Making total quality work aligning organ

Making Total Quality Work: Aligning Organizational Processes, Performance Measures, and Stakeholders1 Judy D.. Rynes Total quality is increasingly used by companies as an organization

Making Total Quality Work:

Aligning Organizational Processes, Performance Measures, and Stakeholders1

Judy D Olian and Sara L Rynes

Total quality is increasingly used by companies as an organization-wide system to achieve fully satisfied customers through the delivery of the highest quality in products and seruices The goals of total quality can be achieved only if organizations entirely reform their cultures Traditional management, operations, finance and accounting sys- tems are reviewed against changes that are needed in organizational processes, measure- ment systems, and the values and behaviors of key stakeholders to overpower the status quo and shift to a total quality culture that permeates every facet of the organization Specific company illustrations are drawn upon to show the inadequacies of these tradi- tional areas under the new imperatives for total qualify 0 1992 by John Wiley & Sons, Inc

1991) In short, quality improvement processes are part of the fabric of modern enterprises

Penril Corporation for instance, is a small manufacturer of data com- munications equipment located in Gaithersburg, Maryland Every ac- tivity in the company is being reengineered to support quality (see Olian, 1991) From the President on down, all employees are involved in

Human Resource Management, Fall 1991, Vol 30, Number 3, Pp 303-333

0 1992 by John Wiley & Sons, Inc CCC 0090-4848/92/030303-31

efforts to achieve improvements in quality For example, the President heads the firm’s quality council, works with vendors to redesign packag- ing that will simplify the unloading process, and actively leads the effort

to identify and recognize individual employees for their quality im- provements The flow of the manufacturing process has changed to emphasize flexibility and speed Before the quality efforts, engineers designed products in a vacuum, then threw the product design “over the wall” to manufacturing, resulting in products which could not be manufactured Today, goods are designed for manufacturability by de- ploying cross-functional design teams Every employee receives exten- sive training in quality and functional cross-training that enables each of them to do several jobs Movable carts replace stationary shelving Infor- mation technology is used heavily in all parts of the design, manufac- turing, and administrative operations of the company The Penril ”Hall

of Fame” lists the names of employees who are champions of the TQ

cause, and once a year the company’s senior executives don aprons and

cook lunch for all employees in the ”Great Chefs of Penril” cookout

The company has gone from taking 4-6 weeks to process an order, to taking 3 days Defects per unit have declined by 83%, and productivity

is up 18%

Although often mistaken as merely a tool or technique, TQ is an entire management system When successfully implemented, TQ changes the way companies view and interact with each of their primary stakeholders-customers, employees, suppliers, and shareholders Many organizational processes change, including factory and office layout, acquisition of raw materials, product development and manufac- turing, interactions with customers and distributors, and measurement, feedback, and control systems TQ processes refocus strategic priorities The role and process of management also changes, from one based on authority and restricted access to one of mentoring, developing, and liberal sharing of information

In this article, the organizational synergies that are critical in achiev- ing a pervasive TQ culture are discussed The following are considered:

(1) Organizational processes that nudge people toward TQ-supportive behaviors

( 2 ) Outcome measures that provide the information necessary to diagnose and continuously improve manufacturing and service processes

( 3 ) Sources of stakeholder support and opposition to transition into a TQ culture

Our premise is that TQ will become an organizational way of life only when all three aspects are ”in sync” with one another: people (that is, stakeholders), processes, and outcomes all moving in the direction of

market-driven quality and continuous improvement Without creating

304 1 Human Resource Management, Fall 1991

1 Recogntzmg and Rewarding

1 Recruiling S e k l m g and Orienting

THE ESSENTIALS OF TQ

Before discussing the organizational synergies that support TQ, the core components of a TQ approach are reviewed Over the years, a number of quality experts such as Deming, Juran, Ishikawa, Crosby, Taguchi, and others, have developed and refined various TQ philoso- phies and systems Although their approaches vary somewhat in terms

of relative emphasis and techniques, in general, most TQ philosophies share the following characteristics (Saraph, Benson, & Schroeder, 1989; Tuttle, 1991):

Customer-driven quality as the main strategic priority which is based on

the presumption that other business goals (such as profit or market share) will follow if customers are fully satisfied or delighted

Olian and Rynes: Making Total Quality Work / 305

Visible, effective leadership, where top management places quality ahead of other pressing demands and objectives-both sym- bolically and in day-to-day activities

