01 TQM

Introduction to Total Quality
in Organizations
I n this chapter we will introduce you to the basic principles of total quality.
Specifically, we will
• provide reasons why attention to quality should be a part of every orga-
nization’s culture and management systems,
• provide a brief history of the “quality revolution,”
• provide an overview of the key principles of total quality,
• compare and contrast quality-focused management with traditional man-
agement practices, and
• discuss relationships of total quality with organizational models in man-
agement theory.
THE IMPORTANCE OF QUALITY

To appreciate the impact that quality has had on business, especially in the
United States, one need only look at the financial and operational results
achieved by companies that have embraced quality as a basic business
principle:
• Texas Nameplate Company, with under 70 employees, increased its
national market share from less than 3 percent to 5 percent over three
years, reduced its defects from 3.65 percent of billings to about 1 percent
of billings, and increased on-time delivery from 95 to 98 percent.
• STMicroelectronics, Inc.—Region Americas reduced lost-day injuries
from 1.01 per 100 workers to 0.65 in three years, which is 74 percent
4 Part I: Introduction to Total Quality
below the industry average, and increased employee satisfaction levels to

a level that exceeded the industry composite in eight of ten categories.
• Over five years, Solar Turbines, Inc., a subsidiary of Caterpillar, Inc., saw
its new product development cycle decrease from 39 to 22 months, war-
ranty claims decrease significantly, and revenues per employee increase
61 percent.
• Dana Corporation—Spicer Driveshaft Division lowered internal defect
rates by more than 75 percent. Employee turnover is below 1 percent, and
economic value added increased from $15 million to $35 million in two
years.
• Operations Management International, Inc., realized a 15 percent average
annual growth rate while top competitor revenues dropped by 4.5 per-
cent. Eighty-eight percent of industrial clients say the company exceeds
expectations.
Many more statistics like these can be cited, and other empirical evidence
exists that firms implementing effective total quality approaches improve
their performance on measures of income, sales growth, cost control, and
growth in employment and total assets.1 Nevertheless, scores of companies
have either failed to take the first step in a quality journey, or have let initial
successes fade away because of lack of commitment and sustainability.
One wonders whether quality has lost its importance. We think not. First,
consumers are intelligent enough to recognize quality issues that firms face
today (see box). Second, the business press, which hyped quality in the early
1990s only to drop it like a hot potato, has renewed the charge. The December
18, 2000, issue of Business Week includes an editorial titled “The War for Better
You Can Fool Some of the People Some of the Time . . .
Letters to the editor of Business Week show that quality is an important con-
cern to consumers, and that quality guides their purchasing decisions:
[Robert A.] Lutz and the other big hires will have to do more than spruce
up GM’s designs in order to regain market share. The new Cadillac CTS
and other model changes will have very little effect unless GM buckles
down to improve the quality of its products. As a longtime GM cus-
tomer . . . I have watched GM fall behind in product reliability and dura-
bility and just never quite get with it. Finally this year, I threw in the
towel and reluctantly invested in a Lexus. (September 17, 2001, p. 16)
“Can the Nordstroms find the right style?” summarizes, in part,
what my wife has been telling me for several years: The company has
lost touch with its customer base. When a salesperson responded to
an observation my wife made by telling her to write the company a let-
ter—while telling her they had “100 letters on the same subject”—that
tells you something. (September 10, 2001, p. 22)
Chapter 1: Introduction to Total Quality in Organizations 5
Quality Is Far From Won” by Jeffrey E. Garten, dean of the Yale School of Man-
agement. He observes: “Whatever happened to the hoopla surrounding qual-
ity control in Corporate America? Has the issue slipped from the front page
because the war against big-time defects has been won? Or could Corporate
America be deluding itself into thinking that quality no longer is the huge
problem it once was?” Dean Garten points to the Firestone tire fiasco, recalls of
circuit boards by Intel, automobile recalls, poor customer-service quality, the
lack of a quality framework for e-business, and the need for higher quality stan-
dards in biotechnology as reminders that quality problems still abound.
Total quality—a comprehensive, organization-wide effort to improve
the quality of products and services—applies not only to large manufactur-
ers, but to small companies like Trident Precision Manufacturing (see box).
Quality Starts with a Vision2
Unless you live in Webster, New York, you probably have never heard of Trident
Precision Manufacturing, Inc. The privately held company was formed in 1979
with three people, and today manufactures precision sheet metal components,
electromechanical assemblies, and custom products, mostly in the office
equipment, medical supply, computer, and defense industries with a work-
force of about 170. In 1995, revenues totaled $14.5 million. Trident has estab-
lished quality as its basic business plan to accomplish short- and long-term
goals for five key business drivers: customer satisfaction, employee satisfac-
tion, shareholder value, operational performance, and supplier partnerships.
Employee turnover declined dramatically, from 41 percent in 1988 to 5
percent in 1994 and 1995. Defect rates fell so much that Trident offered a full
guarantee against defects in its custom products. On-time delivery perform-
ance increased from 87 percent in 1990 to 99.94 percent in 1995. Rates of
return on assets consistently exceeded industry averages, customers rated
the quality of their products at 99.8 percent or better, and the company never
lost a customer to a competitor. In 1996, Trident received the Malcolm Baldrige
National Quality Award, the highest level of recognition in the United States
for organizations demonstrating outstanding business results and manage-
ment approaches to achieving performance excellence.
How did Trident achieve such success? Trident’s total quality quest began
in 1988, when CEO Nicholas Juskiw attended a symposium offered by Xerox
Corporation about its Leadership Through Quality strategy. When Juskiw wrote
his vision statement he said:
My Vision for Trident is one in which each of us shares in the responsibil-
ity, growth, and benefits of becoming a world-class organization. How will we,
as a team, achieve this? Through quality! Not just the quality of each individ-
ual part but through Total Quality—in everything we say and do. . . . As a strong
team, with each headed in the same direction, we can become the unques-
tionable leader that our Customers, Industry, and Community look up to.
All organizations—large and small, manufacturing and service, profit and

not-for-profit—can benefit from applying the principles of total quality.
A BRIEF HISTORY
To understand the importance of quality in business today, we need to review
some history. Before the Industrial Revolution, skilled craftspeople served
both as manufacturers and inspectors, building quality into their products
through their considerable pride in their workmanship. Customers expected
quality, and craftspeople understood it.
The Industrial Revolution changed everything. Thomas Jefferson brought
Honore Le Blanc’s concept of interchangeable parts to America. Eli Whitney
mistakenly believed that this idea would be easy to carry out. The govern-
ment awarded him a contract in 1798 to supply 10,000 muskets in two years.
He designed special machine tools and trained unskilled workmen to make
parts according to a standard design, measure them, and compare them to a
model. Unfortunately, Whitney grossly underestimated the effect of variation
in the production process and its impact on quality. It took more than 10
years to complete the project, perhaps the first example of cost-overrun in
government contracts! This same obstacle—variation—continues to plague
American managers to this day.
Frederick W. Taylor’s concept of “scientific management” greatly influ-
enced the nature of quality in manufacturing organizations. By focusing on
production efficiency and decomposing jobs into small work tasks, the mod-
ern assembly line destroyed the holistic nature of manufacturing. To ensure
that products were manufactured correctly, independent “quality control”
departments assumed the tasks of inspection. Thus, the separation of good
from bad product became the chief means of ensuring quality.
Statistical approaches to quality control had their origins at Western Elec-
tric when the inspection department was transferred to Bell Telephone Lab-
oratories in the 1920s. The pioneers of quality control—Walter Shewhart,
Harold Dodge, George Edwards, and others—developed new theories and
methods of inspection to improve and maintain quality. Control charts, sam-
pling techniques, and economic analysis tools laid the foundation for mod-
ern quality assurance activity and influenced the thinking of two of their col-
leagues, W. Edwards Deming and Joseph M. Juran.
Deming and Juran introduced statistical quality control to Japanese
workers after World War II as part of General MacArthur’s rebuilding pro-
gram. Although this was not much different than what was being done in
America, there was one vital difference. They convinced top Japanese man-
agers that quality improvement would open new world markets and was
necessary for the survival of their nation. The managers believed in, and fully
supported, the concept of quality improvement. The Japanese were in an
ideal position to embrace this philosophy. Their country was devastated
from the war, and they had few natural resources with which to compete,
except their people. During the next 20 years, while the Japanese were improv-
ing quality at an unprecedented rate, quality levels in the West remained
stagnant. Western manufacturers had little need to focus on quality. America
had a virtual monopoly in manufacturing, and the post-war economy was
hungry for nearly any kind of consumer good. Top managers focused their
efforts on marketing, production quantity, and financial performance.
During the late 1970s and early 1980s, many businesses in the United States
lost significant market share to other global competitors, Japan in particular. By
1987 Business Week posed a stern warning to American management:
Quality. Remember it? American manufacturing has slumped a long

way from the glory days of the 1950s and ‘60s when “Made in U.S.A.”
proudly stood for the best that industry could turn out. . . . While the
Japanese were developing remarkably higher standards for a whole
host of products, from consumer electronics to cars and machine
tools, many U.S. managers were smugly dozing at the switch. Now,
aside from aerospace and agriculture, there are few markets left where
the U.S. carries its own weight in international trade. For American
industry, the message is simple. Get better or get beat.3
The “quality revolution” in America can be traced to 1980, when NBC

