Omega, Int. J. Mgmt Sci. Vol. 24, No. 1, pp.

83-106, 1996
Pergamon Copyright © 1996 Elsevier Science Ltd
0305-0483(95)00055-0 Printed in Great Britain. All rights reserved
0305-0483/96 $15.00 + 0.00

Total Quality Management in SMEs

A GHOBADIAN

DN GALLEAR

Middlesex University Business School, L o n d o n , U K

(Received February 1995; accepted in revised form November 1995)

Small and medium size enterprises (SMEs) are the life blood of modem economies. That they should
remain competitive and produce high quality outputs is of importance not only at the macro level hut
also to larger organizations, because SMEs are often suppliers of goods and services to larger
organizations and lack of product quality would adversely affect the competitive ability of the larger
organizations. Total Quality Management (TQM) is considered an important quality improvement
tool. Compared with large organizations, SMEs have been slow to adopt TQM. This paper initially
examines the differences between the characteristics of SMEs and large organizations; the relationship
between the size of organization and inherent characteristics of TQM; and the effect of organization
size on the implementation of TQM using deductive research. These issues are further examined
through inductive research. For this purpose the development of TQM was studied in four
small-medium size organizations.

Key words--total quality management, implementation, SME, culture, organizational change

INTRODUCTION and broader variations in the business environ-

THE GLOBALIZATIONOF markets, growing inter-
penetration of economies, and increased inter-
dependence of economic agents are reshaping
the international and national competitive
environment. These fundamental changes are
prompting the far sighted organizations to
re-examine and modify their competitive strat-
egies. Small and medium sized enterprises
(SMEs) are not exempt from these pressures.
Drihlon et al. [10] argued that improving
competitiveness is now an imperative for small
and large businesses alike. To survive and
prosper in the 90s and beyond all businesses
need to establish mechanisms enabling them to
exert conscious and sustained effort to continu-
ously improve all facets of their operations. The
continuous improvement effort needs to be
coupled with an acute awareness of changes in
customers' requirements; competitive factors;
83
ment. In an increasingly competitive market-
place businesses with a strong continuous
improvement culture and external focus are
more likely to survive and prosper. Total
Quality Management (TQM) is considered an
important catalyst in this context. This is why
the TQM concept has captured the attention of
all sides of commerce and industry, as well as
that of politicians and academics. The large
number of articles being published in this area
is a testimony to the high level of interest in
quality issues. A recent search of the relevant
databases showed that more than 900 articles
dealing with a facet of TQM have been
published in the last 3 years.
The published empirical data supports the
supposition that by focusing on quality, a
business can substantially increase its market
share and profitability. Phillips et al. [29]
showed that perceived quality and profitability
84 Ghobadian, Gallear--Total Quality Management
were positively correlated. This led them to
conclude that in the long-run the relative
perceived quality of an organizations' products
or services relative to its competitors is the most
important single factor affecting its perform-
ance. A quality edge boosts performance in two
ways. In the short-term, superior quality yields
increased profitability via premium pricing. In
the long-term, superior or improving quality
should result in increased market share. Higher
volumes of output lead to improved scale
economies that in turn should result in lower
operating costs. Thus, the investment required
to improve quality is normally off-set over a
relatively short period of time. Gale et al. [12]
empirically showed that higher relative quality
and market share lead to substantially higher
return on sales. Peters [27], using empirical
evidence collected by Garvin, showed that
improved quality reduced operational costs.
There is also empirical evidence clearly indicat-
ing that customers are willing to pay a premium
price for better quality products [30]. Peters and
Austin [28] concluded that winning medium
sized companies competed on the value of their
products or services and usually enjoyed
premium prices. They achieved this position by
consistently satisfying customers' needs and
meeting or exceeding their perceived quality
expectations. Oakland [23] reported the results
of a study that compared the performance of 29
companies practising TQM, along seven key
financial indicators for a 5 year period, with the
corresponding industry medians. This study
showed that the performance of all the
companies that had adopted TQM exceeded
their respective industry's median performance.
Governments also recognize the link between
relative superior quality and competitiveness.
For example, the UK Government in its
consultative document entitled 'A National
Strategy for Quality' [1] identified quality as the
most important non-price determinants of
competitiveness. A DTI publication of the UK
Government's Department of Trade and Indus-
try [2] stated that the battle for survival is being
waged and won by the companies wielding the
quality weapon to the best effect. To improve
the quality and therefore the competitive
q986 for twelve member states: Belgium, Denmark, West
Germany, Greece, Spain, France, Ireland, Italy,
Luxcmbourg, Netherlands, Portugal, United Kingdom.
performance of commerce and industry, the US
Government through an act of Congress
introduced the Baldrige Award. Similarly, the
European Quality Award (EQA) and the British
Quality Award (BQA) were established with the
help and assistance of the European Commis-
sion (EC) and the UK Government respectively.
The evidence presented above shows the
competitive importance of relative superior
quality. Moreover, it was briefly argued that the
TQM concept has been successfully used to
achieve this end. Now we turn our attention to
examining the importance of SMEs (businesses
employing fewer than 500 people) to the UK's
and European Union's economy. SMEs domi-
nate the industrial and commercial infrastruc-
ture, e.g. 93% of UK companies employ fewer
than 500 people and 60% fewer than 100
people. They are the major source of employ-
ment. For example, SMEs employ 65%
companies with less than 100 people employ
47% of the total workforce. Micro (fewer than
10 employees) and small (10-99 employees)
enterprises have an equal share with medium
sized (100-499 employees) enterprises of the
distribution of sales in all non-primary sectors.
Together they account for 60% of all sales in
these sectors. Figure 1 shows the percentage of
gross output of UK manufacturing firms by size
for 1991. Significantly, 32% of the gross output
is generated by firms with fewer than 500
employees.
In the European Union (EU) 1 the number of
enterprises (excluding the primary sector enter-
prises) is estimated to be around 13.4 million,
employing some 92.4 million people. Small and
medium sized enterprises constituted 8.6 per
cent of all enterprises. In the manufacturing
sector they constituted 16.9% of all manufac-
turing enterprises, while in the service sector
they constituted 6.9% of all service enterprises.
NO.Employees I G r o s s Output %
1-99
100-499
500-4999
5000-19999
20000 & over
5 10 15 20 25 30 35
Source : The Gus.~lian, MLy 3 1994.
Fig. I. UK manufacturing gross output by size.

