Category: Quality management

Quality management is a recent phenomenon but important for an organization. Civilizations that supported the arts and crafts allowed clients to choose goods meeting higher quality standards rather than normal goods. In societies where arts and crafts are the responsibility of master craftsmen or artists, these masters would lead their studios and train and supervise others. The importance of craftsmen diminished as mass production and repetitive work practices were instituted. The aim was to produce large numbers of the same goods. The first proponent in the US for this approach was Eli Whitney who proposed (interchangeable) parts manufacture for muskets, hence producing the identical components and creating a musket assembly line. The next step forward was promoted by several people including Frederick Winslow Taylor, a mechanical engineer who sought to improve industrial efficiency. He is sometimes called “the father of scientific management.” He was one of the intellectual leaders of the Efficiency Movement and part of his approach laid a further foundation for quality management, including aspects like standardization and adopting improved practices. Henry Ford was also important in bringing process and quality management practices into operation in his assembly lines. In Germany, Karl Benz, often called the inventor of the motor car, was pursuing similar assembly and production practices, although real mass production was properly initiated in Volkswagen after World War II. From this period onwards, North American companies focused predominantly upon production against lower cost with increased efficiency.

Quality management ensures that an organization, product or service is consistent. It has four main components: quality planning, quality assurance, quality control and quality improvement. Quality management is focused not only on product and service quality, but also on the means to achieve it. Quality management, therefore, uses quality assurance and control of processes as well as products to achieve more consistent quality. What a customer wants and is willing to pay for it determines quality. It is a written or unwritten commitment to a known or unknown consumer in the market. Thus, quality can be defined as fitness for intended use or, in other words, how well the product performs its intended function.

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To understand total quality, we must first understand qual­ity. Customers that are businesses will define quality very clearly using specifications, standards, and other measures. This makes the point that quality can be defined and mea­sured. Although few consumers could define quality if asked, all know it when they see it. This makes the critical point that quality is in the eye of the beholder. With the total quality approach, customers ultimately define quality.

People deal with the issue of quality continually in their daily lives. We concern ourselves with quality when we are shopping groceries, eating in a restaurant, and making a major purchase, such as an automobile, a home, a television, or a personal computer. Perceived quality is a major fac­tor by which people make distinctions in the marketplace. Whether we articulate them openly or keep them in the back of our minds, we all apply a number of criteria when mak­ing a purchase. The extent to which a purchase meets these criteria determines its quality in our eyes.

One way to understand quality as a consumer-driven concept is to consider the example of eating at a restaurant. How will you judge the quality of the restaurant? Most peo­ple apply such criteria as the following:

• Service
• Response time
• Food preparation
• Environment or atmosphere
• Price
• Selection

This example gets at one aspect of quality—the results aspect. Does the product or service meet or exceed customer expec­tations? This is a critical aspect of quality, but it is not the only one. Total quality is a much broader concept that encom­passes not just the results aspect but also the quality of people and the quality of processes.

Quality has been defined in a number of different ways by a number of different people and organizations. Consider the following definitions:

• Performance that meets or exceeds expectations.¹
• Performance that meets the customer’s needs.²
• Consistently meeting customer needs and expectations.³
• Satisfying the customer today and getting better tomorrow.⁴

In his landmark book Out of the Crisis, quality pioneer W Edwards Deming makes the point that quality must be defined from the perspective of the stakeholder. The customer has a stake in the quality of a product or service, the production workers have a stake in it, and the organization that employs the produc­tion worker has a stake in it. Each of these entities should have their own view of quality and all of their views should mesh.⁵

Although Deming’s landmark book is now dated, his thoughts on quality are still valid and insightful. Deming makes the point that quality has many different criteria and that these criteria change continually.⁶ To complicate matters even fur­ther, different people value the various criteria differently. For this reason, it is important to measure consumer preferences and to remeasure them frequently. Deming gives an example of the criteria that are important to him in selecting paper:⁷

• It is not slick and, therefore, takes pencil or ink well.
• Writing on the back does not show through.
• It fits into a three-ring notebook.
• It is available at most stationery stores and is, therefore, easily replenished.
• It is reasonably priced.

Each of these preferences represents a variable the manu­facturer can measure and use to continually improve decision making. Deming is well known for his belief that 94% of work­place problems are caused by management and especially for his role in helping Japan rise up out of the ashes of World War II to become a major industrial power. Deming’s contribu­tions to the quality movement are explained in greater depth later in this chapter.

Although there is no universally accepted definition of quality, enough similarity does exist among the definitions that common elements can be extracted:

• Quality involves meeting or exceeding customer expectations.
• Quality applies to products, services, people, processes, and environments.
• Quality is an ever-changing state (i.e., what is considered quality today may not be good enough to be considered quality tomorrow).

With these common elements extracted, the following defi­nition of quality can be set forth:

Quality is a dynamic state associated with products, ser­vices, people, processes, and environments that meets or exceeds expectations and helps produce superior value.

Consider the individual elements of this definition: The dynamic state element speaks to the fact that what is consid­ered quality can and often does change as time passes and cir­cumstances are altered. For example, gas mileage is an impor­tant criterion in judging the quality of modern automobiles. However, in the days of 20-cent-per-gallon gasoline, consum­ers were more likely to concern themselves with horsepower, cubic inches, and acceleration rates than with gas mileage.

The products, services, people, processes, and environments element is critical. It makes the point that quality applies not just to the products and services provided, but also to the peo­ple and processes that provide them and the environments in which they are provided. In the short term, two competitors who focus on continual improvement might produce a prod­uct of comparable quality. But the competitor who looks be­yond just the quality of the finished product and also focuses on the continual improvement of the people who produce the product, the processes they use, and the environment in which they work will win in the long run and, most frequently, in the short run. This is because quality products are produced most consistently by quality organizations.

The superior value element acknowledges that quality is a key element in providing superior value (i.e., superior quality, cost, and service).

Quality, Value, and Organizational Excellence

It is important for quality professionals to understand how quality fits into the bigger picture of providing superior value to customers. Organizations survive and thrive in a globally competitive marketplace by providing superior value to customers. Achieving organizational excellence is about developing the ability to consistently provide superior value to customers over the long term. Superior value has three basic elements: superior quality, superior cost, and su­perior service.

In order to achieve organizational excellence—the level of performance necessary for long-term success in a global environment—it is necessary to consistently provide supe­rior value to customers. Quality is obviously one of the key elements in providing superior value. But total quality is even more than that. Total quality is a broad-based approach that encompasses all three of the elements of superior value. Continually improving the quality of products, processes, ser­vices, and costs is what total quality is all about—hence the name total quality. Organizations that effectively apply the total quality approach to management are the ones most likely to achieve organizational excellence.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

Just as there are different definitions of quality, there are dif­ferent definitions of total quality. The authors define total quality as follows:

An easy way to grasp the concept of total quality is to consider the analogy of a three-legged stool, as shown in Figure 1.1. The seat of the stool is customer focus. This means with total quality the customer is in the “driver’s seat” as the primary arbiter of what is acceptable in terms of quality. Each of the three legs is a broad element of the total quality philosophy (i.e., measures, people, and pro­cesses). The “measures” leg of the stool makes the point that quality can and must be measured. The “people” leg of the stool makes the point that quality cannot be inspected into a product or service. Rather, it must be built in by people who are empowered to do their jobs the right way. The “processes” leg of the stool makes the point that processes must be improved, continually and forever. What is con­sidered excellent today may be just mediocre tomorrow. Consequently, “good enough” is never good enough.

Another way to understand total quality as a concept is shown in Figure 1.2. Notice that the first part of the defi­nition in Figure 1.2 explains the what of total quality; the second part explains the how. In the case of total quality, the how is important because it is what separates this approach to doing business from all of the others.

The total in total quality indicates a concern for quality in the broadest sense—what has come to be known as the “Big Q.” Big Q refers to quality of products, services, people, processes, and environments. Correspondingly, “Little Q” refers to a narrower concern that focuses on the quality of one of these elements or individual quality criteria within an individual element.

1. How Is Total Quality Different?

What distinguishes the total quality approach from tra­ditional ways of doing business can be found in how it is achieved. The distinctive characteristics of total quality are these: strategically based, customer focus (internal and ex­ternal), obsession with quality, use of the scientific approach in decision making and problem solving, long-term com­mitment, teamwork, continual process improvement, bot­tom-up education and training, freedom through control, unity of purpose, and employee involvement and empow­erment, all deliberately aimed at supporting the organiza­tional strategy. The underlying concept that drives the need for total quality is competitiveness. Although pride of prod­uct (or service) is a philosophical driver of the total quality concept—organizations that produce a product or provide a service should want it to represent them in a way they can be proud of—the practical driver is competitiveness. In today’s globally competitive business environment, organizations cannot survive, much less thrive, unless they outperform the competition in proving superior value. And quality is an essential ingredient in superior value (quality, cost, service). The individual characteristics relating to total quality shown in Figure 1.2 are explained later in this chapter.

2. The Historic Development of Total Quality

The total quality movement had its roots in the time and motion studies conducted by Frederick Taylor in the 1920s. Table 1.1 is a time line that shows some of the major events in the evolution of the total quality movement since the days of Taylor. Taylor is now known as “the father of scientific management.”

The most fundamental aspect of scientific manage­ment is the separation of planning and execution. Although the division of labor spawned tremendous leaps forward in productivity, it virtually eliminated the old practice of one highly skilled individual performing all the tasks required to produce a quality product. In a sense, that individual was CEO, production worker, and quality controller all rolled into one. Taylor’s scientific management did away with this by making planning the job of management and production the job of labor. To keep quality from falling through the cracks, it was necessary to create a separate quality depart­ment. Such departments had shaky beginnings, and just who was responsible for quality became a clouded issue.

As the volume and complexity of manufacturing grew, quality became an increasingly difficult issue. Volume and complexity together gave birth to quality engineering in the 1920s and reliability engineering in the 1950s. Quality engi­neering, in turn, resulted in the use of statistical methods in the control of quality, which eventually led to the concepts of control charts and statistical process control, which are now fundamental aspects of the total quality approach.

Reliability engineering emerged in the 1950s. It began a trend toward moving quality control away from the traditional after-the-fact approach and toward inserting it throughout the design and production processes. However, for the most part, quality control in the 1950s and 1960s involved inspections that resulted in nothing more than cutting out bad parts.

World War II had an impact on quality that is still being felt. In general, the effect was negative for the United States and positive for Japan. Because of the urgency to meet production schedules during the war, U.S. companies focused more on meeting delivery dates than on quality. This approach became a habit that carried over even after the war.

Japanese companies, on the other hand, were forced to learn to compete with the rest of the world in the produc­tion of nonmilitary goods. At first, their attempts were un­successful, and “Made in Japan” remained synonymous with poor quality, as it had been before World War II. Around 1950, however, Japan decided to get serious about quality and establishing ways to produce quality products.

Japanese manufacturers overcame a reputation for pro­ducing cheap, shabby products and developed a reputation as world leaders in the production of quality products. More than any other single factor, it was the Japanese miracle— which was not a miracle at all but the result of a concerted effort that took 20 years to really bear fruit—that got the rest of the world to focus on quality. When Western companies finally realized that quality was the key factor in global com­petition, they responded. Unfortunately, their first responses were the opposite of what was needed.

In spite of these early negative reactions, Western com­panies began to realize that the key to competing in the global marketplace was to improve quality. With this realization, the total quality movement finally began to gain momentum.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

The total quality philosophy introduced a whole new way of looking at quality. The traditional view of quality mea­sured process performance in defective parts per hundred produced. With total quality, the same measurement is thought of in terms of defective parts per million produced. The traditional view focused on after-the-fact inspections of products. With total quality, the emphasis is on continual improvement of products, processes, and people in order to prevent problems before they occur. The traditional view of quality saw employees as passive workers who followed or­ders given by supervisors and managers. It was their labor, not their brains, that was wanted. With total quality, employ­ees are empowered to think and make recommendations for continual improvement. They are also shown the control boundaries within which they must work and are given free­dom to make decisions within those boundaries.

The traditional view of quality expected one improve­ment per employee per year. Total quality organizations expect to make at least ten or more improvements per em­ployee per year. Organizations that think traditionally focus on short-term profits. The total quality approach focuses on long-term profits and continual improvement.

The following statements summarize some of the major differences between the traditional view of quality and the total quality perspective:

• Productivity versus quality. The traditional view is that productivity and quality are always in conflict. You cannot have both. The total quality view is that lasting productivity gains are made only as a result of quality improvements.
• How quality is defined. The traditional view is that quality is defined solely as meeting customer specifica­tions. The total quality view is that quality means satisfy­ing customer needs and exceeding customer expectations.
• How quality is measured. The traditional view is that quality is measured by establishing an acceptable level of nonconformance and measuring against that bench­mark. The total quality view is that quality is measured by establishing high-performance benchmarks for customer satisfaction and then continually improving performance.
• How quality is achieved. The traditional view is that quality is inspected into the product. The total quality view is that quality is determined by product and process design and achieved by effective control techniques.
• Attitude toward defects. The traditional view is that defects are an expected part of producing a product. Measuring defects per hundred is an acceptable standard. The total quality view is that defects are to be prevented using effective control systems and should be measured in defects per million (Six Sigma).
• Quality as a function. The traditional view is that quality is a separate function. The total quality view is that quality should be fully integrated throughout the organization—it should be everybody’s responsibility.
• Responsibility for quality. The traditional view is that employees are blamed for poor quality. The total quality view is that at least 85% of quality problems are manage­ment’s fault.
• Supplier relationships. The traditional view is that sup­plier relationships are short term and cost driven. The total quality view is that supplier relationships are long term and quality oriented.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

The total quality approach was defined in Figure 1.2. This definition has two components: the what and the how of total quality. What distinguishes total quality from other ap­proaches to doing business is the how component of the defi­nition. This component has several critical elements, each of which is explained in the remainder of this section and all of which relate to one of the components of the three-legged stool in Figure 1.1.

1. Strategically Based

Total quality organizations have a comprehensive strategic plan that contains at least the following elements: vision, mis­sion, broad objectives, and activities that must be completed to accomplish the broad objectives. The strategic plan of a total quality organization is designed to give it a sustainable competitive advantage in the marketplace. The competitive advantages of a total quality organization are geared toward achieving world-leading quality and improving on it, con­tinually and forever.

2. Customer Focus

In a total quality setting, the customer is the driver. This point applies to both internal and external customers. External customers define the quality of the product or ser­vice delivered. Internal customers help define the quality of the people, processes, and environments associated with the products or services.

3. Obsession with Quality

In a total quality organization, internal and external custom­ers define quality. With quality defined, the organization must then become obsessed with meeting or exceeding this definition. This means all personnel at all levels approach all aspects of the job from the perspective of “How can we do this better?” When an organization is obsessed with quality, “good enough” is never good enough.

4. Scientific Approach

Total quality detractors put off by such concepts as employee empowerment sometimes view total quality as nothing more than another name for “soft” management or “people” man­agement. Although it is true that people skills, involvement, and empowerment are important in a total quality setting, they represent only a part of the equation. Another important part is the use of the scientific approach in structuring work and in making decisions and solving problems that relate to the work. This means that hard data are used in establishing bench­marks, monitoring performance, and making improvements.

Long-Term Commitment attempt to adopt the total quality approach. This is because they look at total quality as just another management innova­tion rather than as a whole new way of doing business that requires an entirely new corporate culture. Too few organiza­tions begin the implementation of total quality with the long­term commitment to change that is necessary for success.

5. Teamwork

In traditionally managed organizations, the best competitive efforts are often among departments within the organization. Internal competition tends to use energy that should be focused on improving quality and, in turn, external competitiveness.

Continual Process Improvement

Products are developed and services delivered by people using processes within environments (systems). To continu­ally improve the quality of products or services—which is a fundamental goal in a total quality setting—it is necessary to continually improve systems.

6. Education and Training

Education and training are fundamental to total quality be­cause they represent the best way to improve people on a con­tinual basis. It is through education and training that people who know how to work hard learn how to also work smart.