aired a white paper titled “If Japan Can . . . Why Can’t We?” This program
introduced the 80-year-old Deming, who was virtually unknown in the
United States, to corporate executives across America. Ford Motor Company
was among the first to invite Deming to help transform its operations.
Within a few years, Ford’s earnings were the highest for any company in
automotive history, despite a 7 percent drop in U.S. car and truck industry
sales, higher capital spending, and increased marketing costs. In 1992 the
media celebrated the fact that the Ford Taurus outsold the Honda Accord to
become the leader in domestic sales. Former CEO Donald Petersen stated:
The work of Dr. Deming has definitely helped change Ford’s corpo-
rate leadership. . . . Dr. Deming has influenced my thinking in a vari-
ety of ways. What stands out is that he helped me crystallize my
ideas concerning the value of teamwork, process improvement and
the pervasive power of the concept of continuous improvement.
Ironically, by the turn of the new century, Ford’s quality dropped to last
place among American car companies, demonstrating that sustaining qual-
ity efforts is indeed a difficult challenge.
America woke up to quality during the 1980s as most major companies
embarked on extensive quality improvement campaigns. In 1984 the U.S.
government designated October as National Quality Month. In 1987—some
34 years after Japan established the Deming Prize—Congress established the
Malcolm Baldrige National Quality Award, spawning a remarkable interest
in quality among American businesses. By the end of the decade Florida
Power and Light became the first non-Japanese company to win Japan’s cov-
eted Deming Prize for quality. After the publicity that quality received from
the manufacturing sector, the quality movement shifted to services. Compa-
nies like FedEx, The Ritz-Carlton Hotel Company, and AT&T Universal Card
Services (now a part of CitiBank) demonstrated clearly that quality princi-
ples can be applied effectively in the service sector.
During the 1990s, health care, government, and education began to pay
increased attention to quality. As more public and government attention
focuses on the nation’s health care system, its providers turn toward quality as
a means of achieving better performance and lower costs.4 One hospital, for
example, lowered its rate of post-surgical infections to less than one-fifth of the
acceptable national norms through the use of quality tools. In 1993, Vice Pres-
ident Al Gore spearheaded the National Performance Review, an initiative
driven by the need to improve quality, which made 384 recommendations and
indicated 1,214 specific actions that the federal government should take to
improve operations and reduce costs. In 1991 a consortium of professional
associations, business associations, and individual businesses and universities
incorporated a nonprofit group called the National Education Quality Initia-
tive to improve educational processes through quality principles. Many local
school systems, colleges, and universities have made considerable progress.
Although quality initiatives focused initially on reducing defects and
errors in products and services through the use of measurement, statistics,
and other problem-solving tools, organizations began to recognize that last-
ing improvement could not be accomplished without significant attention to
the quality of the management practices used on a daily basis. Managers
began to realize that the approaches they use to listen to customers and
develop long-term relationships, develop strategy, measure performance
and analyze data, reward and train employees, design and deliver products
and services, and act as leaders in their organizations are the true enablers of
quality, customer satisfaction, and business results. In other words, they rec-
ognized that the “quality of management” is as important as the “manage-
ment of quality.” As organizations began to integrate quality principles into
their management systems, the notion of total quality management, or TQM,
became popular. Quality took on a new meaning of organization-wide per-
formance excellence rather than an engineering-based technical discipline.
As quality principles have matured in organizations, attention to quality
as “something new” has faded, and the term “total quality management
(TQM),” which was popular throughout the 1980s and early 1990s, has all
but fallen out of the business vernacular. Critics suggested that “TQM is as
dead as a pet rock” (Business Week, June 23, 1997, p. 47). Perhaps it is unfor-
tunate that a three-letter acronym was chosen to represent such a powerful
management concept. It is equally unfortunate that people point to the
demise of faddish terminology as a generalization of the concepts them-
selves. Reasons for failure of quality initiatives are rooted in organizational
approaches and systems, many of which this book addresses. As the editor
of Quality Digest put it: “No, TQM isn’t dead. TQM failures just prove that
bad management is still alive and kicking.” The most successful organiza-
tions have found that the fundamental principles of total quality are essen-
tial to effective management practice, and continue to represent a sound
approach for achieving business success.
The real challenge today is to ensure that managers do not lose sight of
the basic principles on which quality management and performance excel-
lence are based. The global marketplace and domestic and international com-
petition has made organizations around the world realize that their survival
depends on high quality.5 Many countries, such as Korea and India, are
mounting national efforts to increase quality awareness, including confer-
ences, seminars, radio shows, school essay contests, and pamphlet distribu-
tion. Spain and Brazil are encouraging the publication of quality books in
their native language to make them more accessible. These trends will only
increase the level of competition in the future. Even the tools used to achieve
quality a decade ago are no longer sufficient to achieve the performance lev-
els necessary to compete in today’s world. Many organizations are embrac-
ing highly sophisticated, statistically based tools as part of popular “Six Sigma”
initiatives (see chapter 3). These require increased levels of training and edu-
cation for managers and frontline employees alike, as well as the develop-
ment of technical staff. As Tom Engibous, president and chief executive offi-
cer of Texas Instruments, commented on the present and future importance
of quality in 1997: Quality will have to be everywhere, integrated into all
aspects of a winning organization.
THE CONCEPT OF QUALITY

People define quality in many ways. Some think of quality as superiority or
excellence, others view it as a lack of manufacturing or service defects, still
others think of quality as related to product features or price. A study that
asked managers of 86 firms in the eastern United States to define quality pro-
duced several dozen different responses, including
1. perfection
2. consistency
3. eliminating waste
4. speed of delivery
5. compliance with policies and procedures
6. providing a good, usable product
7. doing it right the first time
8. delighting or pleasing customers
9. total customer service and satisfaction6
Today most managers agree that the main reason to pursue quality is to
satisfy customers. The American National Standards Institute (ANSI) and the
American Society for Quality (ASQ) define quality as “the totality of features
At Deer Valley, Quality Is Not a Snow Job7
Deer Valley Resort in Park City, Utah, is viewed by many as The Ritz-Carlton
of ski resorts, providing exceptional services and a superior ski vacation expe-
rience. The resort offers curbside ski valet service to take equipment from
vehicles, parking lot attendants to ensure efficient parking, and a shuttle to
transport guests from the lot to Snow Park Lodge. Guests walk to the slopes
on heated pavers that prevent the pavement from freezing and assist in snow
removal. The central gathering area by the base lifts is wide and level, allow-
ing plenty of room to put on equipment and easy access to the lifts. At the
end of the day, guests can store their skis without charge at each lodge. The
resort limits the number of skiers on the mountain to reduce lines and con-
gestion, and offers complimentary mountain tours for both expert and inter-
mediate skiers. Everyone is committed to ensuring that each guest has a
wonderful experience, from “mountain hosts” stationed at the top of the lifts
to answer questions and provide directions, to the friendly workers at the
cafeterias and restaurants, whose food is consistently rated number one by
ski enthusiast magazines. “Our goal is to make each guest feel like a winner,”
says Bob Wheaton, vice president and general manager. “We go the extra
mile on the mountain, in our ski school, and throughout our food-service oper-
ation because we want our guests to know they come first.”
and characteristics of a product or service that bears on its ability to satisfy

given needs.” The view of quality as the satisfaction of customer needs is
often called fitness for use. In highly competitive markets, merely satisfying
customer needs will not achieve success. To beat the competition, organiza-
tions often must exceed customer expectations. Thus, one of the most popu-
lar definitions of quality is meeting or exceeding customer expectations. This def-
inition is reflected in the vision statement of Hollywood Casino Resort in
Tunica, Mississippi:
Hollywood Casino Resort/Tunica is a place where guests feel invited

and welcome. We provide the highest levels of personalized service
and products for our guests, who always enjoy a fun-filled experi-
ence. Everyone at Hollywood Casino does the right thing right the
first time, and puts the needs and wants of our guests in the fore-
front of every decision we make.
Deer Valley Resort is another example of an organization dedicated to exceed-

ing customer expectations (see box).
Managers of manufacturing and service functions deal with different
types of quality issues; the following sections provide a brief overview of these
issues. Although the details of quality management differ between manufac-
turing and service industries, the customer-driven definition eliminates these
artificial distinctions and provides a unifying perspective.
Quality in Manufacturing
Well-developed quality systems have existed in manufacturing for some time.
However, these systems focused primarily on technical issues such as equip-
ment reliability, inspection, defect measurement, and process control. The
transition to a customer-driven organization has caused fundamental changes
in manufacturing practices, changes that are particularly evident in areas such
as product design, human resource management, and supplier relations. Prod-
uct design activities, for example, now closely integrate marketing, engineer-
ing, and manufacturing operations. Human resource practices concentrate on
empowering workers to collect and analyze data, make critical operations
decisions, and take responsibility for continuous improvements, thereby mov-
ing the responsibility for quality from the quality control department onto the
factory floor. Suppliers have become partners in product design and manu-
facturing efforts. Many of these efforts were stimulated by the automobile
industry, which forced their network of suppliers to improve quality.
Manufactured products have several quality dimensions8 including the
following:
1. Performance: a product’s primary operating characteristics.

2. Features: the “bells and whistles” of a product.
3. Reliability: the probability of a product’s surviving over a specified period
of time under stated conditions of use.
4. Conformance: the degree to which physical and performance characteris-
tics of a product match pre-established standards.
5. Durability: the amount of use one gets from a product before it physically
deteriorates or until replacement is preferable.
6. Serviceability: the ability to repair a product quickly and easily.
7. Aesthetics: how a product looks, feels, sounds, tastes, or smells.
8. Perceived quality: subjective assessment resulting from image, advertising,
or brand names.
Most of these dimensions revolve around the design of the product. In

designing the initial Lexus automobile for instance, Toyota bought several
competitors’ cars including Mercedes, Jaguar, and BMW and put them through
grueling test track runs before taking them apart.9 The chief engineer decided
that he could match Mercedes on performance and reliability, as well as on
luxury and status features. He developed 11 performance goals. The final
design had a drag coefficient smaller than any other luxury car (resulting in
higher aerodynamic performance), a lighter weight, a more fuel-efficient
engine, and a lower noise level. Sturdier materials were used for seat edges
to maintain their appearance longer. The engine was designed with more
torque than German models to give the car the quick start that Americans
prefer. Ford’s director of North American interior design called the instru-
ment cluster “a work of art.”
Quality control in manufacturing is usually based on conformance, specif-
ically conformance to specifications. Specifications are targets and tolerances
determined by designers of products and services. Targets are the ideal val-
ues for which production strives; tolerances are acceptable deviations from
these ideal values. For example, a computer chip manufacturer might spec-
ify that the distance between pins on a computer chip should be 0.095 ± 0.005
inches. The value 0.095 is the target, and ± 0.005 is the tolerance. Thus, any
pin distance between 0.090 and 0.100 would be acceptable.
A lack of defects has constituted quality in manufacturing for many years.
Many studies comparing domestic and foreign products focus on statistical
measures of defects. However, the lack of defects alone will not satisfy or
exceed customer expectations. Many top managers have stated that good
quality of conformance is simply the “entry into the game.” A better way to
achieve distinction and delight customers is through improved product
design. Thus, manufacturers are turning their attention toward improved
design for achieving their quality and business goals.
Quality in Services
Service can be defined as “any primary or complementary activity that does
not directly produce a physical product—that is, the nongoods part of the
transaction between buyer (customer) and seller (provider).”10 A service
might be as simple as handling a complaint or as complex as approving a home
mortgage. Service organizations include hotels; health, legal, engineering,
and other professional services; educational institutions; financial services;
retailers; transportation; and public utilities.
Today services account for nearly 80 percent of the U.S. workforce. The
importance of quality in services cannot be underestimated, as statistics from
a variety of studies reveal:11
• The average company never hears from more than 90 percent of its
unhappy customers. For every complaint it receives, the company has at
least 25 customers with problems, about one-fourth of which are serious.
• Of the customers who make a complaint, more than half will do business
again with that organization if their complaint is resolved. If the cus-
tomer feels that the complaint was resolved quickly, this figure jumps to
about 95 percent.
• The average customer who has had a problem will tell nine or ten others
about it. Customers who have had complaints resolved satisfactorily will
only tell about five others.
• It costs six times more to get a new customer than to keep a current
customer.
So why do many companies treat customers as commodities? In Japan the
notion of customer is equated with “honored guest.” Service clearly should be
at the forefront of a firm’s priorities.
The service sector began to recognize the importance of quality several
years after manufacturing had done so. This can be attributed to the fact that
service industries had not confronted the same aggressive foreign competition
that faced manufacturing. Another factor is the high turnover rate in service
industry jobs, which typically pay less than manufacturing jobs. Constantly
changing personnel makes establishing a culture for continuous improve-
ment more difficult.
The production of services differs from manufacturing in many ways,
and these differences have important implications for managing quality. The
most critical differences are:
1. Customer needs and performance standards are often difficult to identify

