Relationship of Hard TQM, Soft TQM with Organizational Performance - Assignment Example

Partha kar Academia-Research, Inc Total Quality Management 20 February 2007 Relationship of Hard TQM, Soft TQM with Organisational Performance: Summary: It was profoundly believed that Hard TQM was responsible to a greater percentage in evaluating organisational performance and I do not say that holds false. However Soft TQM indirectly affects an organisation's performance through its effect on hard TQM elements. Analysis of 261 Australian manufacturing companies revealed significant positive relationships between soft TQM and hard TQM elements. In addition to direct affects, soft TQM also has an indirect affect on performance through its effect on hard TQM. Introduction: Empirical studies which have examined the relationship between the Total Quality Management (TQM) and organisational performance have investigated the impact of each dimension of TQM on performance separately (Powell, 1995; Dow et al., 1999; Samson and Terziovski, 1999; Rahman, 2001). TQM is viewed in two ways. The first approach conceptualizes TQM as a limited set of technical tools(such as statistical process control and Pareto analysis) while the second approach views TQM as part of broader changes to human resource (HR) practices. Soft TQM corresponds to human factors like commitment, team work and so on which contributes to organisational performance. It plays dual roles. One is to create an environment where seamless diffusion and implementation of hard TQM can take place, and the other is to directly affect organisation's performance in the same way that traditional human resource management (HRM) practices impact organizations. (Ahire et al. 1996). Hard TQM tools tend to be more profound in companies that adopt strategies to increase stakeholder commitment and incorporate the views of employees in decision making processes. It views the organization on the whole as a system. It can be concluded that soft TQM will affect elements of hard TQM, in addition to having a direct impact on performance. In this study Organisational performance is expressed using seven variables used by (Samson and Terziovski, 1999) amongst six variables of soft TQM used by (Dow et al. 1999) and the four elements of hard TQM adopted by (Power et al, 2001). TQM influences organisation's performance in the following ways: 1. Direct effect of soft TQM on organisation's performance: Three (executive commitment, open organization and employee empowerment) of 12 soft TQM factors correlate to corporate performance (Powel, 1995). Again 3 (workforce commitment, shared vision and customer locus) of 9 factors influence corporate performance (Dow et, 1999). 2. Indirect effect of soft TQM on organisation's performance: Here soft TQM influences hard TQM for performance. A blend is required as attention to process, product and information technology may yield quality improvements, but ultimately it is 'people that make quality happen' (Bowen, 1992). Executives appear to understand that employee motivation, education and corporate culture all have an important role to play in efforts to improve quality, even if they are uncertain about how HR-based quality improvements can be implemented in practice (Bowen & Hart). 3. Direct effect of Hard TQM on corporate performance: Hard TQM contemplates in stressing continuous improvement and treat organization as total systems (Sitkin et al, 1994). For instance, product and process benchmarking has resulted in optimal product design and process cost reduction at companies such as Ford, Motorola, Xerox and General Motors (Main and Templin, 1992). Brief Description of areas investigated: A total of 3000 Australian manufacturing sites were surveyed of which 962 sites responded, yielding a response rate of 32 percent. A telephone survey of 108 non-respondents was conducted after the main survey, and no evidence of non-response bias was found (AMC, 1994). Since the survey instrument consisted of a large number of questions (a total of 260), the results of the survey were also tested for respondent fatigue. It was found that the length and complexity of the survey instrument did not seriously affect the quality of the responses (AMC, 1994). The various areas investigated were: Operational Dimensions of Soft TQM: Soft TQM dimensions were adopted from study by Dow (Dow et al,1999). A total of 25 items were identified as soft TQM practices. These items were grouped into six elements & coefficient alpha were calculated for each element. The reliability coefficient (Cronbach's alpha) of the elements ranged between 0.70 (Co-operative supplier relations) and 0.84 (Workforce Commitment). The alpha values indicate that each dimension is a sufficiently reliable measure(Nunnally, 1967). Operational Dimensions of Hard TQM: The items used by Dow (Dow et al, 1999) to identify hard TQM practices were considered to be too narrow. Hard TQM items were therefore adopted from study by Power (Power et al, 2001). A total of 13 items were identified as indicators of hard TQM practices. These items were grouped into four elements and coefficient alpha was calculated for each. The reliability alpha values of the elements ranged between 0.55 (Technology utilization) and 0.86 (Computer-based technologies). The alpha value of 0.55 for the technology utilization scale is considered low, but it was left intact on the basis of its construct and face validity. Operational Measures of Organisational Performance: The items related to organisational performance were adopted from (Samson and Terziovski, 1999). This construct has seven items and was considered to be more comprehensive than the four items used in the study by (Dow et al, 1999). These items are shown in Table 1 (See figure 1). Simple regression and hierarchical regression analysis was used in the analysis. Key learning points: