EFQM Excellence Model and Radar Logic - Essay Example

EFQM Excellence Model and Radar Logic Executive Summary The EFQM model of management is a milestone in modern management because of its relevance its application in organizations. The model is designed to assist organizations to conduct self-assessment activities and strengthen their structural operations at all times. The model is divided into enablers and results section that drive excellence. This exercise focuses on the divided into four parts namely background information, discussions for the aspect of the model, real life application of a bank and proper recommendations for the case study. The fundamental objective for the study is highlighting the effectiveness of the model in the actual business scenario. Further, the paper will discuss the significance of the model which is the practical and objective approach to make operations of a company better. The challenges and critique on the model which include the fact that mathematical details are not inclusive will be highlighted. Since this is a secondary report, the main methods used to compile the report were library study and internet research. A case study of Mr. Smith, a customer with Executive Bank PLC who lost valuables will be the basis of focus on how EFQM can be a turnaround tool. The findings on the case exposed the lack of proper communication by the operations and customer care department. The report recommends that the company should carry out systematic checks on its operations and adopt a continuous improvement of systems. Secondly, proper staff and communication channels are recommended to avoid any future problem. Table of Contents Executive Summary Introduction EFQM: Background Information Principles Value addition to the customer Creating sustainability Developing an organizational capability Harnessing creativity and innovation. Vision, integrity and inspiration Possessing agility Managing talent Continuous results Purpose of EFQM Significance Challenges and criticism of EFQM Case study: Executive Bank PLC. Gold Card Protection Service Possible Causes of the Problem EFQM Solutions for the Gold Card Protection Service Developing an operational network Redesigning of the operations of the card service Prioritize issues Use of the EFQM Concept as an exemplification of the above Solutions Use of The Radar System Conclusion Recommendations References Further sources Introduction It is the objective of each organization or firm to offer quality services and satisfy all interested stakeholders. Many models have been created to measure and control the performances of these firms at specified periods according to Afuah and Tucci (2003, p9). As effective as they may be, each of the models has been found to have a considerable degree of limitations. The most effective of these models ought to have three qualities that can be of use by the management and employees namely innovation, collaboration and cooperation. It is obvious that service delivery executed at the highest level does not only satisfy a customer, it also motivates the employee to work better and give better results. The EFQM or European Framework for Quality management incorporates the three qualities that can harness these desired results in the service sectors such as banking and insurance. The model was launched in 1991 on the platform of eight fundamental concepts of quality management. With over 30,000 small and large organizations applying its principles, EFQM has proved to be not only reliable but also an effective framework of management. This exercise focuses on EFQM principles and their significance, its critique and its application relates to a bank namely, Executive Bank PLC. EFQM: Background Information After the great depression of the 1930’s and the emergence of new markets, organizations in America began to look for new ways of doing business. This was mostly motivated by the drive to do business in an effective and efficient manner. Research activities in various institutions were ongoing on the aspect of incorporating leadership, strategy and resources in business. Total quality management (TQM) principles were being incorporated to the private sector which Ahire (1997, p6-20) talks about intensely. By the end of 1970’s the face of management was being altered since more focus was made towards production and customer service. This was however, without an important part of the commerce process namely the employee or workforce. This was the beginning of conceptualization of EFQM model that took into consideration the aspect of all enablers and results. EFQM was modeled in Belgium by 14 CEOs of companies drawn from various sectors of the economy who included executives from Phillips, Nestle and Volkswagen companies. They came up with an eight principled model that sought to address the addition of the value and achievement of excellence in companies. The principles are to be addressed in the next segment but can be summarized to include people, strategy, creativity, innovation and services with the main objective of the best results. The model is designed to be a self assessment tool for small and medium enterprises as well as the larger corporations in all sectors. Despite the concept being originally modeled for the private sector, various governmental and public institutions have found the model to be extremely effective (Anand. and Tatikonda, 22). This is because the enablers that include people, strategy and processes are able to provide results that include customer and resource oriented results. Coupled with support from the management of the people involved, the staff can provide the best in terms of customer care. Despite these, some management analysts have faulted the model based on various aspects such as that it may be hard for organizations to adapt because it may be complicated and expensive. Secondly, the model may be tricky for social organizations such as NGO’s and other charitable organizations. The following segments will address principles purposes and significance of EFQM in detail. Thereafter, the case study of Executive Bank PLC will be used to