7. Freedom Through Control

Involving and empowering employees is fundamental to total quality as a way to simultaneously bring more minds to bear on the decision-making process and increase the ownership employees feel about decisions that are made. Total qual­ity detractors sometimes mistakenly see employee involve­ment as a loss of management control, when in fact control is fundamental to total quality. The freedoms enjoyed in a total quality setting are actually the result of well-planned and well-carried-out controls. Controls such as scientific methodologies lead to freedom by empowering employees to solve problems within their scope of control.

8. Unity of Purpose

Historically, management and labor have had an adversarial relationship in U.S. industry. One could debate the reasons behind management-labor discord ad infinitum without achieving consensus. From the perspective of total quality, who or what is to blame for adversarial management-labor rela­tions is irrelevant. What is important is this: To apply the total quality approach, organizations must have unity of purpose. This means that internal politics have no place in a total quality organization. Rather, collaboration should be the norm.

A question frequently asked concerning this element of total quality is “Does unity of purpose mean that unions will no longer be needed?” The answer is that unity of purpose has nothing to do with whether unions are needed. Collective bar­gaining is about wages, benefits, and working conditions, not about corporate purpose and vision. Employees should feel more involved and empowered in a total quality setting than in a traditionally managed situation, but the goal of total quality is to enhance competitiveness, not to eliminate unions. For exam­ple, in Japan, where companies are known for achieving unity of purpose, unions are still very much in evidence. Unity of pur­pose does not necessarily mean that labor and management will always agree on wages, benefits, and working conditions, but it does mean that all employees work toward the common goal.

9. Employee Involvement and Empowerment

Employee involvement and empowerment is one of the most misunderstood elements of the total quality approach and one of the most misrepresented by its detractors. The basis for involving employees is twofold. First, it increases the likelihood of a good decision, a better plan, or a more ef­fective improvement by bringing more minds to bear on the situation—not just any minds but the minds of the people who are closest to the work in question. Second, it promotes ownership of decisions by involving the people who will have to implement them.

Empowerment means not just involving people but also involving them in ways that give them a real voice. One of the ways this can be done is by structuring work that allows employees to make decisions concerning the improvement of work processes within well-specified parameters. Should a machinist be allowed to unilaterally drop a vendor if the vendor delivers substandard material? No. However, the ma­chinist should have an avenue for offering his or her input into the matter.

Should the same machinist be allowed to change the way she sets up her machine? If by so doing she can improve her part of the process without adversely affecting someone else’s, yes. Having done so, her next step should be to show other machinists her innovation so that they might try it.

10. Peak Performance

When effectively practiced, total quality allows every aspect of an organization to operate at peak levels. This means that all personnel and processes are operating at their best. Peak performance is essential to organizations that operate in a global environment where competition is intense, constant, and unforgiving.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

Total quality is not just one individual concept. It is a number of related concepts pulled together to create a comprehen­sive approach to doing business. Many people contributed in meaningful ways to the development of the various concepts that are known collectively as total quality. The three major contributors are W. Edwards Deming, Joseph M. Juran, and Philip B. Crosby. To these three, many would add Armand V. Feigenbaum and a number of Japanese experts, such as Shigeo Shingo.

1. Deming’s Contributions

Of the various quality pioneers in the United States, the best known is W. Edwards Deming. Deming’s contribution was his ability to see the big picture, envision the impact of qual­ity on it, and meld different management philosophies into a new, workable, unitary whole. More than any other quality pioneer, Deming is responsible for the total quality approach.

Deming came a long way to achieve the status of inter­nationally acclaimed quality expert. During his formative years, Deming’s family bounced from small town to small town in Iowa and Wyoming, trying in vain to rise out of pov­erty. These early circumstances gave Deming a lifelong ap­preciation for economy and thrift. In later years, even after he was generating a substantial income, Deming maintained only a simple office in the basement of his modest home out of which he conducted his international consulting business.

Working as a janitor and at other odd jobs, Deming worked his way through the University of Wyoming, where he earned a bachelor’s degree in engineering. He went on to receive a master’s degree in mathematics and physics from the University of Colorado and a doctorate in physics from Yale.

His only full-time employment for a corporation was with Western Electric. Many feel that what he witnessed dur­ing his employment there had a major impact on the direction the rest of his life would take. Deming was disturbed by the amount of waste he saw at Western Electrics Hawthorne plant. It was there that he pioneered the use of statistics in quality.

Although Deming was asked in 1940 to help the U.S. Bureau of the Census adopt statistical sampling techniques, his reception in the United States during these early years was not positive. With little real competition in the interna­tional marketplace, major U.S. corporations felt little need for his help. Corporations from other countries were equally uninterested. However, attitudes toward Deming’s idea were changed by World War II. The need to rebuild after the dev­astation of World War II, particularly in bombed-out Japan, brought Deming’s ideas on quality to the forefront.

During World War II, almost all of Japan’s industry went into the business of producing war materials. After the war, those firms had to convert to the production of con­sumer goods, and the conversion was not very successful. To have a market for their products, Japanese firms had to enter the i nternational marketplace. This move put them in direct competition with companies from the other industrialized countries of the world, and the Japanese firms did not fare well.

By the late 1940s, key industrial leaders in Japan had finally come to the realization that the key to competing in the international marketplace is quality. At this time, Shigeiti Mariguti of Tokyo University, Sizaturo Mishibori of Toshiba, and several other Japanese leaders invited Deming to visit Japan and share his views on quality. Unlike their counter­parts in the United States, the Japanese industrialists accepted Deming’s views, learned his techniques, and adopted his phi­losophy. So powerful was Deming’s impact on industry in Japan that the most coveted award a company there can win is the Deming Prize. In fact, the standards that must be met to win this prize are so difficult and so strenuously applied that it is now being questioned by some Japanese companies.

By the 1980s, leading industrialists in the United States were where their Japanese counterparts had been in the late 1940s. At last, Deming’s services began to be requested in his own country. By this time, Deming was over 80 years old. He had not been received as openly and warmly in the United States as he was in Japan. Deming’s attitude toward corporate executives in the United States can be described as cantan­kerous at best.

Deming’s contributions to the quality movement would be difficult to overstate. Many consider him the founder of the movement. The things for which he is most widely known are the Deming Cycle, his Fourteen Points, and his Seven Deadly Diseases.⁸

The Deming Cycle Summarized in Figure 1.3, the Deming Cycle was developed to link the production of a product with consumer needs and focus the resources of all departments (re­search, design, production, marketing) in a cooperative effort to meet those needs. The Deming Cycle proceeds as follows:

1. Conduct consumer research and use it in planning the product (plan).
2. Produce the product (do).
3. Check the product to make sure it was produced in ac­cordance with the plan (check).
4. Market the product (act).
5. Analyze how the product is received in the marketplace in terms of quality, cost, and other criteria (analyze).

Deming’s Fourteen Points Deming’s philosophy is both summarized and operationalized by his Fourteen Points, which are contained in Figure 1.4. Deming modified the specific wording of various points over the years, which ac­counts for the minor differences among the Fourteen Points as described in various publications. Deming stated repeat­edly in his later years that if he had it all to do over again, he would leave off the numbers.

Deming’s Seven Deadly Diseases The Fourteen Points summarize Deming’s views on what a company must do to ef­fect a positive transition from business as usual to world-class quality. The Seven Deadly Diseases summarize the factors that he believed can inhibit such a transformation (see Figure 1.5).

The description of these factors rings particularly true when viewed from the perspective of U.S. firms trying to compete in the global marketplace. Some of these factors can be eliminated by adopting the total quality approach, but three cannot. This does not bode well for U.S. firms trying to regain market share. Total quality can eliminate or reduce the impact of a lack of consistency, personal review systems, job hopping, and using only visible data. However, total quality will not free corporate executives from pres­sure to produce short-term profits, excessive medical costs, or excessive liability costs. These are diseases of the nation’s financial, health care, and legal systems, respectively.

By finding ways for business and government to cooper­ate appropriately without collaborating inappropriately, other industrialized countries have been able to focus their indus­try on long-term rather than short-term profits, hold down health care costs, and prevent the proliferation of costly litiga­tion that has occurred in the United States. Excessive health care and legal costs represent non-value-added costs that must be added to the cost of products produced and services delivered in the United States.

2. Juran’s Contributions

Joseph M. Juran ranks near Deming in the contributions he has made to quality and the recognition he has received as a result. His Juran Institute Inc. in Wilton, Connecticut, is an international leader in conducting training, research, and consulting activities in the area of quality management (see Figure 1.6). Quality materials produced by Juran have been translated into 14 different languages.

Juran holds degrees in both engineering and law. The emperor of Japan awarded him the Order of the Sacred Treasure medal, in recognition of his efforts to develop qual­ity in Japan and to promote friendship between Japan and
figure 1.6 Services Provided by the Juran Institute.

the United States. Juran is best known for the following con­tributions to the quality philosophy:

• Juran’s Three Basic Steps to Progress
• Juran’s Ten Steps to Quality Improvement
• The Pareto Principle
• The Juran Trilogy

Juran’s Three Basic Steps to Progress Juran’s Three Basic Steps to Progress (listed in Figure 1.7) are broad steps that, in Juran’s opinion, companies must take if they are to achieve world-class quality. He also believes there is a point of diminishing return that applies to quality and competitiveness.

Juran’s Ten Steps to Quality Improvement Examining Juran’s Ten Steps to Quality Improvement (in Figure 1.8), you will see some overlap between them and Deming’s Fourteen Points. They also mesh well with the philosophy of quality ex­perts whose contributions are explained later in this chapter.

The Pareto Principle The Pareto Principle espoused by Juran shows up in the views of most quality experts, al­though it often goes by other names. According to this principle, organizations should concentrate their energy on eliminating the vital few sources that cause the majority of problems. Further, both Juran and Deming believe that sys­tems that are controlled by management are the systems in which the majority of problems occur.

The Juran Trilogy The Juran Trilogy summarizes the three primary managerial functions. Juran’s views on these functions are explained in the following sections.

Quality Planning Quality planning involves developing the products, systems, and processes needed to meet or exceed customer expectations. The following steps are required:

1. Determine who the customers are.
2. Identify customers’ needs.
3. Develop products with features that respond to cus­tomer needs.
4. Develop systems and processes that allow the organiza­tion to produce these features.
5. Deploy the plans to operational levels.

Quality Control The control of quality involves the follow­ing processes (see Figure 1.9):

1. Assess actual quality performance.
2. Compare performance with goals.
3. Act on differences between performance and goals.

Quality Improvement The improvement of quality should be ongoing and continual:

1. Develop the infrastructure necessary to make annual quality improvements.
2. Identify specific areas in need of improvement, and im­plement improvement projects.
3. Establish a project team with responsibility for complet­ing each improvement project.
4. Provide teams with what they need to be able to di­agnose problems to determine root causes, develop solutions, and establish controls that will maintain gains made.

3. Crosby’s Contributions

Philip B. Crosby started his career in quality later than Deming and Juran. His corporate background includes 14 years as director of quality at ITT Corporation (1965-1979). He left ITT in 1979 to form Philip Crosby Associates, an in­ternational consulting firm on quality improvement, which he ran until 1992, when he retired as CEO to devote his time to lecturing on quality-related issues. More recently, Crosby had once again entered the business arena as a quality con­sultant until his death in 2001.

Crosby, who defined quality simply as conformance, is best known for his advocacy of zero-defects management and prevention as opposed to statistically acceptable levels of quality. He is also known for his Quality Vaccine and Crosby’s Fourteen Steps to Quality Improvement.

Crosby’s Quality Vaccine consists of three ingredients:⁹

1. Determination
2. Education
3. Implementation

His Fourteen Steps to Quality Improvement are listed in Figure 1.10.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

Organizations that succeed never approach total quality as just another management innovation or, even worse, as a quick fix. Rather, they approach total quality as a new way of doing business. What follows are common errors organiza­tions make when implementing total quality. The successful organizations avoid these errors.

• Senior management delegation and poor leadership. Some organizations attempt to start a quality initiative by delegating responsibility to a hired expert rather than applying the leadership necessary to get everyone involved.

• Team mania. Ultimately teams should be established, and all employees should be involved with them. However, working in teams is an approach that must be learned. Supervisors must learn how to be effective coaches, and employees must learn how to be team players. The orga­nization must undergo a cultural change before teamwork can succeed. Rushing in and putting everyone in teams before learning has occurred and the corporate culture has changed will create problems rather than solve them.
• Deployment process. Some organizations develop qual­ity initiatives without concurrently developing plans for integrating them into all elements of the organization (operations, budgeting, marketing, etc.).
• Taking a narrow, dogmatic approach. Some organi­zations are determined to take the Deming approach, Juran approach, or Crosby approach and use only the principles prescribed in them. None of the approaches advocated by these and other leading quality experts is truly a one-size-fits-all proposition. Even the experts en­courage organizations to tailor quality programs to their individual needs.
• Confusion about the differences among education, awareness, inspiration, and skill building. In order for people to do their part in making the total quality ap­proach work effectively, they must have the skills to apply the fundamental tools of quality. Making them aware of quality and inspiring them to accept it at a philosophical level are good and necessary steps in the right direction. But helping them develop the actual skills necessary to implement the concept must also be part of the transfor­mational process.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

There are several trends that will shape the future of quality management. These trends are as follows:

• Increasing global competition. More and better com­petition from emerging industrialized nations will be an ongoing part of life for organizations.
• Increasing customer expectations. Today’s global cus­tomer is interested in not just the quality of a product provided but also the quality of the organization that backs it up. Customers want an excellent product or ser­vice from an organization that also provides accurate bill­ing, reliable delivery, after-purchase support, and social responsibility.
• Opposing economic pressures. The global marketplace exerts enormous, unrelenting pressure on organizations to continually improve quality while simultaneously re­ducing the prices they charge for goods and services. The key to achieving higher quality and lower prices for customers is the reduction of the expenses associ­ated with satisfying unhappy customers—expenses that amount to as much as 25% of the cost of sales in many companies.
• New approaches to management. Companies that succeed in the global marketplace have learned that you manage budgets, but lead people. The old approach of providing an occasional seminar or motivational speech for employees without making any fundamen­tal changes in the way the organization operates will no longer work.

1. Quality Management Characteristics for the Future

To succeed in the global marketplace for now and in the future, organizations need to operate according to the prin­ciples of quality management. Such companies will have the following characteristics:

• A total commitment to continually increasing value for customers, investors, and employees
• A firm understanding that market driven means that quality is defined by customers, not the company
• A commitment to leading people with a bias for continu­ous improvement and communication
• A recognition that sustained growth requires the simulta­neous achievement of four objectives continually forever: (a) customer satisfaction, (b) cost leadership, (c) effective human resources, and (d) integration with the supplier base
• A commitment to fundamental improvement through knowledge, skills, problem solving, and teamwork
• A commitment to fast-paced, constant learning, and an ability to respond quickly to changes in the competitive environment
• A commitment to achieving end-to-end collaboration using web-based, on-demand tools that are fully inte­grated throughout the supply chain
• A commitment to maintaining an environment in which creativity, critical thinking, and innovation are not just encouraged and supported, but demanded

As long as the concept of competition exists, there will be a need for quality management. In the twenty-first cen­tury, globalization will only intensify the level of compe­tition businesses face. That is why the book you are now reading has been translated into Korean and Indonesian. The concept of quality management is being adopted glob­ally and, as a result, will continue to be applied and refined through this century.

Companies that develop the characteristics listed above will be those that fully institutionalize the principles of quality management. Quality management as both a practice and a profession has a bright future. In fact, in terms of succeeding in the global marketplace, quality management is the future. Consequently, more and more companies are making quality management the way they do business, and more and more institutions of higher education are offering quality management courses and programs.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

In a competitive work environment, one of the ways that quality professionals can distinguish themselves, enhance their credibility, and improve their career potential is to become certified in an appropriate quality discipline. The American Society for Quality (ASQ) offers certifications in a variety of disciplines, including Manager of Quality/ Organizational Excellence, Quality Engineer, Reliability Engineer, Software Quality Engineer, Quality Auditor, Six Sigma Black Belt, Six Sigma Green Belt, Quality Technician, Calibration Technician, Quality Improvement Associate, Quality Inspector, Quality Process Analyst, Hazard Analysis and Critical Point Auditor, Biomedical Auditor, and Pharmaceutical GMP Professional.