Data-driven processes, where all decisions are made from verifiable data that track changes in performance trends over time

Prevention rather than inspection, in which building defect-free per-

formance into product or service design is emphasized, rather than relying on subsequent inspection and rework

Employee empowerment, so that authority over delivering or improv- ing products and services is in the hands of the "doers" rather than the overseers

Vertical deployment of quality initiatives so that everyone in the orga-

nization understands how their work affects key organizational objectives

Emphasis on processes and cross-functional coordination as the most like-

ly source of problems and solutions A process emphasis reduces buck-passing and finger-pointing, and encourages employees to think of themselves as internal customers and suppliers

Continuous improvement philosophy, which recognizes that perfor- mance can, and must, always be improved because the competition never rests

Because TQ requires abandonment of some of our most cherished traditions and assumptions (managers think while workers do; en- gineers design while workers assemble), TQ implementation generally requires a wholesale change in the organizational culture Organiza- tional development experts have been saying for a long time that cultures change very laboriously and only when interdependent sys-

tems are simultaneously nudged in the same direction (Schein, 1985)

For TQ to be successful, organizational processes must be altered, differ- ent forms of information must be attended to, and various stakeholder groups must be persuaded to buy into the process (see Fig 1)

ORGANIZATIONAL PROCESSES THAT SUPPORT TQ

In this section, some of the major processes organizations use to introduce and support TQ implementation are outlined These include (a) communicating a quality vision; (b) translating that vision into quali-

ty goals; (c) training for quality; (d) team-building to enable quality pro-

cesses; (e) recognizing and rewarding for quality; and ( f ) recruiting,

selecting, and socializing quality-oriented employees

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Communicating a Quality Vision

Successful TQ organizations are nearly always driven by a carefully articulated and widely shared quality vision For example, Globe Metal- lurgical, a small alloys company in Ohio, adopted the vision of being the highest quality producer at the lowest price (Papay, 1990) Until very recently, this would have been dismissed as an impossible aspiration by most Western executives, academics, and consultants (Garvin, 1987) However, just four years into the TQ process, Globe has become an industry benchmark Its CEO, Arden Sims (1992), describes what was involved in communicating the quality message:

When Globe Metallurgical first decided to pursue a quality program in

1985, there was no Baldrige Award and no prescribed quality criteria

Quality for Globe was a matter of economic survival, not part of a calcu- lated effort to win an award To compete in a global market, we had to provide our customers with the highest quality products at the lowest possible cost

Once we established this vision, we communicated the values of quali-

ty to every employee at every level of the company To demonstrate our commitment to our employees, we began a companywide profit-shar-

ing program, eliminated time clocks at our main facility, and promised to respond to every quality-related question within 24 hours In addition, I made a personal commitment to eliminate layoffs and began to con- duct small group meetings with every employee in the company to review our financial performance (p 126)

Another illustration is Motorola's former CEO, Bob Galvin, who fo- cused on "six-sigma quality" (no more than 3.4 defects per million) in com- municating Motorola's quality vision Galvin spent sigruficant amounts

of time communicating this vision and ensuring that people in all areas

of Motorola, even bakers and security guards, were able to translate it into personal work goals (Wiggenhom, 1991)

In addition to communicating the quality vision downward, TQ orga- nizations also increase upward and lateral communications For exam- ple, the Conference Board (1991) notes that most TQ-practicing com- panies convene periodic employee meetings with top management (79%

of manufacturing companies; 73% of service companies), face-to-face short-term teams (92% manufacturing, 97% service), focus groups (46%

manufacturing, 71 % service), and employee suggestion systems (60%

manufacturing, 64% service) Another method used to enhance two-

way communication and top management understanding of the busi-

ness is for the top management team to adopt a regular schedule of working with line employees or service workers:

It's not possible to analyze and control quality from behind a desk any more than a golf swing can be corrected by a teaching pro who isn't out on

Olian and Rynes: Making Total Quality Work I 307

the course it is for this reason that Honda managers go to the spot on the factory floor to have direct contact with an actual operation (Shook,

1988, p 158)

