Total Quality Management (TQM): Improve Processes & Keep Customers Happy | Process Street | Checklist, Workflow and SOP Software

What caused the global financial crash in 2008?

Failures of AIG, Lehman, Merrill, and other major financial firms? Disproportionate risk-taking by banks and lenders? Deregulation within the financial industry? Development of new ways to finance mortgage products? Excessive lending and borrowing in the housing market?

Yes, yes, yes, yes, and yes.

However, these causes only tell half the story behind the financial meltdown that morphed into the biggest global recession since the Great Depression (Covid-19 aside).

What was the root cause? The real reason behind the enormous cost to the economies of many countries and the lost fortunes of millions of families?

A lack of total quality management (TQM).

Paul Moore, former head of group regulatory risk at HBOS (part of the Lloyds Banking Group since 2009), dubbed this crisis as ‘the biggest quality failure of all time.’

Total quality management stems from the belief that mistakes can be avoided if everyone is behind the continual process of detecting, reducing, and eliminating errors.

If organizations from within the financial sector believed in putting quality first, and positioned culture and people above profit margins and structure, the events leading up to the crisis could have been avoided.

Just imagine how different things might have been had the financial sector been managing their quality in a similar way to ISO 9001!

We’ll continue to explore this concept later but, before we do, let’s look at what else we’ll cover in this Process Street post:

Let’s get going!

What is total quality management (TQM)?

Quality is the pursuit of excellence. It’s striving to be the best we can be. Quality determines our customers’ happiness. It defines who our competitors are and it’s the biggest driver of success for any business.

Therfore, investing in a quality management system (QMS) is a no brainer. Right?

“93% of organizations agree that the implementation of a quality management system … was a significant driver of success” – Why is Quality so Important in Business Today, ISO Update

So which QMS should you implement? ISO 9001? The Deming Cycle? Six Sigma, PDSA, the Poka-Yoke method (yes, that is a legitimate quality management concept), or total quality management (TQM)?

As this post is all about total quality management, you can probably guess which system I’m about to recommend.

(Not that there’s anything wrong with the other quality management systems. All of them are based on sound, quality management principles, and we’ve written about all of them).

Total quality management is based on the belief that an organization can build long-term growth and success if all its members, from the low-level workers to the high-ranking executives, continually focus on improving quality.

“All members of an organization participate in improving processes, products, services, and the culture in which they work” – What is total quality management?, ASQ

To help us understand the concept better, let’s examine each part individually:

• “Total” implies that all employees in the organization, from the CEO down to the shop floor workers, are obligated to improve operations.
• “Quality’’ describes the culture, attitude, and organization of a company that strives to provide customers with products and services that satisfy their needs.
• “Management” insinuates that this methodology should be a focused effort. Leadership should provide funding, training, staffing, and clearly defined goals to actively manage the continuous improvement of the production of these goods and services.

To put it in its simplest form, TQM is all about:

To make sure you are ‘doing the right things, right the first time, every time’, the TQM framework places great emphasis on companies having solid processes in place to reduce errors.

Having solid processes in place means that the root cause of mistakes can be identified, the repetition of these errors can be prevented, and the quality can be improved, simply by changing the process.

Ok, straplines and expert quotes are all well and good, but the only way we can truly understand what TQM is, is to look at where it came from.

Where did total quality management come from?

The origins of total quality management can be traced back to the 1920s when Walter Shewhart developed the ‘Shewhart cycle’ – a statistical control chart that measures quality.

This quality assurance method is referred to nowadays as the Deming Cycle, or PDCA model, because it was upgraded by management consultant William Deming following World War I.

During the war, Deming was quick to spot that large-scale manufacturing efforts often produced poor quality products. He developed the idea that a variation in the production process would inevitably lead to a variation in the end product. This led him to conclude that if all variations in the process were removed, it would lead to a better, higher quality end product.

And so, a new set of methods that addressed quality were created.

Fast-forward to post-World War II, when the industrial manufacturers in Japan, impressed with Deming’s work, invited him over to train their engineers in quality processes.

Thanks to Deming, quality control soon became an integral part of Japanese manufacturing. He taught and lectured on the basics of statistical quality control while adding in his own ideas, including his belief that ordinary workers had a role to play in the control and management of quality.

This concept caught on, and during the 1950s and 60s it grew and grew, until it evolved into what we know today as total quality management.

By the 1970s everyone, from the top senior managers down to the bottom shop floor workers, in most Japanese manufacturing firms, was adopting total quality management wholeheartedly. The quality of products was starting to rise and the costs of production were beginning to drop.