Micro enterprises constituted 91.4% of all
enterprises, 82.7% of manufacturing enter-
prises, and 93.8% of service enterprises [25].
Perhaps more significantly, of the total number
of employees in the EU 45% were employed by
SMEs, 26.9% were employed by micro enter-
prises, with the remaining 28.1% employed by
large organizations [25]. These statistics are
summarized in Table 1.
The economic importance of SMEs is not
restricted to the UK or the EU. The
predominance of small businesses in the
Japanese economy is well documented. About
75% of manufacturing employment in Japan is
in small and medium-sized companies, in
contrast to about 35% in the United States. [19].
It was recently reported that roughly 355,000
US manufacturers with fewer than 500 em-
ployees are responsible for approx. 46% of
the value added by the US's manufacturing
sector.
SMEs are considered to be the main source of
new jobs. Studies conducted in the US and other
empirical data supports this proposition. For
example, between 1980 and 1986, manufactur-
ing employment at companies with 500 or more
employees declined by 10.8%, a loss of nearly
1.8 million jobs. However, during the same
period, manufacturers employing fewer than
100 workers recruited 326,000 additional
people--an increase of 7.5% [19]. The vitality of
SMEs has been a major factor in the creation of
new jobs and the economic renewal of certain
regions in Europe, such as the 'third' Italy
(Emilia-Romagna, Tuscany, Venezia) or the
Western region of Jutland in Denmark [10]. In
the UK private sector, even when employment
was falling during the recent recession, small
firms were still net creators of jobs----employ-
ment in small firms grew by 350,000 between
1989 and 1991 [4].
Table l. Euro-12--Comparative distribution of enterprises and
employment 1986
No. of employees Micro (0-9) SMEs (10-499) Large (+500)
ENTERPRISES (%) (%)
Total 91.34 8.56
Manufacturing 82.7 16.91
Construction 91,28 8,68
Services 93.83 6.92
EMPLOYMENT
Total 26.89 45.02
Manufacturing 11.14 45.95
Construction 39.53 50.75
Services 34.75 43.44
Source EC-Directorate General XXIII [25].
OM E 24,1 ~ 3
Omega, Vol. 24, No. 1 85
Organizations competing in an increasingly
global market, independent of size or industrial
sector, are reliant on SMEs to provide
sub-contracting facilities [25]. In particular,
large organizations tend to rely heavily on
subcontractors, and the current trend of
focusing on core activities is likely to further
polarize the situation. Therefore, large organiz-
ations are normally dependent on a network of
suppliers, most of which will be small firms. For
example, in the UK 50% of sales in the
manufacturing sector are generated through
subcontracting. In order to improve product
quality and implement TQM programmes, the
large organizations must be assured of obtain-
ing high quality goods and services from small
and medium sized suppliers. Hence, there is a
need for SMEs to meet the required quality
standards. Moreover, competition means that if
a small firm wants to become a supplier to a
large organization, the increasing demand for
quality by the latter puts strong pressure on the
former to consider the application of TQM.
Thus, it is logical for the large organizations
to encourage the diffusion of TQM among
their suppliers [22]. Correspondingly, a small
organization cannot produce or create high
quality goods or services if the quality of its
inputs is inadequate. Establishing links with
suppliers permits interchange of information
and enables the vendors to meet the purchasers'
required quality standards more readily and
consistently.
The TQM concept can potentially play a
significant role in this process. It provides the
basis for a systematic approach to establishing
customers' needs and requirements. Moreover,
it will help to create an environment favourable
to forging a strong cooperative link between
vendors and purchasers; and to improve the
effectiveness of communication between the two
parties [4].
Large organizations, so far, have been more
active in embracing the TQM principles.
However, smaller organizations with limited
(%) resources can equally apply the TQM principles
0.1
0.39
with measurable success, and without undue
0.04 expense [36]. Malcolm Baldrige Award winners
0.06
Globe Metallurgical Inc., Marlow Industries,
28.1 and Granite Rock Company, and European
42,91
9.9
Quality Award recipient MiUiken, have been
21.82 prominent in setting the standards for quality
achievement in recent years. If this is not a
86 Ghobadian, Gallear--Total Quality Management
powerful enough message to SMEs then it is
important to note that according to the US
Commerce Department, in 1991 out of a total
of 106 Baldrige applicants, 47 were small
businesses [26].
Yet, despite the importance of TQM, SMEs
in the UK have been slow to implement the
concept. For example, information from 115
manufacturing organizations showed that by
comparison large organizations were three times
more likely to implement TQM [16]. To
compete more effectively SMEs need to heed the
quality message. However, prevalence of TQM
in SMEs has wider importance. It will
significantly help the quality improvement
efforts of the larger organizations.
Five key propositions emerge from the
arguments put forward so far. One, a relatively
high level of quality is a key factor in the
attainment of a superior competitive position.
Two, TQM concepts facilitate the attainment of
sustainable high goods or services quality.
Three, a buoyant SME sector is vital for
economic prosperity. Four, SMEs can improve
their competitive position by embracing TQM
concepts. Five, the success of quality improve-
ment efforts of larger organizations will
crucially depend on the realization of the quality
improvement of their suppliers which are often
SMEs. The stance of this paper is, broadly, to
accept the truth of these propositions.
The objectives of this paper are 2-fold: first,
to establish a conceptual framework f o r
examining the link between the inherent
characteristics of TQM and SMEs, and the
effect of size on the implementation process; and
second, through field research to examine the
relevance of the issues identified in the first part
of the paper. Therefore, the paper is divided into
two distinct but interrelated parts. In the first
part, through deductive research, the differences
between the characteristics of SMEs and large
organizations are examined. This provides the
foundation to examine the impact of size on the
implementation process and to identify the size
dependent inherent characteristics of TQM. The
likelihood of the success of a TQM programme
is significantly affected by the implementation
process. Therefore, the identification of differ-
ences is of practical importance. Moreover, by
identifying the key priorities, the identification
of size dependent characteristics will benefit the
planning process.
In the second part, with the help of four case
studies, the validity of the issues highlighted in
the first part of the paper is examined. In view
of the complexity of the issues involved, a case
based qualitative approach appeared to provide
the most logical research methodology. There-
fore, caution must be exercised in reaching
generalized conclusions. However, this does not
diminish the value of the research, insofar as it
establishes a conceptual framework and vali-
dates the framework through studies of two
small and two medium size manufacturing
organizations. Furthermore, this study lays the
foundation for further empirical research in this
important area.
DIFFERENCES BETWEEN SMEs A N D LARGE
ORGANIZATIONS
Most of the published literature describes and
discusses the application of TQM concepts in
large organizations [22]. Ideas expounded by the
quality gurus are primarily designed to meet the
needs of large organizations and multinationals
[15]. Furthermore, the concepts of TQM
presented in numerous videos, seminars, and
books are more in tune with the needs of large
organizations than those of SMEs [17]. The
attention paid to the development of TQM in
large organizations is understandable as these
organizations traditionally have been respon-
sible for propagating the virtues of TQM and
championing the concept. The environment in
which TQM is developed would not be an issue
if SMEs and large organizations possessed
similar characteristics. In practice, however,
there are significant structural differences
between SMEs and large organizations. These
differences are likely to influence the relevance,
planning and implementation of the TQM
concept. Welsh and White [35] succinctly
summed up these points. They suggest that a
small business is not a 'little' large business.
Differences exist in structure, policy making
procedures, and utilizations of resources to the
extent that the application of large business
concepts directly to small businesses may border
on the ridiculous. Table 2 depicts the main
differences to be expected between SMEs and
large organizations in areas relevant to the
design and actuation of TQM. We briefly
discuss some of the differences.
 Omega, Vol. 24, No. 1
Large organizations are usually bureaucratic,
that is to say, they rely on the formalization of
behaviour to achieve co-ordination. Thus, in
bureaucratic organizations, the levels of special-
ization, standardization, and formalization are
likely to be high. SMEs, on the other hand, are
more likely to be organic. A salient feature of an
organic organization is the absence of standard-
ization and the prevalence of loose and informal
working relationships. Burns and Stalker [8]
found that bureaucratic structures worked well
for organizations operating in a stable condition
but not so well in a turbulent environment
where the key to survival is innovation or
flexibility to adapt to the new situation.
SMEs can normally operate with a single
manager at the strategic apex. In large
organizations, the division of functions and
labour, and 'span of control' considerations
result in the creation of a hierarchy of authority.
Thus, there are several layers of management
