revealed that the 584 companies surveyed used a total of 945 different quality-management tactics.

"How you implement a quality process that's effective is anyone's guess," Dumas points out. "I could outline several of the steps that you'd have to go through. Then you might look at it and take an approach that's absolutely backward and still do an amazing job."

Companies that have been successful at implementing TQM, however, do share these common denominators that human resources professionals can learn from:

  • A view of quality as a long-term process instead of a program
  • The leadership of the CEO.

CEOs must lead the way.
Without a doubt, the most important contributor to the successful implementation of any quality-improvement effort is top-down leadership. Three years ago, when the Atlanta-based Ritz-Carlton Hotel Co. initiated TQM, Horst Schulze, president and CEO, told his senior management team that although the company was considered to be a leader in the luxury hotel industry, they were just lucky, because everyone else was even worse.

From then on, all quality efforts that were undertaken by the company to provide 100% guest satisfaction have been under Schulze's direction, explains Patrick Mene, corporate director of quality. For example, when a new hotel is ready to open, Schulze and other senior leaders spend a week at the new facility, modeling for new employees the correct way to interact with guests.

Having a million customer contacts each day, it's a people-intensive business. "It sends a strong message to employees when the CEO takes time to show a dishwasher how to greet and make small talk with guests," says Mene.

The involvement of Schulze and other senior leaders, including the company's VP of HR, may be one reason the Ritz-Carlton received the Baldrige Award in 1992, Mene believes, making it the first hotel company to achieve the honor. "Providing thick towels and offering customers an extensive array of luxuries is easy, compared with providing genuinely caring, highly personalized service," Mene explains. "The personal involvement of our leaders is what made this happen."

Texas Instruments' Defense Systems and Electronics Group in Dallas, a 1992 Baldrige winner in the manufacturing category, also has discovered the value of leadership—but only after two failed attempts to achieve the coveted quality award. Hank Hayes, the company's president, had been involved in and committed to the quality effort when the Defense Systems and Electronics Group applied for the award in 1990 and 1991. According to Joe Borden, total quality manager, Hayes didn't jump in with both feet and lead the quality effort until 1992, however. Today, Hayes guides all of the strategic quality planning, beginning with the development of long-term goals and ending with final approval of each division's annual objectives.

"In a nutshell, TQM challenges leaders to accept the role of leadership," says Dumas.

Use the Baldrige as a yardstick.
You must know where you are before you can chart a course for where you want to be. Therefore, before beginning a TQM process, it's important to assess the organization in terms of current quality and to define the level of quality you want to have. "Under the direction of the CEO, managers should review the company's mission, values and vision statements," suggests James F. Riley Jr., senior vice president of the Juran Institute, a quality-management consulting firm in Wilton, Connecticut. These statements provide a framework for evaluating current quality levels.

Eastman Kodak Co. in Rochester, New York, is an example. It first developed a mission statement that stated:

  • Who the company was
  • What the company did
  • Who the customers (both internal and external) were.

According to Paul Smith, senior VP, Kodak then developed a vision statement describing the company's aspirations for the future. "This statement wasn't developed by decree," Smith says. "I worked with my direct reports in quality team meetings and they, in turn, worked with their direct reports in quality team meetings, and so on."

Once a company's vision has been identified clearly, managers can begin to assess the status of quality in the organization. Many companies, including AT&T's Transmission Systems Business Unit in Morristown, New Jersey, have found that the Baldrige Award criteria can help guide this assessment process.

The fallout of divestiture and deregulation forced AT&T's Transmission Systems Business Unit to become more competitive and customer-focused. "Before deregulation, we were our own customer," says Louis Monteforte, manager of the business unit's quality planning. "Afterward, we had to learn how to compete for and satisfy external customers."

In searching for ways to redirect the company, AT&T's Transmission Systems Business Unit used the Baldrige criteria to take a baseline measurement of the company and to provide a road map toward quality. The business unit created a cross-functional team comprising the first-level managers and engineers who were responsible for developing a mock application for the award. "We purposely got down into the company to determine what the average employee thought about our operations," says Monteforte.

The analysis of the completed application showed areas in which AT&T's Transmission Systems Business Unit was doing well in terms of satisfying customers, and areas needing improvement. For example, the application revealed that few employees understood how their responsibilities fit with the duties of their co-workers. It showed that there was little communication or teamwork. Furthermore, although most workers claimed to be committed to quality improvement, they indicated that they didn't believe that the executives were committed to the effort. According to Monteforte, this indicated that the company needed quality training, enhanced communication and increased visibility of senior managers.

Since 1989, AT&T's Transmission Systems Business Unit has evaluated itself against the Baldrige criteria eight times. The company's senior executives serve as the business unit's Quality Council. This council personally reviews the results of these evaluations and uses them to develop annual improvement plans and guide the required actions.

Because the Baldrige criteria help develop quality goals, some companies go so far as to apply for the award, even if they don't feel they can achieve it, because the feedback from Baldrige examiners is so helpful. Texas Instruments' Defense System & Electronics Group, for example, first applied for the award in 1990 to "get objective, third-party feedback from experts who could accelerate our quality improvement efforts," says Steve Leven, VP of HR.

The Baldrige judges evaluate the applicants in seven areas:

  • Leadership
  • Information and analysis
  • Strategic quality planning
  • HR utilization
  • Quality assurance of products and services
  • Quality results
  • Customer satisfaction.

