An analysis of various TQM performance measurement systems

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This paper presents an analysis of various TQM performance measurement systems and investigates which of these systems companies in the process of considering, adopting, or implementing a TQM program consider the most suitable as per their operations and functions and the impact of TQM on these functions.

This critique discusses the following research paper:

Title of the article: "Performance measurement by TQM adopters"

Author: V. Kumar D. De Grosbois, F. Choisne and U. Kumar

Journal: The TQM Journal

Year: 2008. Volume: 30. No: 3. Pages: 209-222.

The article critique

The objective of the paper is to provide guidance for future TQM adopters by investigating the practices implemented by a group of finalists in the total quality category of the Canada Awards for Business Excellence and the perceived suitability or appropriateness of these systems as per the operations and functions of these companies. Overall, the research study reviewed in this article provides guidance for companies that either are in the process of implementing TQM or are considering implementation.

The study investigates two key questions:

To what extent do TQM adopters use the traditional and TQM-related performance measures and systems?

To what extent are the traditional and TQM-related performance measures and systems/methods appropriate for assessing the impact of TQM on company performance?

The paper, written in fairly simple language, provides a comprehensive overview of previous research studies that have been conducted with respect to the performance measures of TQM and their application in companies that are in the process of implementing TQM. This article critique details the methodology used for the study, as well as the findings presented. It also critically analyzes the conclusions reached by the study and compares it to other research studies discussed in the article.

Design/methodology/approach

The study uses the sample of finalists in the total quality category of Canada's Awards for Business Excellence. The data for the study were obtained through in-depth personal interviews and by mail/phone using a questionnaire. The study used descriptive statistical techniques, such as mean and standard deviation, to analyze the data. T-statistic tests were performed in order to determine the significance of the results. The study was conducted by surveying one manager in each firm who was familiar with the TQM program being implemented in that particular company. The manager was surveyed either through an in-depth personal interview or by mail/phone using a questionnaire. Fifteen companies were contacted to participate in the study, and fourteen actually participated. More than 85 percent of the participants were from the manufacturing industry, and more than 69 percent were American owned. Each performance measure was evaluated on a five-point scale, very appropriate to not at all appropriate.

One of the major weaknesses of the study is that the sample it used is limited to only the finalists in the quality category of Canada's Awards for Business Excellence. This limitation is stated in the article itself, when the author says, "The small sample limited exclusively to finalists in the total quality category of Canada Awards for Business Excellence may be a limitation" (Kumar, Grosbois, Choisne, Kumar: 2010). A second weakness is that the way the managers were interviewed was not uniform; while some were interviewed face to face, others were interviewed either through the mail or by phone. As Crano and Brewer (2002) point out, "In a face to face interview, the researcher is more likely to detect and correct confusion on the part of the respondent. He or she is more likely to be able to clarify issues and to realize that a question does not carry the intended implication."

Analysis of the Findings

According to the findings of this study, performance measures and systems/methods in most TQM environments and by TQM adopters are predominantly process-oriented, and most use process sequence flow charts, Pareto charts, and cause and effect diagrams. The systems and methods are also long-term-orientedd with a focus on market research/customer surveys, percentage of sales from new products, and absolute market share, and they are customer-oriented with a close eye on the number of complaints, percentage of on-time delivery, and overall customer satisfaction.

According to Kaplan, Norton, Sinclair and Zairi, Neely, adopting suitable performance measures is very important (and has long been documented) because it is believed that performance measures help in the formulation of a company's strategy, business processes, change strategies, communication strategies, resource allocation, employee motivation, and long-term success. However, because of dissatisfaction with the traditional performance measurement systems, companies have made efforts to improve them and bring about change. Among the changes that were suggested in the paper was the need to adopt a balance of financial and non-financial measures. According to Bititci, Mehra, Brah, Taylor, and Wright, establishing suitable performance measures is now considered a critical success factor for all TQM implementation efforts. If the performance measures are not the right ones, the entire TQM philosophy can be undermined, and the company that is implementing TQM will not be able to gain maximum benefit from it. On the other hand, the use of effective measures can result in increased employee motivation, better and faster response to market demand, and the overall improvement of a company's business processes.