between the manager at the strategic apex and
operatives. This means that top managers, in
large organizations, are far removed from the
point of delivery. Thus, they are likely to
Table 2. A comparison between the characteristics of large, medium and small organizations
Large organizations
Hierarchical with several layers of management
Clear and extensive functional division of activities. High degree
of specialization.
Strong departmental/functional mind set
Activities and operations governed by formal rules and procedures.
High degree of standardization and formalization
Mostly bureaucratic
Extended decision-making chain
Top management a long distance away from the point of delivery
Top management's visibility limited
Wide span of activities
Multi-sited and possibly multinational
Cultural diversity
System dominated
Cultural inertia
Rigid organization and flows
Many interest groups
Incidence of fact-based decision-making more prevalent
Dominated by professionals and technocrats
Range of management styles: directive; participative; paternal; etc.
Meritocratic
Individuals normally cannot see the results of their endeavours
Ample human capital, financial resources and know-how
Training and staff development is more likely to be planned and
large scale
Specified training budget
Extensive external contacts
High incidence of unionization
Normally slow response to environmental changes
High degree of resistance to change
Potentially many internal change catalysts
Low incidence of innovativeness
Formal evaluation, control and reporting procedures
Control oriented
Rigid corporate culture dominating operations and behaviours
87
lack deep understanding of operational issues,
processes, customers' needs, and quality
difficulties, unless they make a point to observe
and experience the situation at the point of
delivery. Moreover, they will lack visibility and
face difficulties in organizing effective communi-
cations and providing leadership by example.
The flat structure of SMEs and fewer
departmental interfaces normally result in a
more flexible work environment [38]. Lack of an
extended hierarchy offers the top management
the opportunity to build a strong personal
relationship with employees, but it also in-
creases the potential for interpersonal conflict.
At SMEs, managers and operatives are more
likely to be directly involved with the customers.
Two way, face to face communication is the
norm in SMEs.
The prevailing cultures in SMEs and in large
organizations also differ because of the span of
activities, geographical dispersion, the back-
ground and range of employees, the age of the
organization, and the existing precedences.
Culture may be defined as norms, values, and
informal beliefs held by people in an organiz-
Small and medium organizations
Flat with very few layers of management
Division of activities limited and unclear. Low degree of specialization
Absence of departmental/functional mind set. Corporate mind-set
Activities and operations not governed by formal rules and procedures.
Low degree of standardization and formalization
Mostly organic
Short decision-making chain
Top management close to the point of delivery
Top management highly visible
Span of activities narrow
Single-sited
Unified culture
People dominated
Fluid culture
Flexible organization and flows
Very few interest groups
Incidence of 'gut feefing" decisions more prevalent
Dominated by pioneers and entrepreneurs
Range of management styles: directive; paternal
Patronage
Individuals normally can see the results of their endeavours
Modest human capital, financial resources and know-how
Training and staff development is more likely to be ad hoc and
small scale
No specified training budget
Limited external contacts
Low incidence of unionization
Normally rapid response to environmental changes
Negligible resistance to change
Very few internal change catalysts
High incidence of innovativeness
Informal evaluation, control and reporting procedures
Result oriented
Operations and behaviour of employees influenced by
owners'/managers" ethos and outlook
88 Ghobadian, Gallear--Total Quality Management
ation. The prevailing culture gives rise to
specific decisions, policies and activities. Culture
is highly informal and perceptual, but usually
dictates what activities or behaviours are
necessary to become successful in a particular
organization. Education and training, employee
participation programmes, enhanced communi-
cation programmes, revision of procedures and
policies, modification of evaluation and reward
system, and behaviour of top managers can all
influence the culture of an organization.
The evaluation, reward and reporting pro-
cedures are simpler in SMEs. Moreover, it is
simpler to establish a clear link between reward
and behaviour. On the other hand, managers in
SMEs are responsible for many facets of the
business and many decisions. The planning
process is not formal and multi-functional
planning takes place within individual minds.
The extent of training and staff development
in SMEs is limited and informal. This is due to
fewer and more broadened human resources,
lack of qualified specialist personnel, and
financial constraints.
On the other hand, SMEs are more likely to
be 'people oriented' rather than 'system
oriented', and flexible. In fact, research in both
Europe and America [32, 20, 6], shows that
SMEs are more responsive to market needs,
more adaptable to change, and more innovative
in their ability to meet customers' demand.
ORGANIZATION SIZE AND
IMPLEMENTATION OF TQM
The adoption of TQM is a radical and
fundamental change in every aspect of business.
Such a radical change requires careful planning
if it is to succeed. TQM practitioners have
proposed a number of different implementation
models. Deming proposed an implementation
MARKET,
STAKEHOLDER I[
FOCUS
PROCESS
I PEOPLE
FOCUS
Fig. 2. The salient elements of TQM implementation.
plan consisting of 14 steps, Juran put forward a
ten step plan, and Crosby suggested a 14 step
programme for the implementation of TQM
[15]. Oakland [24] proposed an eleven step
process, but he also identified two preliminary
stages: understanding the need for quality, and
commitment to quality. These TQM implemen-
tation models are sequential and prescriptive.
Ghobadian [13] proposed an integrative model
where only the key elements of TQM are
predefined. Figure 2 depicts this model.
Management process (i.e. management prac-
tices and attitudes) is the key element in the
implementation of TQM, hence its position at
the spine of the fishbone diagram. The other
elements are:
(a) the direction of the organization focus:
this should be external aiming to meet
the needs of the customer;
(b) process focus around the outcome
requirements rather than the tasks;
(c) people focus; and
(d) communications and measurements.
The main elements can be subdivided into a
number of sub-elements. In this model, the
responsibility for the identification of the
sub-elements (improvement projects) underpin-
ning the implementation of TQM rests with the
organization. This is because particulars within
any approach are more likely to be contingency
dependent than the broad approach.
One such contingency is the size of the
organization, and it is reasonable to assume that
implementation is size dependent. In other
words size is likely to influence the broad steps
necessary to implement TQM. Furthermore,
PROCESS
FOCUS
)
 Omega, Vol. 24, No. I
there is a high probability that size will influence
the implementation detail in terms of specifics
within each broad step. A proper examination
of these hypotheses required a careful consider-
ation of salient key steps and particulars of
TQM implementation. Therefore, the common
steps and elements proposed by the above
models were identified. Using a deductive
approach, the nature of the impact of organiz-
ation size on the salient common elements were
considered. SMEs are likely to encounter
advantages and disadvantages relative to large
organizations with respect to these elements.
The advantages and disadvantages are high-
lighted below.
ADVANTAGES
--There is unanimous agreement that
visible leadership from the top is
important to the successful implemen-
tation of TQM. SMEs have a distinctive
advantage in this respect because nor-
mally without much effort the CEO of an
SME enjoys a high degree of visibility
and can readily emphasize the import-
ance of quality. In a large organization
this may not be readily possible.
--Improvement teams, a cornerstone of
TQM introduction, have a better vertical
and horizontal visibility at SMEs. There-
fore, the level of commitment and
support generated by a quality improve-
ment team can directly and indirectly
influence the change in corporate culture,
a key factor in the successful implemen-
tation of TQM.
--External focus means that, in a TQM
environment, every employee needs to be
aware of customers' needs and be a
marketer. In SMEs employees tend to be
closer to the firms' products and cus-
tomers, creating an increased sense of
responsibility.
--Smaller companies have a natural ten-
dency for cross-functional training be-
cause they have fewer layers of
management and staff. With fewer
people to mobilize, change can come
quickly because the effort required
to gather diverse groups of people
together to initiate change is normally
modest [5].
89
- - I t is easier for small companies to create
the kind of atmosphere that fosters
personal growth, shows workers how
their jobs fit into the overall organiz-
ational goals and encourages them to
come up with ideas for improving or
expanding the business [26].
- - I n a small firm, employees usually have
a very good sense of the overall
profitability of the company, and they
are committed to trying to improve the
business because they know it will
directly affect them [26]. Individuals can
more readily see their efforts translated
into tangible results in SMEs.
--Decision making processes are simpler in
SMEs because there are fewer layers of
management. Communications and co-
ordination between staff is easier and less
