Quality Management
Integration:
Quality In Modern Business
Warren Alford
© 2011 Warren Alford
www.warrenalford.com
Published by
Speckbohne Publishing
All rights reserved
No part of this book may be reproduced by any means without prior written permission of the publisher.
First Edition
10 9 8 7 6 5 4 3 2 1
Dedicated to
Silvia and Lola
I Love You…
Table of Contents
|
Introduction |
Page 5 |
|
Chapter 1 |
Page 11 |
|
Chapter 2 |
Page 16 |
|
Chapter 3 |
Page 23 |
|
Chapter 4 |
Page 30 |
|
Chapter 5 |
Page 41 |
|
Chapter 6 |
Page 46 |
|
Chapter 7 |
Page 53 |
|
Chapter 8 |
Page 59 |
|
Chapter 9 |
Page 68 |
|
Chapter 10 |
Page 76 |
|
Chapter 11 |
Page 81 |
|
Chapter 12 |
Page 91 |
|
List of Figures and Tables |
Page 101 |
|
Glossary of Terms |
Page 103 |
|
References / Citations |
Page 154 |
|
About The Author |
Page 160 |
Introduction
Quality - A subjective term for which each person or sector has its own definition. In technical usage, quality can have two meanings: 1. The characteristics of a product or service that bear on its ability to satisfy stated or implied needs; 2. a product or service free of deficiencies.i
Quality is a word, a theory, an idea, a system, an assumption and a sales tool. It can convey different thoughts to each person’s mind. Certainly, our individual definitions are as varied as opinions of style, fashion and taste. It is a small but important word, which bears more importance than most people realize.
It is interesting to note most people today cannot truly define quality when speaking of a management philosophy or a measurement tool. Quality is simply a Sales tagline or buzzword that is used to lure potential customers to the front door of a business.
I submit this question; “What does Quality truly mean to you?” Before you answer the question, I believe your response will probably be in line with your professional position.
A CEO may believe quality gives his / her company an edge over the competition. This may mean less customer complaints and greater customer satisfaction.
To some managers, it may simply mean once a month they must deal with pesky auditors and inspectors who simply rip through their departments and tell them what is being done wrong. The Sales Department may use the word quality to close a deal, win a contract or attract other customers.
The customer will surely have his or her own idea of quality, which may equate to not having to return a defective purchase or hassle with very much “service after the sale”. Perhaps it is the sole reason a customer is willing to pay more for your product than your competitor’s product. Being able to rely on receiving the same or a higher standard product or service during a purchase may obviously be a deciding factor.
So, how do you begin to develop quality? How do you create a system that customers will believe in and grow to trust? Is it enough to simply use the word quality in your advertising? Perhaps changing your web site and including the word quality more frequently will result in quality being seen through the customer’s eyes. Is it enough to ask employees to use the word quality as a new buzzword? Is quality something more elusive?
You may think of quality in this manner and you will quickly realize quality is not a coincidence or happenstance. Quality is the result of a long, difficult, sometimes confusing and resource- draining exercise that only true upper management skills can put into place and see to fruition.
Quality is not an accident. It requires money, time and other resources to put into place. It is a system that will, one day in the future, allow you to harvest a premium crop that will bring the customers to you.
When the economy is good, anyone can manage a business and have a favorable chance of earning a profit. The talented leaders stand out when the economy is bad and profits are hard to find. It is the foresight and a keen ability to believe in quality in the midst of company layoffs and downsizing. The system of quality requires the belief in the system and the knowledge that quality can and does contribute greatly to the company bottom line.
The reasoning behind this statement is simple: when the economy is bad, your customer has less money to spend. If the customer can consistently depend on your product and / or service, they are able to better budget their business.
Your customer may try your competitors but if their poor quality results in unexpected expenses (i. e. rework, product failure for their customers, etc.) they will not only come back to your company but will actually pay a higher price to ensure your product / service is always available to them in the future.
