Introduction
Total quality management involves the management approach whereby, a firm’s long term success is dependent on customer satisfaction. This approach is for the customer focused organizations that build their strategies around ensuring that their customers are top priority. This is achieved by improving the quality of products, processes, services and the overall work culture. Total quality management uses strategies, effective communication, and data to ensure discipline that will lead to goal achievement.
The main elements of total quality management are strategic planning, effective communication, continual improvement; customer focused assessment and fact-based decision making as well as a process-centered integrated system that incorporates total employee involvement. These primary elements of total quality management are set as core values by organizations that strive for consistent profitability. Micro processes undertaken by firms translate to large processes that then lead to development of the firm (Ishikawa & Juran., 2014). Therefore, TQM is a quality metric that determines processes which lead to the success of an organization. Moreover, an organization must define its operational standards on any stipulated quality measure.
Various models are employed so as to implement total quality management in organizations. These include use of; a Balanced Scorecard, Malcolm Bridge National Quality Award, European Framework for Quality Management models. This paper explores these total quality management models, balanced scorecard specifically showing its principles, practical perspectives of the implementation depicting the pros and cons and also to what extent it is used in our region (Gibson, N.d). The paper will also touch on how information technology can be used to implement the model for effective total quality management. In a nutshell, this paper shall mainstream its focus on the precept of Balance Scorecard as a fundamental of Total Quality Management. Besides, various essentials of Balance Scorecard, its attributes with regards to the quality prospect of an organization, as well as the standards in which it defines for an organization to considered as quality complaisant.
Balanced Scorecard Appraoch of TQM
A balanced scorecard is a strategic planning and management tool that is used a lot in the industry, business, government and non-governmental organisations .It can also be viewed as a semi –standard structured report that is normally supported by automation tools as well as design methods used by managers to monitor how the staff executes activities, and the subsequent consequences of their actions. This tool is characterized by its focus on the organisations’ strategic agenda, the blend of the non financial and financial data items and also selection of a small number of data items that require monitoring.
The term balanced scorecard originated from Dr Kaplan and Norton’s article and they referred to it as a performance measurement framework that worked to add strategic non-financial performance measures that would provide managers and executives with a balanced showcase of the performance of their organisation (Wilhite, 2015).The balanced scorecard usually comprises of financial and internal perspectives offering a straight forward method to act as a link for collected metrics to achieve a stated organizational goal. It is viewed as one of the most powerful management tools that measures and targets development. It is meant to assist an organisation in the management of its future growth, plans and objectives. Its main purpose is to offer a measuring tool that the organisations can use to determine whether or not the goals set have been achieved.
The Balanced Scorecard model offers a non-financial metrics that is different from the financial metrics of goal assessment. The models can be simple or complex and this is dependent on the actual purpose of the company’s metrics. It has four main components, these include; the financial component that evaluates the growth of the company by determining its current position versus where it is expected to be at. Another component is learning and growth, whereby the corporate culture is introduced and implemented.
Internal business processes to improve the day to day running of the business, and lastly customer appeal and satisfaction. The balanced scorecard acts as a comprehensive yet systematic roadmap that can be followed by organisations as a way of translating their mission statements into a set of performance strategies. According to Kaplan and Norton, government enterprises should use customer perspective as the driving score card measure. They argue that tangible objectives have to define by every organisation for its customers and constituencies (Kaplan & Norton, 1996). Managers should determine which strategies are best suited in achieving customer and financial objectives.
The balanced scorecard model has four basic principles as drafted by Kaplan and Norton. These main principles have helped shape the quality management of organisations, as well as influencing new mindsets on the subject. These principles can however be tailored to suit the specific organisation that the balanced scorecard model is used on. The four principles are broad and are flexible enough to work for different business sectors.
The first principle is the financial perspective. This focuses on how the particular business is performing in terms of finances. It encompasses the profit targets and revenue of the commercial organisations while at the same time providing cost saving and budget targets for the non profit organisations. This shows that the model does not just propel growth and profitability but it also gives room for saving and ensuring the right use of resources helping stretch them to a maximum to reduce on losses. A businesses financial status should be at the top of things to be tracked by financial managers. Financial performance is normally dependent on how well the other three key principles are used.
The financial drivers of the business strategy should be considered to include revenue growth as well as a mix of investment strategies, productivity improvement and cost reduction. Although the traditional financial measures do tend to work there is a risk of not having an exact picture of what direction the organisation is taking and or end up with short term fixes instead of long term solutions. Kaplan and Norton argue that financial objectives are insufficient in measuring government agencies.
The second principle is the customer perspective. This principle focuses on how performance targets work in relation to the market and customers. It gives an analysis of customer growth, the service market as well as branding objectives and the market share. This principle includes measures to ensure customer satisfaction, boosting of service levels, net promoter scores and the market share and brand awareness (Marr, 2009). This is especially so for government organisations. Governmental organisations success is to be measured on their effectiveness and efficiency in satisfying needs of their constituencies. Their strategies and mission statements should be drafted around customer based objectives. There are five main measures ever organisation should place an emphasis on. These include; customer satisfaction, customer acquisition, customer retention, customer profitability and the market share (Kaplan & Norton, 1996).