The requirements for all of these certifications are avail­able at the ASQ’s Web site: www.asq.org/certification. At this Web site, there is a list of the various certifications available through the ASQ. Simply click on the certification of interest, and all relevant information pertaining to that certification will be available. In addition, the ASQ provides assistance to potential examinees who are preparing for certification examinations: They may find the help they need under the heading “Prepare for the exam” at the applicable page on the ASQ’s certification Web site address (www.asq.org/ certification). The requirements and body of knowledge re­lating to the most pertinent of these certifications—Manager of Quality/Organizational Excellence, Quality Engineer, and Quality Technician—are summarized in the following paragraphs.

2. Manager of Quality/Organizational Excellence

This certification is for managers who lead and champion continual process-improvement initiatives, facilitates and leads team efforts to establish and monitor customer and supplier relations, supports strategic planning and de­ployment efforts, assists in the development of measure­ment systems, motivates staff, evaluates staff, manages projects, manages human resources, analyzes budgets and finances, evaluates risk, and uses management tools and techniques.

Education and Experience Requirements In order to sit for the Manager of Quality/Organizational Excellence examination, individuals must have ten years of experience in one or more of the following areas: leadership, strategic plan development and deployment, management elements and methods, quality management tools, customer focus, supply-chain management, and training and development. At least five of the ten years of experience in one or more of these areas of expertise must be at the decision-making level. Education waivers of up to five years are allowed for individuals who have completed a diploma or degree from an institution accredited by the ASQ. The waivers apply as follows: (1) one year for a technical diploma, (2) two years for an associate degree, (3) four years for a baccalau­reate degree, and (4) five years for a master or doctorate degree.

Examination Topics The ASQ offers a practice exami­nation that helps prospective examinees determine what the test covers and what areas or topics they might need to re­view more thoroughly. The body of knowledge covered on the examination for certification as a Manager of Quality/ Organizational Excellence is as follows:

• Leadership. Organizational structures and culture, leadership challenges, team and team processes, and the ASQ Code of Ethics.
• Strategic plan development and deployment. Strategic planning models, business environment analysis, and stra­tegic plan deployment.
• Management elements and methods. Management skills and abilities, communication skills and abilities, project management, quality systems, and quality models and theories.
• Quality management tools. Problem-solving tools, process management, and measurement/metrics.
• Customer-focused organizations. Customer identifica­tion, segmentation, and relationship management.
• Supply-chain management. Supplier selection, supplier communications, supplier performance, supplier improve­ment, supplier certification/partnerships/ alliances, and supplier logistics.
• Training and development. Training plans, needs anal­ysis, training material/curriculum development and de­livery, and training effectiveness/evaluation.

3. Quality Engineer

The Quality Engineer certification is for individuals who develop and operate quality control systems, apply and ana­lyze testing and inspection procedures, use metrology and statistical systems to diagnose and correct quality problems, understand human factors and motivation, understand quality cost techniques, develop and administer manage­ment information systems, and audit quality systems for identifying deficiencies and correcting them.

Education and Experience Requirements In order to sit for the Quality Engineer certification examination, individuals must have a minimum of eight years of work experience in one or more of the following disciplines: management and leadership, the quality system, product and process design, product and process control, and con­tinuous improvement. Waivers of part of the experience requirement available to individuals who have completed a diploma or degree from an institution accredited by the ASQ are as follows: (1) one year for a technical diploma, (2) two years for an associate degree, (3) four years for a baccalaureate degree, and (4) five years for a masters or doctorate degree.

Examination Topics The ASQ provides a practice ex­amination that helps prospective examinees find out what the test covers and what areas or topics they might need to review more thoroughly. The body of knowledge covered on the examination for certification as a Quality Engineer is as follows:

• Management and leadership. Topics include quality philosophies and foundations, the quality management system, the ASQ Code of Ethics, leadership principles and techniques, facilitation principles and techniques, communication skills, customer relations, supplier man­agement, and barriers to quality.
• The quality system. Topics include elements of the quality system, documentation of the quality system, quality standards and other guidelines, quality audits, cost of quality, and quality training.
• Product and process design. Topics include classifica­tion of quality characteristics, design inputs and review, technical drawings and specifications, design verification, and reliability/maintainability.
• Product and process control. Topics include tools, ma­terial control, acceptance sampling, measurement and testing, metrology, and measurement analysis.
• Continuous improvement. Topics include quality con­trol tools, quality management planning tools, continuous improvement techniques, corrective action, and preven­tive action.
• Quantitative methods and tools. Topics include col­lecting and summarizing data, quantitative concepts, probability distributions, statistical decision making, re­lationships between variables, statistical process control, process and performance capability, and design and anal­ysis of experiments.

4. Quality Technician

This certification is for paraprofessionals who—under the direction of quality engineers and managers—analyze and solve quality problems, prepare inspection plans and in­structions, select applications for sampling plans, prepare procedures, train inspectors, perform audits, analyze quality data, analyze quality costs, and apply basic statistical meth­ods for process control.

Education and Experience Requirements In order to sit for the Quality Technician examination, individuals must have at least four years of higher education and/or work ex­perience in one or more of the following disciplines: qual­ity concepts and tools, statistical techniques, metrology and calibration, inspection and testing, quality audits, and pre- ventive/corrective action. Education waivers of up to three years are allowed for individuals who have completed a cer­tification program or degree from an institution accredited by the ASQ. The waivers apply as follows: (1) one year for certification through the Quality Technology program of a community college or technical school, (2) two years for an associate degree, and (3) three years for a baccalaureate, masters, or doctorate degree.

Examination Topics The ASQ offers a practice ex­amination that helps prospective examinees find out what the test covers and what topics they might need to review more thoroughly. The body of knowledge covered on the examination for certification as a Quality Technician is as follows:

• Quality concepts and tools. Topics include quality con­cepts, quality tools, and team functions.
• Statistical techniques. Topics include general concepts, calculations, and control charts.
• Metrology and calibration. Topics include measure­ment and test equipment and calibration.
• Inspection and testing. Topics include blueprint read­ing and interpretation, inspection concepts, inspection techniques and processes, and sampling.
• Quality audits. Topics include audit types, audit com­ponents, and tools/techniques.
• Preventive and corrective action. Topics include pre­ventive action, corrective action, and nonconforming material.

For more detail concerning the certification examina­tions, readers are encouraged to visit the certification pages of the ASQ’s Web site: www.asq.org/certification. Details concerning study materials, costs, examination dates, and application procedures are provided on these pages.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

1. THE RELATIONSHIP BETWEEN QUALITY AND COMPETITIVENESS

The relationship between quality and competitiveness is best illustrated by an example from the world of athlet­ics. Consider track star Juan Arballo. In high school, he was his track team’s best sprinter. Competing at the district level, Juan easily topped the competition in such events as the 100-, 200-, and 400-meter runs and several relays in which he was the anchor. He did well enough in high school to win a college scholarship. However, at the col­lege level the competition was of a higher quality, and Juan found he had to train harder and run smarter to win. This he did, and although he no longer won every race, Juan did well enough to pursue a spot on the U.S. Olympic team. In the Olympic Trials, the quality of the competition was yet
again better than that to which Juan was accustomed. He made the Olympic team but only in two events: the 200- meter dash and the 4 x 100 relay.

In the preliminary events at the Olympics, Juan Arballo found the quality of his competitors to be even better than he had imagined it would be. Some competitors had pre­liminary times better than the best times he had ever run in meets. Clearly, Juan faced the competitive challenge of his career. When his event was finally run, Juan, for the first time in his life, did not place high enough to win a medal. The quality of the global competition was simply beyond his reach.

In this example, at each successive level of competi­tion the quality of the competitors increased. A similar phenomenon happens to businesses in the marketplace. Companies that used to compete only on a local, regional, or national level now find themselves competing against
companies from throughout the world. Like Juan Arballo, some of these companies find the competition to be more intense than any they have ever encountered. Only those who are able to produce world-class quality can compete at this level. In practical terms, it is extremely important for a country’s businesses to be able to compete globally. When they can’t, jobs are lost and the quality of life in that country declines correspondingly.

How Quality and Competitiveness Encourage Job Satisfaction and Financial Benefits

Human resource professionals know that job satisfaction is affected by several factors including working conditions, opportunity for advancement, workload, stress level, rela­tionships with co-workers, relationships with supervisors, and financial benefits. What is less known is that all of these job satisfaction factors are affected by an organiza­tion’s commitment to quality and, in turn, competitiveness. The formula is simple. The better an organization’s qual­ity is, the more competitive the organization is. The more competitive an organization is, the better everything in the organization functions.

For example, because everything that affects quality and competitiveness is continually improved in an organization that is committed to total quality, working conditions, work­load, and stress levels tend to be better in the organization. Because competitive organizations have no trouble finding customers for their products and services, they are able to stay in business and even grow which, in turn, provides op­portunities for advancement. In addition, because competi­tive organizations generate a profit, they are better able to reward their personnel financially (salary, benefits, bonuses, incentive pay, and perquisites).

Finally, in competitive organizations that continually im­prove quality, interpersonal relationships among employees and between employees and supervisors tend to be more pos­itive because the quality of these relationships is stressed and continually improved. Further, relationships always go better when they are not complicated by the stress of wondering about layoffs, reductions in force, restructuring, buyouts, and all of the other pressures inflicted on employees of organi­zations that struggle to stay in business. In short, everything tends to work better in organizations that effectively use qual­ity management to maintain their competitive edge.

2. COST OF POOR QUALITY

Many business executives adopt the attitude that ensuring quality is good thing to do until hard times set in and cost cutting is necessary. During tough times, quality initiatives are often the first functions to go. Companies that take this approach are those that have never integrated continual qual­ity improvement as a normal part of doing business. Rather, they see it as a stand-alone, separate issue. What executives in such companies fail to calculate or to even understand is the costs associated with poor quality. This ironic dilemma is best illustrated with an example of two companies.

2.1. A Tale of Two Companies

Two companies, ABC Inc. and XYZ Inc., both need to com­pete in the global marketplace in order to survive. As might be expected, over the years competition has become in­creasingly intense. In order to be more competitive, ABC’s executives undertook a major company-wide cost-cutting initiative. They eliminated quality audits; changed from trusted, proven suppliers to low-bid suppliers; purchased new computer systems; cut back on research and develop­ment; and reduced customer service staff.

These cost-cutting strategies did have the desired effect of decreasing the company’s overhead, but they also had the unplanned consequences of disrupting the company’s ability to satisfy customers and reducing the company’s potential to develop new business in the future. The net outcome of all this was unhappy customers, disenchanted employees, and a de­cline in business. To make matters even worse, the company was still struggling with the poor performance record that caused its executives to want to cut costs in the first place.

The executives of XYZ Inc. also needed to make some changes in order to stay competitive, but they decided to take a different approach. XYZ’s management team set out to identify all of the costs that would disappear if their company improved its performance in key areas. The costs identified included those associated with the following: late deliveries to customers, billing errors, scrap and rework, and accounts payable errors. In other words, XYZ’s executives decided to identify the costs associated with poor quality. Having done so, they were able to begin improvement projects in the areas identified without making cuts in functions essential to competitiveness (e.g., product quality, research and develop­ment, customer service).

2.2. Cost of Poor Quality and Competitiveness

Few things affect an organization’s ability to compete in the global marketplace more than the costs associated with poor quality. When an organization does what is necessary to im­prove its performance by reducing deficiencies in key areas (cycle time, warranty costs, scrap and rework, on-time deliv­ery, billing, etc.), it can reduce overall costs without eliminating essential services, functions, product features, and personnel. Reducing the costs associated with poor quality is mandatory for companies that hope to compete in the global marketplace. Reducing such costs is one of the principal drivers behind the total quality concept of continual improvement.

Figure 2.1 summarizes both the traditional and the hid­den costs of poor quality. The key principle to understand when examining the hidden costs shown in Figure 2.1 is that if every activity in an organization is performed properly every time, these costs simply disappear.

2.3. Interpreting the Costs of Poor Quality

Once activities have been identified that exist only or pri­marily because of poor quality, improvement projects can be undertaken to correct the situation. It is important at this stage to select those projects that have the greatest potential to yield the highest return. The following steps can be used to measure the costs of poor quality so that selected im­provement projects have the highest priority:

1. Identify all activities that exist only or primarily because of poor quality.
2. Decide how to estimate the costs of these activities.
3. Collect data on these activities and make the cost estimates.
4. Analyze the results and take necessary corrective ac­tions in the proper order of priority.

Reducing the cost of poor quality reduces all other costs— product costs, the cost of doing business, and so on. This, in turn, improves the superior value equation: quality, cost, and service.

3. COMPETITIVENESS AND THE U.S. ECONOMY

The United States came out of World War II as the only major industrialized nation with its manufacturing sector completely intact. A well-oiled manufacturing sector and the availability of abundant raw materials helped the United States become the world leader in the production and export of durable goods. This resulted in a period of unparalleled prosperity and one of the highest standards of living ever experienced by any country.

While the United States was enjoying its position as the world’s preeminent economic superpower, the other industrialized nations of the world, particularly Japan and Germany, were busy rebuilding their manufacturing sectors. As Japanese and German manufacturers rebuilt, two things became apparent to them:

1. To succeed, they would have to compete globally.
2. To compete globally, they would have to produce goods of world-class quality, which meant producing better goods but at reasonable, competitive prices.

Basking in their prosperity, U.S. manufacturers were slow to catch on that the game had changed from mass produc­tion with acceptable levels of waste to quality production with things done right the first time every time to provide superior value for customers. The old game was best cost. The new game had become best cost and best quality. When foreign companies—through a combination of better train­ing, better technology, and better management—began to eat away at markets, U.S. companies, mistakenly seeing cost rather than quality as the issue, began sending work offshore to hold down labor costs. By the time U.S. companies learned that quality and value were key to success in the global mar­ketplace, Japan, Germany, Taiwan, and Korea had made major inroads into global markets previously dominated by U.S. manufacturers (e.g., steel, automobiles, computers, and consumer electronics). In a relatively short period of time, the United States went from the world’s leading lender and exporter to the world’s biggest debtor, with a huge balance- of-trade deficit. By 1980, the United States was consuming more than it produced and the trend continues to this day.

Impact of Competitiveness on Quality of Life

A nation’s ability to compete in the global marketplace has a direct bearing on the quality of life of its citizens. Because the ability to compete translates into the ability to do a better job of producing quality goods, it is critical that nations and individual organizations within them focus their policies, systems, and resources in a coordinated way on continually improving both quality and competitiveness.

The United States began the first decade of the new cen­tury poised on the precipice of a growing gap between the haves and the have-nots. While Canada, France, Germany, Italy, Japan, Sweden, and Great Britain have taken steps to link economics, education, and labor market policy in ways that promote competitiveness, the United States is still de­bating the need for an industrial policy and struggling to re­verse the decline of its public schools.

During the 1980s, the United States improved productiv­ity by putting more people to work. Other countries improved their productivity by making the individual worker more ef­ficient. Most new entrants into the workforce during the 1970s and 1980s were people who had not worked previously, primar­ily women. This influx of new workers helped the United States maintain its traditionally high level of productivity. However, by the 1990s, the gains that could be made by increasing the number of people in the workforce had been made.

From 2010 to the foreseeable future, the number of people in the prime working-years age groups in the United States will be on the decline.¹ As the size of the workforce continues the downward trend that began in the early 1990s, the only way to improve productivity will be to do what other industrialized countries have done—concentrate on improving the efficiency of individual workers. In other words, businesses in the United States will need to get more work out of fewer workers. As some businesses have already learned, the best way to do this is to adopt the total quality philosophy.

Figure 2.2 contains several vignettes relating to the quality of life in the United States. This figure presents either a bleak picture of bad times to come or an unprecedented national challenge. To meet the challenge, companies in the United States will have to produce world-class value, which will re­quire a commitment to superior quality, cost, and service.

4. FACTORS INHIBITING COMPETITIVENESS

Improving competitiveness on a national scale is no simple matter. Much can be done at the level of the individual com­pany, where the total quality approach can be applied to great advantage, but competitiveness on a national scale re­quires more than just total quality. Students of quality man­agement must understand this point. Failure to understand the limits of total quality has caused some business leaders to expect too much too soon. This, as a result, has turned them into detractors.