Establishing Quality Goals

Not surprisingly, the specific goals that flow from overall quality vi- sions such as six-sigma or "zero customer defections" (Reichheld & Sasser, 1990) are also extremely ambitious In fact, many would argue that the "trick" to TQ goalsetting is to make the goals so ambitious that they cannot be achieved merely by incremental improvements to busi- ness-as-usual For example, Motorola, which has already cut defects from 6000 per million to only 40 per million in just 5 years, has a goal of further cutting defects by 90% every 2 years throughout the 1990s (The Economist, Jan 4, 1992) Furthermore, Motorola is thinking ahead to the

time (about 10 years from now) when its 68040 microprocessor chips will contain 10 billion transistors (up from 1.2m at present), at which point even one-in-a-billion defects will mean a lot of "dud" chips Thus, Motorola is already thinking about building "redundancy" into those products via such tactics as adding space capacity or alternative signal paths Such thoughts are also triggering a search for structural ways in which Motorola can accelerate the dissemination of learning from al- ready completed projects to new ones

Similarly, as indicated by a Westinghouse official at their Quality Day (January 23, 1992), the company has never set a cycle-time reduction goal of less than 50% the first time through the self-examination process

To date, Westinghouse (a Baldrige award-winner and two-time finalist) has not missed a single first-time target

With goals such as these, it is clear that TQ is aimed at producing

"quantum leaps" in performance However, because most goal-setting research suggests that people will not embrace goals which they per- ceive to be impossible (Locke & Latham, 1990), achieving quantum leaps

in performance through goal-setting often requires, as a first step, dra- matic shifts in outlook regarding what is possible Examination of indus-

try practices suggests that this is being accomplished through two prin- cipal techniques: (a) benchmarking and (b) setting goals for the system rather than for individuals

Benchmarking

Traditionally, US organizations have looked to past performance and

to historically close competitors (e.g., GM, Ford, and Chrysler) to gauge how they are doing and to set performance objectives However, in a global economy with continuously improving competitors, these insular and backward-looking practices are increasingly inadequate Hence, the

308 I Human Resource Management, Fall 1991

rapidly growing practice of benchmarking has arisen to provide more realistic and much higher standards (Camp, 1989)

Benchmarking turns the focus outward toward the "best in class" for

a given function, regardless of industry For example, many industries look to L L Bean for distribution benchmarks, to Honda for customer service, and to American Express for invoicing Some companies engage

in benchmarking to get a general feel for the best in class, regardless of the function or industry Joseph Gorman, CEO of TRW and a major supplier to the American auto industry, was so impressed after driving a friend's Lexus that his company leased a top-of-the-line Lexus LS400

model to be driven by each of TRWs top executive team for 2 weeks (during the rest of the time they drive American cars) Says Gorman of the luxury Japanese car, "It's as good an example I know of what total quality and satisfaction to a customer mean" (Kretchmar, 1992, p 121) The motivational aspects of benchmarking were recently described by Jack Welch, CEO of General Electric:

(We went to Wal-Mart) to observe the speed, the bias for action, the utter customer fixation that drives Wal-Mart and, despite our (own) progress,

we came back feeling a bit plodding and ponderous, a little envious, but ultimately, fiercely determined that we're going to do whatever it takes to

get that fast (Jack Welch, quoted in Hyatt & Naj, 1992, p B-6.)

System, Not lndividual Goal Setting

A second aspect of TQ that seems to help people accept "stretch" goals is its insistence on looking at processes and systems, rather than individuals, as the most likely causes of and solutions to problems To date, the focus of performance and reward systems for most US em- ployees has been individual performance Thousands of individualized Management by Objectives plans and merit increases have often failed

to produce world-class organizational performance Indeed, according

to Gabor (1990), W Edwards Deming argues that individually based assessment and reward systems are fundamentally flawed in their basic assumptions:

(Dr Deming has argued that) performance appraisals, bonuses, and other reward systems that brand a few employees winners and encourage con- stant competition in the ranks are fundamentally unfair and ultimately harmful to the interests of both companies and employees (He) believes that if the system in which people work is predictable-and if manage- ment has done its job well in selecting employees-then over time most employees will perform at about the same level, and that only a few will perform exceptionally well or poorly Moreover, the influence of variation

is such that it is impossible to accurately measure the overall performance

of individuals within a variable process it is impossible to separate the performance of the individual from that of the system (pp 26-27)