and measure, primarily because the customers define what they are, and
each customer is different.
2. The production of services typically requires a higher degree of cus-
tomization than does manufacturing. Doctors, lawyers, insurance sales-
people, and food-service employees must tailor their services to individ-
ual customers. In manufacturing, the goal is uniformity.
3. The output of many service systems is intangible, whereas manufactur-
ing produces tangible, visible products. Manufacturing quality can be
assessed against firm design specifications, but service quality can only be
assessed against customers’ subjective, nebulous expectations and past
experiences. Manufactured goods can be recalled or replaced by the man-
ufacturer, but poor service can only be followed up by apologies and
reparations.
4. Services are produced and consumed simultaneously, whereas manu-
factured goods are produced prior to consumption. In addition, many
services must be performed at the convenience of the customer. There-
fore, services cannot be stored, inventoried, or inspected prior to deliv-
ery as manufactured goods are. Much more attention must therefore be
paid to training and building quality into the service as a means of qual-
ity assurance.
5. Customers often are involved in the service process and present while it
is being performed, whereas manufacturing is performed away from the
customer. For example, customers of a quick-service restaurant place
their own orders, carry their food to the table, and are expected to clear
the table when they have finished eating.
6. Services are generally labor intensive, whereas manufacturing is more
capital intensive. The quality of human interaction is a vital factor for
services that involve human contact. For example, the quality of hospital
care depends heavily on interactions among the patients, nurses, doctors,
and other medical staff. Hence, the behavior and morale of service
employees is critical in delivering a quality service experience.
7. Many service organizations must handle very large numbers of customer
transactions. For example, on a given business day, the Royal Bank of
Canada might process more than 5.5 million transactions for 7.5 million
customers through 1,600 branches and more than 3,500 banking machines,
and FedEx might handle more than 1.5 million shipments across the globe.
Such large volumes increase the opportunity for error.
These differences have made it difficult for many service organizations to
apply total quality principles.
Many service organizations have well-developed quality assurance sys-
tems. Most of them, however, are based on manufacturing analogies and
tend to be more product-oriented than service-oriented. Many of the key
dimensions of product quality apply to services. For instance, “on time arrival”
for an airline is a measure of service performance; frequent flyer awards and
“business class” sections represent features. A typical hotel’s quality assur-
ance system focuses on technical specifications such as properly made-up
rooms (see box). However, service organizations have special requirements
that manufacturing systems cannot fulfill. The most important dimensions
of service quality include the following:12
• Time: How much time must a customer wait?
• Timeliness: Will a service be performed when promised?
• Completeness: Are all items in the order included?
• Courtesy: Do frontline employees greet each customer cheerfully?
• Consistency: Are services delivered in the same fashion for every cus-
tomer, and every time for the same customer?
• Accessibility and convenience: Is the service easy to obtain?
• Accuracy: Is the service performed right the first time?
• Responsiveness: Can service personnel react quickly and resolve unex-
pected problems?
Knock Three Times13
Marriott has become infamous for its obsessively detailed standard operating
procedures (SOPs), which result in hotels that travelers either love for their
consistent good quality or hate for their bland uniformity. “This is a company
that has more controls, more systems, and more procedural manuals than
anyone—except the government,” says one industry veteran. “And they
actually comply with them.” Housekeepers work with a 114-point checklist.
One SOP: Server knocks three times. After knocking, the associate should
immediately identify themselves in a clear voice, saying, “Room Service!”
The guest’s name is never mentioned outside the door.
Although people love to make fun of such procedures, they are a serious
part of Marriott’s business, and SOPs are designed to protect the brand.
Recently, Marriott has removed some of the rigid guidelines for owners of
hotels it manages, empowering them to make some of their own decisions
on details.
Service organizations must look beyond product orientation and pay

significant attention to customer transactions and employee behavior. Sev-
eral points that service organizations should consider are as follows:14
• The quality characteristics that a firm should control may not be the obvi-
ous ones. Customer perceptions are critical although it may be difficult to
define what the customer wants. For example, speed of service is an
important quality characteristic, yet perceptions of speed may differ sig-
nificantly among different service organizations and customers. Market-
ing and consumer research can play a significant role.
• Behavior is a quality characteristic. The quality of human interaction is
vital in every transaction that involves human contact. For example, banks
have found that the friendliness of tellers is a principal factor in retaining
depositors.
• Image is a major factor in shaping customer expectations of a service and
in setting standards by which customers evaluate that service. A break-
down in image can be as harmful as a breakdown in delivery of the serv-
ice itself. Top management is responsible for shaping and guiding the
image that the firm projects.
• Establishing and measuring service levels may be difficult. Service stan-
dards, particularly those relating to human behavior, are often set judg-
mentally and are hard to measure. In manufacturing, it is easy to quantify
output, scrap, and rework. Customer attitudes and employee competence
are not as easily measured.
• Quality control activity may be required at times or in places where
supervision and control personnel are not present. Often work must be
performed at the convenience of the customer. This calls for more train-
ing of employees and self-management.
These issues suggest that the approach to managing quality in services
differs from that used in manufacturing. However, manufacturing can be seen
as a set of interrelated services, not only between the company and the ulti-
mate consumer, but within the organization. Manufacturing is a customer of
product design; assembly is a customer of manufacturing; sales is a cus-
tomer of packaging and distribution. If quality is meeting and exceeding
customer expectations, then manufacturing takes on a new meaning, far
beyond product orientation. Total quality provides the umbrella under which
everyone in the organization can strive to create customer satisfaction. The
Baldrige Award criteria, discussed in chapter 2, do not distinguish between
manufacturing and service, even though awards are given in both categories.
PRINCIPLES OF TOTAL QUALITY

A definition of total quality was endorsed in 1992 by the chairs and CEOs of
nine major U.S. corporations in cooperation with deans of business and
engineering departments of major universities, and recognized consultants:
Total Quality (TQ) is a people-focused management system that

aims at continual increase in customer satisfaction at continually
lower real cost. TQ is a total system approach (not a separate area or

program) and an integral part of high-level strategy; it works hori-
zontally across functions and departments, involves all employees,
top to bottom, and extends backward and forward to include the
supply chain and the customer chain. TQ stresses learning and adap-
tation to continual change as keys to organizational success.15
The foundation of total quality is philosophical: the scientific
method. TQ includes systems, methods, and tools. The systems per-
mit change; the philosophy stays the same. TQ is anchored in values
that stress the dignity of the individual and the power of community
action.
There probably are as many different approaches to TQ as there are busi-

nesses. However, most share some basic elements: (1) customer focus, (2) a
process orientation, (3) continuous improvement and learning, (4) empow-
erment and teamwork, (5) management by fact, and (6) leadership and
strategic planning.
Customer Focus
The customer is the judge of quality. Understanding customer needs, both
current and future, and keeping pace with changing markets requires effec-
tive strategies for listening to and learning from customers, measuring their
satisfaction relative to competitors, and building relationships. Customer
needs—particularly differences among key customer groups—must be linked
closely to an organization’s strategic planning, product design, process
improvement, and workforce training activities. Satisfaction and dissatisfac-
tion information are important because understanding them leads to the
right improvements that can create satisfied customers who reward the com-
pany with loyalty, repeat business, and positive referrals. Creating satisfied
customers includes prompt and effective response and solutions to their
needs and desires as well as building and maintaining good relationships. A
business can achieve success only by understanding and fulfilling the needs
of customers. From a total quality perspective, all strategic decisions a com-
pany makes are “customer-driven.” In other words, the company shows con-
stant sensitivity to emerging customer and market requirements. This requires
an awareness of developments in technology and rapid and flexible response
to customer and market needs.
Customer-driven firms measure the factors that drive customer satisfac-
tion. A company close to its customer knows what the customer wants, how
the customer uses its products, and anticipates the needs that the customer
may not even be able to express. It also continually develops new techniques
to obtain customer feedback. Customer opinion surveys and focus groups
can help companies understand customer requirements and values. Some
companies require their sales and marketing executives to meet with random
groups of key customers on a regular basis. Other companies bring cus-

tomers and suppliers into internal product design and development meet-
ings. The Coca-Cola Company is one example of good customer relationship
management (see box).
A firm also must recognize that internal customers—the recipients of
any work output, such as the next department in a manufacturing process or
the order-picker who receives instructions from an order entry clerk—are as
important in assuring quality as are external customers who purchase the
product. Failure to meet the needs of internal customers will likely affect
external customers. Employees must view themselves as customers of some
employees and suppliers to others. Employees who view themselves as both
customers of and suppliers to other employees understand how their work
Coke Stays Close to the Customer16
While companies concerned about quality try to minimize problems that

cause customer dissatisfaction, all companies occasionally receive com-
plaints from customers. Often the response to such complaints can make the
difference between keeping and losing a loyal customer. The Coca-Cola Com-
pany’s Industry & Consumer Affairs department is responsible for all con-
sumer contacts with the company’s headquarters in Atlanta. The mission of
the department is “to protect and enhance Coca-Cola’s trademarks and
image by providing a communications link between consumers and company
management.” The department’s 60 employees handle over 500,000 con-
tacts each year, both by mail and via the Company’s toll-free hotline (1-800-
GET-COKE). Most of the contacts are inquiries about the product.
If a customer does call with a complaint, Coca-Cola sends the customer
a letter apologizing for the problem, as well as coupons that allow the cus-
tomer to replace the unacceptable product. As Roger Nunley, director of
Industry & Consumer Affairs puts it, “We strive to exceed customer expec-
tations every time. We want our customers to be excited and pleased with
our response.” In certain circumstances, the local Coca-Cola bottler may also
follow up with the customer.
A Service Quality Survey is mailed to the customer two weeks after the
initial contact. The survey asks the customer to rate the quality of the
response, as well as the quality of the phone agent or letter writer (for exam-
ple, how courteous or professional the company representative was). The
survey also asks whether the customer will continue to purchase products of
the Coca-Cola Company. According to the company’s most recent data, 90
percent of customers were satisfied with how their complaint was handled,
but in the spirit of continuous improvement, the company aspires to 100 per-
cent satisfaction.
links to the final product. After all, the responsibility of any supplier is to
understand and meet customer requirements in the most efficient and effec-
tive manner possible.
Customer focus extends beyond the consumer and internal relation-
ships, however. Society represents an important customer of business. A
world-class company, by definition, is an exemplary corporate citizen. Busi-
ness ethics, public health and safety measures, concern for the environment,
and sharing quality-related information in the company’s business and geo-
graphic communities are required. In addition, company support—within
reasonable limits of its resources—of national, industry, trade, and commu-
nity activities and the sharing of nonproprietary quality-related information
demonstrate far-reaching benefits.
PROCESS ORIENTATION
The traditional way of viewing an organization is by surveying the vertical
dimension—by keeping an eye on an organization chart. However, work
gets done (or fails to get done) horizontally or cross-functionally, not hierar-
chically. A process is a sequence of activities that is intended to achieve some
result. According to AT&T, a process is how work creates value for customers.17
We typically think of processes in the context of production: the collection of
activities and operations involved in transforming inputs—physical facilities,
materials, capital, equipment, people, and energy—into outputs—products and
services. Common types of production processes include machining, mixing,
assembly, filling orders, or approving loans. However, nearly every major
activity within an organization involves a process that crosses traditional
organizational boundaries. For example, an order fulfillment process might
involve a salesperson placing the order; a marketing representative entering
it on the company’s computer system; a credit check by finance; picking,
packaging, and shipping by distribution and logistics personnel; invoicing
by finance; and installation by field service engineers. This is illustrated in
Figure 1.1. A process perspective links all necessary activities together and
increases one’s understanding of the entire system, rather than focusing on
only a small part. Many of the greatest opportunities for improving organi-
zational performance lie in the organizational interfaces—those spaces
between the boxes on an organization chart.
Continuous Improvement and Learning