This section describes factors that can inhibit competi­tiveness but are beyond the scope of total quality. They are socioeconomic and sociopolitical in nature and are indig­enous to the United States. In the age of global competi­tion, managers should apply the principles of total quality to help make their individual organizations more competi­tive. Simultaneously, they should work through the politi­cal and social systems as private citizens and community
leaders to help level the playing field among nations by correcting the inhibitors explained in this section. These inhibitors fall into the following categories: business- and government-related factors, family-related factors, and ed­ucation-related factors.

4.1. Business- and Government-Related Factors

Those U.S. companies trying to compete in the global mar­ketplace are rowing upstream while dragging an anchor. Actually, they drag three anchors. This was pointed out many years ago by W. Edwards Deming when he first set forth his Seven Deadly Diseases. His second, sixth, and sev­enth deadly diseases are as follows:²

• Emphasis on short-term profits fed by fear of unfriendly takeover attempts and pressure from lenders or shareholders
• Excessive medical costs
• Excessive costs of liability inflated by lawyers working on contingency fees

Each of these diseases adds cost to a company’s products without adding value. Nothing could be worse when viewed from the perspective of competitiveness. A company might equal all competitors point for point on all quality and pro­ductivity criteria and still lose in the marketplace because it is a victim of deadly diseases that drive up the cost of its product.

Excessive medical costs and litigation, primarily re­lated to workers’ compensation, have also slanted the play­ing field in favor of foreign competitors. The annual cost of workers’ compensation to U.S. businesses is almost $30 bil­lion. This is a non-value-added cost that increases the price these businesses must charge for their products. Litigation and the associated legal costs have made tort reform an issue in the U.S. Congress and in the legislatures of most states. However, intense lobbying by trial lawyers has prevented any significant tort reform.

Overcoming these business-related inhibitors will re­quire business and government to work together in a posi­tive, constructive partnership to enact policies that will reduce these non-value-added costs to a minimum. To ac­complish this goal, the United States will have to under­take major restructuring of its financial, legal, and medical systems.

4.2. Family-Related Factors

Human resources are a critical part of the competitive­ness equation. Just as one of the most important factors in fielding a competitive athletic team is having the best pos­sible players, one of the most important factors in fielding a competitive company is having the best possible employees. Consequently, the quality of the labor pool is important. The more knowledgeable, skilled, motivated, and able to learn members of the labor pool are, the better.

Well-educated, well-trained, motivated members of the labor pool quickly become productive employees when given jobs. Although providing ongoing training for em­ployees is important in the age of global competitiveness, the type of training provided is important. Organizations that can offer training that has immediate and direct ap­plication spend less than those that have to begin by pro­viding basic education for functionally illiterate employees. Since the 1970s, U.S. businesses have had to devote increas­ing amounts of money to basic education efforts, whereas foreign competitors have been able to provide advanced training that very quickly translates into better quality and productivity.

Many factors account for this difference. Some of these can be traced directly to the family. If the family unit, regard­less of how it is constituted, is the nation’s most important human resource development agency, the labor pool from which U.S. companies must draw their employees cannot match that in competing countries.

Single parents who must work full-time have little or no time to help their children excel in school. Children with parents who do not value education are unlikely to value it themselves. If the family has a strong influence—positive or negative, by design or by default—on the attitudes of chil­dren toward learning and work, the United States faces deep- seated problems that must be solved if its companies are going to compete in the global marketplace.

4.3. Education-Related Factors

The transition from classroom to workplace has never been easy, but in the age of global competition it has only become more difficult. The needs of employers have increased mark­edly. Unfortunately, the academic performance of students in the United States has not kept pace with changes in the global marketplace. High school graduation rates in the United States rank near the bottom when compared with those in other leading industrialized nations—nations that America must compete with. In addition, the performance of those students who do graduate from high school is mark­edly lower than that of their contemporaries in competing industrialized countries.

On international tests of academic performance in such key areas as reading, mathematics, science, and problem solving, American students lag well behind their contem­poraries in other countries. This is bad news for employers in the United States that must compete in an increasingly global environment. Human performance is one of the key ingredients in quality, productivity, value, organizational ex­cellence, and all of the other factors that affect global com­petitiveness. Students who enter the workplace unable to perform at competitive levels in reading, mathematics, sci­ence, and problem solving just handicap their employers.

Figure 2.3 compares annual expenditures per pupil for leading industrialized countries. Of the top seven, the United States spends the most, whereas Korea spends the least. Figure 2.4 compares the number of school days required of students annually in the leading industrialized countries. With this criterion, the order is reversed when comparing the United States and Japan.

Figures 2.5, 2.6, 2.7, and 2.8 show the actual rankings of student performance on international tests of reading, mathematics, science, and problem solving as tracked by the Organization for Economic Cooperation and Development (OECD). Figure 2.5 shows the relative performance rank­ings of students in mathematics literacy. The average score of students from the United States is well below the inter­national average (483 versus 498). Figure 2.6 shows similar results in science literacy. Figure 2.7 shows that students from the United States scored an average of 495 on reading while the average international score was 500. These scores do not bode well for the United States or for its employers who must compete in the global arena. In fact, what the scores mean is that if global competition were a footrace, the United States would be starting 100 yards behind in a 200-yard race.

5. U.S. Manufacturers and Global Competition

The most important sectors in determining the quality of life in a country are manufacturing and agriculture. The United States has led the world in agricultural production for many years and still does. The United States also led the world in manufacturing productivity for many years. Beginning with the 1960s, however, this lead began to slip. The decline continued and accelerated through the 1980s to the point that the U.S. manufacturing sector entered the 1990s struggling uphill to regain ground. In the mid- 1990s, however, the United States began to reemerge as a world-class competitor. No longer is the United States, or any other country, the clear-cut leader in terms of manu­facturing productivity. With the dawning of the new mil­lennium, Japan, the United States, Germany, and Korea became increasingly competitive.

Figure 2.9 compares the productivity of automobile manufacturers in Japan, the United States, and Europe. In this chapter, the term productivity is used several times. In this context, the term should be viewed as “total fac­tor productivity” (ratio of outputs to inputs from labor, capital, materials, and energy). The graph compares the average hours required by the most productive plants to produce one automobile. Japanese plants located in Japan are able to produce an automobile in an aver­age of 15 hours. European manufacturers require more than twice that much time. Such U.S. manufacturers as General Motors, Ford, and Chrysler require an average of 20 hours per automobile. Japanese manufacturers with assembly plants in the United States using U.S. workers, such as Mazda, average 19 hours per automobile. Because hourly wages in Europe tend to be higher than those in Japan and the United States, European firms operate at a double competitive disadvantage. European and U.S. firms are nibbling away at these productivity differences to the point that the gap between the best and worst producers is slowly but steadily closing.

Another area in which Japanese firms have gained a competitive advantage is product development. The prod­uct development cycle—the time it takes to turn an idea into a finished product—is typically shorter in Japan than in the United States and Europe. This allows Japanese firms to get new products to the market faster. Japanese automobile manufacturers take an average of two years to complete the product development cycle compared with more than three years for their competitors in the United States and Europe.

 

Another basis for comparison among automobile manu­facturers is quality. Productivity gained at the expense of qual­ity yields no competitive advantage. Figure 2.10 compares the major automobile-producing nations in terms of the average number of defects per 100 vehicles manufactured. The qual­ity comparisons follow the same trends found in the earlier productivity comparisons. Japanese manufacturers average the fewest defects; European manufacturers average the most. American manufacturers find it difficult to compete in the global marketplace when their productivity and quality are not up to international standards—a situation that must be reversed if the United States is to regain the preeminent posi­tion it has historically enjoyed in the world community.

Even a cursory examination of key economic indica­tors raises concerns. The ability of a country to compete in the manufacturing arena is a direct determinant of its quality of life. Manufacturing created the great American middle class. If the manufacturing sector dwindles because it cannot compete globally, the middle class dwindles cor­respondingly. Figure 2.11 contains a number of facts that indicate what has happened to the U.S. economy during the years since World War II. These are the years in which U.S. manufacturers have steadily lost ground to foreign competition.

Do these comparisons mean that U.S. manufacturers cannot compete? The answer is no. American manufacturers were slow to respond to the international quality revolution.

However, in the 1980s and into the new millennium, the realization that quality coupled with productivity was the key to winning global competition caused many U.S. firms to begin adopting the approach set forth in this book while s imultaneously pushing for change in areas beyond their control (cost of capital, industrial policy, etc.). As the total quality approach continues to gain acceptance, companies in the United States are closing the competitiveness gap.

6. COMPARISONS OF INTERNATIONAL COMPETITORS

According to a report published by the World Economic Forum, the United States has reclaimed its place as the most competitive country in the world community.³ This is good news, since the United States had slipped to fifth place dur­ing the 1990s. This means that in spite of the poor perfor­mance of students in the United States when compared with the performance of students in other industrialized nations, the United States has managed to improve in the areas of standard of living, manufacturing productivity, investment, and trade, which are critical indicators of national competi­tive status (Figure 2.12).

7. HUMAN RESOURCES AND COMPETITIVENESS

The point is made continually throughout this book that the most valuable resources for enhancing competitiveness are human resources. The truth of this point becomes appar­ent if one studies the approach taken by Germany and Japan to rebuild from the rubble of World War II. Both countries were devastated. Being left with only one real resource, the human resource, Germany and Japan were forced to adopt an approach that used this resource to the greatest possible advantage.

The German and Japanese systems are not perfect, nor are they infallible. They are examples of approaches that work as well as any other two systems can in a continually changing and unsure global marketplace. Further, they make wise and effective use of human resources.

Business, government, and labor leaders in the United States could learn a great deal from Germany and Japan. People often respond to suggestions that such study might be helpful by claiming that the culture of the United States is so different that what works in these countries won’t work in the United States. Such thinking misses the point entirely: few countries could be more different from one another than Japan and Germany, yet the approaches to competitiveness adopted by these countries are strikingly similar (see Figure 2.13).

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

1. CHARACTERISTICS OF WORLD- CLASS ORGANIZATIONS

It is often said that only “world-class” organizations can com­pete in the global marketplace. But what is a world-class orga­nization? In an attempt to answer this question, the American Management Association (AMA) conducted a global survey.⁴ According to this survey, the following are the top 15 areas in which organizations are concerned about doing well as they attempt to compete in the global marketplace:

1. Customer service
2. Quality control and assurance
3. Research and development/new product development
4. Acquiring new technologies
5. Innovation
6. Team-based approach (adopting and using effectively)
7. Best practices (study and use of)
8. Manpower planning
9. Environmentally sound practices
10. Business partnerships and alliances

11. Reengineering of processes
12. Mergers and acquisitions
13. Outsourcing and contracting
14. Reliance on consulting services
15. Political lobbying

Of the 15 areas listed in the survey, several are directly as­sociated with the larger issue of quality. Customer service, quality control and assurance, innovation, team-based ap­proach to work, partnerships and alliances, and reengineer­ing of processes are all topics that figure prominently in any discussion of total quality.

In addition to these issues, the AMA survey found that respondents were concerned about a number of human re­sources topics. The ten most important of these are as follows:

1. Worker productivity (improvement)
2. Employee training and development
3. Open communication between management and employees
4. Employee benefits and perquisites
5. Codes of workplace conduct
6. Conflict resolution
7. Employee satisfaction
8. Flextime arrangements
9. Management-employee-union relations
10. Child care

Once again, the AMA survey identified numerous quality- related concerns and functions that organizations must do well if they hope to compete globally. Worker productivity, em­ployee training and development, codes of workplace conduct, conflict resolution, employee satisfaction, and management- employee-union relations are all total quality-related topics that are addressed at various points in this text.

World-Class Manufacturing: What It Takes

Organizations in business sectors ranging from banking to commercial transportation attempt to compete on a global scale. The most prominent of these come from the manufac­turing sector. World-class manufacturers are those that con­sistently provide superior value (quality, cost, and service) for customers. The methods of world-class manufacturers are summarized in the following subsections:

Competitive Analysis Strategies In the area of com­petitive analysis, world-class manufacturers use the follow­ing methods to compare themselves with the competition for the purpose of improving their own performance: cost efficiencies in operations, speed to market, research and development supremacy, rapid delivery from suppliers, first-class delivery logistics, zero defects, real-time order management, seamless integration with sales and market­ing, close to zero inventory, and networked or collaborative operations. By applying these criteria to themselves and their competitors, world-class manufacturers determine where their performance is and where it needs to be in order to compete globally.

Production and Supply-Chain Strategies In the area of production and supply-chain strategies, world-class man­ufacturers use the following methods to stay ahead of the competition: collaborative planning, forecasting, and replen­ishment; collaborative manufacturing and product design; direct delivery of materials to point of use; supplier-managed inventory; and use of channel-assembly distributors. Other manufacturers also use these strategies to varying degrees. Ultimate manufacturers stay ahead of the competition by using them extensively.

Customization Strategies In the area of customiza­tion strategies, world-class manufacturers use the following methods: building to order, mass production that is config­ured for individual customers, configuring to order (linking sales operations to production schedules), one-to-one cus­tomization for customers in real time, and global sourcing and manufacturing. As with the other strategies, it is not just the fact that ultimate manufacturers use these customiza­tion methods that makes them world class; it is the extent to which they use them.

Electronic Commerce Strategies In the area of electronic commerce strategies, world-class manufactur­ers use the following methods: supply management, buy­ing, auctioning, Internet ordering, status and availability tracking by Internet, and accepting Internet orders from customers. World-class manufacturers use electronic com­merce strategies almost twice as often as their competi­tors. In addition, these world-class organizations are on track to increase their use of electronic commerce over the next five years at a rate well beyond the projected rates of competitors.

Compensation Systems In the area of compensa­tion systems, world-class manufacturers use the following methods as benchmarks for rewarding and recognizing managers and employees: product profitability, inventory levels, manufactured/delivered costs per unit, worker pro­ductivity, level of customer satisfaction, manufacturing cycle time, cost efficiencies in operations, employee reten­tion rates, speed of response to market demands, percent of revenues from new products, total delivered cost per unit, zero defects, percent of costs saved from strategic outsourcing, integration of functions across the organiza­tion, economic value added, and percent of products from strategic alliances. Figure 2.14 contains a brief checklist of minimum performance benchmarks that manufactur­ers must be able to meet in order to compete in the global marketplace.

2. MANAGEMENT-BY-ACCOUNTING: ANTITHESIS OF TOTAL QUALITY

In too many businesses, accounting trumps quality. Often, managerial accounting becomes the tail that wags the dog—a questionable approach to doing business in a highly com­petitive environment. When managerial accounting becomes management-by-accounting, quality inevitably suffers. Management-by-accounting amounts to focusing solely on an organization’s financial performance rather than manag­ing the factors that most affect financial performance (e.g., people, process, and quality).

The most obvious problem with management-by­accounting is that it leads to short-term thinking and short­term decision making. According to this approach, one of the fastest ways to improve financial performance in the short run is to ignore investing in continual improvement that are nec­essary to remain competitive in the long run. The practices like (1) keeping people trained and well equipped; (2) employ­ing best practices to keep processes operating at peak perfor­mance levels; and (3) maintaining world-class quality in all aspects of an organization’s operations cost money in the short run but pay off in the long run. In other words, total quality is a long-term concept while management-by-accounting is a short-term concept.

One of the many reasons why companies fall into the management-by-accounting trap is that many CEOs come from a finance-related background, the most com­mon college degree among the American CEOs being an MBA—a degree with a strong finance orientation. To avoid such ideological pitfalls, all business-related de­grees need to include a more thorough study of quality. It is also why more quality professionals need to put them­selves on the “CEO track” in their professions. Consider the following problems that result from the application of management-by-accounting:

• Management-by-accounting leads to decision making by analysis of financial spreadsheets rather than by consider­ation of the factors that lead to organizational excellence and world-class quality.
• Management-by-accounting encourages short-term cost cutting instead of long-term improvements to quality, value, and competitiveness.
• Management-by-accounting leads to narrowly focused leadership of companies based solely on short-term
  financial considerations rather than broader thinking that encompasses all factors that contribute to organizational excellence and make a company competitive.