bureaucratic than in large organizations
[5]. Line and staff managers have better
access to each other and to the CEO.
Thus, cross-functional activities are eas-
ier to organize.
--The resistance to change is likely to be
greater and more significant in larger
organizations than SMEs. There are a
number of factors that contribute to this
phenomenon: the existence of a large
number of different interest groups in big
organizations; the prevalence of a strong
departmental and functional mind set;
the presence of a significant degree of
cultural diversity and inertia; the exist-
ence of a high degree of standardization
and formalization; the sheer number of
employees involved; communication
difficulties; and, potentially, a high
degree of unionization. Moreover, multi-
plicity of sites can increase the implemen-
tation complexities. SMEs normally
operate on a single site and, therefore, it
is simpler to launch a TQM programme
in an SME.
--Successful implementation of TQM re-
lies on company wide quality awareness.
In large organizations, internal catalysts
are more numerous. The likelihood that
the internal catalysts may lose interest or
concentrate on priorities perceived as
more important, is greater in larger
organizations. Only one internal catalyst,
is necessary in an SME. Thus, once
90 Ghobadian, Gallear--Total Quality Management
recognition has taken place, there is little
conflict in communicating the vision to
the whole organization. This should
make it easier to raise quality awareness
in SMEs.
--Functional integration is easier to attain.
DISADVANTAGES
- - I n very small companies, the owner's or
chief executive's personality may domi-
nate the culture [38]. Many owners have
little formal management training. This
may result in inflexibility and rigidity of
outlook.
--The limited size of the management team
means that individuals are often respon-
sible for a number of different functions
with little backup [38]. Frequently, they
are busy with managing the day-to-day
activities of the business and have little time
left for activities perceived as adjunct. In
general, a short rather than long range
management perspective dominates.
- - A small number of de-motivated or
uncommitted staff can disproportion-
ately affect the quality outcome. This is
because most SME employees have at
least some contact with external cus-
tomers. Therefore, the health of the
business depends on all employees being
motivated to provide the best service
available [26].
--Retraining employees when jobs become
superfluous rather than laying them off is
difficult to justify. The flat structure of
SMEs can leave employees frustrated
because they are often unable to realize
their short and mid-term career goals.
This is why SMEs may find it difficult to
employ high calibre staff and even harder
to retain them.
--SMEs are often under pressure to gain
registration to a standard quality man-
agement system [3]. Meeting the require-
ments of these standards can be a
formidable obstacle to a small company.
It requires motivation by the manage-
ment to appreciate, achieve and im-
plement the necessary measures to meet
the standards ' criteria. Moreover, the
organization needs to possess or be able
to purchase the necessary technical and
human resources [9]. It has been deter-
mined that the total average cost to an
SME of designing and installing a QA
system and gaining certification is
around £25,000 [31]. Furthermore, the
total average costs of maintaining certifi-
cation is put at around £14,700 per
annum [31].
--Resource paucity is arguably the most
serious disadvantage faced by SMEs. The
term resource is used in its broadest
sense. SMEs suffer from lack of specialist
knowledge and technical expertise [33],
insufficient external information on
which to base decisions, and lack of
capital. However, the most scarce re-
source is arguably management time. To
successfully implement a quality im-
provement programme, it is necessary for
the management and staff to devote
quality time to this task. This require-
ment can cause considerable difficulties
in an SME, because it lacks the
economies of scale enjoyed by large
organizations [22].
--Time and staffing constraints often
preclude the administration of compli-
cated incentive and reward programmes
[26]. Similarly, it may be difficult to
design and operate an effective perform-
ance measurement system and move
towards fact based management.
--Finally, SMEs are usually sceptical
of outside help. Moreover, there is
generally less interaction and sharing of
information among SMEs. Coupled
with an unsystematic management style,
and the fact that market research is
usually incidental, potentially valuable
knowledge from external sources is often
neglected.
The identification of the strengths and
weaknesses of SMEs in terms of implementation
of TQM facilitates the design of a more effective
approach. This is of considerable importance as
the implementation process is a key determinant
of successful introduction of TQM.
INHERENT CHARACTERISTICS OF TQM
AND SIZE OF THE ORGANIZATION
An important point to consider is the
relationship between the inherent characteristics
 Omega, Vol. 24, No. 1
of TQM and organization size. The issue is
whether the size of an organization significantly
affects the appropriateness of TQM, or whether
other contingencies play a more important role.
To examine this point it is necessary to first
examine the inherent characteristics of TQM.
TQM is a management philosophy that
expounds values and principles largely at odds
with values and principles propagated by Taylor
[34] and Fayol [11]. Broadly, both Taylor and
Fayol directed their attention to tasks, working
systems, and numbers. The principles propa-
gated by them dominated Western management
thinking for most of this century. The economic
success of Japan attracted the attention of
Western managers to an alternative manage-
ment philosophy and concept, namely TQM.
Here management focuses its attention on the
market, the people who carry out the tasks,
processes, and outcomes.
Like most significant new and abstract
philosophies, TQM is interpreted and defined in
different ways. These span a broad continuum.
At one extreme of this continuum stands the
'system dominated rational analytical ap-
proach', and at the other extreme the 'imprecise
behavioral approach'. However, the examin-
ation of secondary source data suggests a broad
agreement on the shape of a TQM managed
company. A TQM environment is reliant on
team work, participation, open culture, effective
all round communications, empowerment and
devolution of decision making, effective
measurement and fact based decision making,
motivated and trained staff, eradication of fear,
removal of sources of problem and error, and
continuous search for improvement regardless
of its magnitude. Deductive research led
Ghobadian [13] to propose the following
definition:
~TQMis a structuredattempt to re-focusthe organization's
behaviour, planning and working practices towards a
culturewhichis employeedriven,problemsolving,customer
oriented, and open and fear-free. Furthermore, the
organization's business practices are based on seeking
continuous improvement, devolution of decision making,
removal of functional barriers, eradication of sources of
error, team working, and fact-based decisionmaking".
From the above definition it is clear that
TQM is likely to involve cultural change at all
levels of an organization. Once the top
management recognizes the need for change,
then it is easier to attain cultural change in
91
SMEs than in large organizations. However, it
is probably more difficult for SMEs' manage-
ment to recognize the need for change. This is
because of limited resources and external
contacts, pressures on top management's time,
and the style of management.
We have so far examined three broad and
interrelated areas using a deductive approach.
First, the differences between large organiz-
ations and SMEs were highlighted. Second, the
impact of size on the implementation process
was explored. Third, the inherent salient
features of TQM were identified. The infor-
mation was brought together to examine the
relationship between the salient characteristics
of TQM and the size of organization, using the
profile analysis technique. This analysis facili-
tated the formation of a series of conceptual
propositions. The result of this analysis is
depicted in Fig. 3.
For the most part, organization size and the
inherent characteristics of TQM appear to be
independent of each other. Therefore, one may
conclude that other contingency factors are
more significant in determining the appropriate-
ness of TQM than organization size. Among the
most important factors are management style,
achievement style, self-actualization, and affilia-
tive style. That is to say, soft contingency issues
connected with management approach and
culture of the organization.
Some TQM characteristics, on the other
hand, appear to be size dependent. Broadly,
there is greater correspondence between the
inherent characteristics of TQM and those of
SMEs than between those of TQM and large
organizations. Thus, on the surface SMEs
appear to be better placed to introduce TQM.
Probably the biggest obstacle to the introduc-
tion of TQM in SMEs is the 'management
realization' and the ability of owner managers
to modify their behaviour and management
style. These are major obstacles and not easy to
overcome. There is also the issue of resources.
Arguably, there is a greater degree of divergence
between the inherent characteristics of large
organizations and requirements of TQM, but,
because of abundance of resources and wide
range of external contacts, realization is likely to
occur quicker and more frequently. Moreover,
in larger organizations there is professional
management with a tradition of hierarchy of
authority, so that it might be easier for
 i ,
TQM Requirements / Characteristics SMEs I S~e ~ Large
I independent I organisetions
i
Top management believes that quality is even/ones
responsibility and that quality leadership starts at the top. !
I