Continuous improvement is part of the management of all systems and
processes. Achieving the highest levels of performance requires a well-defined
and well-executed approach to continuous improvement and learning. “Con-
tinuous improvement” refers to both incremental and “breakthrough”
improvement. Improvement and learning need to be embedded in the way
an organization operates. This means they should be a regular part of daily
work, seek to eliminate problems at their source, and be driven by opportu-
FIGURE 1.1 PROCESS VERSUS FUNCTION
}
CEO
Functional
Focus
Vice President • • • Vice President
Department Department Department Department Department

Manager Manager Manager Manager Manager
}
Process A
Process B
Process
Focus
Process C
Process D
Process E
Source: James R. Evans and William M. Lindsay, The Management and Control of Quality, 5th ed., South-Western Thomson Learning, 2002.
nities to do better as well as by problems that need to be corrected. Improve-

ments may be of several types:
• enhancing value to the customer through new and improved products
and services;
• improving productivity and operational performance through better
work processes and reductions in errors, defects, and waste; and
• improving flexibility, responsiveness, and cycle time performance.
Improving Products and Services
Careful research is required to determine the needs of customers, and those
needs must be reflected in the design of products and services. A Japanese
professor, Noriaki Kano, suggests that three classes of customer needs exist:
• Dissatisfiers—those needs that are expected in a product or service, such
as a radio, heater, and required safety features in an automobile. Such
items generally are not stated by customers but are assumed as given. If
they are not present, the customer is dissatisfied.
• Satisfiers—needs that customers say they want, such as air conditioning or
a compact disc player in a car. Fulfilling these needs creates satisfaction.
• Delighters/exciters—new or innovative features that customers do not
expect. When first introduced, antilock brakes and air bags were examples
of exciters. Newer concepts still under development, such as collision-
avoidance systems, offer other examples. The presence of such unexpected
features, if valued, leads to high perceptions of quality.
The importance of this classification is realizing that although satisfiers

are relatively easy to determine through routine marketing research, special
effort is required to elicit customer perceptions about dissatisfiers and
delighters/exciters. Over time delighters/exciters become satisfiers as cus-
tomers become used to them (as is the case today with antilock brakes and air
bags), and eventually satisfiers become dissatisfiers (customers are dissatis-
fied if they are not provided). Therefore, companies must innovate continu-
ally and study customer perceptions to ensure that their needs are being met.
Improving Work Processes
Quality excellence derives from well-designed and well-executed work
processes and administrative systems that stress prevention. Improvements
in the work processes may lead to major reductions in scrap and defects and,
hence, to lower costs, as the example about Dell Computer Corporation
shows (see box).
Improving Flexibility, Responsiveness, and Cycle Time
Success in globally competitive markets requires a capacity for rapid change
and flexibility. Electronic commerce, for instance, requires more rapid, flexi-
ble, and customized responses than traditional market outlets. Flexibility
refers to the ability to adapt quickly and effectively to changing requirements.
This might mean rapid changeover from one product to another, rapid
response to changing demands, or the ability to produce a wide range of cus-
tomized services. Flexibility might demand special strategies such as modu-
lar designs, sharing components, sharing manufacturing lines, and special-
ized training for employees. It also involves outsourcing decisions, agreements
with key suppliers, and innovative partnering arrangements.
One important business metric that complements flexibility is cycle time.
Cycle time refers to the time it takes to accomplish one cycle of a process—for
instance, the time a customer orders a product to the time that it is delivered,
or the time to introduce a new product. Reductions in cycle time serve two
purposes. First, they speed up work processes so that customer response is
improved. Second, reductions in cycle time can only be accomplished by
Michael Dell’s Touch for Quality18
Although Dell Computer Corporation’s PCs have had some of the highest
quality ratings in the industry, CEO Michael Dell became obsessed with find-
ing a way to reduce their failure rates. The key, he believed, was to reduce
the number of times that each hard drive—the most sensitive part of a PC—
was handled during assembly. Production lines were revamped, and the num-
ber of “touches” were reduced from over 30 to less than 15. Soon after, the
rate of rejected hard drives fell by 40 percent, and the overall failure rate for
the company PCs dropped by 20 percent.
Faster Clinical Testing at Procter & Gamble19
One example of cycle time reduction is Procter & Gamble’s over-the-counter

(OTC) clinical division, which conducts clinical studies that involve testing
drugs, health care products, or treatments in humans. Such testing follows rig-
orous design, conduct, analysis, and summary of the data collected. P&G had
at least four different ways to perform a clinical study and needed to find the
best way to meet its research and development needs. To do this, they focused
on cycle time reduction. Their approach built on fundamental TQ principles: a
focus on the customer, fact-based decisions, continual improvement, empow-
erment, the right leadership structure, and an understanding of work processes.
An example is shown in Figure 1.2. The team found that final reports took
months to prepare. Only by mapping the existing process did they fully
understand the causes of long production times and the amount of rework
and recycling during review and sign-off. By restructuring the activities from
sequential to parallel work and identifying critical measurements to monitor
the process, they were able to reduce the time to less than four weeks.
streamlining and simplifying processes to eliminate non–value-added steps

such as rework (see box). This forces improvements in quality by reducing
the potential for mistakes and errors. By reducing non–value-added steps,
costs are reduced as well. Thus, cycle time reductions often drive simultane-
ous improvements in organization, quality, cost, and productivity. Signifi-
cant reductions in cycle time cannot be achieved simply by focusing on indi-
vidual subprocesses; cross-functional processes must be examined all across
the organization. This forces the company to understand work at the orga-
nizational level and to engage in cooperative behaviors.
Agility is a term that is commonly used to characterize flexibility and
short cycle times. Agility is crucial to such customer-focused strategies as mass
customization, which requires rapid response and flexibility to changing con-
sumer demand. Enablers of agility include close relationships with customers
to understand their emerging needs and requirements, empowering employ-
ees as decision makers, effective manufacturing and information technology,
close supplier and partner relationships, and breakthrough improvement.
Learning
“Learning” refers to understanding why changes are successful through feed-
back between practices and results, and leads to new goals and approaches. A
learning cycle has four stages:
1. planning,
2. execution of plans,
3. assessment of progress, and
4. revision of plans based upon assessment findings.
FIGURE 1.2 EXAMPLE OF PROCESS AND CYCLE TIME IMPROVEMENT
How a final report is How a final report

actually prepared should be prepared
Initial draft
Treatments Treatments report prepared
complete complete from basic
protocol info
during treatment
phase
Complete statistics Complete statistics
Draft statistical and Draft statistical and

medical summaries medical summaries
Integrate Integrate
summaries, make summaries in
consistent with draft report
basic protocol info
in draft report
Perform quality Board review of
control corrections draft product
Sequential review,
negotiate changes
one-on-one
Core teams meet to
integrate comments,
Perform quality final sign-off
control corrections
Investigator
Circulate for signs final
final sign-off report
Changes Yes
required?
No
Investigator
signs final
report
Source: David A. McCamey, Robert W. Bogs, and Linda M. Bayuk, “More, Better, Faster from Total Quality Effort,” Quality Progress, August 1999,
pp. 43–50. © 1999 American Society for Quality. Reprinted with permission.
Measurements provide critical data and information about key processes,

outputs, and results. When supported by sound analytical approaches that
project trends and infer cause-and-effect relationships, measurements pro-
vide an objective foundation for learning, leading to better customer, opera-
tional, and financial performance.
Empowerment and Teamwork

A company’s success depends increasingly on the knowledge, skills, and
motivation of its workforce. Employee success depends increasingly on hav-
ing opportunities to learn and to practice new skills. This can be fostered by
empowerment and teamwork. Empowerment simply means giving people
authority—to make decisions based on what they feel is right, have control
over their work, take risks and learn from mistakes, and promote change; for
example, employees can make decisions that satisfy customers without a lot of
bureaucratic hassles, and barriers between levels are removed. Empowerment
requires, as the management philosophy of Wainwright Industries states, a
sincere belief and trust in people. A survey by Annandale, Va.-based Mastery-
Works Inc. concluded that employees leave their organizations because of
trust, observing that “Lack of trust was an issue with almost every person who
had left an organization.”20
Teamwork can be viewed in three ways:
1. Vertical—teamwork between top management and lower-level employees.

2. Horizontal—teamwork within work groups and across functional lines
(often called cross-functional teams).
3. Interorganizational—partnerships with suppliers and customers.
Vertical Teamwork
Everyone must participate in quality improvement efforts. The person in any
organization who best understands his or her job and how it can be improved
is the one performing it. Vertical teamwork is the sharing of responsibility
among organizational levels through empowerment. This often represents a
profound shift in the philosophy of senior management, as the traditional
philosophy is that the workforce should be “managed” to conform to exist-
ing business systems. Dana Commercial Credit Corporation has a “just do
it” policy to empower its people to act on ideas for improvement without
prior approval.
Companies can encourage participation by recognizing team and indi-
vidual accomplishments, sharing success stories throughout the organiza-
tion, encouraging risk taking by removing the fear of failure, encouraging
the formation of employee involvement teams, implementing suggestion sys-
tems that act rapidly, provide feedback, and reward implemented sugges-
tions, and providing financial and technical support to employees to develop
their ideas.
Employees need training in skills related to performing their work and
to understanding and solving quality-related problems. Frontline workers
need the skills to listen to customers; manufacturing workers need specific

