Integrated Tqm

TOTAL QUALITY MANAGEMENT, VOL. 13, NO. 6, 2002, 759 - 777

Development of an integrated total quality management and performance measurement system for self-assessment: A method Kit-Fai Pun

Department of Mechanical Engineering, The University of the West Indies, St Augustine, Trinidad & Tobago, West Indies

abstract Competitive environments and priorities change over time, eþ ective enterprise management always depends on the eþ ective measurement of performance and results. The ® rst condition to establish and implement, and ultimately to achieve excellence, is a sound system for performance measurement (PM). Many organizations also adopt the total quality management (TQM) philosophies and continuous improvements in the pursuit of excellence. There is a need to foster TQM/PM integration with feasible means of self-assessment. This paper presents the key ® ndings from an empirical study of TQM/PM integration (TPI) in Hong Kong. It discusses the essential ingredients and self-assessment criteria for building a TPI model. A results-oriented scoring method to facilitate TPI in public sector and government organizations is also described. Introduction Performance measurement (PM) serves a wide range of purposes within businesses, including monitoring internal systems, monitoring external performance, tracking the implementation of change, stimulating continuous improvement at system and personnel levels, and tracking the overall ® nancial performance of an organization (e.g. Austin, 1996; Feurer & Chaharbaghi, 1995; Neely, 1998). Many organizations measure ® nancial results, the performance of their employees, the quality of service provided to their customers, employees’ attitude and morale, absenteeism, the quality of processes and products, innovation and creativity (Kermally, 1997; Neely et al., 1995). They would employ a range of qualitative and quantitative measures that have accumulated over time to meet particular operational requirements. Quantitative measures such as ® nancial ratios, staþ turnover and number of customers’ complaints are easy to measure and manage. Qualitative measures, such as quality, customer satisfaction, innovation, motivation, morale, style of leadership and customers’ perception, are diYcult to measure; and the way they are managed depends on the corporate agenda. They are often at diþ erent levels of aggregation and linked loosely, if at all, to the current policies and strategies of the business (Hax & Majluf, 1996; Platts et al., 1998). Some studies also show that it is not unusual to ® nd PM systems that send confusing and occasionally contradictory signals to the organization (e.g. Kasul & Motwani, 1995; Zairi, 1994). PM should support corporate strategy formulation and monitor the value drivers and elements that really make the business Correspondence: Kit-Fai Pun. Tel: 868 662 2002 Ext-2069; Fax: 868 662 4414; E-mail: [email protected] ISSN 0954-4127 print/ISSN 1360-0613 online/02/060759-19 DOI: 10.1080/0954412022000010127

© 2002 Taylor & Francis Ltd

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pro® table (Kermally, 1997; Neely, 1998). Managing organizational performance plays an important role in translating corporate policy and strategy into results. On the other hand, the concepts and philosophies of total quality management (TQM) have come to the fore in recent times, being adopted by organizations as the means of understanding and satisfying the needs and expectations of their customers and taking costs out of their operations (Dale, 1999; Ross, 1993). TQM strives to create an organizational culture that fosters continuous improvements in everything by everyone at all times, and requires changes in organizational processes, strategic priorities, individual belief, attitudes and behaviours (Dale, 1999; Pun, 2001; Shin et al., 1998). The shift from traditional management to TQM is revolutionary and the implementation of TQM involves a fundamental change in the way in which business is conducted (Bounds et al., 1994). Those changes include making customers a top priority, a relentless pursuit of continuous improvement of business processes and managing the systems of the organization through teamwork. Recently, the interest in TQM has been fuelled with a range of national and regional awards for quality, such as the Malcolm Baldrige National Quality Award (MBNQA) and the European Quality Award (EQA). These awards, based on models of business excellence, are being increasingly used by organizations as part of the PM and business improvement process (EFQM, 2001; NIST, 2001). Integrating PM with TQM concepts becomes an imperative in the pursuit of excellence. In this regard, the paper discusses the parameters, factors and processes of TQM/ PM integration. It incorporates the ® ndings from a recent empirical study and derives a selfassessment approach to evaluate the performance measures and determinants of the integration in public sector and government organizations.

The TQM/PM integration and self-assessment TQM is an integrated management philosophy and set of practices that emphasize continuous improvement, meeting customers’ requirements, reducing rework, long-range thinking, increased employee involvement and teamwork, process redesign, competitive benchmarking, team-based problem-solving, constant measurement of results and closer relationships with suppliers (Powell, 1995; Pun, 2001; Whitney & Pavett, 1988). It refers to a basic vision of how an organization should look like and of the way is should be managed. TQM includes a stakeholder perspective, customer and people orientation and corporate responsibility (Dale, 1999; Ross, 1993; van Schalkwyk, 1998). On the other hand, PM is the process of quantifying action, where measurement is the process of quanti® cation and action leads to performance (Neely et al., 1995). It has a clear methodical focus that helps organizations monitor corporate performance at an operational level. Sink and Tuttle (1989) claim that performance of an organizational system is a complex interrelationship between the seven performance criteria, including eþ ectiveness, eYciency, quality, productivity, quality of work life, innovation and pro® tability. Kanji (2001) adds that PM requires attention by the drivers of success, which primarily are:

·

·

·

·

Delighting the customers (i.e. focusing on both external and internal customer satisfaction). Managing the most important organizational asset, which is its people (i.e. providing them with adequate training for quality and encouraging teamwork). Managing by fact (i.e. analysing the organizational processes and measuring the key variables). Developing a culture of continuous improvement (i.e. constantly looking for new improvement opportunities and preventing problems from occurring).

