Customer satisfaction is a top priority for all businesses, given the direct impact it has on their bottom lines. So, is there a methodical system that businesses can use to consistently ensure excellence and maintain positive customer satisfaction levels? The answer is yes, and it lies in a management philosophy known as total quality management.
What is total quality management?
Total quality management (TQM) is an employee-driven, customer-focused management style. TQM prioritizes delivering quality products and services that meet and exceed the expectations of key customer groups for long-term success.
Other valuable outcomes of TQM are improved business quality, productivity, profitability, and competitiveness. It’s no wonder then, that more and more organizations are adding TQM practices into their overall business strategy.
The origins of total quality management
TQM is a relatively recent concept. Although its framework, methods, and practices were developed in the early-to-mid 20th century, the term “total quality management” became popular in the mid-1980s. During this era, the notion of quality management and control really started to take off in the United States.
Laying the groundwork in the first half of the 20th century
In the 1920s, an industrial US began taking a scientific management approach to its production process. A young engineer named Walter Shewhart first came up with a statistical control chart—a replicable method of quality control—in 1924, which was put into practice at the Western Electric Company Hawthorne plant in 1926.
The Hawthorne plant was renowned for having personnel policies far beyond its time, and it was also the site of many industrial studies. In 1924, for example, the plant began studying the potential link between workplace lighting and worker efficiency.
The plant later introduced other critical success factors such as break times and reduced working hours. From the results of such changes, researchers drew the conclusion that productivity increases when workers are involved in decision-making and internal processes.
Although these studies have been criticized for having uncontrolled and methodologically poor standards compared to modern guidelines, they set the stage for the evolution of quality management systems in later decades.
Shewhart published his book, Economic Control of Quality of Manufactured Product, in 1931. This groundbreaking work first discussed how mathematical statistics could be used for improving process management and quality control of industrial manufacturing processes.
W. Edwards Deming applied Shewhart’s quality control principles outside the manufacturing sector for the first time when carrying out the 1940 US census. After World War II, in 1947, Deming was sent by the US Army to Japan.
Later on, in 1950, he was invited by Japanese business leaders to speak about quality control. During his repeated stays in Japan, Deming introduced the methods for statistical quality control (SQC) to Japanese engineers and executives.
Two seminal works of TQM were published in 1951. The first was Joseph Juran’s Quality Control Handbook, which details many ideas for quality improvements, such as the now-famous Pareto Principle. Also known as the 80/20 rule, the Pareto Principle states that 80% of outcomes are determined by 20% of inputs.
The second was Armand Feigenbaum’s book, Total Quality Control, which forms the basis of many key concepts still associated with TQM today.
Toyota: An early example of a total quality management strategy at work
After WWII, Japanese automobile manufacturer Toyota struggled with imbalanced inventory and a staffing surplus. However, inspired by the work of quality experts such as Deming and Juran, the company decided to revamp its production strategy and include 3 of the 8 TQM principles into its production process:
- Put the customer first
- Initiate “kaizen,” or continuous improvement
- Encourage total participation from employees across the business
In 1949, Toyota first introduced TQM strategies into its now-famous Toyota Production System. This led to new practices such as Just-in-Time manufacturing and the Kanban inventory control system that resulted in reduced costs, increased efficiency, diminished production bottlenecks, and ultimately greater customer satisfaction.
Toyota extended its SQC systems in 1951 to include a new initiative called the Creative Idea Suggestion System (CISS). Toyota hoped this initiative could motivate all employees—not just those in managerial roles—to make recommendations on improving quality through improving production methods.
By 1974, creative idea submissions had exceeded one million. In the same decade, Toyota started rising to fame, especially in developed countries, for its high-quality products that cost below prevailing market prices. Today, Toyota still holds a competitive position as one of the biggest and most reputable car companies in the world.
The 8 principles of total quality management
TQM efforts and strategies need to be firmly rooted in the following principles. When Toyota overhauled their production process, they specifically adopted the first, second, and sixth principles.
