Achieving Quality Through Hrd

CASE STUDY

Achieving Quality through Human Resource Development

PAKISTAN INSTITUTE OF QUALITY CONTORL

304, 3rd Floor, Eden Centre, 43 Jail Road Lahore – Pakistan Ph: (+92 42) 7563645-7562260 Fax: 7552656 E-mail: [email protected]; Web Site: http:///www.piqc.com.pk

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Achieving Quality through Human Resource Development by

Dr. S.M. Naqi Chairman SPEL Group of Companies Lahore - Pakistan

HUMAN ELEMENT IN QUALITY PROCESS “Reality” is difficult to grasp through human mind. The information collected by the 5 senses enables the mind to interpret reality. In fact the human mind creates its own reality. What we otherwise consider reality is our own perceptual interpretation. It is a subjective view of life because human beings are incapable of taking an objective view. So it is with the concept of “quality”. There is nothing absolute about this dimension of products and services that people produce and people use. Human element enters thus, the quality process, from the very beginning.

DEFINITION OF QUALITY There are several definitions of quality. People on the production side and the people on the consumption side assign different meanings to quality. PRODUCER’S SIDE Designer’s view: For a designer the quality is the technical and economic fitness created in an innovative and value engineered products to satisfy customer needs. For an Engineer quality means conforming to the specifications laid down by the designer. For the workers quality means meeting the chemistry and geometry specified by the designer and producing a job within the allowable tolerances through the given equipment, materials, tools and other essential inputs. For a salesman it is a magic word to be repeated several times over emphasizing the differentiating features, while promoting and selling the products, in competition with the rivals. For the Senior and Top Management, quality is a reputation to be guarded, by selling products, which will not come back, to the customers that will.

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CONSUMER’S SIDE On the user side, depending on the type of product or service, the people involved in the distribution channels and those who advise and those who buy and those who ultimately use are all human beings. The quality defined on this end of equation is different from the one adopted by the producers. The broad definition in this case is technical and economic fitness for use which gives optimum satisfaction to the user and adequate value for money.

BRIEF HISTORY OF QUALITY IMPROVEMENT PAKISTAN The history of “Quality” with reference to Pakistan, is briefly as follows. For assuring quality of products the Government of Pakistan established “Pakistan Standards Institution” (PSI) under Ministry of Industry 1951. The charter for the PSI required the Institution to frame standards; implement them; promote standardization and control quality. In 1958, the PSI was made an autonomous body under Societies Act 1860. More than 1400 standards were laid down. Industries did not, however, show much interest. In 1961, the Government of Pakistan promulgated Certification Mark Ordinance. The purpose was to bring about uniformity in products for export and domestic markets. In 1966, certification was made compulsory but so far only very few items have been brought under compulsory Certification. In 1980, an ordinance was promulgated amending Import and Export (Control) act 1950. Under this ordinance, commercial courts were set up to deal with complains on exports. These courts, however, have not so far been set up. In 1998 National Accredition Council was formed & that has not yet started functioning. The lack of emphasis on the quality has adversely affected the export potential of Pakistani products and the country has, over a period, progressively lost markets. Acute awareness is being now created about the value of quality and all the industrial organizations, propelled by the threat of ISO 9000, are gearing up for installing systems to assure consistent quality of their products. Progress, however, is very slow. The human factor ! QUALITY OF PRODUCTS The fact remains that, in the industrial sector of Pakistan, with the exception of a very few industries, the overall level of quality is still non-competitive. This is judged from the fact that in the global market we have very few products, which we can sell on distinction of quality. We only sell on the basis of price, and in this also, there has all along been a constant clamour for devaluation of our currency to make the products competitive. Not only that, our manufacturers and traders also continue to agitate for the award of export bonuses and rebates to compensate them and also enable them to quote a low price to secure contracts. We have examples of countries whose currencies, is the past, have continued to appreciate and yet the

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exports continued to rise; leading to unprecedented surpluses on current account. The difference lies in quality of the products.