If your customer pays $10.00 less to your competitors and then spends $30.00 to fix the problems created, they would probably pay you $30.00 more to ensure no problems occur in the first place. Also remember, it is difficult to quantify customer loyalty, which may cost considerably more after damaging the business relationship with the customer.
Quality philosophies are also as varied as customers themselves. The common denominator is the perception the customer has of your approach to quality. If they know you are consistent in your application and you strive for continuous improvement and excellence, they are more likely to be understanding if and when a defect does occur.
As the saying goes, “Actions speak louder than words“. This truly applies when it comes to quality. If you strive for the minimum, your customers will know and may not be your customers much longer.
An organization that takes quality seriously in approach and application will begin to undergo a metamorphosis that will even surprise the management who put the system into place. Quality is truly a living presence that will take on a life of its own.
The quality principle must be ingrained from upper management, all the way down through the organization. Without this simple, yet critical element, there will never be a true quality system and you are paying the Quality Department to “pretend and play quality”. Management who has seen quality truly working rarely recedes into the “old way of thinking”. After seeing what quality can do, it is impossible for most to revert back to quality lip service.
Change is a constant that many people fear. For a quality system to exist, there must first be change. The way a person thinks and rationalizes situations must change when forming the quality base.
One must understand that failure is as viable a possibility as success. Either way, the organization will never be the same. It will either grow and flourish in the quality model or it will soon fail in the endeavor; probably destroying all its customer relationships during the failure.
Yet, some members of upper management are adamant in reinforcing quality and the continuous improvement initiative. They have experienced quality first hand and know it makes their job easier, more predictable and ultimately more profitable.
Upper management who uses Management By Financial Objective will value their yearly bonuses more that quality but without quality, their bonuses will end as they drive customers away. No amount of reassurance matters when you can’t fulfill your customers’ requirements. Without quality, you can not and will not meet the customer’s expectations and specifications with any degree of accuracy and consistency.
Other executives use quality to “hedge their bets” in a metaphorical way. In a world of changing business variables, quality is a constant that management can rely upon. No matter what the business or economic environment, the output of their processes remain strong, predictable and reliable. At the end of the day it is really about meeting the needs of the customer and without quality, you are relying upon luck instead of science. You will, statistically speaking, have a better chance of winning the lottery.
We will examine this phenomenon called Quality and explore the theory and application of the elements required to ensure success. It is within reason to expect some of the things presented herein to be dismissed by advocates of the “fly by the seat of their pants” management theory. These are usually the managers who destroyed the moral of their subordinates with distrust, bullying and deception. If the energy were better used for true management and quality integration measures, they would find a plethora of success in their business endeavors.
In the following pages you will find a roadmap to assist in leading your organization to success. We will begin with the basics, which some may find a waste of time however a building is constructed on a foundation or else it falls.
Quality is no different. If you skim over the basics, you will certainly find it difficult to understand the theory in the following pages. Many mangers claim to understand the human element but in reality, very few do. It is this human element that will prove to be the greatest challenge in creating a quality system. Throughout history, many armies have turned on their leaders and the corporate workforce is no different. The battle is won by the soldier, not the commander.
You cannot manage an organization without employees and you must truly be a student of psychology to understand the unpredictable variable that is the employee. Your management philosophy aside, if you misjudge and do not understand their needs, wants and motivations you will be setting yourself up for failure.
The basics of quality will lead to more advanced techniques and we will explore some of these areas as well. We are delving into a radical management theory and some of the material may seem a waste of time and energy. I remind you - it is not.
I urge you to consider all of the information and how it fits together in a puzzle - like manner. One element omitted during implementation and integration may have an adverse effect on the outcome of your quality pursuit.
“The significant problems we face cannot be solved at the same level of thinking we were at when we created them.” Albert Einstein
Chapter 1
The theory of business is fairly simple. You need to create a product or service, find someone who wants what you created and convince them to purchase the product / service you are selling. It is easy to explain, easy to understand and extremely hard to do. If it were easy, everyone would do it.