1. Focus on customer satisfaction
A core component of any TQM strategy is customer satisfaction. Always take customer needs into account when making decisions and taking action. You can only gain customer loyalty if you maintain quality and delight them every step of the way.
2. Employee buy-in
A company cannot succeed with only its top management. To see results with TQM, you need employees throughout your entire organization to be on the same page.
Of course, every business needs active management participation to maintain employee morale. But this TQM principle still requires all employees to have a general understanding of your company’s vision and goals.
3. One integrated system
Organizational and operational segregation tends to lead to lower product quality. An integrated system is one of many critical success factors you need to implement TQM across all business processes.
If employees and stakeholders can fully understand how to integrate quality and quality planning into each process in which they are involved, your business will see continual improvement. This is also how companies remain competitive—by acting in agreement.
4. Process thinking
This principle centers on defining the steps needed to achieve desired outcomes. Having and adhering to fixed processes integrates quality into organizational systems, making it easier to reproduce the intended results and minimize the chances of human error.
5. Strategic and systematic approach to quality improvement
TQM focuses on making strategic choices that can improve quality in a company overall. For example, if there are underachieving employees, invest some time to find out if there are any underlying issues instead of letting them go. You might uncover quality-related issues in your company’s hiring, onboarding, or training practices.
6. Continuous effort
Quality improvement and quality management are not one-and-done tasks; they can never be completed. Customer needs are constantly evolving, so it’s important to keep gathering customer feedback and improving your products and services accordingly.
7. Fact-based evaluation and decision-making
Make more accurate decisions by drawing on performance data such as customer satisfaction scores, customer retention rates, and balance sheets. For example, if customer satisfaction rates drop after a product change, you should probably try to reverse this change.
8. Relationship management
Keeping open and up-to-date communication channels with stakeholders, employees, and customers is key to establishing effective quality control procedures and receiving constructive feedback.
Six approaches to total quality management
There is no one approach to implementing TQM; however, some approaches are more commonly used than others. These are detailed below.
Approach 1: Leading with award criteria
This approach focuses on meeting specific award criteria, such as the Deming Application Prize and the Malcolm Baldrige National Quality Award, when determining TQM processes and areas for improvement. These awards clearly list the considerations and guidelines for submission, so you can get started straight away.
Approach 2: International Organization for Standards (ISO 9000)
The ISO 9000 is a set of international standards for quality management and assurance that can be used across all industries. It formalized the 8 principles of TQM into a certification process.
Like the previous approach, ISO 9000 gives you an obvious starting point to evaluate quality processes in your organization. Its standards are continually revised, which can be helpful in ensuring that your company is always updating its quality control systems.
Approach 3: Deming’s 14 Points approach
Users of this approach base their TQM processes on Deming’s 14 Points system of quality management. This was an approach that was heavily drawn on by Japanese companies from the 1950s onward and can be universally applied, whether it be to an entire company or just a small division.
Approach 4: Looking to other organizational models
In this approach, businesses looking to implement TQM would look for examples from other companies that have either been successful in their execution of TQM or that have taken a leadership role in quality management. As we mentioned, Toyota is a great example of how to achieve long-term success with efficient TQM strategies.
By studying companies they find admirable, business leaders can better understand how these companies used TQM to achieve progress. Businesses can then integrate these ideas with their own to create a TQM approach that is truly tailored for their organization.
Approach 5: Lean manufacturing
Lean manufacturing is an approach that grew out of the Toyota Production System. In a nutshell, lean manufacturing is about identifying where businesses can cut costs, eliminate unnecessary steps, remove process bottlenecks, and prevent problems before they occur.
Approach 6: Six Sigma
Motorola first launched Six Sigma in the 1980s with the goal of reducing defective products to only 3 in a million. This approach involves the use of advanced statistical tools and data insights to achieve better service and product quality, reduce defects, and prevent future defects.
Although Six Sigma grew out of TQM principles, there are some differences between both methodologies. For example, TQM bases its view on long-term success, whereas the Six Sigma approach gives precedence to speed. While TQM wants organization-wide employee involvement, Six Sigma believes in training experts who are tasked with solving quality problems.