ROOT OF PROBLEM What is at the root of the quality problem in Pakistan industries & services? We have imported machinery, imported technologies, imported systems, imported raw materials in many cases, and yet we produce poor quality products. The only factor we provide from the local government is the people. It is mainly the quality of the manpower that makes the difference.

ORGANIZATION FOR QUALITY From the above account, it would be observed that quality is the result of human endeavour. It is the human being who creates the designs. It is the human beings that translate these designs into the reality of goods, using all the resources which are always there waiting to be exploited, through the organizations created by people. In fact the human organizations, if properly designed and structured, proceed consistently, to create quality more readily than the traditional organizations which we otherwise are used to. The two types of human organizations, the standard organization and the quality organization, as defined by the Quality Guru, Edward Deming, can be compared through the following table for a greater understanding of the quality process (Total Quality Management by Paul James, p. 64) QUALITY COMPANY COMPARISON

1. 2. 3. 4. 5.

6. 7. 8.

9.

Standard Company Quality is expensive Inspection is the key to quality

Good Quality Company Quality leads to lower costs. Inspection is too late. Workers can produce defect free goods and eliminate inspection Quality control experts and inspectors Quality is made in the boardroom. assure quality Defects are caused by workers Most defects are caused by the system The manufacturing process can be Process can always be improved optimized by outside experts. No change in system afterwards. No input from workers. Use of wo rk standards, quotas, and Elimination of all work standards and quotas goals can help productivity is necessary for a break through Fear and reward are proper ways to Fear leads to disaster motivate. People can be treated like commodities People should be made to feel more secure in buying more when needed, laying off their jobs when needing less. Rewarding the best performers and Most variation is caused by the system. punishing the worst will lead to greater Appraisal system can destroy team-work and productivity and creativity the company

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Standard Company Good Quality Company 10. Buy on lowest cost Buy from vendors committed to quality 11. Play off one supplier against another Work with suppliers 12. Switch suppliers frequently based on Invest time and knowledge to help suppliers price improve quality and cost. Develop long-term relationship with suppliers 13. Profits are made by keeping revenue Profits are generated by loyal customers high and costs down

QUALITY THROUGH INSPECTION Traditionally, quality was assured through inspection. This inspectors being human being, could get influenced if placed under the command of the production departments and that is why the traditional view was that quality inspectors should be independent and should, administratively, be placed under the control of higher management so that they could exercise independent judgement without coercion or bias to pass defective products coming from the production systems. Assuring quality through inspectors continued to be the norm in industry and business for over a century till the Japanese introduced another concept. The Japanese concept as vocalized by Ishikawa, a Professor of Tokyo University, is that inspectors are extra people who only hinder productivity. He further explained that quality does not occur by inspection but instead it has to be built into the products by the workers who should be their own inspectors.

THE HUMAN FACTOR From all accounts, in the ultimate analysis, one would tend to conclude that the most important and critical input into the quality process is the human being. The human beings have to be trained to develop sensitivity to the concept of quality. And not only that, the workers should have the motivation to produce quality goods and services. They should develop pride in producing quality without supervision or hope of immediate extrinsic reward. The inner satisfaction derived by producing quality products should be the reward by itself of an enduring nature. QUALITY CULTURE Culture is a human concept. It is the way people work and live. It is the process driven by values, which the people imbibe, from their elders, parents, teachers, preachers and leaders of the society. Japan somehow has developed this culture and since no one in isolation can deliver quality in a total system, where every one is interdependent and inter-related, a countrywide culture is necessary. This is what Japan seems to have done. They have created not only the company-wide quality culture but also the country-wide quality culture. All the inputs that each organization draws from its environments is of quality and therefore, whatever it produces, ultimately carries the stamp of quality. At the same time, the Japanese society is also driven now by the concepts like “kaizen”. This word in Japanese means “improvement”. Simply stated, it means that every one in the country and the company, all the time, must continue to bring improvement in every aspect and sphere of life including the products and services they produce. And improvement has no limits. Now, culture again is a reciprocal determination of people, and is driven by shared beliefs, values and assumptions.