Plans and manager's quality chain. '

!
I
,
Li
,.~ !
d'
!
Explicit and disciplined about goals, roles, and standards at t
ell levels. ,, ,: /:
Decision-making devolved to the lowest possible level.
!
Empowerment. I
I
f
Effective and open communication channels. i
I

Continuous improvement culture. !

,,|
!
Cultural change. I
I I ....
Resistance to change.
1 'I
Values people.
i
Focuses on preventing problems.

Runs by people working with other people. ;<*

.... I l,

Open culture - Invites and encourages participation.

Availability of company related information.

Mistakes are not punished, rather they are considered as a

part of the learning process.

Employees know that positive efforts to improve quality will I

)
be recognised. I
I
I
Drive out fears in dealings with the organisation. I
I
Team working encouraged and fostered. I
I
/],
Employees know that they are responsible for the quality of
I
their work.

High spending on training. I i

! I

Attainment of corporate objectives flows from customer

satisfaction. I i

i ~.l !
! • i
Treats complaints as an opportunity to learn. i I
|
!
, ',
Cost containment through disciplined approach to own !
operations and to supply chain. I / I I
I I I
,,,,, I I i
'i 'i I
! f
Company-wide awareness. i !
n 1 v!
i !
i i
Functional integration. \ : 'I

Continuous search for the improvement of the business

with quality, productivity and cost redu~on as indivisible
elements.
!"4
| :
i
!

i i

Fig. 3. The relationship between the inherent characteristics of T Q M and size of the organization.