skills in developing technologies; and all employees need to understand how
to use measurements to drive continuous improvement. Training brings all
employees to a common understanding of goals and objectives and the means
to attain them. Training usually begins with awareness of quality manage-
ment principles and is followed by specific skills in quality improvement.
Training should be reinforced through on-the-job applications of learning,
involvement, and empowerment.
Horizontal Teamwork
Problem solving and process improvement are best performed by cross-
functional work teams. For example, a product development team might
consist of designers, manufacturing personnel, suppliers, salespeople, and
customers. Texas Instruments Defense Systems & Electronics Group (since
acquired by Raytheon) employs corporation teams to work on corporate-
level goals, employee effectiveness teams to prevent potential problems in
specific work areas, and department action teams to solve departmental
problems. Granite Rock Company, with fewer than 400 employees, has about
100 functioning teams, ranging from ten corporate quality teams, to project
teams, purchasing teams, task forces, and function teams composed of peo-
ple who do the same job at different locations.
Interorganizational Partnerships
Partnerships must be created both internally and externally. Companies should
seek to build partnerships that serve mutual and larger community interests.
Partnerships might include those that promote labor-management coopera-
tion such as agreements with unions that entail employee development, cross-
training, or new work organizations. Rather than dictating specifications for
purchased parts, a company might develop specifications jointly with sup-
pliers to take advantage of the suppliers’ manufacturing capabilities. Internal
partnerships might also involve creating network relationships among com-
pany units to improve flexibility, responsiveness, and knowledge sharing.
External partnerships might be with suppliers, customers, or educational
organizations. Partnerships permit the blending of a company’s core compe-
tencies with complementary strengths and capabilities of partners.
One example of supplier partnerships involves local telephone companies
who provide AT&T access to their customers. Following divestiture, AT&T
established a Financial Assurance Organization to check the accuracy of access
charges and to correct errors. By 1989, AT&T employed 1,100 people working
to duplicate the supplier’s access-billing system, anticipate charges, and
resolve problems. In 1990, AT&T began a joint effort with Pacific Bell to design
a single access billing verification process—involving both supplier and cus-
tomer—that shifted focus from correction to prevention, moved accountabil-
ity for accuracy to the supplier, and replaced post-bill resolution with pre-bill
certification. As a result, the time needed in the validation process declined
from three months to 24 hours, accuracy went up, and costs came down.
Management by Fact
Organizations need performance measures for three reasons:
• to lead the entire organization in a particular direction; that is, to drive

strategies and organizational change,
• to manage the resources needed to travel in this direction by evaluating
the effectiveness of action plans, and
• to operate the processes that make the organization work and continu-
ously improve.21
Data and information support analysis at all organizational levels. The

types of information and how it is disseminated and aligned with organi-
zational levels are equally vital to success. At the work level, data provide
real-time information to identify assignable reasons for variation, determine
root causes, and take corrective action as needed. This might require lean com-
munication channels consisting of bulletins, computerized quality reports,
and digital readouts of part dimensions to provide immediate information
on what is happening and how things are progressing. At the process level,
operational performance data such as yields, cycle times, and productivity
measures help managers determine whether they are doing the right job,
whether they are using resources effectively, and whether they are improv-
ing. Information at this level generally is aggregated; for example, daily or
weekly scrap reports, customer complaint data obtained from customer service
representatives, or monthly sales and cost figures faxed in from field offices.
At the organization level, quality and operational performance data from all
areas of the firm, along with relevant financial, market, human resource, and
supplier data, form the basis for strategic planning and decision making. Such
information is highly aggregated and obtained from many different sources
throughout the organization.
A company should select performance measures and indicators that best
represent the factors that lead to improved customer, operational, and finan-
cial performance. These typically include
• customer satisfaction,
• product and service performance,
• market assessments,
• competitive comparisons,
• supplier performance,
• employee performance, and
• cost and financial performance.
A comprehensive set of measures and indicators tied to customer and com-

pany performance requirements provides a clear basis for aligning all activ-
ities of the company with its goals.
Leadership and Strategic Planning

Leadership for quality is the responsibility of top management. Senior leader-
ship must set directions; create a customer orientation, clear quality values,
and high expectations that address the needs of all stakeholders; and build
them into the way the company operates. Senior leaders need to commit to the
development of the entire workforce and should encourage participation,
learning, innovation, and creativity throughout the organization. Reinforce-
ment of the values and expectations requires the substantial personal commit-
ment and involvement of senior management. Through their personal roles in
planning, reviewing company quality performance, and recognizing employ-
ees for quality achievement, the senior leaders serve as role models, reinforc-
ing the values and encouraging leadership throughout the organization.
If commitment to quality is not a priority, any initiative is doomed to
failure. Lip service to quality improvement is the kiss of death. The CEO of
Motorola, one of the first Baldrige winners, had quality as the first agenda
item at every top management meeting. He frequently left after quality was
discussed, sending the message that once quality was taken care of, financial
and other matters would take care of themselves. When The Ritz-Carlton Hotel
Company opens a new facility, the CEO works alongside the housekeeping
and kitchen staffs making beds and washing dishes. Imagine the message
these actions send to the workers! Many companies have a corporate quality
council made up of top executives and managers, which sets quality policy
and reviews performance goals within the company. Quality should be a
major factor in strategic planning and competitive analysis processes.
Many of the management principles and practices required in a TQ envi-
ronment may be contrary to long-standing practice, as discussed later in this
chapter. Top managers, ideally starting with the CEO, must be the organiza-
tion’s TQ leaders. The CEO should be the focal point providing broad per-
spectives and vision, encouragement, and recognition. The leader must be
determined to establish TQ initiatives and committed to sustain TQ activi-
ties through daily actions in order to overcome employees’ inevitable resist-
ance to change.
Unfortunately, many organizations do not have the commitment and
leadership of their top managers. This does not mean that these organizations
cannot develop a quality focus. Improved quality can be fostered through the
strong leadership of middle managers and the involvement of the work-
force. In many cases, this is where quality begins. In the long run, however,
an organization cannot sustain quality initiatives without strong top man-
agement leadership.
Achieving quality and market leadership requires a strong future orien-
tation and a willingness to make long-term commitments to key stakehold-
ers—customers, employees, suppliers, stockholders, the public, and the com-
munity. Strategic business planning should be the driver for quality excellence
throughout the organization and needs to anticipate many changes, such as
customers’ expectations, new business and partnering opportunities, the global
and electronic marketplace, technological developments, new customer seg-

ments, evolving regulatory requirements, community/societal expectations,
and strategic changes by competitors. Plans, strategies, and resource alloca-
tions need to reflect these influences. Improvements do not happen overnight.
The success of market penetration by Japanese manufacturers evolved over
several decades.
These principles will continue to develop in organizations (see the box
on page 28 for an example of a company that exemplifies these principles).
TQ AND TRADITIONAL MANAGEMENT PRACTICES

TQ is quite different from traditional management practices, requiring signif-
icant changes in organizational processes, beliefs and attitudes, and behav-
iors. “Traditional management” means the way things are usually done in most
organizations in the absence of a TQ focus. Many “traditional” organizations
have been applying TQ principles all along, so not all of these comments
pertain to every organization. The nature of TQ differs from common man-
agement practices in many respects. Among the key differences that will be
explored in greater depth throughout this book are the following:22
1. Strategic Planning and Management
In traditional management, financial and marketing issues such as prof-
itability, return on investments, and market share drive strategic plan-
ning. Quality planning activities are delegated to the “quality control”
department. Long-term quality initiatives are viewed as being costly and
not contributing to the ultimate performance measure—profit. Quality
planning and strategic business planning are indistinguishable in TQ. Qual-
ity goals are the cornerstone of the business plan. Measures such as cus-
tomer satisfaction, defect rates, and process cycle times receive as much
attention in the strategic plan as financial and marketing objectives.
2. Changing Relationships with Customers and Suppliers
In traditional management, quality is defined as adherence to internal
specifications and standards. Quality is measured only by the absence of
defects. Inspection of people’s work by others is necessary to control
defects. In TQ, quality is defined as products and services beyond pres-
ent needs and expectations of customers. Innovation is required to meet
and exceed customers’ needs.
Traditional management places customers outside of the enterprise
and within the domain of marketing and sales. TQ views everyone inside
the enterprise as a customer of an internal or external supplier, and a sup-
plier of an external or internal customer. Marketing concepts and tools
can be used to assess internal customer needs and to communicate inter-
nal supplier capabilities.
In traditional management, suppliers are pitted against each other to
get the lowest price. The more competing suppliers there are, the better
Bringing TQ to Life at KARLEE23
KARLEE is a contract manufacturer of precision sheet metal and machined

components for telecommunications, semi-conductor, and medical equipment
industries, located in Garland, Texas. Some of the ways it exemplifies the prin-
ciples of TQ are described below.
Customer Focus. KARLEE made a strategic decision to carefully select cus-
tomers that support its values—particularly a systematic approach to busi-
ness and performance management, desire for long-term partnerships, and
global leadership. Management and Team Leaders work with each customer
to establish current requirements and future needs, and each customer is
assigned a three-person Customer Service team that is on call 24 hours a day
for day-to-day production issues.
Process Orientation. Processes such as prototype development, schedul-
ing, production setup, fabrication, assembly, and delivery have process own-
ers responsible for maintaining the process to customer requirements. A
Quality Assurance team member works with manufacturing teams to create
process documentation.
Continuous Improvement and Learning. Teams use a structured approach
to evaluate and improve their processes, documenting them, and presenting
a status report of improvements to senior leaders and the KARLEE Steering
Committee. Teams benchmark competitors, “best practice” companies, and
customers to learn from others.
Empowerment and Teamwork. Production and delivery processes are
designed around cell manufacturing. Teams are responsible for knowing their
customer’s requirements and producing according to those requirements.
Teams are empowered to change targets recommended during strategic plan-
ning if they believe it will help them achieve higher performance, as well as to
schedule work, manage inventory, and design the layout of their work areas.
Management by Fact. Teams analyze defect data, customer-reported prob-
lems, and control charts generated during production to identify problems and
opportunities for improvement. Every business goal and project has defined
methods for measurement, and senior leaders meet weekly to review com-
pany performance and ensure alignment with directions and plans.
Leadership and Strategic Planning. Senior Executive Leaders (SELs) and
the KARLEE Leadership Committee (KLC) set the strategic direction of the
company, and communicate and reinforce values and expectations through
performance reviews, participation in improvement or strategic projects, reg-
ular interactions with customers and team members, and recognition of team
member achievements.
All this has contributed to an annual average increase in sales growth of
35 percent from 1995 to 2000, and high levels of customer and employee
satisfaction, and quality and operational performance.
it is for the customer company. In TQ, suppliers are partners with their
customers. The aim of the partnership is innovation, reduction in varia-
tion of critical characteristics of supplied materials, lower costs, and better
quality. The aim may be enhanced by reducing the number of suppliers
and establishing long-term relationships.
3. Organizational Structure
Traditional management views an enterprise as a collection of separate,
highly specialized individual performers and units, loosely linked by a
functional hierarchy. Lateral connections are made by intermediaries close
to the top of the organization. TQ views the enterprise as a system of inter-
dependent processes, linked laterally over time through a network of col-
laborating (internal and external) suppliers and customers. Each process
is connected to the enterprise’s mission and purpose through a hierarchy
of micro- and macroprocesses. Every process contains subprocesses and is
also contained within a higher process. This structure of processes is
repeated throughout the hierarchy.
In traditional management, hierarchical “chimney” organization struc-
tures promote identification with functions and tend to create competi-
tion, conflict, and adversarial relations between functions. In TQ formal
and informal mechanisms encourage and facilitate teamwork and team
development across the entire enterprise.
4. Organizational Change
Once a traditional organization has found a formula for success, it keeps
following it. Management’s job is to prevent change, to maintain the status
quo. In TQ the environment in which the enterprise interacts is changing
constantly. If the enterprise continues to do what it has done in the past, its
future performance relative to the competition will deteriorate. Manage-
ment’s job, therefore, is to provide the leadership for continual improve-
ment and innovation in processes and systems, products, and services.
External change is inevitable, but a favorable future can be shaped.
5. Teamwork
In traditional management, individuals and departments work for them-
selves. Individuals are driven by short-term performance measures, have
narrowly defined jobs, and rarely see how they fit into the whole process
or system. Little communication and cooperation exists between design
and manufacturing, manufacturing and marketing, and sales/service and
design. In TQ individuals cooperate in team structures such as quality cir-
cles, steering committees, and self-directed work teams. Departments work
together toward system optimization through cross-functional teamwork.
The adversarial relationship between union and management is
inevitable in traditional management. The only room for negotiation is in
areas such as wages, health, and safety. In TQ the union is a partner and a
stakeholder in the success of the enterprise. The areas for partnership and
collaboration are broad, particularly in education, training, and meaningful
involvement of employees in the improvement of processes that they
affect and that affect their work.
6. Motivation and Job Design