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QUALITY CIRCLES Having learnt the statistical instruments from Deming and other foreign experts, the Japanese devised and implemented an ingenious system. They created Quality Circles (Q.Cs). It is to be added that circles are concerned with work related issues and improvements and not with grievances, or conditions of employment. Circles are not a part of the bargaining mechanism and nor do they impinge upon the activities of the unions. Their decision making is a democratic process. Circles activities also develop people, and build confidence amongst the members. The people who develop through this route gain considerable respect from their colleagues. The satisfaction that the members derive from the circle activity is yet another gain. People meet, not to criticize the work of others but to get things done and make progress on an ongoing basis. It is a structured activity, which encourages institutionalized thinking. HUMAN ELEMENT IN Q.CS The first quality circle in Japan was set up in 1962. By now there is hardly any organization in Japan whether in the product or in the service sector which does not have quality circles. There are enormous advantages, which accrue as a result of this activity. Quality Circles have lifted the level of quality standards of Japan to unimaginable heights and have put the other industrial economies into a state of shock. And this is turn has built Japan, an over-populated concentration of people on four main islands of highly deficient physical endowment factor be of the most powerful industrial economies in the world. The Japanese model, by itself, amply demonstrates that human element is the most critical input in the quality process, and when human capital develops, the products develop, the quality in the products develops and thereby eventually the countries develop. In Pakistan also, certain companies have started Quality Circle activity and have vastly benefited from it, in terms of Human Resource Development and thereby the product range development, market expansion and financial health as a consequence.

HRD FOR QUALITY From the above detailed account we would have observed that Human Element is the most important and the most crucial input into the Quality process and therefore, the Quality of the people involved in an organization necessarily determines excellence in quality of the products and service such people deliver. The factors in human resource development in the quest for quality can broadly be listed as follows: 1. 2. 3. 4. 5.

Education and knowledge Skills Development Health Attitude and Ethics, and Discipline

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1.

EDUCATION AND KNOWLEDGE

Ours is an age of knowledge and this element has emerged a major source of adding value in what is produced and delivered. Basically the source of knowledge is education. Countries that spend on education a major part of their GNP are the winners in the economic fields. Take example of the United States of America, which is the only super power in the world today. They spend, according to the current estimates, 665.0 billion dollars on education in a year (Fortune, July 6 1998 Issue. New York: Time Inc., p. 114). This is more than their total allocation for defence expenditure. On the contrary, we in Pakistan spend only about 1.24 billion dollars on education which is far less than the expenditure on defence, and with a population of half of that of USA the per capita expenditure on education in Pakistan is about US $ 8.80 as against the per capita expenditure in USA being 2714.00 dollars. That means that the Americans spend, on an average, on each citizen nearly 300 times more on education than what we in Pakistan do. Almost similar is the case with the Japanese who not only spend on education but, in addition make education an extremely serious affair. Education is Japan is so serious that it has actually become a matter of life and death. As a consequence, in Japan, a maximum number of suicide take place when the results of annual examinations are declared in that country. Despite the fact that enormous back log has to be cleared and a long leeway has to be covered, our expenditure on defence in the current federal budget is nearly 30% whereas our expenditure on education is only about one per cent. Allocation for Education in the Provincial Budget is also a mere pittance. No wonder, the country is weak economically and the per capita income, according to the last Economic Survey is only 457.0 dollars as against the world average of nearly 4500 dollars. This is the national picture. On the scale of the organization the percentage allocation on education and training is recommended at 4% of the annual sales, but on the contrary, our study shows that in good company in Pakistan only about 1% of sales is spent on this crucial activity. And we have found that companies that invest on training, retraining and education of their workers and employees are the winners even in depressed market conditions in the country. The moral of the story is that the organization must invest in training and education, as an effort towards human resource development to achieve success. Certain examples have been quoted from Pakistan, subsequently in this Paper, to illustrate how well companies gain in the process. 2.