A look at the criteria shows how easily the process of completing an application can uncover problems in an organization and help managers identify quality goals. "In terms of HR, the application helped the Defense Systems & Electronics Group find ways to align the human resources process directly with the quality objectives of the entire group, which we did by promoting teamwork and team recognition, reviewing our performance-appraisal system and revising our training curriculum to focus more on quality-improvement tools," Leven explains.

Use other methods of assessment.
As useful as the Baldrige criteria are, they're by no means the only way to evaluate the status of quality in an organization. Memphis, Tennessee-based Federal Express, for example, uses statistical measures of customer satisfaction to evaluate quality. The company established quality indicators for 12 types of service problems and weighted them based on their inconvenience to customers. For instance, a missing proof-of-delivery slip rates a factor of one because it's considered a minor inconvenience, whereas a lost package rates 10 points. Federal Express tracks these service indicators every day and keeps a running total as a way of monitoring where quality improvements need to be made in the organization.

For companies that are just starting to assess quality, the Juran Institute suggests conducting:

  • A marketplace review that reveals customers' needs and expectations
  • A cost-of-poor-quality review
  • A description of employees' attitudes toward quality efforts.

"The issues uncovered by this assessment become fodder for the development of quality goals," says Riley, "and the goals become methods for prioritizing where improvements should be made."

Tap the experience of successful firms.
As HR executives review the quality needs of their own organizations, they also should learn about quality tools and techniques and about the quality experiences of other companies.

Winners of the Malcolm Baldrige Award are a good source of quality information, because they're expected to share information about their successful quality strategies with other U.S. organizations. (See "Baldrige Winners Are a Good Source of Information on Quality Programs.") Texas Instruments took full advantage of this opportunity, sending executives to quality conferences hosted by Westinghouse, Motorola, Xerox and Milliken & Co.

Benchmarking, the process whereby companies identify and learn from the best quality practices of other companies, also is helpful. When Xerox was looking for ways to boost quality of its distribution system, it turned to L.L. Bean. Federal Express became its model of billing efficiency and Cummins Engine Co. became its new standard for production.

Benchmarking is helpful only in the latter stages of TQM development, however. "There's too much industrial tourism going on. Instead of understanding their own company's processes and starting to improve them," says Dumas, "many executives get on airplanes and start visiting other organizations. This delays the important work of developing a quality infrastructure and setting some goals, and if you don't have any experience under your belt, you can't ask smart questions."

Create action plans and set goals.
Once an organization has a sense of how and where quality improvement should be implemented in the company, it should develop some strategic goals and action plans. At this stage, Riley recommends appointing a staff support person who can serve as the internal quality expert. This person can help define the company's short- and long-term goals and coordinate responsibilities. By no means should this person become the quality expert, Riley says. "His or her role should be one of facilitation."

At AT&T, the group that prepared the mock Baldrige application that uncovered quality problems devised a quality-action plan listing 18 objectives. "We didn't want the employees simply to present problems. We wanted them to present solutions based on what they had learned," says Monteforte.

A similar process was undertaken by Ritz-Carlton, which established teams to review the criteria and establish goals in each of the seven examination categories of the Baldrige Award.

At the goal-setting stage, companies may find it helpful to conduct a pilot program to see if employees will be responsive to a major quality initiative. At Fort Sander Health System in Knoxville, Tennessee, an 11-week team alliance program was established to "test the water with employees," explains John Milner, senior VP of HR. "We established voluntary teams throughout the organization and defined a procedure for the teams to follow when they create and submit ideas to improve patient care, increase savings and increase revenue," he says. If a suggested idea was implemented, team members received points to cash in for awards. A full 90% of the company's 2,800 employees participated in the program, generating $3.2 million worth of ideas.

"The vision wasn't developed by decree. I worked with my direct reports in quality team meetings, and they, in turn, worked with their reports."

Through the pilot program, Fort Sanders learned that workers wanted to share their ideas. It theorized that a TQM process that rewarded them for participation probably would work well. The pilot also uncovered key areas for training and indicated which managers weren't as supportive of the quality effort. "We spent 10 months after the pilot working with these reluctant managers and devising a training program that supported our quality goals," Milner says.

HR plays a role in a quality start-up.
In the early stages of TQM, HR professionals should be part of the company's effort to evaluate quality needs and establish goals and objectives. Ideally, HR should be represented on the senior management team that reports to the CEO.

HR professionals must share their understanding of corporate culture with company leaders, who may think a certain program will work just because it worked at Florida Power & Light or Federal Express. If the program won't work, the HR person must point out why. This is critical, because the longer you're in senior management, the more out-of-touch you become with the company."

Leven has another bit of advice for HR people. "In the current atmosphere of layoffs and recession, you'll hear a lot of reasons against implementing quality improvement—because quality eliminates jobs, for example. I recommend that you remain tone-deaf to such suggestions. There always are reasons the time isn't right, no matter what the program."

Just as there's no right or wrong way to pursue quality, it appears there's no absolutely right or wrong time to start. For every dumb reason you have for wanting to start a program, there's a smart reason just waiting to reveal itself to you.

Personnel Journal, February 1993, Vol. 72, No. 2, pp. 28-35.

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