Motivation in traditional management is often akin to McGregor’s The-
ory X model of motivation: workers dislike work and require close super-
vision and control. TQ organizations support the premise of Theory Y:
workers are self-motivated, seek responsibility, and exhibit a high degree
of imagination and creativity at work. TQ managers provide leadership
rather than overt intervention in the processes of their subordinates, who
are viewed as process managers rather than functional specialists. People
are motivated to make meaningful contributions to what they believe is
an important and noble cause, of value to the enterprise and society.
In traditional management, competition is inevitable and inherent in
human nature. Performance appraisal, recognition, and reward systems
place people in an internally competitive environment. Individualism is
reinforced to the detriment of teamwork. Competitive behavior—one
person against another or one group against another—is not a natural
state in TQ. TQ reward systems recognize individual as well as team con-
tributions and reinforce cooperation.
7. Management and Leadership
Traditional management views people as interchangeable commodities,
developed to meet the perceived needs of the enterprise. People are pas-
sive contributors with little autonomy—doing what they are told and
nothing more. TQ views people as the enterprise’s true competitive edge.
Leadership provides people with opportunities for personal growth and
development. People are able to take pride and joy in learning and accom-
plishment, and the ability of the enterprise to succeed is enhanced. People
are active contributors, valued for their creativity and intelligence. Every
person is a process manager presiding over the transformation of inputs
to outputs of greater value to the enterprise and to the ultimate customer.
In traditional management, control is achieved by pre-established
inflexible responsive patterns given in the book of rules and procedures.
People are customers of a “book” that prescribes appropriate behaviors.
In TQ, control is achieved by shared values and beliefs in the organiza-
tion, knowledge of mission, purpose, and customer requirements.
The principles of TQ are embodied in the business philosophy of many
leading companies such as KARLEE that we highlighted earlier. Our pur-
pose in this book is to provide a solid link between concepts of total quality
and the traditional management areas of organization theory, organizational
behavior, and strategy. When any company begins to think of how to
improve, it will be led to the various approaches that are united under the
TQ concept. Today, total quality is a matter of survival.
TQ AND AGENCY THEORY24

One model in organizational theory that has received considerable attention
is agency theory. Agency theory is based on the concept of an agency rela-
tionship, in which one party (the principal) engages another party (the
agent) to perform work. Agency theory makes the assumption that individ-
uals in agency relationships are utility maximizers and will always take
actions to enhance their self-interests. As a consequence, when authority is
delegated to agents on behalf of the principal, agents may use this power to
promote their own well-being, at the expense of the principal. Monitoring is
a central issue in agency theory, because it is a primary mechanism used by
both parties to maintain and govern the relationship.
Agency theory provides a stark contrast to TQ. TQ views the manage-
ment system as one based on social and human values, while agency theory
is based on an economic perspective that removes people from the equation.
While agency theory propounds the belief that people are self-interested and
opportunistic and that their rights are conditional and proportional to the
value they add to the organization, TQ suggests that people are also moti-
vated by interests other than self, and that people have an innate right to be
respected. Agency theory assumes an inherent conflict of goals between
agents and principals, and that agent goals are aligned with principal goals
through formal contracts. In TQ, everyone in the organization shares com-
mon goals and a continuous improvement philosophy, and goals are aligned
through adoption of TQ practices and culture. Sharing information to
achieve these goals is fundamental to TQ, while agency theory suggests that
information may be concealed to advance self-interests. TQ takes a long-
term perspective based on continuous improvement, while agency theory
focuses on short-term achievement of the contract between the principal and
agent. In TQ, risk taking is necessary in order to innovate, while agency the-
ory assumes that risks are to be minimized and shared between the two par-
ties. Finally, TQ leaders provide a quality vision and play a strategic role in
the organization; leaders in agency theory develop control mechanisms and
engage in monitoring.
TQ proponents argue that it is a superior strategy because a quality cul-
ture can be sustained and is less costly in the long term. Agency theory advo-
cates suggest that high performance may be achieved by appropriately
structuring agents’ contracts and aligning their interests. As we shall see in
chapter 11, some elements of agency theory are evident in strategy imple-
mentation approaches within a TQ environment. Both theories have shaped
the activities of scholars and practitioners, and research has yet to arrive at a
definitive conclusion. However, it is difficult to argue with the results that
firms choosing a clear TQ path have achieved.
TQ AND ORGANIZATIONAL MODELS25

Although TQ is a new way of thinking about the management of organiza-
tions, it is not a totally new paradigm. When compared with well-known
organizational models, it can be seen as capturing many aspects of these estab-
lished models and amplifying them by providing a useful methodology. Three
major organizational models that management theorists have studied are the
mechanistic, organismic, and cultural models of organizations. Contrasts

between TQ and these models are summarized in Table 1.1. The mechanistic
model, described by classical management theorists, views an organization
as a tool or a machine designed solely to create profits for its owners. Work
is reduced to elementary tasks with a focus on efficiency, conformity, and
compliance. While both the mechanistic model and TQ assume that the
organization exists to achieve a specific performance goal, TQ has a broader
definition of quality. It takes more of an open-systems perspective, which
views managers as leaders and visionaries rather than as individuals who
plan, organize, direct, and control. It broadens employees’ roles; uses a hor-
izontal, rather than vertical, work organization; and focuses on continuous
improvement rather than stability. Narrow-minded managers and those
who criticize TQ often view it in a mechanistic sense and do not see the
broader implications.
The organismic model views organizational systems as living organisms
that depend on their environments for resources and adjust the behavior of
their parts to maintain the properties of the whole within acceptable limits.
This model assumes that systems goals, such as the need to survive, displace
performance goals, such as profit. TQ is similar in that survival in competi-
tive environments is often the primary motivation for adopting it. Customer
satisfaction as a definition of quality is compatible with this notion. In the
organismic model, organizations are not autonomous entities. This is consis-
tent with the notion of partnership development espoused by TQ: Vision
replaces fear as a motivator and driver of management actions; employees
work for shared beliefs and values; horizontal communication becomes as
important as vertical communication and direction in stressing coordination
and organizational rationality; and the organization must adapt to a broad
array of external forces. It is evident that TQ shares many similarities with
this organizational model. This helps explain why many practitioners have
viewed TQ as something new, while many academics recognize its roots in
systems theory that was popular decades ago.
The cultural model views an organization as a collection of cooperative
agreements entered into by individuals with free will. The organization’s cul-
ture and social environment are enacted or socially constructed by organiza-
tion members. From the perspective of this model, the goal of an organization
is to serve the diverse needs of all whom it affects—its stakeholders—a view
often expressed by TQ philosophers. Because of the multiplicity of stakehold-
ers, quality has many meanings, although some degree of consensus regard-
ing the organization’s values and purposes is needed. Although TQ generally
assumes that organizations must adapt to the expectations of customers, more
recent views of building partnerships and sharing of best practices (even with
competitors) is consistent with the cultural model. In the cultural model, man-
agers take on a more distinctive leadership role, relinquishing control and shar-
ing power in order to meet the needs of the many individuals in the organiza-
tion; employees have greater voice in establishing organizational goals; all
structural decisions are value-based and have clear implications with regard
TABLE 1.1 SUMMARY OF TQ AND ORGANIZATIONAL MODELS (ADAPTED FROM SPENCER, 1994)
Mechanistic Organismic Cultural

Dimension TQ Paradigm Model Model Model
Goal Long-term survival Organizational Organizational Meet individual

efficiency and survival needs; human
performance development
Definition of Satisfying or Conformance to Customer Constituent
quality delighting the standards satisfaction satisfaction
customer
Role/nature of Blurred organization Objective; Objective; inside Enacted/
environment and environmental outside boundary boundary boundaries
boundaries defined through
relationships
Role of Focus on Coordinate and Coordinate and Coordinate and
management improvement and provide visible provide invisible mediate
creating a system control control by negotiations
that can produce creating vision regarding vision,
quality outcomes and system system, rewards
Role of Employees are Passive; follow Reactive/self- Active/self-
employees empowered; training orders control within control;
and education system participate in
provide needed skills parameters creation of vision,
system
Structural Horizontal processes Chain of Process flow Mutual
rationality beginning with command (horizontal and adjustment in
suppliers and ending (vertical) vertical) any direction
with customers and
supported by teams Technical Organizational Political
rationality rationality rationality
Philosophy Change, continuous Stability is valued; Change and Change and
toward change improvement, and learning arises learning assist learning are
learning are from specialization adaptation valued in
encouraged themselves
Republished with permission of the Academy of Management, P.O. Box 3020, Briarcliff Manor, New York 10510-8020. Models of Organization and
Total Quality Management: A Comparison and Critical Evaluation (Table), Barbara A. Spencer, Academy of Management Review, 1994, Vol. 19, No. 3.
Reproduced by permission of the publisher via Copyright Clearance Center, Inc.
to individual autonomy (political rationality); and learning needs are driven