The master’s of business administration degree, or MBA, is an excellent credential. So are the various other under­graduate and graduate degrees available from colleges and universities in the United States. It is the concept of focusing excessively on the score rather than the game— management-by-accounting—that is being questioned by quality advocates, not any specific degree. Management- by-accounting is an approach to management, not an aca­demic credential.

As anyone knows, both the game and the score are im­portant. We advocate a blending of the principles of quality management with the curricula of business, engineering, technology, and management programs. Students pursuing a degree in any of these disciplines should learn the principles of quality management set forth in this book as well as their tra­ditional curriculum content. This will ensure that they know how to continually improve both performance and the score.

3. U.S. COMPANIES: GLOBAL STRENGTHS AND WEAKNESSES

As business continues the current trend toward global­ization, how are companies in the United States faring? A business trying to compete in the global marketplace is like an athlete trying to compete in the Olympics. Nowhere is the competition tougher. Correspondingly, no country in the world gives its businesses such a solid foundation from which to work. The following factors account for a country’s ability to compete in the international marketplace:

1. An economy that is open to foreign investment and trade
2. A government that minimizes controls on business but does a good job of supervising financial institutions
3. A judicial system that works well and helps reduce corruption
4. Greater transparency and availability of economic information
5. High labor mobility
6. Ease of entry by new businesses

In varying degrees, the United States meets all of these crite­ria. Of course, how well these criteria are fulfilled is a matter
of debate between and among various interest groups and stakeholders. Nonetheless, when compared with other coun­tries competing in the global marketplace, the United States fares well in all of these key areas. This being the case, a key advantage of American firms trying to compete in the global marketplace is these six factors working in their favor. Other advantages and disadvantages are summarized in the follow­ing sections.

3.1. Global Advantages of U.S. Companies

In the global marketplace, the United States is the world leader in the following industries: aerospace, airlines, bev­erages, chemicals, computer services, electrical products, entertainment, general merchandise, motor vehicles, office equipment, paper products, pharmaceuticals, photographic and scientific equipment, semiconductors, soap and cosmet­ics, and tobacco. Some of the reasons the United States is able to lead the world in these key industries include

1. Strong entrepreneurial spirit
2. Presence of a “small capitalization” stock market for small and mid-sized companies
3. Rapidly advancing technologies
4. Comparatively low taxes
5. Low rate of unionization
6. World-class system of higher education (colleges and universities)

The United States leads the world in new business start-ups. This is because the entrepreneurial spirit is an integral part of the American persona. The presence of a small capitaliza­tion stock market allows small and mid-sized companies to start up and expand without having to use all of their own capital or to take out higher-interest loans from banks, as is often the case in other countries. The United States leads the world in the development, transfer, diffusion, and use of technology. This helps ensure a continual stream of new products on the one hand and improved productivity on the other. Americans complain constantly about taxes (as they are entitled to do in exercising their rights as free citizens). But when compared with other industrialized nations, the United States has a low tax burden. Tension between labor and management can harm productivity and, in turn, de­crease a company’s ability to compete in the global market­place. The amount of tension that exists between labor and management can typically be demonstrated by the level of union activity: the more the tension, the more the union activity. Compared with other industrialized nations, union activity in the United States is low.

The United States also provides the world’s best higher education system. The number of top-notch colleges and universities in the United States is so much greater than those in other countries that comparisons are irrelevant. The cost of higher education in America, although viewed as high by U.S. citizens, is inexpensive when compared with that of other industrialized nations. In addition, financial aid is so readily available that almost any person with the necessary academic ability can pursue a college education in the United States.

3.2. Global Disadvantages of U.S. Companies

In spite of the many strengths companies in the United States can bring to the global marketplace, and in spite of this country’s world-leading position in several key indus­tries, there are still some disadvantages with which compa­nies have to deal. The primary global disadvantages of U.S. companies are these:

1. Expanding government regulation
2. A growing “underclass” of have-nots
3. A weak public school system (K-12)
4. A poorly skilled labor force and poor training opportunities
5. An increasing protectionist sentiment (to restrict imports)
6. Growing public alienation with large institutions (pub­lic and private)

Regardless of which major political party has controlled Congress over the past 40 years, the general trend has been toward increasing government regulation of business. Regulating business is a difficult balancing act. On the one hand, businesses cannot be allowed to simply pursue profits, disregarding the potential consequences to the environment and other national interests. On the other hand, too much regulation or unnecessary regulation can make it impossible to compete globally. The growing divide between haves and have-nots in the United States might lead to the establish­ment and perpetuation of a permanent economic and social underclass. This is precisely what happened in Russia when Czar Nicholas II was overthrown by the Communists in the early 1900s. People who lose hope might very well respond in ways that threaten the peace, stability, and social fabric of the United States. One of the key factors in the establish­ment of a social and economic underclass is the failure of America’s public school system (K-12). Even with the best system of higher education in the world, America cannot overcome the shortcomings of its K-12 system. In fact, if drastic improvements are not made, over time those short­comings will begin to erode the quality of our higher educa­tion system.

The most fundamental problem with the public school system from the perspective of global competition is that most of the jobs in companies that need to compete glob­ally require less than a college education. These jobs must be performed by high school graduates who, if they cannot read, write, speak, listen, think, and calculate better than their counterparts in other countries, will be outperformed. Poorly skilled workers are an outgrowth of the failure of the nation’s public school system, in which the overwhelm­ing majority of Americans are educated. Ideally, every high school graduate should be fully prepared to either go to work or go on to college. When this is not the case, as it certainly is not, American companies must try to compete with a less- skilled labor force. This is like a baseball coach trying to win with a team of players who cannot pitch, catch, run, or hit.

One of the factors that contributed to the Great Depression of the 1930s was global protectionism. Americans wanted their farmers and their manufacturers to be “protected” from their counterparts in other countries. Protectionism hurts ev­eryone and never really protects anyone. But as other coun­tries (principally Japan, Korea, and China) have entered U.S. markets, the jobs of American workers have been threatened. A natural but ill-informed response is to call for protection­ist measures and to adopt slogans such as “Buy American.” Economists are quick to point out, however, that the only valid reason to “buy American” is that American products are the best made. If they are not, buying them makes little sense and is nothing more than misguided patriotism. The better ap­proach is to ask why the American products are not the best and then to do what is necessary to make them the best.

The final factor that gives U.S. companies a disadvantage is the growing tendency of the public to see big organizations as the “bad guys.” This is displayed in many different ways. Disgruntled employees will sometimes pretend injuries and file fraudulent workers’ compensation claims. Employees will cheat and steal from their employers. Of course, the most common way animosity toward big business is acted out is by employees giving less than their best on the job. Another expression is when the public at large supports anti­business legislation and unnecessary regulations.

4. QUALITY MANAGEMENT PRACTICES IN ASIAN COUNTRIES

Companies in the United States compete for market share every day with companies all over the world. Global com­petition has become a way of life for business and industry. Some of the most intense competition comes from Asia, where companies have effectively adopted many of the qual­ity management practices set forth in this book. The most intense competition for companies in the United States now comes from Japan, South Korea, and China. Most students of quality are familiar with the strides Japanese companies have made since beginning to adopt quality management practices after World War II. But what is less known is that many other Asian companies are following Japan’s lead as a way to compete effectively at the global level. These coun­tries include Bangladesh, Brunei, India, Indonesia, Malaysia, the Philippines, Singapore, and Thailand.

Industrialization in these Asian countries began to gain a foothold in the 1960s and developed rapidly through the 1980s. In the 1980s, companies in these countries began to form quality control circles as a way to gain employee input for continually improving processes and products. By the 1990s, companies in these Asian countries were well along in the adoption and effective application of the principles of total quality management including ISO 9000 registration. By the late 1990s, many companies in these countries had re­fined their total quality techniques and had begun to empha­size not just the product quality but the service quality, too.

The dawning of the new century saw Asian companies adopting ISO 14000 as a way to ensure effective environmental management. National quality awards similar to the Baldrige Award in the United States and the Deming Prize in Japan were adopted by several of these Asian countries. As of now, the leading companies throughout Asia are applying global best practices to maximize performance, value, and quality.

The globalization of the marketplace has transformed doing business into an enterprise similar to competing in the Olympics. In the global arena, only the best of the best survive and thrive, the intensity of the competition only in­creases, what was considered outstanding performance yes­terday won’t even make the grade tomorrow, and even the smallest countries can produce world-class performers.

Companies in the United States that used to compete only locally or regionally now find themselves battling daily against companies from not just Japan but also India, Brunei, Bangladesh, Thailand, South Korea, Singapore, Malaysia, Indonesia, and the Philippines. What’s more, companies from these countries have learned the value of effectively adopting and applying the principles set forth in this book.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

The total quality approach cannot be successfully imple­mented in an organization that fails to subscribe to high stan­dards of ethical behavior. This is because ethical behavior builds trust, and trust is an essential ingredient in total quality. Consider the various elements of total quality that depend on trust: communication, interpersonal relations, conflict man­agement, problem solving, teamwork, employee involvement and empowerment, and customer focus (see Figure 4.2).

In human communication, receivers accept messages only from senders they trust. In interpersonal relations, trust is the most fundamental element. People who trust each other will be able to get along and work well together even in the worst of circumstances. On the other hand, people who do not trust each other will be unable to get along and work well to­gether even in the best of circumstances. Trust is also a critical element in conflict management. A manager must be trusted by both sides in a human conflict to help resolve the conflict.

For people to put aside their personal agendas and work together as a team, they must trust each other. If even one team member is concerned that another team member is promoting his or her self-interests over those of the team, teamwork will not succeed. Managers will not involve and empower employees unless they trust them.

Ethics plays a critical role in the successful application of total quality. Ethical behavior on the part of the organi­zation is just as important as the behavior of managers and employees. A company that fails to honor warranties, treats employees poorly, or pollutes its community cannot expect employees to disregard the example it sets and promote a trusting environment in the workplace.

If the trust that results from ethical behavior is so impor­tant to total quality, then it follows that modern managers need to be good trust builders. Although it is important that manag­ers be able to establish themselves as trustworthy, that by itself is not enough. Managers in a total quality setting must also be able to build trust in the organization and among its employees.

One of the best ways managers can help build trust is to protect the interests of those who are not present at the mo­ment as if they are. When a manager speaks up for someone who is not present but is being questioned or attacked, em­ployees get the following two simultaneous messages:

• Talking behind a colleague’s back is not acceptable behavior.
• If this manager doesn’t let me talk about fellow employees who are absent, he or she won’t let others talk about me when I’m absent.

Knowing they will be included in any conversation that is about them or that affects them builds trust among em­ployees. A sincere apology can also build trust. Managers sometimes make mistakes or do things that hurt employees. Making excuses, pointing the finger of blame at someone else, or ignoring the situation only exacerbates it. By simply and sincerely saying “This is my fault; I’m sorry,” managers can build trust even when they have made mistakes.

Keeping promises is another way managers can build trust. Dependability builds trust. It is human nature to want to be able to depend on what others tell us. Promises in the workplace often take the form of deadlines. A deadline promised should be a deadline kept. Regardless of the type of promises made, managers and employees in a total quality setting should keep them and expect others to do the same. It is easier to trust people who are dependable, even when we don’t agree with them, than it is to trust someone who is not dependable. “Be a person of your word” is a good rule of thumb to follow when trying to build trust.

In attempting to build trust in the workplace, manag­ers should take the initiative, even though in a total quality setting trust building and other tasks necessary for success in the intensely competitive global marketplace are the re­sponsibility of everyone. Managers should not sit back and expect trust building to just happen. Their role is to get things moving and to “stir the pot” as necessary to keep things moving.

Motivating employees and continually developing their job skills are important responsibilities of managers in a total quality setting. Managers who are not trusted will be ineffective at fulfilling these responsibilities. This is because employees must trust that they, as well as the organization, will benefit from new skills before they are willing to apply themselves to developing the skills.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

Values are those deeply held beliefs that form the very core of who we are. A person’s conscience or internal barometer is based on his or her values. Our values guide our behavior. This statement also applies to organizations. An organization will not produce a quality product or provide a quality service unless the organization values quality. Knowledge and skills are important, but by themselves, they do not guarantee re­sults. This is because individual employees and organizations as a whole will most willingly apply their knowledge and skills to what they value, what they believe in, and what they feel is important.

Ethical behavior begins with values. Values that lead to ethical behavior include fairness, dependability, integrity, honesty, and truthfulness. These values tend to encourage a work environment that involves, empowers, values, and nurtures people: one that not only holds employees respon­sible, but also gives them the support, leeway, and resources needed to fulfill their responsibilities.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

Another aspect of ethical behavior is integrity. Integrity, as a personal and organizational characteristic, combines hon­esty and dependability. When an individual or an organiza­tion has integrity, ethical behavior automatically follows.

Quality tip

Corporate Values Are Not Just for Show—They Must Be Real

A mistake frequently made by organizations is adopting a set of corporate values that no one really intends to accept or follow. These values look impressive when displayed on the wall of an organization’s lobby and on the organization’s Web site, but when it comes to informing behavior or guiding decisions they are ignored. Adopting corporate values and then ignoring them is worse than not adopting them at all. Stakeholders will soon know if the organization’s leadership is serious about its stated corporate values. A set of corporate values that is adopted and displayed but ignored soon becomes an indictment against the organization rather than a tool for lifting it up.

It is important for managers in a total quality setting to understand that although honesty is fundamental to it, in­tegrity is more than just honesty. People with integrity can be counted on to do the right thing, do things correctly, accom­plish tasks thoroughly and completely, finish work on time, and keep promises. The same is true of organizations.

Managers with integrity will keep the best interests of their organization and employees in mind when making deci­sions and in all other aspects of their jobs. Committing to not knowingly harming an employee, a customer, the organiza­tion, or the public at large forces managers to think about the consequences of their actions before taking them. This princi­ple also applies to employees and the organization as a whole.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

Part of ethical behavior is accepting responsibility. This is critical in the modern workplace because employees are drawn from a society that, as a rule, shuns responsibility— which is why ours has become such a litigious society.

People want to blame others for their own shortcomings and failures. Students graduate from high school unable to read and immediately file lawsuits against the school board as if they had no part in their own failure. A burglar trips on a skateboard after robbing a house, sues the homeowner, and wins! Inmates upset over the quality of food take their guards hostage and burn down an entire wing of the prison, saying their rights have been violated. Modern society has evolved into one that focuses on rights but ignores the re­sponsibilities that must accompany those rights.

Passing blame has become commonplace. Employees often refer to their employer as “they” rather than “we.” Go to a fast-food restaurant or a retail store and complain to a salesclerk. Chances are good that the salesclerk will pass on the blame to an unseen “they.” This is not ethical behavior. In a total quality setting, people are responsible for their actions and accountable for their performance. Accepting responsi­bility helps build trust, integrity, and all the other elements of ethics that are so important in a total quality environment.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

1. DEFINITION AND OVERVIEW OF ETHICS

Ethics is about doing the right thing within a moral framework. In other words, it is the practical application of morality. What is ethical in a given situation is decided by applying the values that comprise the prevailing moral framework. The fundamen­tal question that arises in any ethical dilemma is this: If I be­lieve in a given standard of right and wrong, how should these beliefs guide my actions, behavior, attitude, and decisions? The ever-present challenge, of course, is not just determining what is right but also following through and doing what is right.

1.1. Human Factors That Contribute to Unethical Behavior

Breaches of ethical conduct are, unfortunately, common in to­day’s hectic, hypercompetitive global business environment.

The most common impediment to ethical conduct is simply human nature. Human beings tend to behave according to the principle of perceived personal interest. An unfortunate fact of life is that it will often appear that a person’s personal interests are best served—at least in the short run—by an unethical choice. Factors that contribute to this type of mis­guided perception include greed, impatience, ego, fear, expe­dience, ambition, and need.

Driven by greed, a CEO might decide to deliver a large lot of manufactured goods he knows are defective. Driven by impatience, a person might push her employees to perform a job in an unsafe manner that could lead to accidents and in­juries. Driven by ego, a person might claim credit for superior work that was actually performed by someone else. Driven by fear of retribution, a person who knows his boss is lying to stockholders might simply ignore the fact and look the other way. Driven by expedience, a person might cut corners

in ways that could lead to tragic results. Driven by misguided ambition, a person might lie on her resume, adding a degree she has not completed. Finally, driven by the need to pay the mounting hospital bills for his sick child, a person might use a company credit card for personal expenses.