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Recent research suggests that both TQM and PM can produce economic value to many ® rms (Dale, 1999; Kermally, 1997; Neely, 1998). One of the best indicators is the achievement or competitive advantage obtained from integrating PM and TQM concepts. The integration has to comprise a thorough de® nition of measures and indicators to monitor the TQM implementation process and corporate performance from a stakeholder perspective. Many researchers and practitioners believe that few well-de® ned performance dimensions and critical success factors (CSFs) can help develop speci® c measures to monitor progress and performance towards excellence (Kanji, 2001; Kermally, 1997; Neely et al., 1995). In many circumstances, these measurement systems are embedded in the CSFs. Despite being at some extent organization- or industry-speci® c, these factors can be grouped into some principles that have been systematically proven to be universally valid. Kanji (2001) argues that the criteria for PM are rooted in the CSFs of the organization and ultimately correspond to the determinants of business excellence. Various balanced scorecard techniques (Kaplan & Norton, 1996) and various excellence awards (EFQM, 2001; NIST, 2001) are examples that incorporate the principles identi® ed using a CSF approach and have been empirically tested and validated in diþ erent contexts. The ultimate objective of TQM/PM integration is to assist organizations in their quest for continuous improvement and better organizational performance and results. If eþ orts focus solely on conformity of current management systems and practices, there may be a separation between TQM and PM, reversing a trend toward integration. The integration should align with corporate missions and strategies, and intertwine with the operation goals, management systems, measurements and practices. It also mandates continuous self-assessment to identify relevant factors that help with organizational changes. Recent developments of international and regional quality awards have oþ ered a continually changing blueprint for organizational self-assessment (Pun et al., 1999). For instance, both MBNQA and EQA propagate the TQM principles and stress the importance of self-assessment for identifying and monitoring improvement (Porter & Tanner, 1996). They share a set of fundamental concepts and elements, including leadership and constancy, results orientation, management by processes, people development and involvement, and continuous improvement (Pun & Lau, 2002). There is no signi® cance intended in the order of these concepts and elements. The list in Table 1 is not meant to be exhaustive and will change as organizations develop and improve. According to Henderson (1997), self-assessment can make comprehensive, systematic and regular reviews of an organization’s activities that ultimately result in planned improvement actions. The assessment process helps organizations identify their strengths and shortcomings and best practices where they exist (Neely, 1998). With the common direction and an increased consistency of purpose, self-assessments can provide organizations with opportunities to build greater unity in pursuit of initiatives that eþ ect improvement (Hakes, 1996; Hills, 1996). They not only generate the results and valuable inputs into the annual corporate planning cycle, but also encourage the integration of a range of quality initiatives and performance improvements that may have been separately pursued across the organization (Beasley, 1994; Pun et al., 1999). In other words, self-assessments are a means that help analyse organizations’ status quo in implementing the TQM/PM concepts and in achieving their strategic objectives. Organizations must therefore establish a coherent system with self-assessment orientation. Otherwise, this may result in fragmentation of eþ orts, slow response and weak productivity growth throughout the organizations (Henderson, 1997). Business environment and operational situations vary in diþ erent organizations. The identi® cation and assessment of various CSFs provides a feasible means for integrating PM and TQM concepts strategically (Kanji,

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Table 1. Integration of PM with TQM concepts Core concepts 1. Leadership and · constancy of · purpose

Descriptions

·

2. Results orientation ·

· ·

3. Management by processes · ·

4. People development and involvement

·

5. Continuous improvement

· ·

·

·

Top management recognizes its roles and responsibilities to set directions, management principles and vision, and develops strategies and policies Management should exercise its involvement and commitment in developing the management structure and environment in which the organization and its people can excel to achieve the organization’s objectives The customer is the ® nal arbiter of product and service quality and customer loyalty, retention and market share gain are best optimized through a clear focus on the needs of current and potential customers An organization works more eþ ectively when it has mutually bene® cial relationships with its people and partners focusing on both ® nancial and non® nancial results and organizational eþ ectiveness The long-term interests of the organization and its people are best served by exceeding the expectations and regulations of the community at large Using reliable information and analysis of data, make eþ ective decisions for the current operations and planned improvements More predicable results can be obtained and achieved more eYciently when the interrelated activities are managed as a process Improvements are made though sharing of information and knowledge and eþ ective implementation of organizational strategies and policies Through shared values, trust and empowerment, which encourages the involvement of people in all levels in the organization to release their full potential to be used for the organization’s bene® t Achieving the highest levels of employee performance requires well-developed people education and training and adoption of an ethical approach to promote people well-being and satisfaction The resources are planned, managed and improved with continuous review and update of strategies and policies The importance of continuous innovation with the emphasis of learning culture should be developed and maintained Excellence is dependent upon balancing and satisfying the needs of all relevant stakeholders

Source: Based on NIST (2001) and EFQM (2001).

2001). The integration will bring changes to the current operations and practices in organizations, and will succeed only if they are implemented as a long-term organizational paradigm shift, not as a quick ® x (Bounds et al., 1994). Macdonald (1993) argues that the changes are not really about technology or new management tools, but are concerned with culture value, management, people and communication. In some cases, the changes can be an area-byarea evolution with minor course corrections, or can be more complex and dynamic in many organizations. Senior management must therefore take the lead, commit to the integration and push it downward throughout the organization (Pun et al., 1999). It is also crucial to have the stakeholders (including the management, employees, customers, etc.) involved in the design, implementation, ongoing development and maintenance of the coherent system.