Quality control was now seen as a company-wide practice.

During the global recession of the late ’70s and early ’80s, the United States (and the rest of the world) faced stiff competition from Japan. The Japanese had captured the world automotive and electronics markets because they had found a way to produce high-quality goods at lower prices.

As a result, corporations in the U.S. looked closely at the quality of Japanese goods and services and tried to find ways to improve their own production methods and recover their lost market share.

Their end solution? The adoption of total quality management.

So that’s how, where, and why TQM began, but who uses it? Is it only for the big, industrial manufacturers?

Well, I think you’ll be surprised.

Who uses total quality management?

Contrary to popular belief, TQM does not only apply to manufacturing companies.

Granted, the concept of total quality management did originate in manufacturing, and in the United States, 14% of manufacturing firms use TQM. However, its principles can be applied to a variety of industries such as banking, finance, and medicine.

“There are a number of evolutionary strands, with different sectors creating their own versions from the common ancestor” – Khurram Hashmi, Introduction And Implementation Of Total Quality Management (TQM)

Although the likes of Ford Motor Company, SGL Carbon, and Toyota Motor Company incorporate TQM practices and processes into their production lines, companies such as Motorola, ExxonMobil, and Xerox also use it to support the continuous improvement of the quality of their products.

In fact, Process Street, a state-of-the-art business process management (BPM) software company, even uses TQM practices to continuously improve quality. I’ll go into more depth on this later.

So what is it about TQM that makes it work in most organizations and adapt to most industries?

It’s five core principles.

Total quality management’s 5 core principles

As with most management methods and techniques, the implementation of TQM will vary from company to company.

The core principles will always remain the same.

“The principles of TQM… derive from the simple idea that the processes necessary for the production of given goods and services should be determined by the functional requirements of the ultimate customer. In turn, contributors to the process are coordinated by directly communicating their requirements to the other contributors on whom they are dependent in a series of customer-supplier relationships” – Shammas-Toma et al, Research gate

In other words, the principles of total quality management center around the customer, quality of work, mutual respect, and teamwork.

Let’s take a look at these five core principles.

TQM principle #1: Focus on the customer

Your customers determine the level of quality of your products or services.

It’s your customers that will decide if the effort you put into making sure your product or service satisfies their needs was worthwhile or not.

If your customers are happy with your efforts, they’ll not only pay for your product or service, they’ll spread the word and come back for more.

If they’re not happy, they won’t.

It’s as simple as that.

The first TQM principle is all about understanding your customers and aligning your organizational objectives with their needs and expectations.

Research your customers. Communicate in the right way with them. Measure their satisfaction levels, and use the results to find ways to improve your products, services, and customer experiences.

Get to know your customers and put them at the center of all your TQM processes.

TQM principle #2: Encourage total employee commitment

“You can’t increase productivity, processes, or sales without the total commitment of all employees” – 8 Total Quality Management Principles to Improve Processes, Lucidchart

Total quality management aims to hold all parties involved in the production of goods or services accountable for the overall quality of the final product or service.

How do you do that?

Well, if you were asked for your opinion on how the company should improve, grow, and achieve its goals, how would you feel?

I’d feel trusted, respected, and completely committed to that company and its goals.

If you felt like that, what would that make you want to do for your company?

Work harder and achieve more.

So, get everyone involved. Encourage people to have a say and express their thoughts and opinions. Make them feel appreciated and let them know that they’re an important part of the organization.

Help them to understand the TQM concept. Educate and train them to implement quality in everything they do.

“Everyone must understand the vision, mission, and guiding principles as well as the quality policies, objectives, and critical processes of the organization” – What is Total Quality Management, ASQ

TQM principle #3: Focus on the process

This is my favorite TQM principle because ‘focus on the process’ is, word for word, one of Process Street’s core values.

From the creation of content for the blog to the design and build of new product features, you name it, we have a process for it.

Processes ensure that the the right action is taken at the right time, by the right people, to guarantee consistency, boost productivity, and make sure nothing gets missed.

All our processes are placed in the spotlight and we’re all encouraged to ‘focus on the process’.

Although mistakes can be made by people, most mistakes are caused by faulty systems and processes. If we’re constantly ‘focused on the process’, mistakes can be spotted, quickly resolved, and further errors prevented by changing the process.

TQM principle #4: Continuously look for improvements

The fourth TQM principle requires organizations to continuously look for ways to improve processes and adapt products and services as customer needs shift.

It’s an extension of the ‘focus on the process’ principle and is based on the idea that small, ongoing changes can improve the quality of products and services over the long-term.