SKILLS DEVELOPMENT

Regarding skills development similar effort is needed both on the national level as also at the corporate levels. In the country all our educational syllabi need to be modified to include skill development in addition to the academic education which is to be imparted on modern lines. At the same time a large number of additional polytechnics and technical colleges need to be set up and properly funded and equipped. In the same manner, the various companies should continue to upgrade the skill level of their employees in line with the new developments in Science and Technology. Basically, intellectual and technical skills far more than physical skills, are required if our industries have to stay abreast of the modern world. In the province of  Pakistan Institute of Quality Control – (ICQI'1998)

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the Punjab, a well-conceived project has been prepared for setting up a series of skill development institutes. A council has been set up under an Ordinance, to regulate their working. The activity will be funded from Zakat, usher and Bait-ul-Maal sources. The Council is to be headed by a private sector senior professional and the ten members are drawn from the private sector and the government. Similar effort is needed by other Provinces and the federal government. To further elaborate the type of institutes being set up, two sample statements, together with indicative listing of skills planned to be developed in each centre, are placed at annexure “A” to this paper. There was earlier also a plan to set up skill development centres with the help of funds collected by the Export Promotion Bureau through the levy on Exports imposed by the Federal Government, but that project having passed all the stages of planning, unfortunately, was dropped subsequently for some unknown reasons. HRD MODELS Synthetic Products Enterprises (Pvt) Ltd. (SPEL) can serve as a model in SME Sector as a Company in Lahore which is devoting massively to developing and upgrading the skills of its workers and managers on a continual basis. It has paid off in terms of increase in sales and profitability, and above all, the customer satisfaction. During the last 10 years productivity of workers in this Company has increased at an average rate of 31% every year on a straight line basis, concomitant with continuous improvement in quality of products, which all major customers acknowledge through not only Quality Awards but also repeat orders – an ultimate test. In amongst the large-scale industries, Packages Ltd., can be quoted as a model of a Company, which massively invests time and money in development of the skills of its employees. Human resource development programme of the Company has been paying dividends. Educated young employees are inducted at lower levels and are grommed to rise on the hierarchical ladders. Every one is trained and retrained all along his career. It has been recognized that human resources are the basic factor of production, they need to be developed and it is the quality of the manpower which determines the success of a venture. Others in Pakistan may like to study these models and adopt similar systems in their own companies and thus reap benefits, which these and such other companies have achieved gained as a result of HRD activity. 3.

HEALTH

Human resource development involves not only education or honing of skills but perhaps for more important than that is to ensure that people of the country stay healthy. Whereas the curative side of health cover is flourishing with enormous business for the pharmaceutical industries and the medical practitioners, the preventive side is almost totally ignored. The Health Ministries and the Health Departments are content with the issuing, from time to time, some advertisements funded by the foreign agencies. Making sure that the citizens get safe drinking water, sanitary conditions are properly taken care of, environment is protected against damage, and all in that line, are receiving much less attention. Mosquitos and flies still rule over both urban and rural centres. The drainage system and disposal of solid waste, show absence of any organization. Road vehicles still continue to belch out smoke and lead. The level of carbon mono-oxide on the roads has passed the tolerable limits. Unmindful of all these, the managers of the country and the citizens also continue to go their own way. The people inspite of all these circumstances are still obliged to earn their daily bread anyhow. The  Pakistan Institute of Quality Control – (ICQI'1998)

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workers in the factories are in a poor state of health and they are mostly either tending to their own health problems or the health problems of their families and most of their time is lost on this account. The companies, on their part, should help keep the environment clean & develop healthy physical activities for the workers to keep them reasonably fit. 4.