highlight a real life experience on the model. Principles As hinted above, the model works with a framework of 5 enablers and four result areas. These enablers include strategy, people, partnership of resources and processes, product and services. The results section of EFQM includes factors such as Society results, customer results, people, results and key results. These four elements are directly related to the enablers hence they are a subset of the enablers of the model. On the same breath, this model operates under eight dynamic principles or concepts which organizations can apply in their excellence mode. Each of them is distinct but at the same time related to the rest of the principles. Value addition to the customer The contact of the business and its customer is the product or service which is on offer by the organization according to Crosby, (1989, p16). Customers no longer look at the price or quality of goods or service anymore, but they tend to look at the value of their money. EFQM advocates for an understanding, anticipating and urge to constantly fulfill the customer’s need and expectation. Creating sustainability Organizations have long-term objectives and aspirations hence strive to have a future that is sustainable. One EFQM principle is that organizations ought to have a positive impact on the social, environmental and economic space around their customers for a sustainable future. Developing an organizational capability The ability of an organization to handle change within its operational boundaries reflects its excellence. Organizational capability is the aspect where the firm can handle its affairs efficiently with the desired effect. Harnessing creativity and innovation. Creativity of a firm is vital in a business because it is able to provide solutions to challenges. In addition to this, innovation gives way to continuous improvement and total quality management. Vision, integrity and inspiration This principle directly touches on leadership of firms. Leaders with integrity and vision can steer their firms to higher levels and create a platform for better performances. Inspiration by leaders creates motivation to workers in both the short and long run. Possessing agility EFQM advocates for alertness by leaders in the business environment. Because of competition that is normally experienced by today’s business, managers must identify opportunities which are current and long term and utilize them. Managing talent One responsibility of managers is to identify the strengths of people and maximize their input to the organizations. EFQM model specifies that a stable HRM department in any firm is a key area to help develop firm outputs. Continuous results The model advocates for a sustainable results over both the short and long-term perspective. This means that the management has an obligation to keep positive results inside at all times of the business’ existence. Purpose of EFQM As an organizational performance model, EFQM is designed to help or assist firms to conduct self-assessment activities and understand their position at all times. This is achieved in four major ways according to the creators of this performance model. First, the model helps managers to identify strengths and weaknesses in all areas of operations. This enables maintenance of those strengths while seeking to improve on the weaknesses that may be present (Weill and Vitale , 2001, 10). Secondly, the model integrates, tools procedures and processes that enable effective in the business. Integration creates a room for development and eliminates wastage. EFQM is a model that stimulates ideas and advocates for innovative solutions as already stated above. This is the fundamental aspect of EFQM in its mandate as a self assessment tool of management. Lastly, EFQM is a result oriented model of excellence. The two divisions of the model reflect the purposes of enablers with the end objective as results. The results process ought to be faster but extremely effective. Ultimately, EFQM is tailor made to suit the organization’s abilities to progress to higher grounds. Significance Provision of quality of services and products in any firm is the ultimate objective of management. The EFQM models provide an alternative of harnessing the resources at the disposal of a firm and channel the strengths for better performance. The significance of the application of this model is that proper solutions in a positive manner are incorporated in the firm's operation. For instance, the radar system of the model is designed to create a frank approach and plan for the sake of getting desired results. The benefits that EFQM provides therefore include the fact that, all the operations of the firm are interlinked and perform work in tandem with the common goal of achieving results. Each stakeholder therefore has the duties responsibilities as well as rights and benefit that are derived from the model. The European market is in new pressures to keep up with the increasing demand for better service provision for its customers. Through this, managers need a more integrated approach to keep up the challenge something that the EFQM model provides. Challenges and criticism of EFQM The main criticism of the mode is that it does not address any remedy for permanent organization limitations. For instance, if there is poor management or incompetent managers, EFQM does not address how to rectify the fault rather, it only assumes that management is competent at all times. Secondly, there are assumptions, especially because there is little or no use of mathematical approval as Derek and Richards (1) expound in their publication. Although this aspect was deliberate for the sake of simplification, the model sometimes may lack precision in measuring the result or effect. However, the model is effective and has provided quantifiable results among people who apply the model. The following sections look at a real life scenario of applying the EFQM model. Case study: Executive Bank PLC. Gold Card Protection Service Discussion for the Problem in the Case Study The card service by Executive Bank PLC aims at giving cover to cards