not by adaptation to environmental forces but in response to individual needs.
Many of these attributes are characteristic of recent trends in the evolution of
TQ themes in high-performing organizations.
In summary, TQ appears to have evolved from reactionary influences
against the mechanistic model of management and embraced many of the
characteristics of the organismic model. Recent trends, however, suggest that
ideas from the cultural model are influencing the maturity of TQ in modern
organizations. This will become more evident as we discuss the Malcolm
Baldrige Criteria for Performance Excellence in the next chapter.
REVIEW AND DISCUSSION QUESTIONS
1. Explain why quality became the most important issue facing American
business in the 1980s. In addition to economic competition from Japan,
what other factors may have contributed to the importance that quality
has assumed?
2. Cite several examples in your own experience in which your expecta-
tions were met, exceeded, or not met in purchasing goods or services.
How did you regard the company after your experience?
3. How might the definition of quality apply to your college or university?
Provide examples of who some customers are and how their expecta-
tions can be met or exceeded.
4. Think of a product with which you are familiar. Describe the eight “mul-
tiple quality dimensions” for this product that are listed in this chapter.
5. What might the eight “multiple quality dimensions” mean for a college
or university? For a classroom?
6. Explain the differences between manufacturing and service organiza-
tions and their implications for quality.
7. Describe the key elements of total quality.
8. How might you apply the concepts of total quality to your personal life?
Consider your relations with others and your daily activities such as
being a student, belonging to a fraternity or professional organization,
and so on.
9. Why is a customer focus a critical element of TQ?
10. Make a list of your personal “customers.” What steps might you take to
understand their needs and remain “close” to them?
11. Cite an example in which you did not purchase a product or service
because it lacked “dissatisfiers” as defined in the chapter. Cite another
example in which you received some “exciters/delighters” that you did
not expect.
12. In what ways might the lack of top management leadership in a quality
effort hinder or destroy it?
13. Explain the various areas within an organization in which continuous
improvement and learning may take place.
14. Why is measurement important in a TQ effort?
15. Examine some process with which you are familiar. Make a list of ways
that the process can be measured and improved. What difficulties might
you face in implementing these ideas?
16. Describe the three ways of viewing teamwork.
17. Describe some possible ways in which vertical, horizontal, and interor-
ganizational teamwork can be applied at a college or university.
18. What does empowerment mean? How might an employee really know
that he or she is truly empowered?
19. Have you ever felt restricted in your work because of a lack of empow-
erment? Can you cite any experiences in which you noticed a lack of
empowerment in a person who was serving you? Why is this such a dif-
ficult concept to implement in organizations?
20. Explain the key differences between “traditional” management practices
and those in a TQ environment.
21. Prepare a self-assessment questionnaire designed to determine whether
an organization follows traditional management practices or a TQ
approach. You might consider applying it to some organization.
22. How does TQ differ from agency theory?
23. Explain the mechanistic, organismic, and cultural models of organiza-
tions, and how TQ is similar to or different from them.
24. Investigate recent quality initiatives in either health care or education.
What have these organizations learned from business? What unique
issues do they face with respect to quality? How are they trying to over-
come them?
25. Discuss the implications of the following statements with respect to intro-
ducing TQ principles in a college classroom.26 Do you agree with them?
How do they reflect TQ principles? What changes in traditional learning
approaches would they require for both students and instructors?
a. Embracing a customer focus doesn’t mean giving students all As and
abandoning standards.
b. If students fail, the system has failed.
c. Faculty members are customers of those who teach prerequisites.
d. Treating students as customers means allowing students to choose
not to come to class.
e. Completing the syllabus is not a measure of success.
f. New and tenured instructors should visit each other’s classrooms.
g. Eliminate performance appraisals based on classroom evaluations.
h. No matter how good the test, luck will be involved.
26. For each of the principles of TQ (customer focus, process orientation, etc.)
describe what you might see if you spent time in each of the following
types of organizations:
a. one with primarily traditional management practices;
b. one that has a beginning awareness of the importance of TQ;
c. one that has developed an effective system for TQ;
d. one that has outstanding, world-class management practices.
CASES
Building Trust through Quality at Gerber27

Gerber is the leader in the development, manufacturing, and marketing of
foods and products for children from birth through age three. The Gerber
baby picture—which accompanies everything from strained carrots and
banana cookies to teething rings and diapers—has developed into one of the
most recognizable brand images in the world. The Gerber company has long
been a leader in using TQ approaches to uphold its reputation. While Ger-

ber’s quality programs have gone through various stages over the years, its
goal has remained the same: to make sure consumers continue to see the
Gerber baby, which has gone through periodic updatings of its own, as an
emblem of excellence.
The company began in the Gerber family kitchen in 1927. After watching
her husband’s messy attempt at straining peas for their daughter, Dorothy
Gerber suggested that the task would be better accomplished at the family-
owned canning plant. Daniel Gerber agreed and was so taken by the idea
that within a year he had manufactured enough of five baby food flavors to
begin national distribution. Understanding the concern parents have for
what their babies consume, Gerber paid close attention to what went into the
food and the processes involved in manufacturing it. This was one of the
company’s first steps toward committing to quality.
While Gerber’s quality systems have undergone several improvements
over the years, teamwork was “one of the biggest things to hit quality at
Gerber,” says George Sheffier, a retired, 35-year Gerber veteran. He believes
that fostering a team atmosphere taught Gerber how to help employees adjust
to change, gave the company a head start on the diversity issues of the 1990s,
and was critical when Gerber began spreading quality techniques through-
out its plants.
Gerber experimented with teams in the 1970s but by the end of the decade
the company still lacked the benefits a solid team atmosphere provided. An
attempt to implement the concept to a more intense degree in 1983 was met
by employee skepticism. Realizing that management and supervisors were
themselves having a difficult time adjusting to the team methodology, Ger-
ber hired consultants to teach facilitation skills. Soon supervisors were hold-
ing meetings not only to familiarize workers with the team concept but to
discuss change—how employees felt about it and what the company could
do to help make it easier. As employees began feeling more comfortable
working in teams, they voiced concerns about trouble spots in systems and
processes. Gerber also learned that the team atmosphere was a necessity in
linking quality to every process in the company.
Once employees recognized the value of teamwork, the company began
taking quality functions out of the quality department and spreading them
throughout the plant. The goal of integrating quality into manufacturing was
to build quality into the product on a more consistent basis. By expanding qual-
ity responsibilities to frontline operations, Gerber hoped to increase process
control and reduce line inspections. To accomplish this purpose, Gerber teamed
quality assurance (QA) staff with frontline operators in 1988 to establish proce-
dures for each process. While hesitant at first, frontline employees liked the fact
that they were involved in the process from the start and were able to deter-
mine their own auditing criteria. Within 18 months, Gerber was able to cut its
number of line inspectors and increase its quality auditing functions.
As quality became widespread through the organization, Gerber needed
to teach basic quality tools to its frontline operators. As with the team con-
cept, however, employees accepted the new responsibilities once they real-
ized the values of the tools. Employees came to prefer the use of these tech-
niques, which enabled them to become more directly involved with the quality
of the final product. The company also established management incentives for
integrating quality into its manufacturing process. Many senior managers,
for example, began to be compensated for maintaining a high level of con-
sumer trust through the quality of the final product. Today, the company con-
tinues to improve the quality techniques it applies to each part of the manu-
facturing process. Its most recent project has been to install new software
from SAS Institute Inc. The software gives employees instant access to data
regarding the impact on the final product of each station in each process.
Although Gerber has always tried to create systems that meet the expec-
tations of parents, the company didn’t always utilize feedback from its cus-
tomers. It wasn’t until the company faced its largest crisis to date that Gerber
realized the need to link the customer’s voice with the quality system. This
period, in the 1980s, was a defining point for Gerber, according to Gerber sen-
ior QA manager Jim Fisher. The company lost some trust in the eyes of the con-
sumer, stemming from an instance of consumer tampering that brought Ger-
ber unwanted national attention. Before the company had the opportunity to
prove itself, the case snowballed into a media frenzy, leaving consumers ques-
tioning Gerber’s quality. Gerber’s history of continuous improvement and its
well-documented manufacturing processes paid off, however. The investiga-
tion put the company under a microscope, with Fisher flying across the coun-
try to inspect jars of food and the Food and Drug Administration (FDA)
spending three weeks reviewing Gerber’s systems and records. In the end, the
FDA gave the company a clean bill of health, and any claims against Gerber
dissipated once the FDA’s report became available to the public.
What Gerber found was that it needed a system allowing consumers to
contact it directly with suggestions, complaints, and questions pertaining to
Gerber products or infant care in general. Gerber’s consumer relations depart-
ment, established and operated by Dorothy Gerber in 1938, continued to
receive a steady flow of letters, but the system wasn’t timely and the feedback
wasn’t closely tied to either the quality or the safety department. Consequently,
Gerber opened its telephone information service (800-4-GERBER) in 1986. The
system provided a notable change for the company’s quality discipline as it
allowed telephone operators to log customer information into a database. In
turn, trend analysis could be conducted and consumer demands could be inte-
grated into the product development process. Because parents are up with their
infants throughout the night, the company extended the department’s operat-
ing hours in 1991, capturing information 24 hours a day. Gerber takes a daily
average of 2,400 calls, accommodating all languages, and employs a team of let-
ter correspondents to answer the 45,000 letters it receives yearly.
In 1947 Gerber management came to believe that the best way to ensure
the safety of its product was to control as much of the food-making process as
possible. At that time the company began forming alliances with its growers,
giving Gerber better control of produce cultivation and allowing it to keep
track of the pesticides growers used. By the 1950s, Gerber had implemented a
proactive approach to controlling its manufacturing processes. The Gerber
product analysis laboratories were formed in 1963 to provide data on the com-
position of ingredients, monitor the quality of internal and external water
sources, and provide the analytical information needed to establish food for-
mulations. The company also created procedures to monitor potential hazards
and ensured correctly functioning processes by employing a thermal process-
ing staff. The staff was to determine the amount of time a product needs to be
cooked to become commercially sterile, conduct audits of production facilities
to ensure that processing equipment was operating correctly, and review and
improve thermal processing systems. The thermal processing staff grew so
large that it became its own department in 1994, and it continues to work
closely with Gerber’s quality and safety departments today.
Gerber’s dedication to performance excellence continues to serve the
company well. Thinking beyond quality trends in pesticide control contin-
ues to put the company ahead of others as Gerber investigates what it calls
environmental quality—examining environmental factors not traditionally
considered, such as pollutants carried into the plant by a supplier. This enabled
Gerber to introduce sugarless and starch-free formulations less than a year
after a 1995 report criticized the baby food industry for its use of fillers. By
linking quality practices throughout its processes and making statistical infor-
mation available to all employees, Gerber continues to enhance its quality.
Discussion Questions
1. From what definitional perspective does Gerber view quality?
2. How does Gerber exhibit the fundamental principles of total quality
described in this chapter?
The Reservation Nightmare28