ATTITUDES AND ETHICS

A proper attitude, in addition, needs to be developed towards quality both in the country and in the organizations. Attitude is a predisposition which is the out put of appropriate values, assumptions, believes and some codes of ethics. In fact it is our opinion that quality has its roots in ethics. It signifies giving one’s best to the customers and to the organizations. As such, attitude and ethical values have to be inculcated and instilled in the employees as a deeprooted concern for nothing less than excellence in quality. Some of the quality gurus have come to the conclusion that quality does not cost much and it is only an attitude of the management and the workers, which delivers quality. In fact, it has been stated that “Quality is free”. All the equipment, all the standards all the materials, all the skills and knowledge, and all the upto date machinery and plant would fall by the way side, if the manpower is organization did not have the right attitude to deliver quality of products and services. A deep philosophical approach is needed in developing the right attitude in the people on a mass scale to secure an appropriate approach towards quality. A constant indoctrination is needed and managers and leaders have to provide role models to get results. It is a question of development of healthy character. It is a subject of training and development. Devotion to duty, hard work, honest living, loyalty and commitment to work contract. All these are rooted in the psychology of the people and their moral and ethical values they practice. People have to be trained and a change in the total scheme of thinking is necessary. Learning will take place through counselling and more so through modeling. The managers, the leaders, the parents, the religious teachers and scholars will have to take abundant precaution and set examples of being immaculate models. The objective is to build up a good, hard working, honest and committed society that would command respect amongst the comity of nations. And for commanding respect, they will have to rely on their own hard work and sense of quality. Their competence will be able to produce goods and service which the global market will willing accept at a premium. No one should imagine that others will continue to work for us. Out thinking on this and other related issues has to be straightened out. This requires a sustained effort in educating the people and clearing the ethical and moral issues. All this, in the ultimate analysis, will result from training, education and development. Intellectual, physical and technical skills and health and discipline are indeed important, but all these will not produce results, if the manpower is not driven by a shared philosophy and ethical and moral values. All successful are value driven. 5.

DISCIPLINE

The author once asked a senior state functionary visiting from Singapore as to what was the secret of success of that country in the industrial sector. The reply was that they had developed skilled and disciplined manpower.  Pakistan Institute of Quality Control – (ICQI'1998)

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The off-hand comment carries an important message. That is, education and skill development is important, but this has to go with discipline. Strictly speaking, discipline means self control and willingness to follow laws, rules, procedures and systems. This is a quality which lends predictability and facilitates organizational control. Question arises how to teach discipline to the manpower? The answer is simple. The best way to develop a sense of discipline is to put the people through military training. This is what almost all advanced countries have done. In fact, military training in most of these countries has been compulsory. Even Switzerland, a country that has not entered any war during the last over 100 years, has made army training compulsory for every able bodied citizen. We in Pakistan, who have all along been informed that we are surrounded by enemies, have not even for defence sake, trained our people and are instead spending major part of our resources on a standing army rather than on education, health and other social sectors. It is ironical that the allocation on defence is nearly 30% of our current Federal Expenditure whereas the allocation on all the social services is only about 2%. The whole thing looks topsy-turvy. On all accounts and specifically for the purpose of human resources development, military training should be made compulsory in Pakistan and started without any further loss of time. It is time that military training for all able bodied persons, for a period of two years, is started forthwith. It will make them healthy, it will make them disciplined and also incidentally, make the country invincible against foreign aggression. The companies on their part should counsel their employees to obey the laws of the country and set examples of discipline.

CONCLUSION AND RECOMMENDATIONS (1) (2)

(3) (4)

(5)

(6)

The Human Resource Development is an unending and continuous process, and involves many dimensions. The foremost area of human resource development activity involves education and acquisition of knowledge. We in Pakistan, have lost much time in making education compulsory by law and deciding to make it free, at least upto the secondary level. This needs to be done without any further loss of time. The health sector too needs to be dealt with more seriously, specially the preventive side covering hygiene and environmental protection. Discipline is yet another area which needs attention, and for that purpose military training for all must be made mandatory. This will make people more disciplined and also more healthy. This will also take care of a major part of defence needs and enable the country to reduce expenditure substantially on the large standing army. The financial resources thus saved could be used for education, R&D, health and other social programmes. As a part of the HRD programme package, suggested in this paper, the most essential and most crucial aspect suggested is the development of human character, which has deteriorated because of neglect. No deliberate or serious is being made this direction, neither by parents nor leaders, nor teachers and not even the religious ulema, who have on their own assumed responsibility in this direction. Mass training for designers be organized because design content of a product is one of the largest value added components in the product and consumes less in terms of capital than any other input factor to make the product of quality. Design input, in fact, is synonymous with human creativity.