Olian and Rynes: Making Total Quality Work I 309

In contrast, TQ philosophies argue that if system outcomes are the ultimate determinants of success, then analysis and improvements must

be focused primarily on the system rather than on the individual People

in TQ organizations make heavy use of process tools such as flow- c*harting, cause-and-effect diagrams, and plan-do-check-act cycles Moreover, many of these efforts are conducted on a team basis across, rather than within, functional areas

Looking at performance from a process or systems perspective ap- pears to have a number of side benefits Viewing one’s role as a supplier

of goods or services to other employees (internal customers) often brings

L~ profound change in perspective For example, while considering the role of accounting (staff) from a systems perspective, line managers may realize for the first time that when they do not deal promptly with xcounting paperwork, they may be costing the company money in terms of late payment penalties, not to mention placing inordinate stress

on those with accounts payable responsibilities A second benefit is that people begin to speak the common language of quality, which facilitates

further cross-functional process improvements A third benefit is that

once people get used to the idea of looking at systems rather than people, the amount of fingerpointing and turf protecting that goes on in functionally segregated systems decreases

Training for Quality

Another fundamental premise of TQ philosophies is that people who actually perform jobs are in the best position to understand them Given this assumption, TQ advocates argue that more (and more radical) im- provements occur when frontline employees are empowered to make them For example, the most mature TQ cultures have factory workers who can stop the line over a quality issue or salespeople who are al- lowed to make very large deviations or adjustments for customers with-

out supervisory approval (Garvin, 1991) However, a variety of support

systems must be put in place before workers who are not accustomed

to making decisions (or authorized to do so) become active problem- solvers and decision makers

Formal quality training appears to be the most common technique for initiating and sustaining employee involvement, at least during early

stages of TQ implementation According to the Conference Board (1991),

90% of manufacturing companies and 75% of service corporations report

using some sort of training in their TQ efforts However, KPMG Peat

Marwick (1991) found that while training was the most important ini-

tiative in the early stages of TQ implementation, cross-functional quality teams and work process redesign became relatively more important in

more mature implementations Across TQ-practicing companies, the

310 I Human Resource Management, Fall 1991

median number of hours devoted to quality training (per employee) was

20, with a larger commitment in corporations just launching their TQ efforts

According to the General Accounting Office of the U.S Government (1990), TQ training is typically a two-stage process The first stage con- sists of general awareness training to create a common frame of refer- ence and a sense of the leadership commitment The second stage focuses on concrete skill-based training designed to prepare individuals

to become effective members of quality improvement teams For exam- ple, in a small convenience sample of Fortune 100 firms, Olian and Rynes (1991) found the most common training content to be (in descend- ing order of frequency): personal interaction skills, quality improvement processes and problem solving, team leading, team building, running meetings, statistical process control, supplier qualification training, and benchmarking

Mature TQ organizations also frequently get involved in training people traditionally regarded as outsiders, for example, suppliers, cus- tomers, or public administrators Indeed, one of the major contributions

of TQ, and the analyses it fosters, is to blur entirely the lines between insiderloutsider, and with that, to facilitate redesign and reengineering

of a broader set of factors including t h e previously thought of as uncontrollable, because they were outside the system

Team-building to Enable Quality

The other major strategy to enable empowerment is the use of teams and team-building activities A 1991 Conference Board survey found the formation of short-term problem-solving teams to be the single most commonly employed TQ implementation tactic

As with training, the roles of teams and the issues for team facilitation

change over time Although most companies begin their team involve- ment with short-term single-issue teams, over time teams tend to be- come longer-standing, more cross-functional, multi-issue, and increas- ingly self-managed For example, KPMG Peat Marwick (1991) found that only 15% of their total sample used completely self-managing work teams as a primary TQ tool However, this figure rose to 50% in com- panies with the most developed TQ cultures

Recognizing and Rewarding for Quality

Successful incorporation of TQ principles by all employees is also supported by a dramatically increased emphasis on employee recogni- tion TQ organizations have recognition-rich, even celebratory cultures

Olian and Rynes: Making Total Quality Work I 311

According to Schonberger (1990), world-class approaches to recognition are visible and public, have a strong next- and final-customer bias, focus

on teams first and individuals second, are active and frequent, and ensure consistency (in the sense that self- and other-recognition are bestowed for the same things)