The pathway to successful continuous improvement is centered around the use of data and effective communication from everyone within the comapny.

Let me tell you a story about how the content team at Process Street continuously looks for improvements (while focusing on the process).

I’d just finished my latest post (Checklist Dashboard: The Best Way to Keep Track of Your Team with Process Street – which I thoroughly recommend you read by the way!) and submitted it to my editor, Ben.

We have a pre-publish process checklist for making sure we write high-quality content that people like you will enjoy and get some benefit from. We work through all the tasks in the checklist each time we write a new post.

It looks a bit like this Blog Pre-Publish Checklist.

So, I’d completed the pre-publish process checklist and felt happy that my post was in good shape. It was now over to Ben, who would give it a final once over before hitting the publish button.

Within twenty minutes, I’d received a message from Ben.

All was not well.

The 25 screenshot images I’d painstakingly taken, edited, saved, uploaded, and added to my post to demonstrate how the checklist dashboard worked, all needed to be re-done.

I’d unwittingly taken these screenshots within my personal Process Street account.

Big mistake.

As the newest member of the content team, I didn’t know any different. I had no idea that there was a special account, set up specifically for tasks like this, that I should’ve used to take my screenshots.

It wasn’t included in the pre-publish process checklist and no one had told me.

If I’d thought about it, I should’ve realized that taking screenshots using my own account probably wasn’t the smartest thing to do but, hey-ho, I didn’t. As a result, I had to re-do all 25 images.

It wasn’t an arduous task and it didn’t take me long to re-do, but it was something that I felt should’ve been included in the process, especially for newbies like me.

So I mentioned it to Ben and we changed it. Instantly!

I will never make that mistake again, and neither will any new team members.

See! We really are continuously improving (while focusing on the process)!

TQM principle #5: Make fact-based decisions

I’m the most indecisive person you will ever meet. I struggle to make decisions about everything. What to have for dinner, when to take my dog out, what music to listen to, what to work on next.

When I was growing up, my struggle to make decisions often led me to make rushed, panicked decisions, which usually ended up being the wrong ones.

To help me with this, my Dad used to say:

“Don’t make a decision until you have all the facts” – My Dad, My Dad’s Book of Wise Words

This little nugget of advice has helped me through some of the toughest decisions I’ve ever had to make.

I’m still indecisive. But instead of panicking, I try to focus on using the information that’s available to make better decisions.

This principle applies to companies using TQM.

Analysis and data lead to informed decisions. Informed decisions lead to better processes and happier customers. So make decisions based on the facts, in addition to your experience and intuition.

There you have it; the five core principles of TQM.

Now we know what TQM is and what it involves, it’s time to revisit the financial crash to find out why organizations should implement it.

TQM’s benefits (& how it might’ve stopped the financial crisis)

To help me explain why organizations need a system like TQM to help prevent mistakes, improve quality and keep their customers happy, let’s take a deeper look at the part TQM should have played in the prevention of the global financial crisis of 2008.

“There’s little room in a contemporary, fast-paced business environment for firms whose leaders don’t subscribe to ambitions of bigger factories, healthier accounts, and stronger turnarounds” – European CEO, Total Quality Management: Three Case Studies from Around the World

True.

Yet, all too often, tales of excess go hand-in-hand with stories of a severe drop in quality.

This is exactly what happened with the global financial crash.

Unscrupulous Wall Street bankers, laissez-faire regulators, and greedy credit rating agencies and investors changed the financial industry forever.

It all began when the Glass-Steagall legislation was revoked, giving banks the green light to engage in higher-risk business.

A fairly inconsequential event at this stage, but just you wait.

When interest rates dropped, following the dot-com boom, everything started to spiral. Asset managers became desperate to find new ways to make money so they turned to new, high-yield, mortgage-backed securities.

These mortgage-backed securities were ‘safe-as-houses’ according to the credit rating agencies.

The “innovative” mortgage-backed securities were packaged, sliced, repackaged, insured, and sold, as quickly as possible to an assortment of hungry investors and subprime borrowers.

This meant that even the worst loans could find a buyer.

The banks and financial organizations weren’t concerned about the quality of the loan, or whether it was suitable for the borrower. They were only concerned with the amount they could sell.

Volume began to matter much, much more than quality.

“Inevitably, this became a market in which the participants—mortgage brokers, lenders, and Wall Street firms—had a greater stake in the number of mortgages signed up and sold than in their quality” – Financial crisis, Govinfo

Christopher Cruise, a corporate educator that trained loan officers to sell these new mortgage products to “unsophisticated and unsuspecting borrowers“, admits that he “knew that we could be writing crap”, but business was booming.