In all of these cases, people made unethical choices based on misguided personal interest. Even though one might, understandably, feel sympathy for the individual who was struggling to pay mounting hospital bills, the choice he made to misuse a company credit card was still an unethical choice. Doing the wrong thing, even for the right reasons, is still wrong. Extenuating circumstances do not alter what is right or wrong, just as understanding why a person makes an unethical choice does not excuse her for doing so. This leads to an important point relating to human nature and ethics.

When deciding what is right and wrong in a given situ­ation, it is often necessary to separate the choice from the extenuating circumstances that impinge on making it. These extenuating circumstances can create what is known as a gray area around a given choice. By “gray,” the people involved in making the choice mean that what is right is neither black nor white. There is a gray area surrounding the decision that makes it difficult to see through the fog to find the right thing. There are cases when using the gray area argument is legitimate—for example, when doing what is right will help one person but hurt many. What is the right thing to do in such a case? Should the decision makers take a black-and- white approach or apply the principle of the greater good? This is a legitimate gray area in an ethical dilemma.

However, many times when decision makers say they are dealing with a gray area when facing an ethical dilemma, what is really happening is that they want to make a choice they know is unethical but for reasons of misguided personal interest are trying to find a way to justify it. In such cases, decision makers often use the extenuating circumstances as their justification. This is why it is so important to separate decisions concerning what is right and wrong from extenu­ating circumstances. The approach that is more likely to lead to an ethical choice is to decide what is right in a given situ­ation and do it. Then find other ethical ways to deal with the extenuating circumstances.

For example, in the case above of the individual who misused a company credit card, there were a variety of ethi­cal ways to deal with the extenuating circumstance (hospital bills for a sick child). He could have asked friends, family, colleagues, and charitable organizations for help. In every community, there are civic organizations that sponsor fund­raising events for just such situations. The individual in­volved was in a bind—of this there is no doubt—but he had options for dealing with his situation other than the unethi­cal choice he made.

1.2. Organizational Factors That Contribute to Unethical Behavior

Human nature, coupled with the competitive pressure of the global marketplace, can make adhering to ethical principles a daily challenge. Organizations can either help relieve the pressure, thereby making it less difficult for their personnel to behave ethically, or create an environment that increases the pressure, thereby almost guaranteeing unethical behav­ior. Organizational factors that can contribute to unethical behavior include the following:

• Failing to make ethics part of the organization’s core values. An important component of an organization’s strategic plan is a statement of core values. Failing to make high ethical expectations a core value in the strategic plan is tantamount to approving unethical behavior. Silence on ethics sends the wrong message from the top, and it is not sufficient to claim that “our organization takes ethical be­havior for granted, so we don’t need to make it part of our strategic plan”
• Failing to set a consistent positive example. Executives and managers in any organization set the tone for the organization. If management personnel expect ethi­cal behavior, they have to set a consistent example of it. Employees will follow the actions of management person­nel rather than their words. The words are important, but they must be consistently reinforced by ethical action, de­cisions, and behavior.
• Putting personnel in ethical “corners.” Management personnel who box employees in by forcing them into ethical corners that offer no room to maneuver will al­most surely produce unethical behavior. This can happen, for example, when the pressure to meet a deadline looms. A manager might say to his team, “I don’t care how you do it, but I want you to meet the deadline” This manager has just told his direct reports that even if they have to take unethical shortcuts, they are to meet the deadline.
• Failing to adopt, deploy, and enforce a corporate code of ethics. If ethical behavior is a core value for an orga- nization—as it must be—the organization should adopt, deploy, and enforce a corporate code of ethics that pro­vides specific guidance for personnel. Even a code of eth­ics cannot cover every ethical exigency that might arise, but it can provide guidance that is specific enough to be meaningful but generic enough to allow for the applica­tion of good judgment.
• Applying unrealistic pressure. As the globalization of competition continues, organizations are under increas­ing pressure to perform at ever higher levels. This is why continual improvement is a foundational aspect of quality management. Competition creates pressure by shorten­ing deadlines, demanding lower costs, expecting higher quality, and wanting better service. The pressure on the leaders of organizations that operate in a competitive en­vironment is intense. When this pressure is passed down throughout the organization in a realistic manner, there is no problem. But when poor planning on the part of management causes pressure to be applied unrealistically, employees are forced to take unethical shortcuts.
• Failing to reward ethical behavior. There is an adage that “No good deed goes unpunished” Here is just one example of what this adage can mean in the workplace.

An individual in an organization makes an ethical deci­sion that results in a short-term loss of profits but that is clearly the right thing to do. Rather than being rewarded, she is punished—not overtly but in subtle ways. For exam­ple, a quality manager discovers that his company has just shipped a box of defective parts to a customer. He quickly contacts the customer, recalls the defective parts, and re­places them with parts that meet all quality standards. This causes the manufacturing department’s monthly re­port to show a major increase in waste; hence, the com­pany suffers a temporary loss of profits. The company’s CEO responds by giving the quality manager a bad per­formance review. This CEO actually punished his quality manager for doing the right thing instead of rewarding him. By failing to reward ethical behavior, the CEO actu­ally encouraged unethical behavior—a fact that is sure to cost his company greater losses in the long run than the temporary losses incurred by doing the right thing.

1.3. Cost-Benefit Analysis and Ethics

Some argue that it costs too much to take the ethical high road in today’s hypercompetitive global business environ­ment. Those who make this argument mean that ethical be­havior can cause their organization to lose contracts by tying up so much energy and so many resources in “doing good” that it becomes impossible to compete. This is the short­term perspective that overlooks the long-term benefits of ethical business practices.

The benefit of avoiding harm is the long-term mainte­nance of a good reputation. Unethical behavior that results in government investigations, lawsuits, and media-driven scandals can bankrupt even the largest, most powerful organi­zations. Those that are able to survive the investigations, law­suits, and scandals often lose their reputation, a fact that causes their stock to plummet, their best employees to jump ship, and their customers to take their business elsewhere. How much is an organizations good reputation worth? Everything.

Affirmative benefits of ethical business practices in­clude higher employee morale, a positive reputation in the
marketplace, greater ability to attract and retain high-value personnel, higher ratings with creditors and investors, differentiation from the competition, and increased sales— especially to government organizations that insist on an ex­cellent record in the area of ethics.

The so-called costs of ethical business practices are al­most always short term in nature, while the benefits tend to be long term. This fact presents organizations with a major challenge. In order to enjoy the benefits of ethical business practices, they may have to occasionally make decisions that will cost them in the short run. However, making unethi­cal decisions to serve some misguided short-term goal often means there will be no long-term future for an organization.

1.4. Guidelines for Determining Ethical Behavior

There are some guidelines that can be used in sorting out ethical and unethical behavior. However, before presenting the guidelines, we must distinguish between the concepts of legal and ethical: They are not the same thing. Just because a choice made is legal does not necessarily mean it is ethical. A person’s behavior can be well within the prescribed limits of the law and still be unethical. Some tests for determining ethical behavior shown in Figure 4.1 assume the behavior in question is legal. By applying any one of these tests, a person should be able to see through the gray area surrounding an issue and determine the ethical route to take.

2. MANAGER’S ROLE IN ETHICS

By applying the information set forth so far in this chapter, managers can make ethical decisions. Unfortunately, decid­ing what is ethical is much easier than actually doing what is ethical. In this regard, trying to practice ethics is like trying to lose weight. It is not so much a matter of knowing you should exercise and cut down on eating as it is a matter of following through and actually doing it.

This fact defines the manager’s and the professional’s role with regard to ethics in an organization. Managers and professionals in organizations are responsible for following through and actually exemplifying ethical behavior. They are responsible for establishing high ethical standards, setting a consistently positive example of exceeding those standards, and acting immediately when they observe unethical behav­ior (Figure 4.3).

2.1. Best-Ratio Approach

The best-ratio approach is a pragmatic approach based on the belief that people are basically good, that in the right cir­cumstances they will behave ethically, and that under cer­tain conditions they can be driven to unethical behavior. Therefore, managers should do everything possible to create conditions that promote ethical behavior and try to maintain the best possible ratio of good choices to bad choices and ethical behavior to unethical behavior. When hard decisions must be made, managers should make the choice that will do the most good for the most people. This approach is some­times called situational ethics.

2.2. Black-and-White Approach

With the black-and-white approach, right is right, wrong is wrong, and conditions are irrelevant. The manager’s job is to make ethical decisions and carry them out. It is also to help employees behave ethically regardless of circumstances. When difficult decisions must be made, managers should make fair and impartial choices regardless of the outcome and do the right thing without concern for short-term circumstances.

2.3. Full-Potential Approach

With the full-potential approach, decisions made are based on how they will affect the ability of those involved to achieve their full potential. The underlying philosophy is that people are responsible for realizing their full potential within the confines of morality. Choices that can achieve this goal with­out infringing on the rights of others are considered ethical.

The values of the organization and the manager will de­termine which approach is used. Which one is best is a phil­osophical question that could be debated at length without being resolved and can be discussed only within the context of a values system.

3. ORGANIZATION’S ROLE IN ETHICS

Organizations have a corporate responsibility for promoting and encouraging ethical behavior among their personnel. The organization’s responsibilities are to: (1) create an ethical environment in which stakeholders know that they will be supported when making ethical choices and (2) ensure that all people in positions of authority in the organization set an example of living up to the highest ethical standards.

3.1. Creating an Ethical Environment

An organization creates an ethical environment by establish­ing policies and practices that ensure that all employees are treated ethically and then by enforcing those policies. Do employees have the right of due process? Do employees have access to an objective grievance procedure? Are appropriate health and safety measures in place to protect employees? Are employees protected from harassment based on race, gender, or other reasons? A company that establishes an en­vironment that promotes, expects, and rewards ethical be­havior can answer “yes” to all of these questions.

One effective way to create an ethical environment is to develop an ethics philosophy with specific guidelines for putting the philosophy into operation, to put it in writing, and to share it with all employees. What follows is a sample corporate ethics statement that could be used by any organization as a first step in creating an ethical environment.

At ABC Inc., all personnel are expected to uphold the highest ethical standards. As we interact with each other and with the customers, suppliers, and the general public, we will be guided by the following principles:

• We will be honest and tell the truth in all situations.
• We will fulfill all promises we make.
• We will be fair and impartial in dealing with others.
• We will be selfless in dealing with others, putting the team’s needs before our own.
• We will accept responsibility and accountability for our actions, decisions, and behavior.
• We will endeavor to earn and maintain the trust of each other, customers, suppliers, and the general public.
• We will refuse to rationalize unethical behavior.
• We will obey all applicable laws, regulations, and rules— federal, state, local, and organizational.

A statement such as this sets the tone for all personnel in an organization. It lets them know that upper management not only supports ethical behavior, but also expects it. This approach makes it less difficult for managers when they find themselves caught in the middle between the pressures of business and the maintenance of ethical behavior in their departments.

Beliefs such as those in the preceding sample ethics statement tell employees that they have obligations that ex­tend beyond the workplace and that how they perform their work can have an impact, negative or positive, on fellow em­ployees and on their organization, customers, and country. Key concepts set forth in these statements are honesty, in­tegrity, truth, and fairness. Managers who stress, promote, and model these concepts will make a major contribution to ethical behavior in the workplace.

Written philosophies and guidelines such as those developed by Wisconsin Public Service Corporation are the first step in creating an ethical environment in the work­place. Managers can play a key role in promoting ethical behavior on the job by encouraging upper management to develop written ethics philosophies, credos, or guidelines and then by modeling the behavior they encourage.

3.2. Setting an Example

Organizations that take the “Do as I say, not as I do” approach to ethics will not succeed. Employees must be able to trust their employers to conduct all external and internal dealings in an ethical manner. Companies that do not pay their bills on time, companies that pollute, companies that fail to live up to adver­tised quality standards or stand behind their guarantees, and companies that are not good neighbors in their communities fail to set a good ethical example. Such companies can expect employees to mimic their unethical behavior. Finally, in addi­tion to creating an ethical internal environment and handling external dealings in an ethical manner, organizations must support managers who make ethically correct decisions—not just when such decisions are profitable but in all cases.

4. HANDLING ETHICAL DILEMMAS

Every manager will eventually confront an ethical dilemma. When this happens, the manager’s response is very impor­tant. Figure 4.4 provides guidelines that managers can use in such situations.

5. ETHICS TRAINING AND CODES OF BUSINESS CONDUCT

Ethical behavior and the rationale for it can be taught. In fact, almost 40% of the organizations in the United States with 100 or more employees provide ethics training. A sur­vey by the Ethics Resource Center in Washington, DC, re­vealed that “28 percent of the 711 responding companies provide specific training on ethics.”¹

The Ethics Resource Center has identified the following as topics that are widely addressed in corporate-sponsored ethics training programs:²

• Drug and alcohol abuse
• Employee theft
• Conflicts of interest
• Quality control
• Misuse of proprietary information
• Abuse of expense accounts
• Plant closings and layoffs

• Misuse of company property
• Environmental pollution
• Methods of gathering competitors’ information
• Inaccuracy of books and records
• Receiving excessive gifts and entertainment
• False or misleading advertising
• Giving excessive gifts and entertainment
• Kickbacks
• Insider trading
• Relations with local communities
• Antitrust issues
• Bribery
• Political contributions and activities
• Improper relations with local government representatives
• Improper relations with federal government representatives
• Inaccurate time charging to government
• Improper relations with foreign government officials
• Making exaggerated advertising claims

Codes of Business Conduct

Ethics training should not take place in a vacuum, nor should it be nothing more than a list of “thou shalt nots” Rather, organizations should develop codes of business con­duct written from a positive perspective that encourage em­ployees to do the right thing. Figure 4.5 is an example of one organization’s code of business conduct.

Ethics training is becoming increasingly important as the pressures of succeeding in an intensely competitive global marketplace grow. Professionals operating in the hypercom­petitive environment that is today’s global marketplace will frequently face ethical dilemmas. This may be why such ethics-related problems as kickbacks, bribes, insider trading, tax evasion, fraud, environmental violations, sexual harass­ment, and discrimination seem to be so common in today’s workplace. As a result, when providing ethics training, it is so important to observe the following rules of thumb:

• Encourage two-way communication. “Broadcasting” to people about rules, regulations, and policies is ineffective as a training strategy. Rather, it is important to encourage open, frank, informed discussion and give participants
  ample opportunities to state their views, ask questions, and propose solutions.
• Make the training practical.People need to see how the training applies specifically to them. An effective ap­proach for ensuring that training is practical is to pres­ent real-life scenarios and ask participants to explain how they would handle each situation and why. It is also im­portant to ask how the organization could help them do the right thing in each case.

• Avoid dogmatic statements. People are typically turned off by dogma. Rather, it is better to present and discuss ethical principles and then allow participants to decide how they apply. The trainer’s role is to tactfully guide participants toward an ethical solution by helping them take their opinions to their logical conclusion. Rather than telling participants that an idea or opinion is wrong or right, it is better to lead them in such a way that they come to that conclusion themselves.

6. MODELS FOR MAKING ETHICAL DECISIONS

Ethics as a concept exists within a framework defined by organizational values. Just as the values of organizations can differ, so can the decision-making models used for de­termining the ethical course of action in a given situation. This section briefly describes several such models that can be used for making ethical decisions. The actual model cho­sen will depend on the values of the organization and of the larger community in which the organization does business.

In a total quality organization, all stakeholders— external and internal—have a say in establishing and judging the corporate values. Consequently, it is important to select a model that will withstand the scrutiny of all stakeholders. Having done so, an organization should stick with its model and apply it consistently. The most widely used models are as follows:

• Categorical imperative model. The categorical impera­tive model is also known as the black-and-white model. With this model, right is right, wrong is wrong, and there are no gray areas.
• Full-disclosure model. With this model, the func­tional criterion is a simple question: Could the organi­zation explain its actions to the satisfaction of a broad cross-section of stakeholders? Only when this question can be answered in the affirmative is an action considered ethical. This model has the advantage of applying the val­ues of stakeholders in deciding what is ethical.