For example, Milliken, the Baldrige Award-winning textile manufac- turer, has ”Alcoves of Excellence,” “Walls of Fame,” and a company news magazine filled with recognition stories and photos of both indi- vidual and team accomplishments (Schonberger, 1990) Monsanto Agri- cultural Products has a “Big Meeting” day, in which more than 500

worldwide employees and team members come to corporate headquar- ters to be recognized for quality improvements At Xerox, the Team Celebration Day turns into a “happening,” with over 12,000 employees, customers, and suppliers attending a huge quality fair at one of four US

or international locations, all linked via satellite As early as 1986, Honda

of America’s president began taking line workers (rather than other company executives) to Detroit’s annual Automotive Hall of Fame Dinner, a meeting of approximately 600 of the industry’s top-level executives

In addition to verbal praise and visual recognition, many TQ organi- zations have also changed their financial reward systems to support employee involvement and quality achievements For example, WTD Industries (sawmills) hands out $50 spot awards; Nucor steel has imple- mented profit-sharing plus a variety of small group incentives; and Pep- siCo, Inc provides stock options for all of its roughly 100,000 permanent employees to involve everyone in the fate of the company (Kanter, 1989; Perry, 1988, Schonberger, 1990)

As is the case with most other aspects of TQ, reward systems tend to

evolve in predictable ways as commitment to TQ grows For example, both the Conference Board and KPMG Peat Marwick surveys showed that as companies mature along the TQ cycle, they increasingly shift their reward and recognition practices toward teams and broader units (see Table I) In addition, the KPMG study showed an increasing linkage between incentive payouts and explicit quality improvement goals: 60%

of the TQ ”leaders” (those furthest along in TQ implementation) had incentive plans reflecting quality goals, as compared with none of those just beginning TQ

Interestingly, the Peat Marwick study also revealed that companies are less willing to link quality to rewards for top executives than for middle managers Indeed, contingent executive compensation awards are still driven almost exclusively by financials, a situation which Eccles (1991) argues undercuts TQ strategies

Despite the lack of an explicit link between quality and executive compensation, highly evolved TQ firms in the United States tend to be more concerned about vertical pay equity than are less advanced com-

312 I Human Resource Management, Fall 1991

Table I Frequency of Distributing Awards

To Individuals To Teams Unit-wide Years TQ Process

in place: Cash Noncash Cash Noncash Cash Noncash

8 years or more 10% 58% 10% 53% 10% 53%

1 year or less 15% 23% 8% 31 % 4% 11%

N = 146

Source: The Conference Board (1991), p 30

panies For example, companies such as Nike, Herman Miller, and Ben

& Jerry’s strictly limit the number of pay grades in the hierarchy, as well

as the ratio of top executive to lowest-level employee pay In addition, some have increased horizontal equity as well For example, Mars, 1nc.-a highly successful multibillion-dollar enterprise-does not differ- entiate the pay of same-level managers in different functional areas (e.g., finance versus human resources) and has no individual merit or incentive system Instead, all employees are held to very high work standards, paid at the 90th percentile against market competitors, and given equal annual increases (Cantoni, 1992) Indeed, the concept of simply paying higher-than-market wages to attract and retain high-in- volvement employees, rather than “incenting” every little action and outcome, has taken hold in many high-performance organizations, in- cluding Au Bon Pain, American Savings Bank, and the GE Answer Center (Sellers, 1990; Rice 1990)

Generally speaking, although T Q companies tend to treat employees well financially, most make a bigger issue out of employee recognition than of financial rewards Although in part this may reflect the fact that praise and recognition are more predictable than payouts based on fi- nancial or productivity improvements, there is also some concern that tying formal pay systems too closely to short-term achievements focuses employees on the wrong things:

We have never added up, and we never will, the cost savings that come out of employee involvement-on the simple basis that if that becomes the focus, some dumb cluck is going to decide that more is better, and then everybody’s focus in going to be, “Gee, look at all the money I’m saving-

I ought to get a piece.” The thing we do is given ’em a belt buckle, a picnic once a year, all the beer they can drink (that’s Harley beer, by the way) and

we just say thanks Their satisfaction is they made the product better, they had fun doing it, and they have some control over their environment- which is what it’s all about (Vaughn Beak, CEO of Harley-Davidson, quoted in Schonberger, 1990, pp 200-201)