held by international travellers. As part of its offer, the protection scheme gives the holder of the card cover worth $1000 dollars against loss or misuse of the funds that may be in the card. This service is packaged to attract premium travellers who have a high margin of expenditure. However, one factor about such travellers is the limited time on schedule which they normally have. The bank has advertised this service and managed to package it in a very attractive manner hence a raised customer expectation. In this scenario, Mr. Smith was a victim of card theft and loss of his important valuables including cash. Being a rational customer, Smith reported the matter within the acceptable time limit and disclosed all that was required. However, delays and miscommunication exposed some of operational faults and weaknesses that the service providers could have been experiencing. These faults are based on the core service operations as well as the basic service operations within the company’s service. Possible Causes of the Problem Poor Communication- The service provides a promise that a 24 hour call service is available at all times. In addition to this, there is a provision that a single call cancellation call to cancel all cards upon request by the client. Mr Smith had notified the company customer care as per the required frame of time. Therefore he was qualified for all compensation due to his notification to the company. One can note that there was a breakdown of communication since the Gold card arrived within two days while the Standard Cash Line Card took longer and had not been fully attended when the customer was making his complaint. Poor communication between the personnel and departments is an error which customers can easily notice. The EFQM model identifies services and processes as some of the enablers for customer satisfaction results. In this case, James, probably the customer affairs personnel was not conversant with the steps of operation. Despite his timely apologies and follow-ups, he failed to tell the customer about the due process of going about the recovery of the card. Despite the marketing catch of promptness and on-the spot service, there was failure of the service to live to the client’s expectations. The recovery process is lengthy and broken into unexplainable pieces. For instance, the replacement of the Standard Cashline card must be ordered by the customer and not any other party, including the bank. This information is not disclosed to the customer upfront meaning that delays may highly inconvenience the users. This brings into focus the product in question and the ability of the customers to believe the value of their money. Matter of fact, Mr. Smith insinuates that he fails to understand the rationale of paying large amounts of annual charge when the promptness promised is not delivered. This is a service issue which can be solved by clarity of direction in the process of resolving problems. Executive Bank PLC may be having excellent products which can greatly make the customers happy. However, a breakdown in any of the important structures may lead to poor consumer rating and eventual losses. EFQM can resolve the discrepancy that the customer experiences in three aspects. First, is through addressing the gaps which are clear within the customer service area, those within the personnel matters and those that the management can solve. EFQM Solutions for the Gold Card Protection Service Developing an operational network Ineffective communication may be as a result of incompetent staff, poor infrastructure and other internal factors according to Hamel (2000, 19). However, to a large extent this may be brought about by poor networking amongst operational departments. The operations department of Standard Bank ought to be linked with the Executive PLC. Bank because they offer similar and complementing products. Mr. Smith lost valuable which were in offer by the two institutions. The fact that The Gold Card was ordered and delivered while the Cash line card was not, shows that operational networking was lacking. Secondly, there EFQM addresses the issue of quality gaps management and gives solutions to ways of addressing such discrepancies (Gordijn, 2002, 98). Communication and interpretation gaps make customer expectations to flaw. Sometimes a customer such as Mr. Smith who has a busy work schedule finds it hard to follow something that would take few minutes to address correctly if operations were to function correctly. Networking by operations saves time, energy and customer apathy. Redesigning of the operations of the card service The incident shows that the service is not as efficient as the marketers would want to communicate to the consumers. Marketers can actively participate in getting the message to the consumer with the best tactics. However, if the service does not match the expectations of the client, there is a danger of losing the effort put in place by the salesman as Hamel (1) notes. From the explanation by Mr. Smith, the bank does not have a card centre where all matters are solved promptly. Issues of re-ordering, replacement and card cancellation are very critical to all card holders. Operations of the card service can be restructured by the management if possible. Prioritize issues One of the fundamentals of EFQM is to increase the capability and the general arrangement of the organization. In line with this, card service is a matter of urgency because clients use the funds constantly. Recovery and restoration of such matters is not only a professional objective but also a personal one. It is not fair for the client to stay without funds for too long hence a priority for their issues ought to be given the desired attention. Research Lastly, errors and discrepancies are bound to happen in line of service delivery. Proper research activities ought to be employed to obtain information about possible weaknesses on the matters of delivery (Hendricks & Singhal, 1996, 22). This therefore means that the company can carry out competitor analysis and know how some of them cope with similar problems. Use of the EFQM Concept as