All businesses face this challenge. The elements of business are basically the same whether you are selling widgets or a variety of services that someone would see as a value to them. Money is spent to create, market, sell, deliver and guarantee the product or service.
It is surprising that quality is an after thought for some companies who believe a Quality Inspector at the end of an assembly line is all the quality management needed.
What is interesting to point out is the fact that once the product reaches the end of the assembly line, it is already complete and no amount of inspection will be able to fix the defects. By this time, the damage is already done.
The idea of adding quality into the last few process steps is really a holdover from the days when farmers planted seeds, tilled the ground and at a certain time, gathered the crop.
After reaping the harvest, the farmer would use a rudimentary quality process resembling modern day quality control. The need to “cull and grade” the harvest led to the “make it, then sort it” approach. This technique is still used in many inspection - based quality system initiatives.
There is a basic flaw in using this approach exclusively; quality will be an afterthought and not an integral part of creating the product or service. If you use this quality theory in your business, you must be prepared to “cull” the defectives, which cost as much to make as non-defectives but carry the additional cost of rework, lost materials, wasted resources and scrap costs. Just like the farmer, you may end up throwing away a large percentage of your output.
Craft workers were the first to realize they had some control over their processes and they began to take advantage of that knowledge. The manufacturing plant would make the same product day in and day out. The problem was consistency.
The output from the assembly line was so varied there was no way to say with any certainty that a specified percentage of the output would meet the customer’s specifications and standards.
This created a major problem for the manufacturer…especially when the customer imposed monetary sanctions on the manufacturer due to contractual nonperformance. If the contact called for one hundred defect-free widgets produced per day and the manufacturer could only provide seventy-five per day, the manufacturer would be required to drop their price per unit or pay a penalty.
At this point, quality began to be used to help determine why the output consistency fluctuated. Quality was then tasked with discovering the root cause and evaluating a corrective action. Quality was about to enter the business world and become a tool that could not only identify problems but would seek ways to make the operation run smoother, faster and more economical. This could never be achieved with only a “Quality Inspector”.
The idea of manufacturing huge numbers of products and sorting out the good ones was an expensive undertaking. The factories of the early 1900s began to see that money could be saved and more could be earned by lowering the number of defectives and the way to do that was simple yet complicated at the same time. Quality would need to be incorporated into the entire manufacturing process; from receiving the raw materials, to loading the product into a truck or train for final transport. All steps in between would require quality controls.
There would need to be a monitoring system, which could objectively verify the processes were working and the output from each process was consistent. The idea was if all processes are in control and outputs are consistent, the widget at the end of the assembly line would be of consistent quality because there would be no opportunity for a defect to occur.
Manufacturers became obsessed with consistency but the harder they tried, the more they failed. But how could the numerous in - control processes not yield a product free of any defects?
Enter variation.
Variation meant even while a process was in control and providing constant output, the process was still producing variations. The process was in control, but being in control and being variation - free are two separate things. If each process varied 2% and there were twenty processes needed to manufacture a product, you could say the amplified sum of the output was 40%. If your chances of waking up tomorrow are 40%, you might want to increase your life insurance coverage before going to bed. If the process output varied so much, there was no way to reasonably expect to lower the occurrence of defects.
Great strides in process control were made during World War II. The military needed huge amounts of materials and uniform products. If a grenade fuse was supposed to take five seconds to detonate and it detonated in only two seconds, there was more at stake than customer satisfaction.
Statistical Process Control (SPC)ii was used extensively during the war by engineers. Reliability Engineers focused on designs and practices to build quality into the product from the very beginning.
Elementary plotting charts gave way to more advanced statistical metric charts and the theory of “management by facts and data” was created.
Management was beginning to see that processes were “alive” in a certain sense and as such, could not be fully controlled and the variation completely removed. The challenge was to lower the variation to a point so it would no longer have an adverse effect on the process output. Since this was almost like foretelling the future, management again turned to the engineers for quality help.