The internal process perspective is the third balance scorecard principle. It places a focus on the internal operation goals covering objectives and how they relate to the key processes that are essential in delivering customer objectives. Organisations get to outline the internal business process strategies and goals, and this forces the organisation to put extra effort in achieving these. Some of the changes that organisations can make are capacity utilisation, improvement of processes and optimisation of quality. Managers have to determine which processes best serve their organisation based on which are more critical to achieve their customer and financial objectives. These principle prompt organisation leaders to identify entirely new ways of making their organization excel such that it will be able to meet its customers and financial objectives. The internal process perspective shapes customer requirements, it also determines tender effectiveness, quality service and safety and loss control. It is used in superior project management and it ensures perfect results.
The final yet equally important principle is the learning and growth perspective. This principle entails three main components; utilization of human capital, which includes skills talent and knowledge, information databases that are comprised of databases, network and overall infrastructure, the last component is organization capital which includes employee alignment, teamwork and knowledge management (Gibson).This acts as the infrastructure with which organizations can achieve their set goals according to the other three principles. This acts as the vehicle with which all the other three perspectives can be achieved. There are three main categories of learning and growth perspective. These include; information system capabilities, employee capabilities and motivation, and empowerment and alignment. These categories need to be invested so as to close the gap between the financial, internal business and customer objectives and the existent capabilities of the organization to achieve these goals. These principles need to be adapted to the particular field for it to work effectively. The main aim of this model is to enforce a customer driven culture in the industry that will ensure profitability in this sector. These principles governing the model may not be applicable to all sectors but are applicable to most.
Balanced Scorecard model is very applicable on a theoretical and practical level. The approach is very advantageous and this motivates the organization leaders to have a better understanding of the various aspects of performance. The advantages include; the balanced scorecard model usually puts into perspective the way forward for an organization to achieve profits in a simple way. This is usually done by having the organizations’ goals and objectives presented in a single chart and then broken down into relatable areas. This simplifies the translation of set goals making it easier to implement for the organization.
The balanced scorecard model serves as a drawing board that can be referred to on different occasions during company assessment. The other advantage is that it allows for companies to bridge the gap between the company’s mission statement and set goals and objectives as well as the daily running of the organization. The balanced scorecards aim of satisfying and pleasing customers can be linked to improvement of technical support performance. Besides, the balanced scorecard boosts innovation in organizations’ and improves process methods for example the Six Sigma and also lean manufacturing geared towards a corporate goal (Jackson, 2015). The model places importance on the voice of the customer. This creates customer satisfaction which translates to organizational growth. The other advantage is that the model fails to include some other methods of business reporting and improvement of processes. This is advantageous in that the six sigma projects are under learn and growth principle and they fall here naturally. The model acts to provide a visual mode of demonstrating the relationship between different goals and how they help achieve objectives. For example, an increase in sales profit results in successful achievement of the financial goal, whereas the achievement of customer goals is done through improved customer service that then results in increase in market size. The last advantage is that the balanced scorecard model is easy to translate and implement and it therefore does not require any special training for the organizations leaders to implement.
Although the model has proved to be very advantageous it is met by several short comings. These include; the model is very subjective in that it cannot be quantified unless through surveys or management opinion. The other disadvantage is that the model fails to include a direct financial analysis of the economic value and risk management. The goals set in the model may be easy to reach but quantifying still poses a great challenge (Niven, 2010). It can therefore, be viewed as a distraction from achieving actual goals.
In accordance with a recent study, the balanced scorecard model is among ten of the most used business model. The balanced scorecard model is not just limited to large companies, but it is also used by the small companies and 56% of companies that used the model had less than 500 employees (Jackson, 2015). According to statistics, 87% use of the model in organizations influences business action. This goes to show that this model is used extensively in the region and it has been adopted by most business organizations. This is because of the many advantages that the model offers for the organizations it is implemented in.
The focus areas to be considered when implementing this model would be in training funds that are budgeted for by the finance department. By improving the quality of the training offered by organization, it means that the service will also be improved and this will result in better customer service. Another point of focus would be a reevaluation of short term objectives and long term objectives. The performance measures will be drafted in such a way that the short term goals can automatically become long term goals by building on the short term goals slowly over time. The application of balanced scorecard entails evaluation of financial measures and non financial measures.
The balanced scorecard model covers non-financial measures and these help to ensure that the organization runs smoothly in an all rounded way ensuring product improvement and customer profitability and satisfaction. The balanced scorecard model is a system of strategy measurement; it is not a measure of the organizations strategy, and therefore, helps to focus in various areas. The tool can be implemented in various company projects first as a trial program and then it can be expanded as time passes.
Sales growth is also another focus area, although as a manager new ideas may spring up the use of traditional methods may hinder it from developing accordingly this is where the need for the balanced scorecard model arises. The modern information technology can support the implementation of such tool in that computer programs such as BSC software have been developed for companies and it creates a simpler more easily interpreted model that can be used by untrained personelle.29% of the balanced scorecard model used software’s such as the one above instead of creating one manually on Microsoft office.
References
Gibson, D. B. (n.d.). Putting the balanced scorecard to work. Harvard business review .
Ishikawa, K., & Juran., J. M. (2014). Total Quality Management (TQM). ASQ .
Jackson, T. (2015). Top 10 companies using the BSC. clear point strategy .
Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard. Harvard business school press.
Marr, B. (2009). Balanced Scorecard: The Four Perspectives. Advanced performance institute .
Niven, P. R. (2010). Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results. John Wiley and Sons.
Wilhite, T. (2015). Balanced Scorecard. Hub pages .
