Business Essays - Quality Excellence Development

Quality Excellence Development

Discuss ‘business excellence’ and ‘quality management’ practices within current organizational context

Introduction

As markets become more global, competition increasingly fierce, and as advances in technology continue to redefine competitive advantage, quality and excellence theories have changed. In order to expand business, enter new markets, and set realistic, competitive long term objectives, excellence has become imperative. The terminology of Excellence models has become widely used as the normal communication medium for performance improvement and business excellence.

The increasing complexity of organizations has made scholars search for excellence models to help improve organizational productivity and performance (Lamberg & Parvinen, 2003). Over the past decade there has been continual development of Total Quality Management (TQM) through Quality Award or Business Excellence models.

Most of these models are built on TQM constructs and their purpose is to apply these constructs in organizations (Adrian, 1995). This has led to a change in the criteria for success in the current global, internationally oriented market. Management’s effort has been directed towards discovering what makes companies excel.

The overlap of business excellence with TQM

Business excellence models have been widely used in self-assessment of organizations with the aim of improving organizational performance (Van der Wiele et al., 2000). The concept of ‘Business excellence’ or ‘excellence’ is a direct take off from the concept of TQM because quality, itself, has been defined by Lugen et al., (2003) as the degree of business excellence’.

Juran & Gryna (2000) define TQM as a philosophy aimed at achieving business excellence through the use and application of tools and techniques, as well as the management of soft aspects, such as human motivation in work.

The concept of quality management is supposed to encapsulate the overall concept that foster continuous improvement in an organization. The TQM philosophy stresses a systematic, integrated, consistent, organization-wide perspective involving everyone and everything. This definition includes excellence of the final product as well as excellence of the process that produces that product.

The close similarity between the concepts of TQM and business excellence has started off a debate within the research community. E.g. Authors like Dale et al. (2000) have argued against the need for changing the name of ‘quality’ to ‘excellence’ when the concept driving both the theories remains the same.

Their article (Quality is Dead in Europe – long live excellence) states that it’s the way quality is understood and implemented which needs to be looked into rather than the concept of quality itself.

Also, researchers like Meyer (2002) & Ritchie (2000) state that just replacing the term ‘quality’ with ‘excellence’ has not solved the implementation issues that arose through the introduction of the TQM concept. One of the difficulties faced by managers in the understanding of the TQM concept was centered on the business meaning of quality. E.g. When TQM theory was introduced, there were various definitions of ‘quality’ (conformance to requirements’ ((Crosby 1979), ‘fitness for purpose’, ‘conformance for requirements’). The problem remains with ‘excellence’ models as ‘excellence’ like ‘quality’ is also open to interpretations.

The rise of Business Excellence models

But, it can be argued that although, the concept of business excellence remains closely tied with the ‘quality’ idea, there is some divergence. While TQM is normally considered a long-term process that relies on relative achievements through continuous improvement, ‘Business Excellence’ or ‘Excellence’ is more short term oriented. Also proponents of business excellence argue that while excellence can be measured by the models, ‘quality’ was a qualitative variable, there was no set way to measure quality.

The other reasons for the rise of scoring models like and European Foundation for Quality Management (EFQM) and Baldrige criteria for Performance Excellence can be attributed to the need for a model to put the best quality practices together in a sequential model which can be used as a step-by-step guide for the companies who want to achieve performance improvement (Jacob, 2004).

The models are more comprehensive and holistic management and provide a mechanism for quantifying an organization’s current state of Total Quality Management (TQM) development by means of a point’s score (Williams et al., 2006).

But, again it can be argued that the degree of business excellence is still measured and described as the quality of the particular business process, so, in a way, EFQM model and other excellence models achieve the same purpose as TQM. The only difference being, they give a systematic approach to TQM, with their scoring model. The model is easier understood, simple and logical and yet comprehensive enough for implementation (Van der Wiele, 2000).

An important part of the models is the suggestion by Flynn et al., (1995) that both core and infrastructure quality practices have to be present in order to produce success in operational and financial terms.

Comparing TQM and excellence models

All ‘excellence’ models recognize that leadership plays the key role in creating the structures and infrastructures necessary to support TQM. Moreover, they all stress the importance of developing human resources and process management and emphasize, in this regard, the criticality of education and training. In fact, both the MBNQA and the EFQM implicitly assume there are causality links between TQM elements and results (Ghobadian & Woo, 1996).

For instance, in the EFQM, the enablers represent the TQM practices that are expected to lead to outstanding results in terms of customer satisfaction, profitability, low employees’ turnover, etc. The set of constructs included within these models (i.e. top management support/leadership, customer focus, supplier relationship, employee involvement) are already classified under the Quality Management umbrella.

Both quality management practices and business excellence are contingent on other factors, such as the nature of the market environment.

The success of ‘excellence’ models over TQM rests on the fact that excellence models have made the measurement and management of ‘quality’ or ‘excellence’ easier.