92
 Omega, Vol. 24, No. 1
management in larger organizations to accept
the type of behaviour imposed by TQM
philosophy.
PRIMARY RESEARCH
The primary data were collected through in
depth case analysis. The variables being
investigated were subtle and intangible. They
could sensibly be examined only through an in
depth study. Therefore, a survey approach was
deemed inappropriate. On the other hand
caution must be exercised in extrapolating and
generalizing the findings of this research.
Homans [18], in discussing research methods,
suggested that there are neither good nor bad
methods, but only methods that are effective
under particular circumstances in reaching
objectives on the way to a distant goal. Case
methodology provided the most effective route
to the attainment of our research objectives.
Four manufacturing organizations were stud-
ied. Two were small organizations and two
medium size organizations. The concepts put
forward in the previous sections did not readily
lend themselves to direct examination. There-
fore, they were studied as a part of broad
examination of: (a) the TQM implementation
process; (b) the impact of TQM and the
resulting organizational change; and (c)
difficulties encountered in implementing and
operating TQM. The four cases are presented in
this section.
CASE STUDY I--DUTTON ENGINEERING
(WOODSIDE)
Brief background
Dutton Engineering (Woodside) is a subcon-
tract precision engineering fabricator. The
company manufactures prototype or small
batches of stainless steel enclosures and
fabrications for the electronics industry. Its
turnover, last year, was of £1.3M. Dutton
2BS5750is a series of national standards whichpromulgate,
for use by UK suppliers and purchasers, the ISO 9000
series international standards and the EN 29000 series
European standards for quality systems respectively.
BS5750 sets out how an organization can establish,
document and maintain an effective quality system
which will demonstrate to the organization'scustomers
that the organization is committed to quality and are
able to supply their quality needs [3].
93
employs 27 people--21 direct employees and 6
indirect employees.
Why TQM and the main steps involved in its
implementation
In 1984 Dutton faced a number of problems.
Chief among these were poor delivery perform-
ance, quality problems caused by a functional
approach to quality, and poor financial returns.
To counter these problems, Dutton introduced
BS57502 and obtained accreditation in 1984.
However, soon the realization dawned that
BS5750 was not going to make a significant
impression on these problems. Internal prob-
lems were the catalyst for recognizing that
change was required. Internal resources, how-
ever, were incapable of specifying the nature
and the direction of change. Therefore, manage-
ment looked outside, but was unable to find the
appropriate help and advice in the UK.
Consequently, the Managing Director under-
took an exploratory visit to Japan in 1984. The
key lesson of the visit was the importance of
building trust within the supply chain and
among employees.
Dutton became acquainted with the TQM
concept in 1988, when a customer presented the
principles of its Company Wide Quality
Improvement Programme (CWQI) to its suppli-
ers. In addition, the company offered to help the
interested suppliers to implement TQM in their
organizations. Following further discussions
Dutton's Managing Director became a convert
to the TQM cause. The customer helped Dutton
to design and deliver CWQI awareness training
to all its employees. Dutton's experience
highlights some of the conceptual points raised
previously: the importance of recognizing the
need for change; limitations of internal know-
how; the key role of external sources as the
catalyst for new ideas; and the relative ease of
training all employees once resources are
available. Dutton was fortunate in that it had a
progressive customer that offered help and
support. Other SMEs may not be as fortunate.
The visit to Japan and introduction to the
principles of TQM raised the management's
awareness. However, they had the foresight to
recognize that their understanding was superfi-
cial and they required a deep understanding of
issues prior to embarking on the TQM journey.
Therefore, the Managing Director spent a year
examining and identifying the potential sources
94 Ghobadian, Gallear--Total Quality Management
of poor and high product quality and
delivery performance as well as the principles of
TQM.
A comprehensive implementation plan was
not developed. The implementation priorities
were generated organically. These were guided
by the following five principles:
simplify the manufacturing process;
reduce the working inventory;
increase employees' skill flexibility;
maintain and improve product quality, and
remain highly customer focused; and
strive towards zero defects.
To launch the CWQI the following six
initiatives were introduced initially and in quick
succession.
Educating all employees. The vehicle used for
this purpose was the Awareness Day. Its aims
were 2-fold: first, to ensure that everybody
understood the need for change; and second, to
ensure that everybody was familiar with the
principles underpinning the CWQI programme
and understood how it would help the firm to
change. All new employees received this
education to ensure constancy of purpose. To
reinforce the message all employees were
furnished with a pocket size CWQI guide that
highlighted the salient features of the pro-
gramme.
Annual hour scheme. This was construed
by the workforce as a sign of trust, and it
enhanced operational work flexibility, thus
facilitating a more effective management of the
workflow. Now if there is no order to fulfill the
workers can go home rather than make for
stock.
Change in the status of blue colour workers and
the reward system. By harmonizing the payment
method the distinctions between the white and
blue colour workers were removed. Overtime
payments were eliminated. However, the man-
agement introduced a profit sharing scheme.
This heightened employees interest in issues
such as the operating costs, profitability, and
customer satisfaction.
The introduction and reinforcement of the
'internal customer' concept. This helped to build
and cement strong trust between employees.
Moreover, it helped to heighten individual's
awareness of needs and requirements of
colleagues.
Elimination of mangers' resistant to change.
The initiative was not welcomed by all middle
managers. Those who reacted negatively were
identified and dismissed. Dutton's experience
shows that SMEs are also susceptible to
resistance, but the scope of resistance is limited
and it is relatively easy to overcome resistance.
High visibility made it easy to convey that
obstacles on the path of quality improvement
effort would not be tolerated.
Elimination of quality inspectors from the
company. This transferred the responsibility and
authority for conformance to and improvement
in quality to the shopfloor employees. It made
no sense to spend £50,000 to train an apprentice
and then turn around and tell him that he was
not responsible for the quality of his output.
This conveyed a lack of trust. The transfer
would have been more difficult and certainly
much slower if the direct employees were more
numerous.
The above six initiatives gave the CWQI
programme some quick wins and, therefore,
momentum. Furthermore, these initiatives
spurred the culture change.
The initiatives discussed below formed the
second stage of the CWQI programme.
Team work. For the achievement of everyday
tasks, employees were organized into multi-
skilled teams with responsibility for specific
products and customers. In addition, each team
was responsible for recruitment, planning,
purchasing, and skill development. Further-
more, teams were responsible for the continuous
improvement activities. Team leaders were
trained for their role, and they were encouraged
to keep up to date by attending training courses
outside the company. Teams were encouraged to
learn from customers and suppliers by visiting
them or working at their premises on an ex-
change basis. They were also encouraged to
benchmark against other companies. Teams met
formally once a week to discuss production issues
and conduct skill training. At Dutton teams
were given significant authority. The small
numbers of employees and teams made this
readily possible. Their high degree of visibility
across the company enabled them to influence key
business issues. The development of effective