an exemplification of the above Solutions Enablers (50%) Results (50%) kkkfkj Innovation and learning As the diagram exemplifies, leadership is the fundamental enabler for excellence. This aspect drives all the other 8 concepts to reach the key results. Leadership harnesses people strategy and partnership to work well with the available processes. In the case of Gold Card solution, the management should staff competent human resource who understands the procedures and policies of the card system. Networking in the firm as well as with people outside the firm makes it possible for work to be done. This is coupled with research and proper system balance. The results for this are reflected from the reaction of the customer, service and the society at large through which innovation and learning is boosted. Use of The Radar System It provides an assessment which is truthful and without bias. Divided into four aspects, the system takes into consideration planning and development, systematic deployment of apprioaches, assessment of these approaches as well as an audit of the result (Schroeder, 2001, 60).The case of Gold Card Protection service can be serviced well by use of this system. A different communication and gap filling method should be applied by having a one stop shop for customer service. Conclusion The study has focused on the dynamics of the EFQM model as a framework for quality assessment. This model for excellence includes every stakeholder in the firm for performance. Management contributes a tenth of the whole equation. One case of Mr. Smith’s inconvenience may pass as trivial yet important to the performance of the company in the long run. The solutions of EFQM include proper research, establishment of research of issues and a general redesigning of the card process. This translates to partnership, innovation policy and people as the direct criterion for success. The model is effective although not efficient because of the diversification of the departments involved. Recommendations About 30,000 SME companies globally use this model. The first recommendation for first time user companies of the EFQM model is to redesign their operational structure and clarify their channels of communication. Secondly proper personnel and human resource with relevant skills should be engaged in executing the idea. As already hinted above, Executive Bank PLC should link its decision making channels to all departments. Communication lapse for on the case of Mr. Smith caused the discontent which he suffered in the due process of recovery. Executive Bank PLC should establish a quality framework that keeps the service delivery and consistent feedback from its operations. In other words, constant feedback and improvement which EFQM advocates should be in place. In order to avoid future problems such as the scenario of Mr. Smith, Executive Bank PLC should have a system that prioritizes urgent and non-urgent manner. This should be linked to customer care and operations department. The long-term benefit of the company using the EFQM model is the continuous assessment and the clarity in service and profit chain. Secondly the cost effectiveness will benefit the company in the long run. Anand and Tatikonda (2010, p78) observe that using an excellence model such as EFQM cuts up to 11% of the total cost in the long run References Afuah, A and Tucci C, 2003 Internet Business Models and Strategies, McGraw Hill, Boston Ahire, S. L. 1997, Management Science- Total Quality Management interfaces: An integrative framework. Model Interfaces journal 27 (6) p 100 Anand, G., P. and Tatikonda. M V, 2010. ‘Role of explicit and tacit knowledge in six sigma project’. Journal of Operations Management 28 (4) p 135 Crosby, P B. 1989. Let's Talk Quality: 96 Questions You Always Wanted to ask Phil Crosby (1st McGraw-Hill. London Derek, M and Richards D. Reasons for Not Using EFQM, 2010. Viewed 13 April 2013 http://www.ddexcellence.com/Downloads/Reasons_or_excuses_2010.pdf Hamel, G, 2000, Leading the revolution, Boston, Harvard Business School Press Hendricks K & Singhal, V, 1996 Quality Awards and the Market Value of the Firm: Management Science, 42(3). 43 J. Gordijn, 2002 Value-based Requirements Engineering - Exploring Innovative e-Commerce Ideas, Vrije Universities, Amsterdam, George, G., 2012 Models of opportunity: How entrepreneurs design firms to achieve the unexpected Bock, AJ. Cambridge University Press Padhi N, The Eight Elements of TQM web 2010. Viewed on http://www.isixsigma.com/methodology/total-quality-management-tqm/eight-elements-tqm/ Schroeder R G, 2001. Relationships between implementation of TQM, JIT, and TPM and manufacturing performance, Journal of Operations Management 19 (6) 675-694 Weill, P and Vitale M. R 2001, Place to space: Migrating to eBusiness Models. Boston, Harvard Business School Press, 2001. Further sources Tuchi, C 2001, Internet Business Models and Strategies, Boston, McGraw Hill, Lamb, R, B 1984, Competitive strategic management, Prentice-Hall, New Jersey Selznick, P 1957 Leadership in Administration: A Sociological Interpretation, Row, Peterson, Evanston. Buzzell, R. and Gale, B 1987. The PIMS Principles: Linking Strategy to Performance, Free Press, New York Hamel, G. & Prahalad, C.K, 1989 “Strategic Intent”, Harvard Business Review, 6 (89) p19-27 Kearney, A.T. 1982 Total Quality Management: A business process perspective, Kearney Preen Inc, Watson city Kotter, J, 1982 The general manager, Free Press, New York, 1982. Zaleznik, A 1989, The Managerial Mystique, Harper and Row, New York Farnham, D. and S. Horton, Managing the New Public Services, 2nd New York: Macmillan, 1996, p. 56. Pascal, R, 1990 Managing on the Edge, Simon and Schuster, New York Markides, C, 1999 “A dynamic view of strategy” Sloan Management Review, vol 40(1), p67 Mintzberg, H 1973 The Nature of Managerial Work, Harper and Row, New York, p 38. Watson, P. 2000, ‘Applying the European Foundation for Quality Management (EFQM) Model’, Journal of the Association of Building Engineers Vol. 75 (4), p 18-20 Hillman, G. P. 1994) ‘Making Self-assessment Success’, Total Quality Management, 6(3), p 29-31 Read More