This article presents a detailed definition and overview of what TQM or Total Quality Management is. "TQM is a holistic approach that seeks to integrate all organizational functions to focus on meeting customer needs and organizational objectives through the improvement of quality, productivity and competitiveness." (Kumar, Grosbois, Choisne, Kumar: 2008) "The origin of this concept can be credited to the work and writings of the US and Japanese strategists such as Deming, Ishikawa, Juran, and Crosby." (Palo, Padhi: 2006)

The concept of TQM emphasises an organization's internal and external customers and suppliers in order to improve the services and/or products it provides. While TQM has been criticized on some grounds, it has been widely accepted in the academic and business communities overall. "The basic principle of TQM is to enhance productivity through organization-wide continuous improvement." (Lee: 2000)

Extensive research on the importance and role of performance measures with respect to TQM has already been conducted, and the study presented in this article is merely an extension of those studies. It has already been established that, in order to implement TQM effectively, it is important to review and update an organization's performance measurement system. A performance measurement system specific to TQM is not easy and requires special focus and emphasis.

The reason this particular study was conducted is that there is a lack of empirical research that investigates the performance measures used by organizations in the process of implementing TQM. According to Westpha, Gulati, and Shortell (1997), "Empirical tests of institutional processes have neglected to examine directly both economic and social consequences of adoption."

In particular, this study investigates three performance measurement systems:

management by cycle time

value-added management accounting

the activity-based costing system (ABC).

The performance measures and methods are then studied in eight key domains: employee relations, production, productivity, finance, market, customer satisfaction, quality of products and services, and quality of suppliers' products and services. The study reveals that management by cycle time and value-added management accounting are the most popular TQM performance measurement systems, while the activity based costing system has not been used as frequently.

These performance measures are imperative for the successful implementation of TQM and may avoid the risk of failure. "Anecdotal studies have most commonly attributed the failures of TQM implementation and financial improvement to deficiencies of: (1) shared vision, (2) application planning, (3) organizational commitment, (4) training, (5) reward systems, (6) empowerment, or (7) cross functional integration." (Barker, Emery: 2006) Thus having extensive performance measures to evaluate performance in each area is very important.

While this study provides guidance for companies interested in implementing TQM, it does not offer a new approach or suggest a new methodology or process to improve TQM performance. Instead, it provides an overview of the methods currently being used and the extent of their usage. While the idea of this study and article is not completely original, it does provide insight into performance measurement in TQM both for academics and for practitioners. There are even some new findings in the study that contradict previous research studies, such as that top-down efforts, generally seen as more appropriate in TQM implementation, are not. However, the study offered no groundbreaking or breakthrough results and/or finding, so it can be considered merely an addition to the already extensive literature available on TQM adoption and implementation. Also, the study does not present the benefits that can be achieved through effective implementation of TQM. "Adoption of innovative management approaches which strive toward total quality improvement has great significance, both at the micro level for the individual organization, and at the macro level for the country as a whole." (Mitki, Shani: 2005)

Areas of Improvement for the study/article

The study should use a more uniform method for data collection since the advantages of face-to-face interviews and telephone interviews differ from each other. Face-to-face interviews offer more visual advantages than telephone interviews or mail surveys do. According to Crano and Brewer (2002), "The telephone interview does not allow for the use of visual aids; this can prove to be important if complex questions or lengthy response options are to be provided to the interviewee."

The study should use a more extensive sample with participation from a variety of industries and companies with different background and functions. The article points out that the sample was limited to finalists in the total quality category of Canada's Awards for Business Excellence.

There is a need for an entirely different approach to TQM evaluation. According to Wilson and Durant, "TQM evaluations and research must become more theory grounded and contingency based than has historically been the case if practice, cumulative knowledge bases, or theory-building are to improve significantly. Explicitly delineated models of change processes, the assumptions underlying them, and the ways in which variables in the models are expected to interact to produce these outcomes must inform any serious attempt at TQM evaluation or theory building" (Wilson, Durant: 1994).

There is also a need to evaluate the application of TQM on a broader scale. "Few writers have focused upon the application of TQM to functional or organizational subunits; fewer still have addressed staff-driven units which primarily offer services and/or products to internal customers." (Fleisher, Nickel: 1995)

The benefits of TQM for an organization should be more clearly highlighted. "There is an increasing awareness that TQM is becoming the key factor in improving productivity, efficiency, effectiveness, and increasing employee and customer satisfaction." (Agus: 2005)

Conclusion

While this study provides guidance for companies interested in implementing TQM, it does not offer any new approach or suggest a new methodology or process to improve TQM performance. It merely provides an overview of the methods being used and the extent of their usage. However, although this study is not completely original, it does provide insight into performance measurement in TQM both for academics and for practitioners. There are even some new findings in the study which contradict previous research studies such as the fact that it is generally believed that characteristics driven from top down are more appropriate but this study revealed that in reality they are not. However, overall, this study did not offer any groundbreaking or breakthrough result and/or finding and can be considered to be merely an addition to the already extensive literature available on TQM adoption and implementation




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