A whopping 40% of the underlying mortgages that were re-packaged into a security and sold by the Bank of America did not even meet the bank’s own underwriting standards!

These new mortgage products were thriving, and so were the number of new borrowers.

Investors were buying two, three, or four properties with little or no money, and homeowners were able to refinance their houses, regardless of whether they could afford to repay the loans.

“Systemic risks emerged, yet went undetected or unaddressed for some time and then created great havoc” – The Global Financial Crisis, The BRC

The fun had to stop sometime. And when it did stop, my word did it stop.

People were crowding into banks and loan offices, desperately trying to seek help to deal with the loans and mortgages they couldn’t afford to pay.

Property prices started to fall, leading to a collapse in the values of the assets held by many financial institutions and it pushed the world’s banking system towards the edge of collapse.

With complex financial organizations to run, a loosening of industry regulations, and an increasing pressure to make more money, it’s easy to see why some of the biggest banks CEOs sacrificed quality for quantity.

If only these CEO’s had integrated a system of total quality management into their organizations.

Processes could’ve been created to force greedy banks and their employees to put the customer at the center of all their endeavors, instead of their own money-making agendas. If they’d followed the TQM framework they could’ve looked at the data, seen that borrowers weren’t suitable for loans, and improved the product so it was more appropriate for their customers.

Who knows? If a TQM system had been in place, the whole catastrophe might never have happened.

On that note, let’s recap. We know what TQM is. We know where it came from and who can use it. We know why organizations should use it, and we know what the key principles behind the concept are. All that remains, is for me to tell you how to use TQM in your organization.

To do that, I’ll need a little help from a company that I may have previously mentioned?

Create and use a TQM framework with Process Street!

Process Street is super-powered checklists. You can create a process for everything using our intuitive, easy to use platform.

Watch this quick video to get an idea about who we are and what we do:

Not only can you create templates and run individual checklists from those templates to manage all your recurring tasks, but you can integrate with thousands of Apps through Zapier, webhooks, or API integration to automate your workflows.

Watch this webinar for tips on how to ramp up your automation to create efficiencies and boost your productivity levels:

How can you use TQM with Process Street?

As you may have gathered, Process Street is all about processes. Taking each of the five principles we went through earlier, I’ve included examples of the types of processes you could build, in Process Street, to help you implement TQM principles into your organization successfully.

Processes for focusing on the customer

To put the customer at the center of everything you do, you could create a process to manage your customer relationships and include tasks that encourage employees to research and understand your customer’s needs and expectations.

Why not create a process that ensures you and your staff communicate with your customers in the right way? Or you could build a process that measures customer satisfaction. Like this Customer Feedback Survey Process for example.

If you’re already a Process Street member, jump straight into the template and start using it. If you don’t have an account yet, get started for free.

Processes for encouraging total employee engagement

To involve all your employees in continually improving your products and services, create an environment where they can openly discuss problems and suggest ways to solve them.

Try creating a process like this Employee Relations Template. This will allow them to take ownership of their work, assess their own skills, communicate their ideas to the entire company, share their thoughts, and express their opinions in an open, transparent forum.

It’s a great way to encourage people to continually seek opportunities to learn and move into other roles to increase their knowledge, competence, and experience.

Processes for focusing on the process

To create new processes or to analyze and measure your current processes to see where improvements can be made, try creating a process like this Process Pre-publish Checklist.

It’s a fantastic way to create and document a process, to make sure it’s standardized with your other templates, and to assess its effectiveness.

Processes for ensuring continuous improvement

You can create a process that continuously looks for ways to improve your products or services. Like this Usability Testing Template, for example.

This process allows you to recognize where improvements could be made and it encourages company-wide input, to improve the product, process, and development.

Or, you could create a training plan process, like this Training Plan Template, that will push people to learn and take on new and additional roles so they can keep improving.

Processes for making fact-based decisions

To make sure your decisions are based on facts, create a process for collecting and analyzing data to help inform these decisions. For instance you could create a Gap Analysis Template that identifies what resources you need against what resources you already have.

Give it a try:

You can use any of the above processes as they are, or you can customize them by using these features to make them fit into your organization.

Also, before I leave you to it, check out these TQM related articles.

Articles related to total quality management

And there you have it; How to improve your processes and keep your customers happy with total quality management.

“Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction, and skillful execution; it represents the wise choice of many alternatives” – William A. Foster, Quotes

Do you use total quality management principles within your company? Let us know about your experience in the comments. Who knows? You may even get featured in an upcoming article!