As a result, some even argue that Six Sigma is not strictly TQM, but since both center on improving quality and being customer focused, it is still considered a type of quality improvement methodology.
Potential challenges of total quality management
If TQM can result in business benefits and continual improvement, why doesn’t every company just implement total quality management? Of course, doing this is not an easy task, and here are the reasons why.
High investment costs
TQM is a long process that won’t yield immediate results. Essentially, you are overhauling operational procedures and internal processes across your entire business. To achieve this, you will need to hire experts to advise on and oversee this process (which could take years), as well as retrain most of your workforce.
Not everyone is able to spend the amount of time and money needed to make TQM work for their business, given that most of its benefits are not directly financial in nature, such as integrating quality and customer satisfaction.
Potential employee backlash
TQM needs total employee commitment, which is a tough ask especially in larger or more established companies. With very few, if any, businesses starting with TQM from the get-go, the radical changes demanded by the practice may generate resistance from both employees and management alike. If this does not diminish, it could be very difficult to continue implementing TQM.
Creativity might be stifled
To ensure quality consistency, TQM places a lot of emphasis on standardization. This focus on uniformity might come at the expense of creativity and innovation. However, as we have seen with Toyota, this is not a definite consequence, although striking the right balance could be tricky.
How to successfully implement total quality management in your business processes
Step 1: Make total quality management an essential component of your business strategy
By knowing your target customer groups, you can accurately identify their needs and expectations as well as take concrete steps to address and exceed them. Some of your potential customer groups could be your clientele, suppliers, vendors, volunteers, or stakeholders.
With total employee involvement being a core tenet of any TQM effort, it’s vital that you include your employees as a key “customer” group and take their interests into consideration.
Step 2: Research your target customer and their needs
It is only by knowing your target customer groups that you can accurately identify their needs and expectations, and take concrete steps to address and exceed them. Some of your potential customer groups could be your clientele, suppliers, vendors, volunteers and stakeholders.
As total employee involvement is a core tenet of any TQM effort, it is vital that you include your employees as a key customer group and take their interests into consideration.
Step 3: Seek customer-focused feedback
Now that you’ve identified your target audience, it’s time to create a customized customer survey for each group. The survey results will give you an informed idea of what each group feels toward your business at the moment, and how you can spark ideas for improvement.
One method you can consider using is conjoint analysis, which uses survey data to determine the consumer preferences that influence purchase decisions.
Step 4: Set targets and regularly review them
Based on your customer feedback, determine the key performance based measures for each group and what would constitute improvement. Is it just an increase in survey scores? Do you want to see a certain number of recurring customers? Consistently track progress and analyze data in a set period of time—for example, every 6 months.
Given that needs and expectations change over time, it’s important to keep up to date with them if you want to achieve success and maintain it. Not only will this improve decision-making, but it will also help set future goals.
Step 5: Implement employee training and education on an ongoing basis
With employees being the driving force of TQM, it’s crucial that throughout your company, your employees understand your TQM vision and their role in it. Think of how to educate both old and new employees so they can start integrating your TQM mission, vision, and values into their daily work routines.
There should be long-term training in both hard skills (e.g., business operations and end products) and soft skills (e.g., effective communication and problem solving) for your employees to grow.
At this step, strategic management is crucial to ensure that these objectives are met. Do not neglect the leadership development of your managers, directors, and executives.
Step 6: Lead employees at all levels toward continuous improvement
Quality assurance is everyone’s responsibility. Consider implementing mechanisms like Toyota’s CISS to kick-start performance improvements at the grassroots level.
Furthermore, it’s not enough for employees to participate in a TQM strategy as mere individuals; they also need to work effectively in groups. Create cross-functional teams that can share knowledge, identify immediate process issues before they escalate, and create a better understanding of their role in the TQM process.
Reaping customer satisfaction rewards in the long run
There is no widely agreed upon approach to achieving success with TQM. You may experience a lot of trial and error before you find something that works for your business. But if you are willing to invest enough resources and stick it out, we believe that we will hear about your success in the future.