An empirical study There has been disagreement on whether the principles of TQM/PM could be applied equally in diþ erent organizations, particularly in public sector and government organizations. In this regard, an empirical study was conducted in Hong Kong to investigate whether both TQM and PM are compatible and to explore the in¯ uences that they will contribute to performance

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improvements as perceived (Pun & Lau, 2002). The study was composed of a questionnaire survey and a series of personal interviews with senior executives and technical personnel in a representative government organizationÐ the ITSD in Hong Kong. The organization has six branches, including the Corporate Services Branch, three Departmental Services Branches (DSB-1, -2 and -3), the Management and Community Services Branch, and the Infrastructure Services Branch. The department provides information technology (IT) services to all policy bureaus and some 70 government departments and organizations in accordance with the Government’ s IT policy. It also provides IT services to some quasi-government organizations with prior service agreements. According to the latest statistics, about 74% of analyst/programmer grade staþ are hired on the establishment of the ITSD. The remaining 26% are hired on the establishment of other government organizations and departments, including the Census and Statistics Department, the Housing Department, the Hong Kong Police Force, the Hongkong Post and the Treasury. The ITSD serves many stakeholders, including citizens, IT professionals, local and overseas IT industries, parents, students, teachers, trainees, schools, universities, staþ , managers, employers, government departments and agencies (HKSAR, 2001). A set of questionnaires sought the respondents’ views concerning the current status of TQM/PM integration and the determinants (including evaluation criteria, sub-criteria and bene® ts) that might in¯ uence the integration and its eþ ectiveness in government departments and organizations. The research frame was de® ned within the ITSD, and the sample population was de® ned in two stages. Firstly, a random sampling was employed and eventually the DSB-2 was selected among the six branches of the ITSD. The selected branch had some 240 employees (including the contract staþ ) and was one of the largest branches of the department. A systematic sampling approach was then adopted to determine the sample size in the subsequent stage. The elements were selected from the research frame of a targeted population at a uniform sampling interval. As a result, 24 respondents were selected as the survey sample. They were grouped according to their job nature and position; and two groups of management and technical personnel were formed. According to the analytic hierarchy process (AHP) methodology advocated by Saaty (1994, 1996), the questionnaire survey acquired both the management and technical personnel’s views on various determinants for the TQM/PM integration. Apart from the analysis of pro® le and background information, the respondents were asked to compare the relative importance among the determinants and criteria aþ ecting TQM/PM adoption in the ITSD and other government departments and organizations they were serving. A list of TQM/PM criteria, bene® ts and sub-elements is given in Table 2, and structured into the analytical framework as illustrated in Fig. 1. The framework helps accommodate both objective and subjective judgements of the respondents involved in order to make trade-oþ s and to determine priorities among the criteria (Saaty, 1994, 1996). All valid replies were recorded and the computations of survey ® ndings were made using a computer software of Expert Choice (Decision Support Software, 1995) For the second stage of the study, a series of personal interviews was carried out with senior management and technical personnel who participated in the survey. All interviews involved personal visits with a set of prescribed questions. The questions focused on acquiring personal opinions on the TQM/PM integration and the needs of integration strategies for performance improvement in government departments and organizations. Analysis of empirical study results Survey response rate and respondents pro® le Ten valid responses were received from the sample of 24 managerial staþ

and technical

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Table 2. A list of TQM/PM criteria, bene® ts and sub-elements TQM/PM criteria and bene® ts

Sub-criteria or elements

1. Leadership and constancy of purposes

· ·

· · ·

2. Results orientation · · · · ·

3. Management by processes · · · ·

4. People development · · · ·

5. Continuous improvement · · · ·

6. Anticipated bene® ts · · ·

Corporate mission, vision and values Management involvement Management commitment Strategy and policy development Customer focus Financial results Non-® nancial results Organizational eþ ectiveness Social responsibilities Product and service processes Sharing of information Sharing of knowledge Implementation of strategy and policy People education, training and development People well-being and satisfaction People involvement People empowerment Learning culture Continuous innovation Review and update of strategy/policy Balancing and satisfying stakeholders’ needs Optimization of value added operations Improvement of organizational eYciency and eþ ectiveness Enhancement of corporate image and reputation Strengthening of people’s loyalty and morale

Source: Abstracted from Pun and Lau (2002).

personnel in the ITSD, yielding a response rate of 41.7 per cent. Half of the respondents were either senior managers or managers, with the rest being technical personnel including the contract staþ employed on a project basis serving the ITSD and other government departments and organizations. Eighty per cent of the management group and 40 per cent of the technical group of respondents served the Government for more than ® ve years; and 60 per cent of the technical group respondents were contract staþ . Priorities among the determinants of TQM/PM Table 3 summarizes the normalized weights of judgements from the two respondent groups. The results comprise three parts, including the management, technical personnel and their combined judgements. The overall inconsistency index of evaluator judgements was calculated to be 0.05, which fell within the acceptable level of 0.10 as recommended by Saaty (1994, 1996). This implied that most respondents held a positive view and assigned their weightings consistently on examining the priorities of decision criteria and evaluating the eþ ectiveness of TQM/PM integration. Level 1: Evaluation criteria By examining the normalized priority weights of evaluation criteria in level 1 (see Table 3), the management group of respondents considered continuous improvement (i.e. with normal-

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Figure 1. An analytical framework for evaluating TQM/PM integration (source: abstracted from Pun & Lau, 2002).

ized weight, CI 5 0.278) to be the top criterion followed by results orientation (i.e. RO 5 0.230) and leadership and constancy (i.e. LC 5 0.197). The technical group had a slightly diþ erent view on the importance of the criteria, they considered results orientation (i.e. RO 5 0.305) to be the most signi® cant decision criterion. People development (i.e. PD 5 0.227) and continuous improvement (i.e. CI 5 0.225) followed in the second and third places, respectively. The results coincided with the combined judgements, that is, the top-ranked criteria were RO ( 5 0.269), PD ( 5 0.227) and CI ( 5 0.225). Many respondents stressed the importance of results orientation (such as customer focus, ® nancial results and social responsibilities) and continuous improvement (such as innovation, balancing and satisfying corporate needs) on the direction of the organizations. In particular, the management group realized that their leadership and constancy of purpose could drive the introduction and promotion of TQM/ PM integration in government departments and organizations. The technical group would look into the people development aspects that could facilitate people education, involvement and empowerment with respect to promoting the results orientation and continuous process for performance improvement. Nevertheless, the respondents considered the management by processes (MP) criteria to be less critical when compared with the other three criteria in evaluating the TQM/PM integration. The normalized weights obtained from the management group, the technical group and the combined judgement were 0.127, 0.081 and 0.106, respectively.