Olian and Rynes: Making Total Quality Work I 313

Recruiting, Selecting, and Socializing Quality-Oriented Employees

Consistent with recent evidence suggesting the critical importance of hiring the right people, TQ-practicing organizations tend to distinguish themselves in terms of the effort and expense devoted to recruitment, selection, and orientation at all organizational levels (Shook, 1988) For example, Hampton (1988) reports that Mazda and Diamond-Star Motors (a Chrysler-Mitsubishi joint venture) spend about $13,000 per produc- tion employee hire Although specifics vary slightly across the two firms, each includes written tests, drug tests, medical exams, and sever-

al rounds of interviews, problem-solving exercises, and work sample

In addition, TQ organizations often use realistic job previews and extensive orientation sessions to ensure appropriate applicant expecta- tions and values For example, Diamond-Star uses a realistic preview video that warns applicants they must learn several jobs, change shifts, work overtime, make and take constructive criticism, and submit a con- stant stream of suggestions for improving efficiency The video con- cludes by saying, "It's not an easy decision; you've got to ask yourself if you're willing to dedicate yourself to the Diamond-Star team" (Hampton, 1988) In addition, many TQ firms (such as Honda and Wal- Mart) also involve family members in selection procedures in order to ensure familywide commitment to the new employer

The importance of teams and teamwork is also reinforced in a number

of ways First, in many companies, ongoing teams play a large (or even solo) role in new employee recruitment and selection Interpersonal skills and willingness to be a team player also form a large part of the interviewing and testing procedures Finally, these characteristics are reinforced through general orientation and training which often lasts several months even for production workers At Mazda, line workers receive several days of general philosophy training, followed by 5-7 weeks of technical skills training, followed by 3-4 weeks of supervision when first placed on the assembly line Thus, recruitment, selection, and orientation all work in concert to produce dedicated, team-oriented, and highly skilled employees

Despite their screening rigor and demanding work requirements, em- ployers such as Honda, Mazda, and Diamond-Star can afford to be very selective because they are widely regarded as good places to work Selection ratios (number of hires relative to the size of the applicant pool) of 0.04 are reported at Diamond-Star; 0.13 at Mazda (Hampton,

1988); 0.095 at Honda, Marysville; and 0.025 at Honda Power Equipment (Shook, 1988)

tryouts

314 I Human Resource Management, Fall 1991

OUTCOME MEASURES THAT SUPPORT TQ

You cannot manage what you cannot measure And what gets mea- sured gets done (Bill Hewlett, co-founder of Hewlett-Packard, quoted in House & Price, 1991, p 93)

Given that implementation of TQ typically involves a multiplicity of changes, it is not surprising that many of the things that are measured and attended to in TQ organizations are quite different from those that drive traditional organizations Also, consistent with recommendations from goal-setting research, employees in TQ organizations are given rich information and feedback to help them control and improve pro- cesses and outcomes Fred Smith, Chairman and CEO of Federal Ex-

press, explains the rationale for extensive, incessant measurement and feedback:

We recognized long ago that when you get an operation that is as complex and as large as Federal Express, you must have very sophisticated mea- surement systems That, in turn, requires extensive use of various tech- nologies We put a lot into mechanisms to feed information back to the people who are doing the job so if they have a quality problem or an error,

they know it and can fix it (Smith, quoted in Karabatsos, 1990, p W )

At least four groups of outcome measures are undergoing close scru-

tiny in TQM-driven organizations These measures reflect: (a) customer

data, (b) operations data, (c) financial information, and (d) employee data

and are all critical in supporting and directing the TQ efforts Each is discussed in turn, followed by a brief discussion of the synergies across the various measurement categories

Measuring Customer Reactions

Interestingly, although such slogans as "The Customer is King" or

"We're #1 on Service" have increased exponentially in recent years, these self-proclamations drive the day-to-day activities of only a fraction

of companies The survey conducted by the American Quality Founda- tion and Emst & Young (1991) found that, at present, customer satisfac- tion is a primary criterion in the strategic planning process for only 37%

of American, 42% of Japanese, and 22% of German companies Similar-

ly, evaluating and rewarding employees on the basis of customer service

is rare at all levels, although the practice is growing (Rice, 1990; Sellers,

izing that “zero defects” are of little ultimate value if products or services are not attuned to customer needs (The Economist, Jan 4, 1992) Thus,

consultants and firms increasingly talk about zero defections and mar- ket-driven quality to differentiate ultimate consumer-based objectives (first-time purchases, repeat buying, and service recovery) from nar- rower reliability or process improvements (e.g., Reichheld & Sasser, 1990; Hart, Heskett, & Sasser, 1990)