The above analyses have shown the following: Soft TQM have got direct effects on organisational performance. Both Technology utilization and Continuous improvement enablers are significantly related to five out of six Soft TQM elements and Use of JIT principles is related to four out of six soft TQM elements. Computer-based Figure 1: Items related to organisational Performance technologies have a significant correlation only with Personnel training. Thus proving that soft TQM indirectly influences hard TQM. Both Dew and Powell have found the dimensions of hard TQM to be weakly related or unrelated to performance. Critical analysis and discussion: The results of this study suggest that in general, the elements of soft TQM are significantly related to the measures of organisational performance. Five out of six soft TQM elements have a positive liaison with organisational performance. These are Workforce commitment, Shared vision, Customer focus, Use of teams, and Cooperative supplier relations. Most importantly what does matter when selecting between soft and hard TQM is the nature of the organization and its available resources to be managed. Three out of four elements of hard TQM--Use of JIT principles, Technology utilization, and Continuous improvement enablers--have significant relationships with all six soft TQM elements. Practical implementations: In addition to the direct impact of soft TQM elements on performance, soft TQM indirectly affects performance through hard TQM elements. Soft TQM elements affect Continuous improvement enablers, which in turn affects three measures of performance such as Customer satisfaction, Productivity, and Delivery in full. This pattern of direct impact on Continuous improvement enablers and indirect impact on three measures of performance was observed for five of the six soft TQM elements. This pattern was observed for all performance measures with the exception of Customer focus. Workforce commitment, Shared vision, and Cooperative supplier relations affect three out of four hard TQM elements (Use of JIT principles, Technology utilization, and Continuous improvement enablers). Each one of these in turn affects the Productivity performance measure. Elements of soft TQM affect Use of JIT principles, which in turn affects Employee morale, Productivity, Warranty cost, and Cost of Quality. This was observed for four of the six elements of soft TQM, with the exception of Use of teams and Personnel training. Workforce commitment, Shared vision, Customer focus, and Cooperative supplier relations have a direct impact on Use of JIT principles and Technology utilization which in turn affects Cost of quality. Conclusion: In practice both the soft and hard TQM techniques are exercised based on the availability of resources of an organization and its focus towards the customers. A manufacturing company is more focused on supplier relations than a service organization. The type of organization to a large extent influences the type of TQM to be implemented or the priority of the TQM types to be attached importance. Recommendations: The main findings of this research are relevant to both quality management researchers and practicing managers. For researchers the paper presents an alternative methodology to assess not only the direct impacts of soft and hard TQM on performance, but the indirect impact of soft TQM on performance via hard TQM elements. This corresponds to calls made by Powell for the use of alternative methodologies in research on quality management. For practicing managers, this study, like those of Dew et al., Powell and Samson and Terziovski, suggests that soft TQM elements affect organisational performance. In addition, this study provides evidence that certain hard TQM elements have a significant effect on performance and suggests that for hard TQM to impact performance, it is essential that such hard elements are supported by the elements of soft TQM. References Ahire, L. .S., Golhar, D. Y. and Waller, M. A.,1996, Development and validation of TQM implementation constructs, Decision Sciences, 27,1, 23-56. AMC (Australian Manufacturing Council), 1994, Leading the Way: A study of best Manufacturing Practices in Australia and New Zealand, Melbourne. Bowen, D. and Lawler, L.,1992, Total quality-oriented human resource management, Organisational Dynamics, 24, 4, 39-41. Dow, D., Samson, D. and Ford, S.,1999, Exploding the myth: do all quality management practices contribute to superior quality performance, Production and Operations Management, 8,1, 1-27. Ergas H, Wright M. Internationalisation, firm conduct and productivity. In: Lowe P, Dwyer J, editors. Proceedings of the 1994 Conference on International Integration of the Australian Economy, Reserve Bank of Australia, Sydney. Hart, M. and Schlesinger, J.,1991, "Total quality management and human resource professional", Human Resource Management, 30, 4, 433-454. Nunnaally, J. C., 1967, Psychometric Theory, McGraw-Hill, NY. Power, D. J., Amrik, S. S. and Rahman, S.,2001, Critical success factors in agile supply chain management, International Journal of Physical Distribution and Logistics Management, 31,4, 247-265. Powell, T. C.,1995, Total quality management as competitive advantage: a review and empirical study, Strategic Management Journal, 16,1, 15-37. Rahman, S. 2001, A comparative study of TQM practice and organisational performance of SMEs with and without ISO 9000 certification, International Journal of Quality and Reliability Management, 18,1, 35-49. Samson, D., and Terzioski, M.,1999, The relationship between total quality management and operational performance, Journal of Operations Management, 17, 393-409. Sitkin, S. B., Sutcliffe, K. M., and Schroeder, R. G.,1994, Distinguishing control from learning in total quality management: a contingency perspective, Academy of Management Journal, 19,3, 537-564. Read More