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Table 3. Normalized weights of judgements from respondent groups Management group

Technical group

Combined judgements

0.197 0.230 0.127 0.167 0.278

0.143 0.305 0.081 0.290 0.180

0.172 0.269 0.106 0.227 0.225

Learning culture (LEC) Continuous innovation (COI) Review and update of strategy/policy (RUS) Balancing and satisfying needs (BSN)

LC 0.102 0.127 0.542 0.229 RO 0.298 0.262 0.091 0.116 0.234 MP 0.165 0.137 0.365 0.333 PD 0.133 0.312 0.155 0.400 CI 0.225 0.275 0.197 0.273

LC 0.099 0.315 0.394 0.192 RO 0.269 0.221 0.129 0.252 0.129 MP 0.343 0.241 0.157 0.258 PD 0.160 0.416 0.224 0.199 CI 0.221 0.231 0.225 0.323

LC 0.104 0.205 0.479 0.212 RO 0.290 0.260 0.108 0.176 0.166 MP 0.244 0.191 0.255 0.310 PD 0.147 0.370 0.191 0.292 CI 0.239 0.256 0.209 0.296

Level 3: Bene® ts Optimize value added operations (OVO) Improve eYciency and eþ ectiveness (IEE) Enhance corporate image (ECI) Strengthen loyalty and morale (SLM)

0.229 0.193 0.455 0.124

0.179 0.360 0.220 0.241

0.206 0.295 0.329 0.170

Level 1: Evaluation criteria Leadership and constancy (LC) Results orientation (RO) Management by processes (MP) People development (PD) Continuous improvement (CI) Level 2: Evaluation sub-criteria Corporate mission (COM) Management involvement (MIN) Management commitment (MAC) Strategy and policy development (SPD) Customer focus (CUR) Financial results (FIR) Non-® nancial results (NFR) Organizational eþ ectiveness (OEF) Social responsibilities (SOR) Product and service processes (PSP) Sharing of information (SIN) Sharing of knowledge (SKN) Implementation of strategy and policy (ISP) Education, training and development (ETD) People well-being and satisfaction (PWS) People involvement (PIN) People empowerment (PEM)

Notes: Priority score, i.e. 0.000 5 the least signi® cant, 1.000 5 the most signi® cant.

Level 2: Evaluation sub-criteria Under each evaluation criterion, the relative importance (that is, in terms of local normalized priority weights) of the sub-criteria in level 2 was computed. It was found that both evaluator groups have certain diverted views of their relative weights and rankings among the subcriteria (see Table 3). For the management group, the leading sub-criteria were management commitment (i.e. MAC 5 0.542), people empowerment (i.e. PEM 5 0.400), sharing of knowledge (i.e. SKN 5 0.365), customer focus (i.e. CUR 5 0.298) and continuous innovation (i.e. COI 5 0.275), corresponding to their parent decision criteria. With regard to the considerations of the technical group, they were people well-being and satisfaction (i.e. PWS 5 0.416), management commitment (i.e. MAC 5 0.394), product and service processes (i.e. PSP 5 0.343),