H. James Harrington, a noted quality consultant, related the following story
in Quality Digest magazine:
I called to make a flight reservation just an hour ago. The telephone

rang five times before a recorded voice answered. “Thank you for
calling ABC Travel Services,” it said. “To ensure the highest level of
customer service, this call may be recorded for future analysis.”
Next, I was asked to select from one of the following three choices:
“If the trip is related to company business, press 1. Personal busi-
ness, press 2. Group travel, press 3.” I pressed 1.
I was then asked to select from the following four choices: “If
this is a trip within the United States, press 1. International, press 2.
Scheduled training, press 3. Related to a conference, press 4.”
Because I was going to Canada, I pressed 2.
Now two minutes into my telephone call, I was instructed to be
sure that I had my customer identification card available. A few sec-
onds passed and a very sweet voice came on, saying, “All interna-
tional operators are busy, but please hold because you are a very
important customer.” The voice was then replaced by music. About
two minutes later, another recorded message said, “Our operators
are still busy, but please hold and the first available operator will
take care of you.” More music. Then yet another message: “Our
operators are still busy, but please hold. Your business is important
to us.” More bad music. Finally the sweet voice returned, stating,
“To speed up your service, enter your 19-digit customer service
number.” I frantically searched for their card, hoping that I could
find it before I was cut off. I was lucky; I found it and entered the
number in time. The same sweet voice came back to me, saying, “To
confirm your customer service number, enter the last four digits of
your social security number.” I pushed the four numbers on the key-
pad. The voice said: “Thank you. An operator will be with you
shortly. If your call is an emergency, you can call 1-800-CAL-HELP,
or push all of the buttons on the telephone at the same time. Other-
wise, please hold, as you are a very important customer.” This time,
in place of music, I heard a commercial about the service that the
company provides.
At last, a real person answered the telephone and asked, “Can I
help you?” I replied, “Yes, oh yes.” He answered, “Please give me
your 19-digit customer service number, followed by the last four
digits of your social security number so I can verify who you are.” (I
thought I gave these numbers in the first place to speed up service.
Why do I have to rattle them off again?)
I was now convinced that he would call me Mr. 5523-3675-0714-
1313-040. But, to my surprise, he said: “Yes, Mr. Harrington. Where
do you want to go and when?” I explained that I wanted to go to
Montreal the following Monday morning. He replied: “I only han-
dle domestic reservations. Our international desk has a new tele-
phone number: 1-800-1WE-GOTU. I’ll transfer you.” A few clicks
later a message came on, saying: “All of our international operators
are busy. Please hold and your call will be answered in the order it
was received. Do not hang up or redial, as it will only delay our
response to your call. Please continue to hold, as your business is
important to us.”
1. Summarize the service failures associated with this experience.
2. What might the travel agency have done to guarantee a better service
experience for Mr. Harrington? How do your suggestions relate to the
TQ principles?
A Tale of Two Restaurants29

Kelley’s Seafood Restaurant was founded about 15 years ago by Tim Kelley,
who has run it from the start. The restaurant is very profitable because of its
excellent food quality, but lately has been having problems with consistency
because of numerous suppliers. The restaurant operations are divided into
front-end (servers) and back-end (kitchen). The kitchen has notes to boost
employee morale, employees are cross-trained in all areas, and the kitchen
staff continually seek improvements in cooking. Servers, however, have
minimal wages and few perks, and turnover is a bit of a problem. Tim’s pri-
mary criterion for selecting servers is their ability to show up on time. There
is little communication between the front-end and back-end operations,
other than fulfilling orders. Tim makes sure that any complaints are referred
to him immediately by the servers.
The restaurant has no automation, as Tim believes that it would get in
the way of customers’ special requests. “This is the way we’ve done it for the
past 15 years and how we will continue to do it,” was his response to a sug-
gestion of using a computerized system to speed up orders and eliminate
delays. Tim used to hold staff meetings regularly, but recently they have
dropped from once each week to one every five or six months. Most of the
time is spent focusing on negative behavior, and Tim has often said “You
can’t find good people anymore.”
Jim’s SteakHouse is a family-owned restaurant in the same state. Jim
uses only the freshest meats and ingredients from the best suppliers and
gives extra large portions of food to customers, who feel they are getting
their money’s worth. Jim pays his cooks high wages to attract quality
employees. Servers get 70 percent of tips, bussers 20 percent, and the kitchen
staff 10 percent to foster teamwork. Many new hires come from referrals
from current employees. Jim interviews all potential employees and asks
them many pointed questions relating to courtesy, responsibility, and cre-
ativity. The restaurant sponsors bowling nights, golf outings, picnics, and
holiday parties for its employees. At Jim’s, birthday customers receive a free
dinner, children are welcomed with balloons, candy, and crayons, and big-
screen TVs cater to sports fans. Jim walks around and constantly solicits cus-
tomer feedback. Jim visits many other restaurants to study their operations
and learn new techniques. As a result of these visits, Jim installed computers
to schedule reservations and enter orders to the kitchen.
1. Contrast these two restaurants from the perspective of TQ. What conclu-
sions can you make and what advice would you give the owners?
2. What type of management model (mechanistic, organismic, or cultural)
do you think each organization represents?
ENDNOTES
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Actually Improve Operating Performance? Empirical Evidence from Firms that Have Won
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3. “The Push for Quality,” Business Week, June 8, 1987, p. 131.
4. “Reinventing Health Care,” Fortune, July 12, 1993, advertisement section.
5. Lori L. Silverman with Annabeth L. Propst, “Quality Today: Recognizing the Critical SHIFT,”
Quality Progress, February 1999, pp. 53–60.
6. Nabil Tamimi and Rose Sebastianelli, “How Firms Define and Measure Quality,” Production
and Inventory Management Journal, Vol. 37, No. 3, Third Quarter 1996, pp. 34–39.
7. Courtesy of Deer Valley Resort.
8. David A. Garvin, “What Does ‘Product Quality’ Really Mean?”, Sloan Management Review,
Vol. 26, No. 1, 1984, pp. 25–43.
9. “A New Era for Auto Quality,” Business Week, October 2, 1990, pp. 84–96.
10. D.A Collier, “The Customer Service and Quality Challenge,” The Service Industries Journal,
Vol. 7, No. 1, January 1987, p. 79.
11. Karl Albrecht and Ronald E. Zemke, Service America, Homewood, Ill.: Dow Jones-Irwin,
1985.
12. A. Parasuraman, V.A. Zeithaml, and L.L. Berry, “SERVQUAL: A Multiple-Item Scale for
Measuring Consumer Perceptions of Service Quality,” Journal of Retailing, Vol. 64, No. 1, Spring
1988, pp. 12–40.
13. Eryn Brown, “Heartbreak Hotel?” Fortune, November 26, 2001, pp. 161–165.
14. Carol A. King, “Service Quality Assurance Is Different,” Quality Progress, Vol. 18, No. 6, June
1985, pp. 14–18.
15. Procter & Gamble, “Report to the Total Quality Leadership Steering Committee and Work-
ing Councils,” Cincinnati, Ohio, 1992.
16. Based on personal communication from Roger Nunley, Director, Industry & Consumer
Affairs, Coca-Cola, the Service Quality Survey, and the Industry & Consumer Affairs Depart-
ment Overview.
17. AT&T Corporate Quality Office, “AT&T’s Total Quality Approach,” 1992, p. 6.
18. Andrew E. Serwer, “Michael Dell Turns the PC World Inside Out,” Fortune, September 8,
1997, pp. 76–86.
19. David A. McCamey, Robert W. Bogs, and Linda M. Bayuk, “More, Better, Faster from Total
Quality Effort,” Quality Progress, August 1999, pp. 43–50.
20. “It’s My Manager, Stupid,” Across the Board, January 2000, p. 9.
21. Kicab Casteñeda-Mendez, “Performance Measurement in Health Care,” Quality Digest, May
1999, pp. 33–36.
22. Adapted in part from Ed Baker, “The Chief Executive Officer’s Role in Total Quality: Prepar-
ing the Enterprise for Leadership in the New Economic Age,“ Proceedings of the William G.
Hunter Conference on Quality, Madison, Wis., 1989.
23. Adapted from KARLEE 2000 Malcolm Baldrige Application Summary, National Institute of
Standards and Technology, U.S. Department of Commerce.
24. See S.S. Masterson, J.D. Olian and E.R. Schnell, “Belief versus practice in management the-
ory: Total quality management and Agency Theory,” in D. Fedor and S. Ghosh (eds.), Advances
in the Management of Organizational Quality (Vol. 2), Greenwich, CT: JAI Press, 1997, pp. 169–209.
25. Based on Barbara A. Spencer, “Models of Organization and Total Quality Management: A
Comparison and Critical Evaluation,” Academy of Management Review, Vol. 19, No. 3, pp.
446–471, 1994.
26. Adapted from Ronald E. Turner, “TQM in the College Classroom,” Quality Progress, Vol. 28,
No.10, October 1995, pp. 105–108.
27. Adapted from Mark R. Hagen, “Quality for the Long Haul at Gerber,” Quality Progress, Vol. 33,
No. 2, February 2000, pp. 29–34. © 2000 American Society for Quality. Reprinted with permission.
28. H. James Harrington, “Looking for a Little Service,” Quality Digest, May 2000.
29. Based on a student project prepared by Stacey Bizzell, Suzanne Lee, and Kenneth Shircliff.
Their contribution is gratefully acknowledged.

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Introduction to Total Quality

THE IMPORTANCE OF QUALITY

below the industry average, and increased employee satisfaction levels to

You Can Fool Some of the People Some of the Time . . .

Quality Starts with a Vision2

All organizations—large and small, manufacturing and service, profit and

Quality. Remember it? American manufacturing has slumped a long

The “quality revolution” in America can be traced to 1980, when NBC

THE CONCEPT OF QUALITY

At Deer Valley, Quality Is Not a Snow Job7

and characteristics of a product or service that bears on its ability to satisfy

Hollywood Casino Resort/Tunica is a place where guests feel invited

Deer Valley Resort is another example of an organization dedicated to exceed-

1. Performance: a product’s primary operating characteristics.

Most of these dimensions revolve around the design of the product. In

1. Customer needs and performance standards are often difficult to identify

Knock Three Times13

Service organizations must look beyond product orientation and pay

PRINCIPLES OF TOTAL QUALITY

Total Quality (TQ) is a people-focused management system that

lower real cost. TQ is a total system approach (not a separate area or

There probably are as many different approaches to TQ as there are busi-

groups of key customers on a regular basis. Other companies bring cus-

Coke Stays Close to the Customer16

While companies concerned about quality try to minimize problems that

Continuous Improvement and Learning

FIGURE 1.1 PROCESS VERSUS FUNCTION

Vice President • • • Vice President

Department Department Department Department Department

nities to do better as well as by problems that need to be corrected. Improve-

The importance of this classification is realizing that although satisfiers

Michael Dell’s Touch for Quality18

Faster Clinical Testing at Procter & Gamble19

One example of cycle time reduction is Procter & Gamble’s over-the-counter

streamlining and simplifying processes to eliminate non–value-added steps

FIGURE 1.2 EXAMPLE OF PROCESS AND CYCLE TIME IMPROVEMENT

How a final report is How a final report

Complete statistics Complete statistics

Draft statistical and Draft statistical and

Measurements provide critical data and information about key processes,

Empowerment and Teamwork

1. Vertical—teamwork between top management and lower-level employees.

need the skills to listen to customers; manufacturing workers need specific

• to lead the entire organization in a particular direction; that is, to drive

Data and information support analysis at all organizational levels. The

A comprehensive set of measures and indicators tied to customer and com-

Leadership and Strategic Planning

and electronic marketplace, technological developments, new customer seg-

TQ AND TRADITIONAL MANAGEMENT PRACTICES

Bringing TQ to Life at KARLEE23

KARLEE is a contract manufacturer of precision sheet metal and machined

6. Motivation and Job Design

TQ AND AGENCY THEORY24

TQ AND ORGANIZATIONAL MODELS25

mechanistic, organismic, and cultural models of organizations. Contrasts

Mechanistic Organismic Cultural

Goal Long-term survival Organizational Organizational Meet individual

to individual autonomy (political rationality); and learning needs are driven

REVIEW AND DISCUSSION QUESTIONS