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(7) (8) (9) (10) (11)

Atleast 2% of the GNP be allocated to Research & Development activity, instead of 0.2% as at present, to create technology and produce differentiated products. Training and retraining of workers should become a norm for the industry and business through out the country. Commercial Courts created under Ordinance 1980 should be made more active and quality failure complaints taken up seriously. Massive efforts should be made in the field of human resource development, particularly in the filed of technical education and training. Mass media should mobilize public opinion to create a quality culture in the country.

THE AUTHOR Dr. S.M. Naqi born in 1927, is Ph.D in Business Administration and a Chartered Engineer, Fellow Institute of Mechanical Engineers (London) and Fellow of several others professional Engineering Institutes. He is the Chairman of SPEL Group of Industries, dealing with Hi Tech Engineering products. Consultant to US Aid, JICA, APO and several financial and industrial institutions. Dr. Naqi also teaches the MBA & MPA programmes at the Punjab University and is a visiting faculty at many other Management Training & Educational Institutions in the country.

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ANNEXURE “A”

LAHORE VTI LOCATION • •

Lot of lands presently under cultivation, suitable for VTI in the Campus area Second alternative is Township where a plot of 30 kanals can be acquired from LDA

BASIC TRADERS A) (FOR MEN) • • • • • • • • •

Refrigeration and air-conditioning machine Electrician/Winders Auto Mechanic (Diesel/Petrol) Turner/Mechanists Instrumentation (Radio, TV, VCR) Fitters/Fabricators/Millers Tailoring/Dress Making (Garment Industry) Plumbers Moulders

b) (FOR WOMEN) • • • • •

Dress Designing & Dress Making (Garment Industry) Embroidery (Hand and Machine) Tailoring, Cutting & Sticking Leather goods (Hand bags, purse, shaving kit bags, leather jackets, hand gloves) Knitting (Machine and hand)

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GAKKHAR VTI LOCATION • •

Ghakkar is located in middle of two big industrial cities, Gujranwala and Wazirabad (10 km distance). Hence marketability of trades. 7-8 acres of Govt. and available in the heart of Gakkhar on the main G.T. Road in between Govt. High School No. 2 and Grid Station, opposite Town Committee.

BASIC TRADERS • • • • • • • • • • •

Machinist/Turner Electrician Armature winder Refrigerators and AC Instrumentation (Radio, TV & VCR) Fitting Moulding Tailoring/Dress Making Auto Machine Press man Draftsman Civil/Mechanical

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BIBLIOGRAPHY Amu Gruppen, “Training for a World of Change:. Sweden Asian Productivity Organization, “Directory of National Productivity Organizations is APO Member Countries”, 1993 ---- “Comparative Information on Productivity Levels and Changes in APO Member Countries”, 1992 ---- “Cooperation and Productivity for Growth”, 1993 ---- “Top Management Forum – Human Centred Management”, 1993 ---- “Asian Dynamism Through Human Resource Development”, 1989 ---- “Comparative Information on Productivity Levels and Changes in APO Member Countries”, 1993 Aziz Ahmad (Ed.) “Report of the Sixth Management Convention – Feb. 8-9, 1992”, Lahore: Management Association of Pakistan. Bajwa, Muhammad Yaqub. “Search for Islamic Work Ethic”. An article published in The Nation daily, Lahore April 26, 1992. Eul Yong Park, “Management of Human Resources and Korean Industrialization”. The 196090. Korea Development Institute, June 1994. Khalid, Syed Mohammad, “Pakistan Steel – The New Look”. An article published in Business Recorder daily, Lahore June 23, 1994. Lodhi, Maudood Ahmad, “Human Resource Development”. An article published in Business Recorder daily, Lahore May 30, 1994. “Modular and Individualised Training System and Preparation of Teaching/Learning Material”. Sweden: Swedish International Development Authority. Naqi, S.M. APO Survey Report on Wages, Incentives and Productivity Linkages for Pakistan, 1992. Nasir-ud-Din, “Higher Education: Social and Economic Implications”. An article published in The Nation daily, Lahore June 24, 1994. World Bank “World Development Report”, 1993.

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