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balancing and satisfying needs (i.e. BSN 5 0.323) and customer focus (i.e. CUR 5 0.269). While combining the judgements of both groups, the top sub-criteria were MAC ( 5 0.479), PWS ( 5 0.370), BSN ( 5 0.296), CUR ( 5 0.290) and SKN ( 5 0.255). The rankings of normalized priorities among sub-criteria coincided with those of the global priorities relative to the goal of evaluating TQM/PM eþ orts as shown in Table 4. It was found that ® nancial results (FIN) were included, whereas SKN was not. The top-ranked sub-criteria were PWS ( 5 0.084), MAC ( 5 0.083), FIN ( 5 0.71), CUR ( 5 0.070) and BSN ( 5 0.067). While considering the global priority weights of sub-criteria in individual respondent groups, there were certain diverted views of the relative weights and rankings among the subcriteria. The management group considered MAC (i.e. 0.107) to be the top-ranked subcriterion, whereas the technical group considered PWS ( 5 0.121) to be the top-ranked subcriterion. In addition, other sub-criteria were also emerging, including learning culture (LEC), organizational eþ ectiveness (OEF), ® nancial results (FIN) and people involvement (PIN). The management group also stressed the importance of COI ( 5 0.077), BSN ( 5 0.076), LEC ( 5 0.071) and CUR ( 5 0.069). On the other hand, the technical group looked into the needs of CUR ( 5 0.082), OEF ( 5 0.077), FIR ( 5 0.068) and PIN ( 5 0.065). Furthermore, the combined judgements also showed that both respondent groups considered the reliance of corporate mission (i.e. COM 5 0.018), sharing of information (i.e. SIN 5 0.020), product and service processes (i.e. PSP 5 0.026), sharing of knowledge (i.e. SKN 5 0.027) and non-® nancial results (i.e. NFR 5 0.029) as generally less dominating sub-criteria when compared with others in promoting TQM/PM integration. Level 3: Bene® ts of TQM/PM integration Table 3 also shows that the ranked priority of the TQM/PM bene® ts was diverted in both respondent groups. The management group placed strong emphasis on enhancing corporate image (ECI). Its relative importance was about two times that of optimizing value added operations (that is, OVO 5 0.455/0.229), 2.4 times that of improving eYciency and eþ ectiveness (that is, IEE 5 0.455/0.193) and 3.7 times that of strengthening of loyalty and morale (that is, SLM 5 0.455/0.124). The technical group considered IEE ( 5 0.36) as the most important bene® t, followed by SLM ( 5 0.241), ECI ( 5 0.220) and VOV ( 5 0.179). While combining the judgements from both groups, the ranking of ECI ( 5 0.329) was found to be the ® rst bene® t. The bene® ts of IEE ( 5 0.295) and OVO ( 5 0.206) were in the second and third places, respectively. Summary of interview ® ndings All respondents to the survey were invited to the subsequent personal interviews. Successful interviews were conducted with three senior management and technical personnel. Each had more than ten years’ working experience in serving the ITSD and other government departments or organizations in Hong Kong. From the analysis of the interview ® ndings, the characteristics of good quality management practices and several barriers that often hindered government departments in adopting TQM/PM were identi® ed. One key success factor of TQM/PM integration was management commitment and leadership. Another crucial one was the maturity level of people in terms of experience and motivation (Pun & Lau, 2002). Many staþ members perceived that quality management was equivalent to keeping documentation. Training should be provided to correct their attitudes and interpretations. Individual oYcers should have positive attitudes towards continuous improvement and stress quality and performance of their work. The maturity level of people must be high before TQM/PM can be integrated eþ ectively. From the interviews, the main barriers for the

a

Management commitment (MAC) Continuous innovation (COI) Balancing/satisfying needs (BSN) Learning culture (LEC) Customer focus (CUR) People empowerment (PEM) Financial results (FIR) Review/update of strategy (RUS) Social responsibilities (SOR) People well-being/satisfaction (PWS) Sharing of knowledge (SKN) Strategy/policy development (SPD) Implementation of strategy/policy (ISP) Organizational eþ ectiveness (OEF) People involvement (PIN) Management involvement (MIN) Education, training and development (ETD) Non-® nancial results (NFR) Product/service processes (PSP) Corporate mission (COM) Sharing of information (SIN)

0.107 0.077 0.076 0.071 0.069 0.067 0.060 0.055 0.054 0.052 0.046 0.045 0.042 0.027 0.026 0.025 0.022 0.021 0.021 0.020 0.017 1.000

Global weightsa 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Total:

Ranking People well-being/satisfaction (PWS) Customer focus (CUR) Organizational eþ ectiveness (OEF) Financial results (FIR) People involvement (PIN) Balancing/satisfying needs (BSN) People empowerment (PEM) Management commitment (MAC) Education, training and development (ETD) Management involvement (MIN) Continuous innovation (COI) Review/update of strategy (RUS) Learning culture (LEC) Social responsibilities (SOR) Non-® nancial results (NFR) Product/service processes (PSP) Strategy/policy development (SPD) Implementation of strategy/Policy (ISP) Sharing of information (SIN) Corporate mission (COM) Sharing of knowledge (SKN)

Sub-criteria

Technical group

0.121 0.082 0.077 0.068 0.065 0.058 0.058 0.056 0.046 0.045 0.042 0.041 0.040 0.039 0.039 0.028 0.028 0.021 0.020 0.014 0.013 1.000

Global weightsa

The global weights are determined based on the priority scores (i.e. 0.000 5 the least signi® cant, 1.000 5 the most signi® cant).

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Total:

Ranking Sub-criteria

Management group

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Total:

Ranking

Combined judgements

People well-being/satisfaction (PWS) Management commitment (MAC) Financial results (FIR) Customer focus (CUR) Balancing/satisfying needs (BSN) People empowerment (PEM) Continuous innovation (COI) Learning culture (LEC) Review/update of strategy (RUS) Organizational eþ ectiveness (OEF) Social responsibilities (SOR) People involvement (PIN) Strategy/policy development (SPD) Management involvement (MIN) Implementation of strategy/policy (ISP) Education, training and development (ETD) Non-® nancal results (NFR) Sharing of knowledge (SKN) Product/service processes (PSP) Sharing of information (SIN) Corporate mission (COM)

Sub-criteria

Table 4. Global priority of sub-criteria relative to the goal of evaluating TQM/PM integration

0.084 0.083 0.071 0.070 0.067 0.066 0.058 0.054 0.047 0.047 0.045 0.043 0.037 0.035 0.033 0.033 0.029 0.027 0.026 0.020 0.018 1.000

Global weightsa

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integration in government departments included low commitment of individual oYcers and wrong interpretation of quality management concepts. The interviews also found that the formulation of a TQM/PM strategy could help accommodate the sharpening needs of performance improvement. Building of TQM/PM integration model The empirical study contributes to the identi® cation of various TQM/PM determinants and evaluation criteria for performance improvement in government departments and other public sector organizations in Hong Kong. Evidence shows that results orientation, people involvement and continuous improvement are the leading evaluation criteria. Promoting people well-being and satisfaction, management commitment, ® nancial results and customer focus are the dominant sub-factors for TQM/PM integration. The integration can bring many bene® ts, including enhanced corporate image, improved eYciency and eþ ectiveness, and optimization of value added operations in organizations. The ® ndings verify the shared focuses and the complementary nature of TQM and PM. Management leadership and commitment, people development and satisfaction take an enabling role for the integration. Senior management should lead the way, whereas middle management should facilitate the TQM/PM process and front-line operations should follow to attain corporate objectives. By consolidating main ® ndings from the study, the author incorporated those determinants into a generic TQM/PM integration (TPI) model. The model has ® ve categories of evaluation criteria, including leadership and constancy of purposes, management by processes, people development, continuous improvement and results orientation. These criteria are primarily designed for self-assessment of an organization’s performance on an ongoing basis. Built upon the core concepts and values, the criteria integrate with each other. A diagrammatic representation of a system’s framework for the TPI model is given in Fig. 2.