team work required careful planning. However,
the fact that everybody knew everybody else
and people worked closely with each other
meant that teams jelled together very quickly.
 Omega, Vol. 24, No. 1
Work organization]process. Team work was
augmented by other organizational changes.
The production was divided into three focused
cells, and a team was assigned to each cell. This
improved efficiency, flexibility and motivation.
Replacement of planning sheets by Kanban
improved the flow of components and at the
same time eliminated the need for heavily
documented work cards. The purchasing and
invoicing system was also changed. Technol-
ogies such as CNC and computerized cost
control and accounting were introduced.
Employee participation. Participation was
encouraged through the use of Kaizen. Em-
ployees were encouraged to put forward
suggestions for improvement. They were not
expected nor encouraged to provide financial
justification for their proposals. At the discre-
tion of the team leader a nominal reward was
paid for each Kaizen. Seeking improvement is
now part of the culture and employees put
forward suggestions without expecting a finan-
cial reward.
Training. The primary aims of the training
were to improve employees' skills and compe-
tencies, and to give them the belief and
confidence that they can make decisions and
that it is safe to act. Employees took an active
part in identifying their training needs. Re-
sources did not inhibit Dutton's training efforts.
The extent of training is more dependent on the
CEO's outlook than availability of financial
resources. Training is only useful when the real
training needs are identified and the level of
potential paybacks are clear. It is a folly to
invest heavily in training at the initial stage of
the TQM journey. The perception that intro-
duction of TQM requires heavy investment in
training at the inception is what puts off a lot of
small companies. Once the CEO is committed,
then it is easier to foster personal growth in
SMEs.
Development of a market oriented culture. In
a truly market oriented environment all
members of the organization are aware of the
needs and requirements of both internal and
external customers. Furthermore, they share the
conviction that customer satisfaction is the key
requirement of their task. The link between
performance and output is much clearer in
SMEs. Customer awareness is also reasonably
high. Nevertheless, Dutton management felt it
was necessary to improve employees' market
95
orientation. Teams were encouraged to contact
and visit both suppliers and customers. Man-
agement did not interfere in the relationship
between employees and customers/suppliers. All
team members have access to telephones on the
shop floor. Employees are empowered to
directly contact the customer and discuss
orders, clarify ambiguities, arrange to meet
customers at their premises, or invite customers
to visit Dutton. It is easier for SME manage-
ments to allow their employees to get close
to customers and become more market
oriented.
Performance measurement andfeedback. This
was one of the key operational cornerstones of
the CWQI programme. Financial and non-
financial indicators were developed for every
function. These were displayed on the notice
boards, keeping employees informed of com-
pany's performance and progress. Employees
were trained to comprehend financial infor-
mation. Measurement system facilitated con-
tinuous benchmarking. Size was not an
impediment to design and implementation of a
comprehensive measurement system.
Customer and supplier involvement. Suppliers
and customers were regularly invited to visit the
company, inspect the shopfloor, and discuss
issues of mutual interest. This helped Dutton to
forge a close relationship along the supply
chain. Dutton provided help and support to its
suppliers when possible. In return they expected
continuous improvement from their suppliers.
Impact]organizational changes resulting from
TQM
The CWQI programme substantially altered
the culture of the company. The autocratic
management style was replaced by a consulta-
tive and participative style. Teams at the
shopfloor were given responsibility for major
decisions. Management realized that employees
occupied positions of responsibility outside
their workplace, for example, running football
teams. This led to the question--why not give
employees responsibility at work and stop
wasting the, talents of the organization's key
resource? Management at Dutton now believes
that harnessing the creativity and enthusiasm
latent in all employees is crucial to long-term
quality and performance improvement.
The management structure of the company
was made flatter. At the initial stage the short
96 Ghobadian, Gallear--Total Quality Management
span of decision making enabled the manage-
ment to implement the six key initiatives
quickly. The span of decision making was
further shortened by empowering employees
lower down the organization. The vertical and
horizontal visibility inherent in SMEs makes it
easier to provide effective leadership. Visibility
also allows teams and individuals to signifi-
cantly influence events.
Simple structure enables SMEs to avoid
conflicts and complications that can arise from
diversity of roles and goals prevalent in larger
organizations. Functional integration was not
an issue at Dutton. The small size ensured that
most activities were integrated. The CWQI
brought the management and employees
closer together. Moreover, it helped to create
greater synergy between individual and corpor-
ate goals.
Work organization and procedures were
subject to significant changes. These have been
discussed except for the change in the recruit-
ment procedure. The key recruitment criteria
are now attitude, willingness to learn, and the
ability to fit in a team instead of engineering
skill and relevant experience. This helps to
sustain the new culture.
Introduction of the CWQI resulted in
increased customer and market share. More-
over, a significant amount of waste was driven
out of the organization. Over the past three
years turnover per direct employee has in-
creased by 54%, the reject rate is down from 9
to 0%, average lateness is down from 7 to 1 day,
and the value of WlP is reduced to less than half
of its June 1991 value.
Staff surveys showed that the CWQI pro-
gramme has helped the employees to feel
empowered, enhance their aspirations, and
eradicate fear of change and mistake. The key
to a successful change programme is the mutual
trust between all employees and management.
Management, with relative ease, has fostered an
environment that supports personal growth.
Size of the organization was instrumental in this
respect. The resistance to change was low keyed.
This was because of the small number of interest
groups, and the ability to easily put a stop to
negative influences.
Prior to the introduction of the CWQI
programme the top management spent most of
its time fire fighting. The CWQI programme has
put an end to this position. This is arguably the
most significant benefit of the CWQI pro-
gramme. People now have fun at work instead
of continual stress.
Difficulties and problems of TQM
The first problem Dutton encountered was
the difficulty of understanding the requirements
for change. Lack of internal specialist knowl-
edge and technical expertise was found to be a
hindrance. The difficulty of locating and
accessing the relevant external sources of
knowledge compounded Dutton's dilemma.
There was a gap of almost 1 year between the
Awareness Day and a serious attempt to
implement the CWQI programme. The reasons
for the slow start were 2-fold: first, the need, by
the top management, to build a deep under-
standing of the requirements of TQM prior to
its implementation; and second, lack of
cooperation by middle managers.
Apart from the initial phase, Dutton's
experience suggests that small size of financial
and human resources was not a barrier to the
successful implementation of the CWQI pro-
gramme. It, however, meant that Dutton was
forced to consider alternative strategies that did
not rely on the availability of substantial
resources, and quickly brought about the
necessary structural and cultural changes. It
took longer to implement the CWQI pro-
gramme than originally envisaged. Resource
availability, however, was not the main
culprit.
An SME's welfare is dependent on customers'
welfare. Therefore, Dutton aims to ensure that
its customer's and customers' customers are