• Doctrine of the mean model. In this model, the mean refers to the average or middle point between two ex­tremes. Translated for practical application, this model suggests that in any situation, a moderate middle-ground option is likely to be an ethical option. Said another way, this model suggests that moderation is ethical.
• Golden Rule model. This model is based on the Golden Rule: “Do unto others as you would have them do unto you” It is one of the most popular models in Western society. Like the full-disclosure model, it takes the view­points of stakeholders into account in deciding what is ethical.
• Market-ethic model. This model is based on the belief that any legal action that promotes profitability is ethi­cal. Proponents of this model profess that the purpose of a business is to make a profit. Consequently, what is ethical should be decided within a framework of profit and loss. They argue that in the long run the market will reject unethical corporate behavior, making it thereby unprofitable.
• Organizational ethic model. This model is based on loyalty to the organization. Its underlying premise is that the most ethical decision is the one that best serves the or­ganization’s interests. Unless an organization has adopted a set of guiding principles that ensure ethical behavior, the organizational ethic model is difficult to defend.
• Equal freedom model. The underlying principle of this model is that organizations have the freedom to behave as they wish unless their actions infringe on the rights of stakeholders. This is a more confining model than it might appear at first glance. For example, suppose an or­ganization decides to use a new chemical that improves product quality and costs substantially less than the one it will replace. Before making a decision, the organization learns that the community’s current water safety tech­nology may not be able to screen out the chemical. The worst-case scenario is that it could contaminate the local water supply. Applying the equal freedom model, adopt­ing the new chemical would be unethical because it might violate the rights of stakeholders (everyone who depends on the local water supply).
• Proportionality ethic model. This model is based on the assumption that the world is so complex that deci­sions are seldom clearly right or wrong. Consequently, the best an organization can do is to make sure that the good outweighs the bad when making decisions.
• Professional ethic model. This model is based on the principle of peer review. It states that a decision is ethical if it can be explained to the approval of a broad cross­section of professional peers. Professions that subscribe to this model typically adopt a professional code of ethics.

7. BELIEFS VERSUS BEHAVIOR: WHY THE DISPARITY?

Ethics in the workplace manifests itself through the ap­plication of such values as honesty, loyalty, fairness, caring, respect, tolerance, and duty. Most, but not all, people in the workplace subscribe to these values. Why, then, is there so often a gap between what people believe and what they do? In other words, if people believe in honesty, why are they some­times dishonest? If people believe in fairness, why are they sometimes unfair? These are questions that could be debated at length in a broad philosophical context. However, several reasons explain the disparity, at least on a practical level.

7.1. Self-Interest and Self-Protection

People are, by their very nature, self-interested and, as a re­sult, self-protective. The driving force behind such slogans as “Me First” and “Looking Out for Number One” is a self- centered attitude. Most people work against human nature to put someone else’s needs ahead of their own. Yet, this is precisely what one must do to deal ethically with fellow em­ployees and the public at large.

Being honest sometimes means putting yourself at a dis­advantage or having to admit something you would rather not. In such situations, the natural instinct for self-protection takes over and the inclination is to evade the truth. Consider the example of John.

John had some minor repair work to do on his truck but didn’t have a certain tool he needed. Consequently, at the end of his shift at Autoworld Inc., he borrowed the needed tool from the company’s tool locker. That night he completed the work on his truck, but the next morning he forgot about the tool and left it at home. By the time he remembered the tool, it was too late to go back home without missing the begin­ning of his shift. John drove on to work hoping that the tool wouldn’t be needed that day. If nobody needed it, the tool wouldn’t be missed and he could return it the next day.

Everything went well until midmorning when a job came in requiring the missing tool. When it wasn’t in its place in the tool locker, the shift supervisor began asking around to determine who was using it or who had used it last. Finally, when a thorough search of the shop failed to produce it, the supervisor asked if anyone had borrowed it.

John knew that Autoworld had a strict p olicy against j ust this sort of thing. He also knew that if he didn’t speak up, the last person to have used the tool would be required to pay for it. That was the rule. Unfortunately, if he did admit having borrowed the tool, he would be reprimanded and fined, even if he returned it. John did not want to see a colleague forced to pay for his mistake. But, on the other hand, he had already been reprimanded and fined once this month. He certainly didn’t want to go through that again. John faced a common dilemma: tell the truth and bear the consequences, or give in to his natural instinct for self-protection. Faced with such a dilemma, people will go one way or the other, depending on which factor—conscience or self-protection—has the stron­gest pull on them at the time.

It is not uncommon for self-interest or self-protection to win out under the pressure of the moment, only to have the conscience take over once there has been time for quiet re­flection. This is why stories abound about thieves who later return the money or successful people who make a large financial contribution to assuage their guilt over an earlier transgression.

7.2. Conflicting Values

People who believe in ethical values (honesty, loyalty, fair­ness, etc.) sometimes find themselves in situations where these values seem to conflict. For example, consider the dilemma faced by Mary Ann, a sales representative for Construction Products Inc. (CPI).

CPI is having a bad year and desperately needs every contract it can get. Mary Ann has an opportunity to win a contract to supply all the kitchen cabinets for a 56-house subdivision that is going to be built in the near future. But there is a problem: CPI cannot deliver the cabinets by the required date. Failure to deliver on time will throw off the customer’s entire production schedule. Mary Ann’s boss is pressuring her to agree to the delivery date, even though they both know that the deadline cannot be met. Mary Ann wants to give an honest reply with a more realistic delivery date, but she is in a quandary over what to do.

This morning her boss took her aside and said, “You are so worried about honesty that you’ve forgotten about loyalty. What about loyalty to this company and your friends who work here? If we don’t bring in some work soon, we are all going to be out looking for jobs!”

Honesty versus loyalty—what does one do when ethical values seem to conflict? People obviously choose one over the other based on their interpretation of the situation, the facts as they know them, and contributing personal influ­ences. However, rather than asking what to do when ethical values seem to conflict, it might be better to ask whether the values do in fact truly conflict.

What kind of loyalty would require one to be dishonest, unfair, or disrespectful? Although ethical values sometimes appear to be in conflict, a closer look will usually reveal a different story. For example, the loyalty issue in Mary Ann’s case was false loyalty. True loyalty would rarely, if ever, re­quire dishonesty.

7.3. Tangible or Intangible, Immediate or Deferred

People frequently make decisions that run counter to their beliefs because the benefits of ethical decisions are often in­tangible or deferred. Put another way, the consequences of unethical behavior are often intangible or deferred, while the perceived benefits are usually both tangible and immediate.

Take the case of Mary Ann previously described. If she is willing to deceive the contractor by submitting a false delivery date, there will be a direct benefit that is both im­mediate and tangible. Her company will win a badly needed contract, and she will be the author of the victory. The downside is that at some point in the future the company will lose the trust and, as a likely result, the future business of the contractor she deceived. The benefit in this situation is immediate; the downside is deferred.

7.4. Making Ethics Tangible and Immediate

Because the benefits of ethical behavior can be perceived as being intangible and deferred, people will sometimes choose the unethical option—even people who believe in ethical values. The challenge to the management is to help employ­ees see that the benefits of ethical behavior are tangible and that even when deferred they still accrue.

Periodic focus groups conducted by an outside facili­tator in which employees discuss ethics-related issues can be an effective way to make ethics tangible. During these meetings, employees discuss very specific situations that in­clude ethical dilemmas. The facilitator asks questions, such as “What would you do in this situation? Why? What is the right thing to do? What would keep you from doing the right thing? What are the consequences of choosing an unethical option?” Group members discuss the issue and respond to the facilitator’s questions. The facilitator’s job is to guide the discussion toward the tangible and immediate consequences of unethical behavior, or, put another way, the tangible and immediate benefits of ethical behavior.

Sometime during the meeting, the facilitator will ask the following types of questions and lead participants through discussion and debate:

• How does the management reward ethical behavior?
• How does the management unknowingly promote un­ethical behavior?
• Does the management unknowingly reward unethical behavior?

Discussing these questions will sometimes reveal that the management expects ethical behavior but does not reward it or, worse yet, unknowingly rewards unethical behavior. For example, is ethical behavior a part of the performance evaluation process? Does the management publish ethics guidelines and reward employees who follow them? Is the management’s commitment to ethical values real or just lip service? For example, in the earlier case of Mary Ann, would the upper management have supported the supervisor or Mary Ann?

8. ETHICAL DILEMMAS: CASES

This section contains ethical dilemmas that are representative of those faced by managers every day in the world of business. While studying these dilemmas, the reader is encouraged to consider the various factors such as pressure from superiors or peers, personal interest, ambition, financial need, job secu­rity, and others that tend to promote unethical behavior on the part of the people who are normally honest and trustworthy. While reading these cases, ask yourself, “What would I do in the same situation if I were facing the same pressures?”

Let’s consider some examples. Certain models of sport utility vehicles manufactured by Ford begin to show a pat­tern of high-speed accidents. The similarity in these acci­dents leads investigators to suspect tire defects. Ford quickly points to its supplier, Firestone. Firestone defends itself and points back at Ford. Union Carbide establishes a process­ing plant in Bhopal, India, where the laws protecting the safety of employees and the environment are less rigid than those in the United States. The processes at Union Carbide’s Bhopal plant involve the use of extremely toxic chemicals and gases. When various emergency protection systems ei­ther are not working or fail, more than 40 tons of lethal gas are released into the atmosphere, killing more than 3,000 people.

Most of the discussion surrounding the Ford-Firestone and Union Carbide cases focused on litigation and who would eventually be held responsible for financial damages. However, very little attention was paid to the ethical ques­tions involved. Did these multinational corporations behave in ways that were fair to all stakeholders? Should companies locate plants in developing nations to take advantage of less restrictive safety and environmental protection laws than those in the United States? Should the company that actually sells the product to the consumer pass along responsibility to its supplier or accept responsibility itself?

The Ford-Firestone and Union Carbide cases received a great deal of media attention worldwide. However, these “big name” cases represent just a few of the thousands of similar situations that arise in the corporate world every year. From small “mom-and-pop” operations to large multinationals, dealing with ethical dilemmas is an everyday part of doing business. In order to succeed in the long term, managers must know how to deal with these dilemmas, and they must understand that just knowing what is right is not enough. Most people who commit ethical violations know what is morally correct.

Typically, people intuitively know the difference be­tween right and wrong. Since this is the case, why, then, do basically “good” people still sometimes behave un­ethically? This is a valid question and one that has been debated and discussed by philosophers for thousands of years. After all, if we know what is right, will we not do what is right? The answer to this question, unfortunately, is “not always.” Even people who have a strong sense of right and wrong can be pressured to behave unethically. This is because an individual’s sense of right and wrong can sometimes be overpowered by a stronger sense of am­bition, need, fear of the consequences of making the ethi­cal choice, peer pressure, pressure from superiors, and nu­merous other human factors.

8.1. Case 1: “I Need This Promotion”

Janice Carlson had always seen herself as an ethical person. She took pride in always telling the truth, even when doing so was uncomfortable. She also insisted that those she su­pervised at Comstock Engineering Company (CEC) do the same. Carlson frequently admonished her employees to be “straight” with her. She was fond of saying, “I can accept mis­takes. They happen. I can even overlook an occasional bad day. But I will not put up with lying.” Close friends knew that Carlson’s distaste for lying grew out of an unhappy marriage she had endured for years with a husband who lied to her as a matter of course. When she could take her husband’s dis­honesty no more, Carlson had filed for divorce.

Her commitment to honesty is why Carlson now feels, as she quietly admits to herself, “lower than a snake in the grass.” What makes things even worse is that this is a day on which Carlson should be overjoyed. After 15 years of loyal and effective service to CEC, several of which were spent as the only female engineer in the company, Carlson has just been promoted to director of the civil engineering depart­ment. Her promotion means a substantial salary increase, and Carlson needs it. Her daughter has just started college at a private institution. It is an excellent school, but the tuition rate is sky high, and her ex-husband, true to form, has re­fused to help. Why, then, on this day of all days does Carlson feel so bad? The answer is simple: She got the promotion be­cause she lied.

The process for selecting CEC’s new director of civil engineering had been difficult. The competition had been especially tough. One of Carlson’s long time colleagues and friends had also been a leading candidate. Since Carlson and her friend were equally qualified and equally experienced, the ultimate selection had come down to solving a complex engineering problem developed by the outgoing director, who was retiring.

A couple of days before the candidates were scheduled to take the promotion test, Carlson had gone to the direc­tor’s office to return a file she had borrowed. The problem she would have to solve on the promotion test was on the director’s desk. The director was out of the office for the day. Carlson saw the problem and knew immediately what it was. She started to turn away but felt herself drawn to it. Almost without realizing what she was doing, Carlson leaned over the director’s desk and looked at the solution. It was a really tough problem.

When the two candidates had completed the test, Carlson’s friend and colleague asked how she had done. “I think I solved it” was her response. “Not me,” said her friend. “That was the trickiest engineering problem I’ve ever seen. I’ve heard that the director had this really complicated prob­lem that no one has ever been able to solve, except him, of course. I don’t suppose you had ever seen this problem before, had you?” Janice Carlson could not look her friend in the eye when she said, “No. I’ve heard about it, too. But that was the first time I had ever seen it. I guess I just got lucky.” Her friend had smiled and held out his hand, say­ing, “Anyway, congratulations. It looks like you get the promotion.”

Carlson is a person who prides herself on honesty, but in this case, her personal interest overcame her commitment to the truth. On the one hand, she needs the promotion in order to help pay her daughter’s college costs. On the other hand, the way she received it was dishonest. Put yourself in Carlson’s shoes. What would you have done?

8.2. Case 2: To Pay or Not to Pay?

John Hingas didn’t know what to do, but he did know that he would have to make a recommendation, and soon. He had been the leading marketing representative for Government Products Inc. (GPI) for years. In fact, he was practically a leg­end in the company. That’s why GPI’s president had given him the current assignment to “break into the Mexican market.” GPI produces various office products ranging from desks and chairs to filing cabinets and shelves. The company’s major cus­tomers are local, state, and federal government organizations.

With the passage of the North American Free Trade Agreement (NAFTA), GPI’s executives had decided to ex­pand into Mexico. Unfortunately, they were getting nowhere. After nine months of concerted effort, GPI had nothing to show for its attempts to gain a foothold in Mexican markets except a stack of invoices for airline tickets, motel rooms, and restaurants. Finally, GPI’s executives decided to send in the “A Team” That is when John Hingas received the call. While meeting with GPI’s executive management team, Hingas quickly showed why he had always been so effective. After analyzing the company’s marketing plan for Mexico, Hingas told the executives, “I have just one question. How many of the marketing representatives we send to Mexico actually speak Spanish?” There was an embarrassed silence before Hingas said, “Why don’t we step back from the Mexico ini­tiative for a while and give me a chance to look into it? I’ll then come back with recommendations.”

“How long do you need?” asked the company’s CEO.

“Six months,” said Hingas.

“Why so long?”

“Because before I go down to Mexico to look into things, I need to learn to speak the language”

Eight months and many trips to Mexico later, Hingas knew exactly what would be necessary to succeed in the Mexican markets. By learning to speak Spanish and by get­ting to know a number of key contact people, Hingas had learned precisely what GPI would have to do in order to compete in its targeted market in Mexico. In a word, the an­swer was “bribery.” GPI could make the best products in the world at the most reasonable prices, but unless its marketing representatives became adept at playing the bribery game, the company would never sell one piece of furniture to a government organization in Mexico. GPI’s competitors had already figured this out and were using it to their advantage.

Hingas knew GPI could “play the game” as well as or even better than its competitors, but should it? On the one hand, bribery is simply a way of life, a part of the culture in the markets GPI is trying to reach. The hard truth is clear to Hingas: no bribes, no contracts. However, with just a few well-placed bribes, GPI could increase its annual sales by more than 15% in less than two years. On the other hand, GPI enjoys a well-deserved reputation for integrity with its customers, and nobody in the company wants to damage that reputation. Hingas has a recommendation to make, and he will have to make it soon. Put yourself in his place. What would you recommend?

8.3. Case 3: The Product Is Inferior, but the Profits Are Good

The executive management team of Athletic Footwear Inc. (AFI) faces both a threat and an opportunity. The threat is that unless it can find a buyer for a large production run of soccer shoes, the company is going to lose a lot of money. The opportunity is that the vice president of marketing has found a buyer. The problem is that although this batch of shoes is the company’s best-selling, most popular model, the shoes are defective.