Figure 2. A systems framework of the TPI model.

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The model is composed of several core enablers and results elements that govern its operations. Leadership and constancy of purposes is the driver of the TQM/PM concepts that lead the sustained pursuit of customer value and improvement in performance. In other words, if the management does not want self-assessment to occur, it will not happen. The TQM/PM integration rests on systematic management by processes, people development and continuous improvement to meet the customer, quality and performance requirements. The enabler elements stress the company’s human resources and key processes on fostering performance. The results-oriented measures of progress provide a basis for channelling actions to delivering continuous improvement with the aim of fostering value added operations, improving eYciency and eþ ectiveness, enhancing corporate image and strengthening people’ s loyalty and morale. Self-assessment method for TQM/PM The TQM/PM criteria are concerned with the predetermined evaluation requirements for the model and the deployment of organizational eþ orts and resources. They are used to measure performance on an ongoing basis, benchmark the business results internally and compare them externally with other competitors and best-in-class organizations. The scores of TQM/PM criteria and sub-criteria total 1000 points (see Table 5). The scoring method Table 5. A score listing of the TQM/PM criteria and sub-criteria Point valuesa

Category

Evaluation criteria and sub-criteria

1.

Leadership and constanc y of purposes (LC) 1(a) Corporate mission, vision and values (COM) 1(b) Management involvement (MIN) 1(c) Management commitment (MAC) 1(d) Strategy and policy development (SPD)

175 20 35 80 40

2.

Management by processes (MP) 2(a) Product and service processes (PSP) 2(b) Sharing of information (SIN) 2(c) Sharing of knowledge (SKN) 2(d) Implementation of strategy and policy (ISP)

110 30 30 30 30

3.

People development and involvement (PD) 3(a) People education, training and development (ETD) 3(b) People well-being and satisfaction (PWS) 3(c) People involvement (PIN) 3(d) People empowerment (PEM)

220 30

4.

Continuous improvement (CI) 4(a) Learning culture (LEC) 4(b) Continuous innovation (COI) 4(c) Review and update of strategy/policy (RUS) 4(d) Balancing and satisfying stakeholders’ needs (BSN)

230 50 60 50 70

5.

Results orientation (RO) 5(a) Customer focus (CUR) 5(b) Financial results (FIR) 5(c) Non-® nancial results (NFR) 5(d) Organizational eþ ectiveness (OEF) 5(e) Social responsibilities (SOR) Total score points: a

40 70

265 70 70 30 50 45 1000

Based the global priority of combined judgements corresponding to the subcriteria (see Tables 3 and 4). The values were rounded oþ and scaled up by 1000.

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Table 6. Self-assessment dimensions, anticipated outcomes and focal areas Dimensions

Anticipated outcomes

Focal areas

Results

The results should show positive trends and/or sustained performance. TQM/PM targets should be met or exceeded, and performance will compare well with others and will have been caused by the approaches. In addition, the scope of the results should address the relevant areas A sound approach includes having a clear rationale, de® ned and developed processes and a clear focus on stakeholder-supporting policy and strategy and linked to other approaches where appropriate

·

Approach

·

·

·

·

·

·

·

·

Deployment

Assessment and review

The strategies, policies and actions should be deployed in relevant areas, in a systematic manner TQM/PM activities should be undertaken, and the outputs should be used to identify priorities, plan and implement improvement ·

·

·

·

Organization’s current performance Performance relative to appropriate comparisons and/or benchmarks Rate, breadth and importance of the performance improvements Linkage of results measures to process and action plan Appropriateness and eþ ectiveness of use of the methods Alignment with the organizational needs Degree to which the approach is repeatable, integrated and consistently applied Reliable information and data Evidence of innovation Deployment addressing the evaluation requirements Adopted by all appropriate work units All relevant factors of other three dimensions Subject to regular measurement

stresses the self-assessment of the performance status and improvements. The point values of its evaluation criteria and sub-criteria are derived from the empirical ® ndings. The self-assessment requires dynamic linkages among criteria, and thereby serves both as a communications tool and a basis for deploying consistent overall performance requirements. Any user (that is, an organization) can furnish the self-assessment information relating to four dimensions advocated by the EQA, namely results, approach, deployment, and assessment and review dimensions (EFQM, 2000). First of all, the results dimension covers what the organization achieves in performance. Secondly, the approach dimension covers what an organization plans to do and the reasons for it. This refers to how the organization addresses the evaluation requirements or, in other words, the method(s) being used. Thirdly, the deployment dimension covers what the organization does to deploy the approach. This refers to the extent to which the approach is applied to individual evaluation criteria and sub-criteria. Lastly, the assessment and review dimension covers what the organization does to assess and review both the approach and the deployment of the approach. This focuses on the monitoring and analysis of the results achieved and ongoing learning activities. The self-assessment results and their anticipated outcomes and focal areas are elaborated in Table 6.

