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CEO Perceptions of Total Quality Management

CEO Perceptions of Total Quality Management

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Published by jessiepham
The chief executives of 49 member companies in Total Quality Management
Institute (Australia) were surveyed regarding their perceptions of the effects of the
Total Quality Management (TQM) processes in their companies.
Average costs associated with implementing TQM were reported as steady
over time, at around 0.5% of sales, while the average value of the benefits gained
was around 2% of sales, giving an average benefit to cost ratio of 4:1. Just under
30% of the respondents indicated that TQM had resulted in a culture change in
their company. About a quarter reported increased customer focus and
satisfaction, and improved productivity, competitiveness and profits. Significant
numbers also reported increased workloads and time commitment, and a high
need for training.
Many executives commented that implementing the TQM philosophy was
difficult and that they needed to actively lead and drive the process. Many also
commented that TQM is a central philosophy which is basic to all aspects of
company operations.
The chief executives of 49 member companies in Total Quality Management
Institute (Australia) were surveyed regarding their perceptions of the effects of the
Total Quality Management (TQM) processes in their companies.
Average costs associated with implementing TQM were reported as steady
over time, at around 0.5% of sales, while the average value of the benefits gained
was around 2% of sales, giving an average benefit to cost ratio of 4:1. Just under
30% of the respondents indicated that TQM had resulted in a culture change in
their company. About a quarter reported increased customer focus and
satisfaction, and improved productivity, competitiveness and profits. Significant
numbers also reported increased workloads and time commitment, and a high
need for training.
Many executives commented that implementing the TQM philosophy was
difficult and that they needed to actively lead and drive the process. Many also
commented that TQM is a central philosophy which is basic to all aspects of
company operations.

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4
The View from the Top: Chief Executives’Perceptions of Total Quality Management
by
Tom Fisher †
 Abstract:
The chief executives of 49 member companies in Total Quality Managemen Institute (Australia) were surveyed regarding their perceptions of the effects of theTotal Quality Management (
TQM 
) processes in their companies. Average costs associated with implementing
TQM 
were reported as steadyover time, at around 0.5% of sales, while the average value of the benefits gained was around 2% of sales, giving an average benefit to cost ratio of 4:1. Just under 30% of the respondents indicated that 
TQM 
had resulted in a culture change intheir company. About a quarter reported increased customer focus ansatisfaction, and improved productivity, competitiveness and profits. Significant numbers also reported increased workloads and time commitment, and a highneed for training. Many executives commented that implementing the
TQM 
philosophy wasdifficult and that they needed to actively lead and drive the process. Many alsocommented that 
TQM 
is a central philosophy which is basic to all aspects of company operations.
 Keywords:
TOTAL QUALITY MANAGEMENT; TQM; QUALITY; PRODUCTIVITY.
School of Management, University of Technology, Sydney,
PO
Box 123,Broadway
NSW
2007.
 Australian Journal of Management, 18, 2, December 1993,
©
The University of New South Wales
- 181 -
 
 AUSTRALIAN JOURNAL OF MANAGEMENT December 1993
1. Introduction
T
he Total Quality Management (
TQM
) approach to running organisations hasbeen used by some Australian companies for ten years or more, and by someorganisations overseas for much longer. The commercial success of manyJapanese companies is often attributed, at least in part, to the
TQM
approach.Private groups in Australia such as Enterprise Australia and the Total QualityManagement Institute (
TQMI
), now amalgamated into the Australian QualityCouncil, and Government groups such as the National Industry Extension Service(
NIES
), are actively promoting
TQM
to Australian private and public sectorenterprises and many organisations have taken up this challenge.It is far from clear, however, whether
TQM
has been effective in providingsignificant benefits to those organisations which have adopted this approach. Pastresearch on some Australian companies has not identified performanceimprovements which could be directly attributed to their
TQM
processes (Fisher1992), and other observers and researchers have expressed doubts about
TQM
’seffectiveness (
 Economist 
1992). There are, however, many enthusiastic supportersof 
TQM
who believe it is the only way for Australian companies to developinternational competitiveness, and there are numerous case studies indicating that
TQM
has resulted in beneficial change in organisations.
1
The
TQMI
agreed to support a research project aimed at determining theeffects of 
TQM
on organisations actively pursuing this approach to management. Itwas decided to survey
TQMI
member companies in the private sector and to seek feedback from the chief executives of these companies on their experiences withand impressions of 
TQM
within their organisations. A questionnaire wasdeveloped and posted to all of the 218
TQMI
member companies which wereprivate sector manufacturing and service organisations, not including qualityconsultants. Replies were received from 59 companies in total, 49 of whichprovided usable responses (22%).
2. Objectives of the Survey
I
n general terms, the main objective was to obtain the views of those persons incommercial organisations who have the responsibility and accountability for theoverall performance of their organisations, that is, chief executive officers (
CEO
s).The survey group was deliberately restricted to
TQMI
member companies on thebasis that these companies’ membership of 
TQMI
indicated a level of commitmentto the
TQM
philosophy. The responses of these committed companieschief executives would, it was thought, provide a baseline of opinions of those companyleaders genuinely attempting to implement the
TQM
philosophies and techniques.
______________1. See, for example, Clarke, Chapman and Sloan (1992) and Glover (1992).
- 182 -
 
Vol.18, No.2 Fisher: TOTAL QUALITY MANAGEMEN
The specific survey objectives were to determine:1. the
CEO
s’ expectations of the
TQM
process, in terms of both costs andbenefits, and the timing of those benefits;2. their perceptions of the actual costs incurred, the benefits gained, and thetiming of these benefits, resulting from the
TQM
process;3. the effects of 
TQM
on the activities of the
CEO
s;4. the
CEO
sviews on the
TQM
process and its application in theirorganisations; and,5. their views on
TQM
’s importance relative to other busines strategies.This survey was specifically designed to seek the views of chief executives aboutwhat was happening in their companies. Accordingly, terms such as
TQM
, costand benefits associated with
TQM
, and the timing of achievement of benefits were
not 
defined but were left to the
CEO
s to interpret in their own context. It was takenfor granted that these executives had a basic understanding of these issues becauseof their company’s membership of the
TQMI
. The results of this survey, therefore,represent the reported perceptions of the
CEO
s—not absolute determinations of thecosts, times and benefits associated with their companies’
TQM
processes.
3. Method
A
questionnaire was developed with the above objectives in mind. Many of thequestions were designed for easy responses and simple analysis usingnumbered multiple choice answers, and some questions were open-ended to allowrespondents to use their own words. The questionnaire was posted to the chief executives of the 218
TQMI
member companies which were commercial businessenterprises. Public sector organisations and management and quality consultantswere deliberately excluded so as to limit the responses to companies which arecompeting in the normal commercial world, but which don’t have particularexpertise in
TQM
as would be the case for quality consultants. The survey wasconducted between May and October 1991.The responses were analysed by simple frequency tallies for the numericalresponse questions and content analysis for the open ended questions. Someanalyses were also carried out to determine differences in responses betweenvarious categories of companies for some questions. These categories and thenumber of companies in each category were as follows:
service (6) versus manufacturing (43);
Australian public companies (6) versus subsidiaries and divisions (25)versus private companies (16);
small [less than 101 employees (9)] versus medium [100 to 500 employees(20)] versus large [more than 500 employees (17)] companies;- 183 -

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