They have also made it easy to enable comparison between organizations to take place and for organizations to ‘benchmark’ their performance. ‘Excellence’ models are also easy to suit employer’s needs in different regions. E.g. a US based organization might be better off using the MBNQA model while an European enterprise might find it beneficial to use the EQA model.

This is because; the models assign relevant weightings in changing business contexts in which organizations operates. The models are also useful to implement in organizations that have yet to progress far on their quality journeys (Sinha, 2001). It is easier to customize these models to suit organization’s need, they can be tailored to providing competitive advantage within the organizations own particular market place.

Bonfour (2003) argues that a model with customized dimensions and weightings is necessary because the company needs to move from being rewarded for past good works to being better able to predict future performance against their competition.

Models assign different weightings given to the dimensions to come out with a more industry specific score. Weights vary across industries, due to variations in market situations and thus in the strategic focus of the organizations within each industry (Eskilden, 2001).

So, where models excel as compared to TQM is when excellence is assessed across different industry type or across different regions because the weightings can be changed accordingly. E.g. Different weightings need to be assigned to variables such as ‘leadership’ in service and manufacturing sector. The rapid pace of change means that new dimensions and new weightings may be more relevant for those businesses whose market environment differs greatly from that when the models were developed

Other models of business excellence like ‘Six Sigma’ have also been suggested and used across organizations to link quality directly with cost. ‘Six Sigma’ offers an indicator of how often defects are likely to occur, where a higher sigma quality level indicates a process that is less likely to create defects. Six sigma types of excellence looks to reduce defects, improve efficiency having direct effect on costs (Kajdan, 2007).

As defects decrease, sigma level of quality increases and product reliability improves, the need for testing and inspection diminishes, work in progress declines, cycle time goes down, costs go down, and customer satisfaction goes up (Harry & Schroeder, 2000). Researchers like Kanji (2002) believe that if a Business Excellence Model is to drive superior performance for sustainable growth, it should be based on the critical success factors.

Conclusions

No matter whether business improvement is termed as ‘quality’ or ‘excellence’, the fundamentals still remain the same. To achieve excellence, companies must develop a corporate culture of treating people as their most important asset, and provide a consistent level of high quality products and services in every market in which they operate.

Excellence is still reliant on focusing on satisfaction for both internal and external customers, within a management environment that seeks continuous improvement of all systems and processes.

Quality, in a way, can be considered as a big subset of the excellence model. All that excellence models have done is to expand or further the scope of the original model. It has enlarged the already existing ‘quality’ model, assigned scores and weightings to it to make it more objective.

There is little doubt that models have made the assessment of quality easier and more accurate but the concept of business excellence and total quality management remain the same.

Introduction

For business excellence to be successful, organizations need to realize that business excellence is a tool which helps them translate their plan into action and is a way of executing strategy. The best way to implement ‘business excellence’ practices in any organization is to balance the differential elements or variables of ‘business excellence’ models in such a way that development is strongly aligned to organizational imperatives (Nolan, 2007).

The successful implementation of ‘excellence’ practices requires focused leadership whose concern for improvement (excellence) or financial necessity outweighs their attachment to traditional norms (Moynihan, 2006).

One of the major issues faced by organizations implementing business excellence or quality management practices is the change in the culture of organizations as ‘business excellence’ implementation process may need to change the current work practices.

The article concentrates on implementing business excellence practices in a contact centre environment. It takes the case of Halifax Bank of Scotland (HBOS) and its outbound tele-sales contact centre. To manage business in increasing competitive environment, call centers need to plan their TQM or excellence strategies to stay ahead of the competition.

This can be partly achieved by providing ‘quality’ service. For this, management and policy-makers have to incorporate quality practices in their organizations’ culture since business excellence improves competitive advantage and produce economic value not only for the contact centre but for the whole organization.

Implementation Process

The three aspects which should form an essential ingredient of the business excellence system are program design, leadership support and effective execution. Apart from this, systems that capture and measure performance also play a vital role.

First step of the execution plan should be to ensure that the systems are reliable and score what they are meant to score. Simplicity of the whole business excellence process is also important. Besides, the tools in place should be convenient to access. It has to be ensured that staff at all levels (strategic, tactical and operational), understand the need of business excellence and the associated variables that form a part of the business excellence framework.

Employees should be made to know about the program as they are the ones responsible for implementing it. Managers and strategists who are involved in the implementation of the ‘excellence’ framework have to foresee the ease of ‘business excellence’ management.

Therefore, it is utmost important that the program itself is valued by its employees and managers have trust in it and are willing to put faith in it. For call centers to be a success, they have to create a culture of continuous development by making business excellence something that employee’s value (Eckes, 2003).

Each business unit and employee should know what they are supposed to achieve and how (Laff, 2007). The best way to implement business excellence framework is to use a standardized performance criteria by using standard language to define competencies or values for individual employees and business units. This will allow them to compare performance among employees and units throughout the organization.