TPI scoring tools and processes The TPI model employs scoring matrix checklists (SMCs) and questionnaires to perform self-assessment and benchmarking. Senior management are responsible for the design and revision of the SMCs, taking into consideration all inputs from representatives of stakeholders (including employees, internal and external customers, and the public and society at large). Since each criterion corresponds to a concept that cannot be directly measured, it must be

772

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translated into a set of indicators and then converted into items of a SMC. Basically, each question addresses a management practice that the users expected to have in place if they are adopting the principles and concepts underlying TQM/PM. The SMCs can and should be customized to individual users, according to their dimension, sector and environment within which it operates, under the required universal principles. Public and private organizations, health, education or local government institutions, for instance, will all have to use diþ erent checklists that re¯ ect diþ erent cultural backgrounds and the particularities they face. When designing and revising the SMCs, the focal areas of TQM/PM should therefore be addressed. Data collection for self-assessment It is recommended that the standard SMCs should be designed and used on a regular basis, so that the user can monitor progress over time and anticipate changes. Data collected should be analysed without delay in order to identify improvement opportunities and closely control the outcomes of the improvement plans and the way they are being perceived by the stakeholders. The SMCs should be administered throughout the organization, and not just the opinions of leaders and senior managers but those of everyone should count. All employees can and should participate in the process. This allows leaders to have a deeper understanding of how strategies and practices have been deployed and how their own skills and behaviours are perceived and can be improved. Moreover, since it is essential to measure performance externally, customers, suppliers and other stakeholders should be involved as much as possible in the process. Speci® c SMCs can be developed for the purpose of getting feedback from outside people, who will certainly have a say on how well they think the organization is doing and on what they would like improved. Scoring the performance The ® rst step in scoring is to use a scoring matrix to allocate a percentage score to each subcriterion (see Fig. 3). This is achieved by considering each element of the matrix for each of the sub-criteria. The scoring records are then used to combine the percentage scores awarded to the sub-criteria to give an overall score, in order to present the self-assessment results in a set of indicators, including the enablers and results criteria and sub-criteria. The maximum score for each criterion ranges from 110 to 265 points out of 1000 points. Table 7 summarizes the conversion factors for individual criteria and sub-criteria based on the ® ndings from the empirical study. The scores generated are then recorded in the TPI scores summary sheet. They are taken together to calculate the ® nal score points or the so-called performance index for the organization. An illustrated case for scoring TPI self-assessment is given in Table 8, assuming that a user can achieve 80 per cent of scores in all sub-criteria. For examples, the scores for the Enabler Sub-criterion 1(a): Corporate Mission is determined by the achievement times conversion factor (i.e. 80% of scores 3 1.14 5 91 points). For the Enabler Criterion 1: Leadership and Constancy, the score is calculated from the score obtained times conversion factor (i.e. 800 scores 3 0.175 5 140 points). Similarly, the scores for all other enablers and results criteria and sub-criteria can be calculated in the same fashion, and then the overall performance index can be ® nalized. The scoring analysis can help the user utilize its resources and keep up improvement progress that it may experience. Through regular TPI self-assessments, organizations can simulate where they should concentrate their improvement eþ orts in a way that maximizes their performance. They can also take into account their starting point and the constraints that they may have in getting improvements above certain levels in particular areas.

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Figure 3. Scoring guide of the TPI self-assessment (source: based on EFQM, 2000).

Adaptation of TPI model The integration of both TQM and PM cannot be achieved overnight. Various elements and practices have to be in place, and management must understand the questions underpinning the integrated system on which self-assessment is being made. What has not been implemented cannot be assessed, and zero scoring is self-defeating and de-motivating. The entire organization or individual departments and functions within the organization can be discouraged as a result of low scores, or there can be a tendency to score higher against the evaluation criteria of the TPI model. Both over-optimistic and under-pessimistic pictures can be created, and internal auditors may not have suYcient experience to know what they are talking about and looking for (Beasley, 1994; Pun et al., 1999). Therefore, senior management must take the initiatives to integrate TQM and PM into corporate vision and missions. These include the strengthening of management commitment, quality awareness and leadership and the creation of supportive corporate culture. They must identify internal strengths and weaknesses and external opportunities and threats for the organization, and align the integration eþ orts with corporate culture, mission and strategies. Middle management and front-line personnel must facilitate the integration, in order: to motivate active employee participation in education and training programmes; support employee suggestion scheme; promote job enrichment, enlargement, rotation and redesign; reinforce quality audits and assessments; and establish records and documentation in the workplace. The TPI model can provide users with a feasible means to evaluate the eþ ectiveness of TQM/PM integration. The associated scoring method helps organizations pro® le their strengths and weaknesses, and identify improvement opportunities with respect to the evaluation criteria and sub-criteria. The results obtained constitute an integral part of the organizational performance reviews. They are used to compare with previous performance records, target the measure of progress, communicate planned changes and accelerate the

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Table 7. Conversion factors for criteria and sub-criteria Conversion factors

TQM/PM criteria and sub-criteria

Calculations

1. Leadership and constancy of purposes (enabler) 1(a) Corporate mission, vision and values 1(b) Management involvement 1(c) Management commitment 1(d) Strategy and policy development

175/1000 5 20/175 5 35/175 5 80/175 5 40/175 5

0.175 0.114 0.200 0.457 0.229

2. Management by processes (enabler) 2(a) Product and service processes 2(b) Sharing of information 2(c) Sharing of knowledge 2(d) Implementation of strategy and policy

110/1000 5 20/110 5 30/110 5 30/110 5 30/110 5

0.110 0.182 0.273 0.273 0.273

3. People development (enabler) 3(a) People education, training and development 3(b) People well-being and satisfaction 3(c) People involvement 3(d) People empowerment