Mathematics could almost foretell the future - at least a probability of occurrences. Predictions could be made by making assumptions of things which remained relatively stable and the Law of Averages could be used to gage certain outcomes. A process output is actually an outcome, so the principle could be applied.
Equally difficult was the management of the human element. Variation was always present when human interaction with the processes took place. The variation was totally unpredictable and huge fluctuations were always observed.
It was interesting to note that process output performance increased and variation decreased slightly in the short period of time prior to the employee’s payday.
The human element remains the most unpredictable force in the modern organization. Human resources void SPC charts when human interaction is present. Employees also represent one of the highest (if not the highest) risk to an organization. Payroll is often over fifty percent of an organization’s expense. Therefore, if we cannot predict or unequivocally control employees, there is only one option left. We must learn to “read and understand” the employee; their limitations, expectations and most of all, their motivations.
Without understanding the employee, the business will suffer greatly. Recognizing an employee can be an asset or a liability is one of the first steps the manager takes in becoming a leader.
Chapter 2
There are many things that motivate people. The difficulty faced by management is discovering what motivates the workforce. This is an age-old dilemma, which very few have mastered.
Some managers believe the workforce is motivated only by monetary means however, that is far from the truth. An employee must feel they are adequately and competitively compensated for their work, and they must earn enough money to pay their pecuniary obligations but here are many other variables to consider.
Managers should review the chart below (Figure 1). The ranking of work factors is quite surprising.
|
Factor |
Employee Rating |
Manager Rating |
|
Interesting Work |
1 |
5 |
|
Appreciation |
2 |
8 |
|
Involvement |
3 |
10 |
|
Job Security |
4 |
2 |
|
Compensation |
5 |
1 |
|
Promotion |
6 |
3 |
|
Working Conditions |
7 |
4 |
|
Loyalty to Employees |
8 |
7 |
|
Help with Problems |
9 |
9 |
|
Tactful Discipline |
10 |
6 |
Figure 1: Ranking of Work Factors
A manager must align their actions with the employee’s expectations. The manager who believes compensation is the most important factor may be simply “throwing money at the problem”.
This assumption can be very costly and may actually prove to be a detriment to the business. There must be more thought dedicated to how the manager intends to direct the workers to accomplish their goals. Money alone will not motivate the employee to give 110% to the manager’s agenda. So what can the manager do to further their plan?
Abraham Maslow’s Hierarchy of Needs (Figure 2) theory considers human motivation to be based upon a simple premise: Individuals are motivated toward lower-order needs until they are satisfied. Once satisfied, the individual is free to pursue higher-order needs until ultimately, their self-actualization needs are fulfilled. His idea was management should place more emphasis on the higher-order needs for employees.
Self-actualization allows the employee to achieve their full potential and creativity, independence and spontaneity. Individuals who operate in this cognitive “higher state” are the ones who can get things done the right way and in a timely manner. Alignment of their goals with the goals of the manager can be a win-win situation for manager, employee and company.
Observant managers can use this system to their benefit by adjusting the employee’s perception; showing the employee what is in it for them to align with the manager’s goals.
Once the goals are made common, the manager has not only directed the employee to the destination but has also motivated the employee to strive and work harder to achieve the objective.
Figure 2: Maslow’s Hierarchy of Needs
Theory X and Theory Y (Figure 3)iii are two dominant theories in industrial practice. They are readily recognized by most managers in the modern workplace. These theories are based on how managers view their employees and how they are treated for motivational and work related purposes.
|
Theory X |
Theory Y |
|
Dislikes Work |
Willing to Work |
|
Lacks Ambition |
Responsible |
|
Irresponsible |
Self Directed |
|
Will Not Change |
Has Self Control |
|
Follower |
Leader |
Figure 3: Comparison of Theory X and Theory Y
Douglas McGregor viewed management’s job as one in which working conditions are created so that individuals can establish and integrate goals with those organizations.