Simplicity is vital to business excellence, the implementation plan has to ensure that the evaluation and measurement process is simple and flexible fitting well with the organization’s goals and needs. Measures, variables and the overall scoring criteria should not be too complex and cumbersome to evaluate.

As previous researches have highlighted that employees who are responsible for implementing the ‘quality’ and ‘excellence’ principles have to clearly understand the various aspects of ‘business excellence’. The plan should be to measure and improve performance against objectives.

HBOS call center should always have a rating scale revolving around objectives. It is also important that the business excellence plan has measures that encourage excellence or quality in terms of both performance and behavior.

Implementation Issues

Execution of business excellence is as much of an issue with call centers as development and as a part of the implementation plan, it has to be made sure that the development plan considers the implementation and the management aspects of it. Successful ‘business excellence’ implementation requires a thorough understanding of critical success factors for implementation, barriers to achieving these factors, and managerial tools and techniques to overcome these barriers (Douglas & Judge, 2001).

In call centers, determining the correct excellence measures and assigning appropriate weights to these measures is one of the biggest challenges. Management and monitoring of those measures and scores come only after the measures in place reflect on actual organization performance. One of the other key questions in front of call center management is whether to have a generic excellence framework with the same measure for every call centre (inbound and outbound) at that level or to have a slightly different measure dependent on conditions.

This is because, in call centers, there is no single business excellence framework which can be generically said to be suited as the scores, weights, design, structure, metrics and the measures included in the business excellence framework depend on various factors. The size of call center, how well the business excellence system is linked to objectives, the structure of the call centre, the systems measuring the performance, the importance of business excellence to the management; all determine the structure of business excellence system.

As part of the implementation process, managers have to brief on the ‘business excellence’ measures and the role of business excellence in the larger scheme of things. In a call centre environment, this would mean highlighting the importance of call centre on the overall company performance. Employees in call centre have to be explained how their efforts can help in increased customer satisfaction which can lead to repeat purchase, loyalty and long-term relationship which eventually can have a positive affect on the brand image.

In summary, as a part of implementation, frontline employees should be made realize their value of in broader business sense. The importance of excellence and continuous improvement can then be better understood within the larger context of things. The plan should be to make HBOS call centre’s corporate culture compatible with the strategy adopted so that business excellence is later extended to the whole organization.

This has to be guided by a strategic quality / excellence focused leadership should guide the whole process. Employee involvement within the implementation phase cannot be overemphasized, as it has traditionally been seen that processes done with the employee are much more effective and achieve better buy-in. It can also be gathered from previous researchers that call centers that do a spectacular job of performance and talent management don’t rely on infrastructure but on employees and their managers who believe in the business excellence process.

The variables within the ‘business excellence’ framework

It has already been mentioned that the variables and the weightings within a ‘business excellence’ framework varies with the conditions. For the purpose of HBOS call center, the ‘business excellence’ model should consider both the sales and the service element of excellence. The service element can be measured and improved by customer satisfaction parameters. Six sigma and its zero defect concept can be implemented as service excellence in call centers. For the purpose of call centers, this would mean dealing with customer queries in one call in the best possible manner to prevent any repeat calls (zero defects).

The sales element can involve some useful metrics which have been highlighted below. Also, depending on the conditions and HBOS company objectives, weights can then be attributed to the variables. E.g. If an organization is more customer centered and values customer satisfaction more than sales, there will be more weight attributed to ‘Abandon Rate’ rather than ‘Sales per hour’ or ‘Conversion Rate’.

• Sales Per Hour - The amount of sales completed within the hour

• Conversion rate - the amount of sales completed per hundred RPC's

• RPC - Right party contact- a completed conversational call with a conclusion to the call

• Abandon Rate - the amount of silent calls made per 100 connects

• Connects - once a connection has been made to another line ( not necessarily a person , aka answer phone , fax line )

• Connect/Dial Ratio - efficiency measures, the amount of connects per hundred dials

• RPC/Connect Ratio - efficiency measures, the amount of RPC's per hundred connects

• RPC/Hr - the average RPC's completed within an hour of dialling

• Revenue = the amount of revenue generated per sale

• Revenue/Hr = the amount of revenue generated per hour of dialling

Conclusions

The important variables and the key determinants of successful ‘business excellence’ structure implementation are management commitment to business excellence and continuous improvement, training for excellence throughout the organization, customer focus and continuous improvement, and a focus on employee involvement and empowerment.

A well implemented excellence structure should look at all the critical aspects of employment, recruiting, retention, and relationships. It should also align measures to business needs and makes measures relevant to the goals of the senior management team.

The best way to manage and improve performance is to track and measure the right factors and to ensure that all levels of the organization accept the metrics. Implementation issues can be best taken care of by involving employees in the development and implementation of ‘excellence’ frameworks across organizations.

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