220/1000 5 30/220 5 80/202 5 40/220 5 70/220 5

0.220 0.136 0.364 0.182 0.318

4. Continuous improvement (enabler) 4(a) Learning culture 4(b) Continuous innovation 4(c) Review and update of strategy/policy 4(d) Balancing and satisfying stakeholders’ needs

230/1000 5 50/230 5 60/230 5 50/230 5 70/230 5

0.230 0.217 0.261 0.217 0.304

5. Results orientation (result) 5(a) Customer focus 5(b) Financial results 5(c) Non-® nancial results 5(d) Organizational eþ ectiveness 5(e) Social responsibilities

265/1000 5 70/265 5 70/265 5 30/265 5 50/265 5 45/265 5

0.265 0.264 0.264 0.113 0.189 0.170

improvements. Those factors that contribute to an organization’s success in integrating PM and TQM concepts and inhibiting it must be made explicit. While support from top management is crucial to its success, improvement initiatives often come from middle and lower parts of an organization. Therefore, recognition and encouragement of these initiatives with continual management reviews are important. During the process, the user must also prepare to handle the challenges of resources constraints and resolve other potential problems that may arise.

Conclusion Integrating TQM and PM is a challenging endeavour, but the rewards for those who succeed will be handsome. Organizations are increasingly dependent on their capabilities in TQM and PM to boost competitive strengths and performance, irrespective of their sizes, nature and location. As greater numbers of ® rms in virtually every industry sector integrate TQM/ PM, this will probably become a strategic necessity. The empirical ® ndings aYrm that integration of TQM/PM would garner management commitment and people well-being and satisfaction. Several determinants and CSFs, such as customer focus, ® nancial results, people empowerment, and balancing and satisfying stakeholders’ needs, are facilitating the integration.

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Table 8. An illustrated case for scoring TPI self-assessment

a

Assuming that the organization can achieve 80% of scores in all sub-criteria from the TPI selfassessment exercise.

Built upon the empirical ® ndings, the TPI model described stresses the result-oriented self-assessments on ® ve operational performance measures, namely leadership and constancy of purposes, management by processes, people development, continuous improvement and results orientation. The model serves three important purposes. Firstly, it is a working tool for integrating PM with TQM concepts and guiding the implementation of TQM in organiza-

776

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tions. Secondly, it helps organizations to improve their management practices and capabilities in relation to self-assessments of operational performance measures. Thirdly, it facilitates sharing information of best practices and benchmarking performance within and among organizations. The self-assessment process can facilitate organizational learning and allow organizations to amalgamat e improvement strategies, plans and actions. It is anticipated that the achievements obtained can help organizations build a solid foundation for stepping towards continuous performance improvement and seeking possible recognition of national and international quality excellence awards (e.g. MBNQA and EQA). Although the roles of TQM/PM integration are crucial for enabling performance improvements, ¯ exible adoption of the model and the scoring method may be needed to suit speci® c requirements and purposes of organizations. Future studies can validate the key TQM/PM determinants among various government departments, public and private sector organizations, separately and collectively. The comparison of ® ndings can help determine whether the results are signi® cantly diþ erent. Furthermore, continuous performance improvement based on the TQM/PM integration in today’s organizations is a never-ending process that can be expanded to all facets of individual life and societal action, given the diþ erences in political, legal and economic environments. This is a rich research area to investigate the complexities inherent in the activities of individuals, groups and organizations and their interactions in society at large. Acknowledgement The author would like to thank Mr C. W. Lau at the Department of Public and Social Administration of City University of Hong Kong for his assistance in the empirical study and subsequent data analysis. References Austin, R.D. (1996) Measuring and Managing Performance in Organisations (New York, Dorset Publishing). Beasley, K (1994) Self-assessment: A Tool for Integrated Management (Cheltenham, Stanley Thorns). Bounds, G., Yorks, L., Adams, M. & Ranney, G. (1994) Beyond Total Quality Management: Towards the Emerging Paradigm (New York, McGraw-Hill). Dale, B.G. (1999) Managing Quality, 3rd Edn (Oxford, Blackwell). Decision Support Software (1995) Expert Choice User Manual (Version 9.0) (McLean, VA, Decision Suppor t Software). EFQM (2000) The EFQM Excellence Model, Assessor Training Modules, MC Modules, V1/E. EFQM (2001) European Quality Award, http://www.EFQM.org/, December. Feurer, R. & Chaharbaghi, K. (1995) Performance measurement in strategic change, Benchmarking for Quality Management and Technology, 2, pp. 64- 83. Hakes, C. (1996) The Corporate Self-assessment Handbook for Measuring Business Excellence (London, Chapman & Hall). Hax, A.C. & Majluf, N.S. (1996) The Strategy Concept and Process: A Pragmatic Approach, 2nd Edn (New York, Prentice-Hall). Henderson, S. (1997) Black swans don’ t ¯ y double loops: The limits of the learning organisation?, The Learning Organisation, 5, pp. 99- 105. Hill, R. (1996) A measure of the learning organisation, Industrial and Commercial Training, 28, pp. 19- 25. HKSAR (2001) http://www.info.gov.hk /itsd/, Hong Kong Special Administrative Region, December. Kanji, G.K. (2001) An integrated approach of organisational excellence, www.gopal-kanji.com , December. Kasul , R.A. & Motwani, J.G. (1995) Performance measurements in world-class operations: a strategic method, Benchmarking for Quality Management and Technology, 2, pp. 20- 36. Kermally, S. (1997) Managing Performance in Brief (Oxford, Butterworth Heinemann). MacDonald, J. (1993) TQM: Does it Always Work? (Hertfordshire, Technical Communications). Neely, A. (1998) Measuring Business PerformanceÐ Why, What and How (London, The Economist Books).

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