The basic statements of Theory X organizations are described as:
a. There is a critical, fault finding upper management;
b. Hostile relationships exist within and between departments;
c. Work rates emphasize the attainment of individual achievements;
d. Emphasis is placed on whom to blame if things go wrong;
e. An independent inspection group must be used to catch defects;
f. Workers are not consulted for work related improvements;
g. Workers do not care about the company, products produced or quality.
The basic statements of Theory Y organizations are described as:
a. Upper management empowers workers to improve the work process;
b. Supportive, professional and friendly relationships are clearly visible;
c. Employees share incentives and individuals are encouraged to become leaders;
d. Self inspections are used to discover, rectify and prevent future defects;
e. Continuous improvement begins with soliciting worker feedback and suggestions;
f. Workers truly care about the company, the product and take pride in the quality level of their respective department.
So, which organization do you feel is better, more productive and can help you - the manager - achieve your goals?
The truth is many companies are run as Theory Y organizations but all the indications point to a Theory X company in reality. Some managers may see Theory Y as being too relaxed or not getting as much productivity from the workforce. Some managers lack the business and psychological skills needed to make a Theory Y organization successful.
The truth is, Theory Y yields more productivity, creativity in solving problems and a more stable workforce. When employees are empowered, they take a vested personal interest in the output of a process.
Passionate workers begin to develop a skill set that they can use in any department in which they work. Since the outcome is “personal”, they are invested in not only doing their job but also ensuring they give as much of themselves as the task requires.
Imagine if one hundred workers were empowered and shared your drive to see your goals achieved. Does this sound like something you could use in your business?
Management must begin to understand the need to truly know what employees want from their organization in order to align their goals with that of management. Without that vital link, managers may find themselves in a position of “commander without an army“.
A person must admit there is a problem before a solution can be found and implemented. Ignoring a workforce problem will not make it go away. It will, in fact, become much worse and may ultimately cause a total breakdown of the system. The manager may indeed face this consequence.
How do you motivate the workforce? Why should an hourly - paid employee care about helping you, the manager, to meet your objectives and goals? What would inspire a worker to ensure your goals are accepted as his / her goals?
In one word: Motivation.
There are two types of motivation.
Intrinsic Motivation - the undertaking of an activity, as a hobby, without external incentive; also, personal satisfaction derived through self-initiated achievementiv
Extrinsic Motivation - motivation that comes from outside an individual. The motivating factors are external, or outside, rewards such as money or grades. These rewards provide satisfaction and pleasure that the task itself may not provide.v
However, there is more to it than simply motivation. The most motivated employee will soon become frustrated and give up without the other very important - mandatory - tools to succeed. An employee must have all the necessary items.
The first item is training. Without training, you are paying the employee for not doing their job. Without training, employees will soon fail in their positions. Failure, one or many occurrences, will force the employee to withdraw and begin to feel isolated and embarrassed about the failures of which they unnecessarily accept ownership.
The employee must have the tools to do the job. This sounds very elementary but in the corporate world, the problem does exist. Basic items such as reasonably speedy internet access, ergonomic chairs and other general office supplies may be overlooked by upper management disconnected from the reality of their worker ranks.
Third, employees must know if they are meeting the expectations of management in the performance of their jobs. This is measured, in most companies, through a performance review methodology. This is a valuable process that is often an opportunity wasted when management and the worker do not see the benefit of this important formal evaluation.
Chapter 3
What are the attributes that all great leaders possess? Notice, I said leaders and not managers. There is a difference. Let us begin by defining leadership and management.
Leadership: An essential part of a quality improvement effort. Organization leaders must establish a vision, communicate that vision to those in the organization and provide the tools and knowledge necessary to accomplish the vision.
Management: The act, manner, or practice of managing; handling, supervision, or controlling.
It must be acknowledged that “Every Leader is a Manager but not all Managers are Leaders”.
Leaders are those individuals who make an effort to better themselves in not only the areas of management but in the areas of human psychology and sociology. The leader knows how to manage but recognizes that managing is not enough to achieve his / her professional goals. The leader knows a title or position alone does not make a leader and wants to learn more about making their job easier; working smarter and not harder.