Several months earlier, AFI’s management team had de­cided to save on production costs by using a different glue provided by a new supplier. The glue came highly recom­mended, and it was much less expensive than that previously used. Consequently, AFI’s management team had jumped at the opportunity to save money without first running in­house tests on the glue. Much to their dismay, the new glue turned out to be inferior to that normally used when secur­ing the sole of the shoe. Now, the company is stuck with a warehouse full of defective shoes.

Normally, the company would simply write off the de­fective shoes and absorb the loss. However, the company has just gone through a year-long battle to stave off a hostile takeover. As a result, its coffers are practically empty and its debt has nearly doubled. Nobody seated around the table in the executive conference room is in a mood to just absorb the potential loss they face. Legal action against the supplier has already been ruled out for fear of permanently damag­ing the company’s image and credibility. Nobody wants the company’s regular customers to know that a defective batch of shoes was produced. Management doesn’t want customers thinking, “If AFI produces one large batch of defective shoes, maybe it will produce another”

The potential buyer is a distributor that has retail outlets throughout South America. This company is even willing to pay more than the market price for the shoes in order to be the first distributor in South America to carry the AFI brand. No sport in South America is more favored than soccer, and the AFI soccer shoe is very popular in the United States, Canada, and Europe. The shoe has a reputation for being comfortable and durable. It lasts a long time in even the most demand­ing conditions. But the defective batch in question won’t; in fact, based on initial trial runs, the soles will probably begin to separate after less than 20 hours of use. What should AFI’s executives do? Should they sell the shoes, knowing they are defective, or destroy them and find a way to take a loss they really don’t need at this point in the company’s history? If you were an AFI executive, what would you suggest?

8.4. Case 4: Should He Keep Accurate Records or Fudge on the Facts

In an attempt to improve quality, the shop superintendent at FWM Inc. has instructed all work cell supervisors to keep re­cords of waste, scrap, and rework items. These records will be reviewed periodically at irregular intervals to identify which work cells are performing best and to make adjustments as necessary. The superintendent has stressed that the records will be used for making continual improvements to machin­ing processes and to the performance of individual machin­ists. But John Simpson, supervisor of Work Cells B and C, is concerned. He was passed over for a promotion that last time he was eligible because his work cells were at the bot­tom of the company’s performance ratings.

John Simpson is a new father of a child suffering from a rare and debilitating disease that requires the baby to have constant medical attention. Most of the medical costs are covered by FWM’s health insurance policy. Consequently, Simpson needs to keep his job badly. He cannot risk los­ing his job and, in turn, his health insurance because his work cells fail to measure up to company quality standards. Simpson’s problem is complicated by the fact that his Work Cells B and C have the least experienced machinists in the company. He knows how competitive the machining busi­ness has become. FWM needs the absolute best work from its machinists—no waste, no scrap, and no rework—so the pressure to perform is intense.

Simpson is considering doctoring his waste, scrap, and rework records to make things look better. He knows this is only a temporary tactic. The truth will eventually come out. But he hopes before that happens he will be able to improve the performance of his machining teams to acceptable, com­petitive levels. What do you think Simpson should do? If you were a friend, what advice would you give Simpson?

8.5. Case 5: Questionable Political Contributions

ABC Inc. is a defense contractor that renovates and retrofits military aircraft. The company has been in business for more than 50 years and has an excellent performance record. ABC has kept airplanes modernized for the Navy and Air Force for all this time and is well respected in government contract­ing circles. Usually maintaining a steady flow of government contracts is not a problem. But recently, with ongoing budget cuts to the military the work has slowed down and getting new contracts has become an intensely competitive challenge.

Sharon Beckford is ABC’s chief contracting officer. She is the principal interface between the government and ABC. One of the reasons Beckford has been so effective at bring­ing in new contracts over the years is her friendship with and family connection to Congressman Mack Jones, chairman of the Military Appropriations Committee. A word or nod from Jones to one of the military chiefs of staff is all it takes to ensure that ABC gets a new contract whenever one becomes available. But a problem has arisen that could threaten ABC’s future: Congressman Jones has strong opposition in the upcoming Congressional elections and his continuance in Congress is anything but a sure bet. If Jones loses, ABC will also lose.

Congressman Jones’ reelection is of paramount impor­tance to Beckford and her company, a fact that has presented Beckford with an ethical dilemma. The other political party has targeted Jones’ seat and, as a result, is pouring money into trying to elect his opponent. Jones badly needs more cam­paign contributions to buy television and radio ads, but his campaign fund is quickly running out. He has asked all of his closest supporters—including Sharon Beckford—to raise more money for him and to do it fast. The problem is that she and ABC Inc. have already given all the law allows. Jones wants Beckford to twist the arms of ABC’s employees to con­tribute to a special fund she will collect and pass on to him as if the money came from legitimate individual donations without any coercion. Although this is commonly done, it is of ques­tionable legality and is at the very least unethical. Beckford does not want to see ABC forced to lay off good employees— especially during a time of high unemployment—but she is reluctant to bend federal election laws. What do you think Beckford should do? How would you handle this situation?

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

The material presented so far in this chapter has dealt pri­marily with the behavior of individuals in organizations and the ethical ramifications of that behavior. This section deals with the issue of corporate behavior and its attendant ethical ramifications.

Business scandals tend to undermine the credibility of businesses in general by eroding public trust and confidence. In an attempt to stem the tide of unethical behavior in busi­ness, the International Organization for Standardization (ISO)—the same organization that developed the interna­tional quality management guidelines known as ISO 9000 and the international environmental management guidelines known as ISO 14000—has taken on the issue of corporate social responsibility (CSR). The ISO defines CSR as follows:

[CSR is] a balanced approach for organizations to address economic, social and environmental issues in a way that aims to benefit people, communities and society.³

Key elements of CSR include the ethical aspects of the following business and workplace issues:

1. Human rights
2. Occupational safety and health
3. Business practices (fair or unfair)
4. Governance
5. Environmental management
6. Consumer relations
7. Marketplace activities
8. Community involvement
9. Social development

The CSR is critical because the credibility and, in turn, suc­cess of a free-market economic system rest on a founda­tion of trust. All the principles of total quality—continual improvement, competition, strategic management, and so on—are inextricably linked with free-market practices. Undermine that foundation of the free-market system and you undermine the entire system. When public trust is un­dermined, it is replaced by fear, suspicion, and protectionist attitudes. Businesses cannot survive and thrive in such an environment.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

To understand what a quality culture is, one must first un­derstand the concept of organizational culture. Every orga­nization has one. An organization’s culture is the everyday manifestation of its underlying values and traditions. It shows up in how employees behave at work, what their ex­pectations are of the organization and each other, and what is considered normal in terms of how employees approach their jobs. Have you ever shopped at a store or eaten in a restaurant in which the service was poor and the employ­ees surly or disinterested? Such organizations have a cultural problem. Valuing the customer is not part of their culture. No matter what slogans or what advertising gimmicks they use, the behavior of their employees clearly says, “We don’t care about customers.”

An organization’s culture has the following elements:

• Business environment
• Organizational values
• Cultural role models
• Organizational rites, rituals, and customs
• Cultural transmitters

The business environment in which an organiza­tion must operate is a critical determinant of its culture. Organizations that operate in a highly competitive business environment that changes rapidly and continually are likely to develop a change-oriented culture. Organizations that op­erate in a stable market in which competition is limited may develop a dont-rock-the-boat culture.

Organizational values describe what the organization thinks is important. Adherence to these values is synony­mous with success. Consequently, an organization’s values are the heart and soul of its culture.

Cultural role models are employees at any level who personify the organization’s values. When cultural role mod­els retire or die, they typically become legends in their orga­nizations. While still active, they serve as living examples of what the organization wants its employees to be.

Organizational rites, rituals, and customs express the organization’s unwritten rules about how things are done. How employees dress, interact with each other, and ap­proach their work are all part of this element of an organiza­tion’s culture. Rites, rituals, and customs are enforced most effectively by peer pressure.

Cultural transmitters are the vehicles by which an or­ganization’s culture is passed down through successive gen­erations of employees. The grapevine in any organization is a cultural transmitter, as are an organization’s symbols, slo­gans, and recognition ceremonies.

What an organization truly values will show up in the behavior of its employees, and no amount of lip service or advertising to the contrary will change this. If an organiza­tion’s culture is its value system as manifested in organiza­tional behavior, what is a quality culture?

A quality culture is an organizational value system that results in an environment that is conducive to the estab­lishment and continual improvement of quality. It consists of values, traditions, procedures, and expectations that promote quality.

How do you recognize an organization with a quality culture? It is actually easier to recognize a quality culture than to define one. Organizations with a quality culture, regardless of the products or services they provide, share a number of common characteristics, presented in Figure 6.1.

How Are Organizational Cultures Created?

Many factors contribute to the creation of an organization’s culture. The value systems of executive-level decision makers are often reflected in their organization’s culture. How manag­ers treat employees and how employees at all levels interact on a personal basis also contribute to the organizational culture. Expectations are important determinants of organizational culture. What management expects of employees and what employees, in turn, expect of management both contribute to an organization’s culture. The stories passed along from employee to employee typically play a major role in the estab­lishment and perpetuation of an organization’s culture. All of these factors can either help or hurt an organization.

If managers treat employees with trust, dignity, and re­spect, employees will be more likely to treat each other in this way, and trust, dignity, and respect in everyday interac­tion will become part of the organization’s culture. On the other hand, if management treats employees poorly, employ­ees are likely to follow suit. Both situations, if not changed, will become ingrained as traditions. These traditions will be perpetuated both by the behavior of employees and by the stories they pass along to one another. This is why it is so im­portant to establish a quality culture. If mistrust is part of the organizational culture, it will be difficult to build partner­ships between internal and external customers. It will also be difficult to establish an environment of mutually supportive teamwork. Organizations that have these problems are not likely to be world-class competitors.

Commitment to quality cannot be faked. Employees know when management is just going through the motions. Changing an organization’s culture requires a total commit­ment and a sustained effort at all levels of the organization.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

Organizations that develop and maintain a quality culture will differ significantly from those with a traditional culture. The differences will be most noticeable in the following areas:

• Operating philosophy
• Objectives
• Management approach
• Attitude toward customers
• Problem-solving approach
• Supplier relationships
• Performance-improvement approach

1. Operating Philosophy

In an organization with a traditional culture, the primary focus is return on investment and short-term profits. Often the methods used to maximize profits in the short term have a negative effect in the long run. In order to improve the organization’s bottom line on the next quarter’s profit- and-loss statement, executives might decide to “unload” a defective product on customers, put off critical technology upgrades, or eliminate training programs for employees. An organization might cut back on equipment maintenance, employee benefits, or performance-incentive programs. All of these shortsighted methods are common in organizations with traditional cultures, and while they might prop up the bottom line temporarily, they invariably lead to disaster in the long run. A short-term operating philosophy is the rea­son why traditional organizations often experience a large turnover at the top. The CEOs who apply this short-term operating philosophy are often “cut-and-run” managers who maximize short-term profits by eliminating essential functions, activities, and personnel. They then take their percentage of the resulting profits and leave, only to repeat the charade at another organization.

In an organization with a quality culture, the core of the operating philosophy is customer satisfaction. Quality organizations focus on doing what is necessary to exceed the reasonable expectations of customers. Such an approach can lower profits in the short run but is the key to long­term survival and prosperity. For example, making a major investment in an expensive technology upgrade can cause the next quarter’s profit-and-loss statement to be flat. Over time, however, the benefits of the new technology will take hold and will be reflected in profit-and-loss statements for years to come. Organizations that adopt a quality culture typically have less turnover at the top. This is because such a philosophy encourages decision makers to stay in their positions long enough to either enjoy or suffer the conse­quences of their decisions.

2. Objectives

Organizations with traditional cultures typically adopt short-term objectives. The focus is on what the organization should accomplish over the next several weeks and months. Organizations that adopt a quality culture plan strategically. They develop both long- and short-term objectives, and they do so within the context of an organizational vision.

3. Management Approach

In organizations with traditional cultures, managers think and employees do. In fact, employees don’t just do; they do what they are told. Managers are seen as “bosses” who give orders and enforce policies, procedures, and rules. In orga­nizations with quality cultures, managers are seen as coaches of the team. They communicate the vision, mission, and goals; provide resources; remove barriers; seek employee input and feedback; build trust; provide training; and reward and recognize performance.

4. Attitude toward Customers

Organizations with traditional cultures tend to look in­ward. They are more concerned about their needs than those of customers. Customer relations might actually be adversarial. Organizations with a quality culture are customer-focused. Customer satisfaction is the highest pri­ority and is the primary motivation driving continual im­provement efforts.

5. Problem-Solving Approach

There is a lot of finger pointing in organizations with a traditional culture. When problems occur, decision mak­ers and employees tend to expend more energy on deflect­ing or assigning blame than on identifying the root cause of the problem, which must occur before the problem can be solved. Traditional organizations suffer from the “most valuable player (MVP)” syndrome, in which problem solv­ing is viewed as an individual undertaking wherein inde­pendent “heroes” operating all alone jump into the breach to put things right just in the nick of time. At best, this ap­proach is erratic.

Another phenomenon that occurs in traditional cul­tures is the “waiting game.” With this strategy, decision makers hold back until someone appears to have the prob­lem almost solved; then they jump on board and act as if the idea was theirs all along. Such an approach encourages manipulation and subterfuge rather than innovation and creative thinking.

When difficulties occur in organizations with a qual­ity culture, the focus is on identifying and isolating the root cause so that the problem, and not just its symptoms, can be eliminated. Problem solving is typically a systematic process undertaken by teams, with input solicited from all stake­holders. The goal is to create solutions, not “heroes.”

6. Supplier Relationships

In organizations with a traditional culture, suppliers are kept at arm’s length in relationships that are often adversarial. The maximum possible pressure is exerted on suppliers to bring down prices and speed up delivery, even when such an approach is likely to drive the supplier out of business. In organizations with a quality culture, suppliers are viewed as partners. Supplier and customers work together cooper­atively for the good of both. Each gets to know the other’s processes, problems, strengths, and weaknesses, and they collaborate, using this information to continually improve the relationship and the performance of both.

7. Performance-Improvement Approach

In organizations with a traditional culture, performance im­provement is an erratic, reactive undertaking that is typically triggered by problems. In organizations with a quality cul­ture, continual improvement of processes, people, products, the working environment, and every other factor that affects performance is at the very core of the operating philosophy.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.

To attempt the implementation of total quality without creating a quality culture is to invite failure. Organizations in which the prevailing culture is based on traditional management practices are not likely to succeed in the implementation of total qual­ity. Successful total quality requires cultural change. Several primary reasons cultural change must either precede or at least parallel the implementation of total quality are described here.

1. Change cannot occur in a hostile environment. The total quality approach to doing business may be radi­cally different from what management and employees are accustomed to. Managers who are used to sitting in their lonely towers at the top of the pecking order and issuing edicts from on high are likely to reject the con­cept of employee involvement and empowerment.

Employees who are used to competing against their fellow employees for promotions and wage increases may not be open to mutually supportive internal part­nerships and teamwork. Situations such as these can create an environment that is hostile toward change, no matter how desirable that change is. Change can be dif­ficult, even when people want to do so. It can be impos­sible in a hostile environment.

2. Moving to total quality takes time. The nature of total quality is such that the organization may have to go down somewhat before it can turn things around and start to come up. In a conversion to total quality, positive results are rarely achieved in the short run. This characteristic gives nonbelievers and people who just don’t want to change (and such people are often in the majority at first) the opportunity to promote the “I told you it wouldn’t work” syndrome.
3. It can be difficult to overcome the past. Employees who have worked in an organization for any period of time have probably seen a variety of management fads come and go. Promoting the latest management gim­mick and then letting it die for lack of interest may be part of the existing organizational culture. If this is the case, it will be difficult to overcome the past. Employees will remember earlier fads and gimmicks and characterize total quality as being just the latest one; they may take a “This too shall pass” attitude toward it. The past is not just an important part of an organiza­tion’s culture; it can also be the most difficult part to leave behind.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.