Businesses are responding to the growing ”pickiness” of consumers and their increasing willingness to pay for quality in a variety of ways In some cases, companies are merely paying more attention to the custom-

er satisfaction data they have always collected, but typically ignored Even in these companies, however, just paying more attention typically leads to a desire for more, and more useful, information Thus, more companies actively pursue customer feedback than in the past, and increasing numbers hire marketing research firms to conduct routine follow-ups with recent purchasers

Other companies are more aggressively tracking both their products and their customers Bar code scanning techniques have made it pos- sible to track not only what people are buying, but also who is buying it Firms such as Nielson Marketing Research and information Resources, Inc recruit ordinary consumers to become part of “scanner panels” which provide detailed information about family demographics, in- come, and consumption patterns Then, each time they shop, panel members pass a uniquely coded ID card to the cashier, whose register entries link everything purchased to the appropriate consumer In this way, the success of new product launches, which have more than dou- bled over the past 6 years, can be tracked, particularly the all-important depth of repeat buying In a world where approximately 80% of new products fail, such analyses can be critical determinants of success or

failure (Caminiti, 1991) Some supermarket chains have instituted fre-

quent buyer discount clubs which enable the creation of a database showing individual customer purchasing behavior against demographic information

Similarly, toll free complaint lines are no longer merely mechanisms for remedying customer problems, but rather information-gathering ser- vices to help identdy recurring problems requiring correction In the most sophisticated systems, producers systematically integrate custom-

er feedback into the organizational learning and product design process Honda of America has long posted engineers in centralized service posi- tions to help licensed mechanics who call in with difficult service or repair problems Each request for help is incorporated into a centrally maintained database so that what is learned from one repair job can be transmitted to future mechanics who encounter the same problem The system is also used by design engineers to locate trouble spots in current designs so they can be eliminated from subsequent products Similar

316 I Human Resource Management, Fall 1991

systems now exist at Cadillac and at GEs 800-number Answer Center (Rice, 1990)

Increasingly, firms are using "groupware" (software designed to sup- port the collective work of teams) to gather the insights of cross-func- tional teams with respect to customer needs Marriott Hotels recently

used a 2!j-minute, electronic brainstorming meeting to generate 139

ideas on how to improve customer satisfaction Each idea was then rated

on two criteria; likely size of impact on guests and likely cost A major

outcome of the meeting was the consensus that, among other things,

hotel employees needed more thorough training (Kirkpatrick, 1992)

Dell Computer used a similar session to generate 75 possible new prod- uct names, and then to whittle them down to 5 Without the measure- ment technology, these processes would have taken several days Finally, consumer behavior has revealed that customers often are will-

ing to pay hefty premiums for speed (Stalk & Hout, 1990) Conse- quently, retailers like Wal-Mart and J C Penney have put a great deal of effort into tracking inventories, working with suppliers, and improving distribution systems to make sure that shelves are stocked with in-fash- ion, fast-moving items On the distribution end, transport firms such as Schneider have equipped their trucks with the necessary technology to provide just-in-time deliveries On the production end, manufacturers such as Hewlett-Packard and IBM have used project mapping to cut design and production cycle times

Operation Measures

Of the four measurement areas described in tlus paper, the most substantial changes have occurred in the documentation, reengineering, and measurement of operations and work processes At the risk of over- simplifying, operational approaches to quality have, at least in one sense, come full circle They have shifted from: (a) the pre-mass-produc- tion assumption that quality is built into the product by a well-trained craftsman, to (b) the advent of inspection as a separate function, neces- sitated by the rise of mass production, unskilled labor, and the need for interchangeable parts, to (c) the development of statistical process con- trols and sampling procedures to meet the pragmatic goal of attaining adequate quality with less-than-100% inspection, to (d) the rise of broad quality-assurance programs, where a wide array of tools (psychological and social, as well as statistical) are employed to once again insure that quality is built into the product [The interested reader is encouraged to consult Garvin (1987) for further details.]

In the early phases of TQ Implementation, the first challenge is to

create an environment where improvements in quality take priority over the more usual short-term drivers such as scheduling, shipping, or cost

Olian and Rynes: Making Total Quality Work I 317