satisfied. TQM has helped Dutton to achieve its
aim. Dutton's case demonstrated that small size
was not a barrier to the successful introduction
of TQM.
CAST STUDY 2--RENISHAW METROLOGY
Brief background
Renishaw Metrology is a world leader in the
design and manufacture of precision metrology
equipment. Its products are used primarily for
engineering inspection and process control.
Many of the products are covered by one or
more patents.
In the recent years Renishaw has invested in
an advanced product development system,
 Omega, Vol. 24, No. 1
including a state of the art CAD/CAM system
downloading, via DNC links, to a cell of CNC
lathes and machining centres each capable of
running with minimum operator assistance. The
manufacturing philosophy is based on two
concepts: right first time, and one hit machining.
The Renishaw Group is a medium size
company, has a turnover of approximately £48
million and employs about 380 people.
Why TQM and the main steps involved in its
implementation
The development of the formal quality system
commenced in 1988. The BS5750 Part 1
accreditation was attained in August 1990. The
reasons for the introduction of BS5750 were to
build a firm foundation for the continuous
improvement process, to reduce variation and
improve consistency, and to establish common
procedures and standards.
TQM's development was gradual and evol-
utionary. The primary aim of the quality
improvement programme was to attain or
exceed world class quality levels. This was a
pro-active step to improve competitiveness,
facilitate continued growth, and minimize any
detrimental effects from patent expiry. Perhaps
the most significant step in the drive to improve
quality occurred in 1985, when the company
developed a Total Quality Commitment Pro-
gramme (TQCP). This programme was designed
to create a company wide realization that
quality was an important part of employees
task, and to generate commitment to this
principle.
The TQCP was based on the teachings of
several quality gurus. For example, Deming's
'constancy of purpose' was adopted in order to
drive out fear in the organization, and in line
with another Deming philosophy the company
had attempted to create an 'open culture'. On
the other hand, efforts to improve relationships
with suppliers were rooted in Juran's teachings.
Training at Renishaw was highly flexible--
managers were responsible for their own
department's training, including induction
courses for new employees. Much use was made
of the Belbin profiling method, which enabled
the employees to examine how they interacted
with other people, and to identify their own
strengths and weaknesses. Training pro-
grammes were not impeded by paucity of
resources.
97
To improve links within the supply chain a
customers' visits initiative was introduced. This
provided the existing and potential customers
with the opportunity to observe at close
quarters the developments at Renishaw and
facilitated better communications. Renishaw
also formed strategic alliances with its key
customers. This strategy had two major
advantages: it enabled Renishaw to more
readily develop new products required at the
marketplace, and it made it easier to meet
customers' expected quality levels. Another
important component of the quality improve-
ment programme was the suppliers' days. The
rationale for this programme was similar to that
described for the customers' visits. Yet another
initiative involved pruning back the number of
suppliers. The aim was to eliminate the need for
the inspection of the incoming goods and have
them directly delivered to the production line.
Impact[organizational changes resulting from
TQM
The TQM scheme at Renishaw was well
established and a key part of the company's
philosophy. In spite of peaks and troughs
caused by the recession, the quality improve-
ment programme had a positive impact on the
employees morale.
In the early days, a number of the key
managers clearly understood the TQM concept
and its likely potential benefits. However, it
took some time before other key managers
reached this position. The concept of continual
improvement is now universally accepted. The
case suggests that acceptance is not necessarily
automatic within SMEs. However, the problem
was manageable. Size was an important factor
in this respect.
The bulk of the TQM literature emphasizes
the importance of the top managements'
commitment and it was argued that in smaller
organizations commitment may be more
difficult to come by. In this case the top
management was fully committed to the
concept. Thus, top managements' commitment
and enthusiasm was not a problem. However,
variation in the level of TQM knowledge,
coupled with a degree of complacency, was a
problem.
The introduction of the TQM concept gave
employees more job variety and greater control
over their day-to-day activities, thus, increasing
98 Ghobadian, Gallear--Total Quality Management
job satisfaction. For example, on the shopfloor
operatives were made responsible for inspecting
their own work using co-ordinate measuring
machines. Over a period of time the quality
inspectors and engineers were transferred from
the QA department to operational functions.
This enabled them to train operatives so they
could assume total responsibility for what they
produced or supplied irrespective of whether the
object in question was a manufactured com-
ponent or design.
Team work and functional integration are
among the main pillars of TQM. The move
towards greater functional integration was not
all plain sailing. Management had to overcome
years of conditioning, allegiance, and comfort
level. To encourage functional integration,
cross-functional training programmes were
introduced. Another step involved locating
closer together groups of employees that needed
to be in regular contact with one another and
other groups of employees. On a priori grounds,
functional integration should be easier to attain
within SMEs. However, in a medium size
company attempts to improve functional inte-
gration faced a number of problems not too
dissimilar to those encountered by large
organizations.
For several years, management at Renishaw
had strived to develop an effective team culture.
Cross-functional, multi-disciplinary Quality Im-
provement Teams (QITs) were formed to tackle
various product deficiencies. In some cases,
Corrective Action Teams (CATs) were formed
in specific departments to investigate defective
parts or process problems. Continual Improve-
ment Teams (CITs) were established more
recently to tackle improvement projects nomi-
nated by sponsors. Teams presented their
findings to the steering group and directors. The
presentations served two purposes. First, they
facilitated more effective decision making.
Second, they give group members prominence
and recognition. The introduction of team work
has changed the way people at Renishaw
approach problems, identify solutions, and
implement corrective actions. Greater team
work was instrumental in identifying many
improvement opportunities. The change to a
team working environment was achieved with
relative ease.
Three factors had helped the introduction of
TQM. The first was the excellent working
conditions and facilities, and the second the
age of the company. Renishaw was a relatively
young company. It was founded less than
20 years ago and as such 'die hard' attitudes
were not too prevalent. The third factor
was a genuine desire by the top management
to guarantee employment and to develop
the company and its people. These types
of attitude are arguably more prevalent in
smaller companies, but not exclusively their
province.
DiJ~cuities and problems of TQM
In the first couple of years lack of formal
procedures hindered the progress of the quality
improvement programme. This problem was
overcome by the introduction of BS5750.
However, implementation of BS5750 created a
different problem, namely the perception by
employees that they must adhere to procedures
rather than search for improved methods. This
was a serious problem as it stifled the
continuous improvement philosophy, a central
component of the TQM concept.
Renishaw's experience suggests that the
implementation of TQM may create internal
tensions. Broadly, small and medium size
companies have few formal procedures. How-
ever, it appears that it is not practical to
implement TQM or attain high levels of quality
without some formal procedures. On the other
hand, the organic nature of these organizations
encourages employees to search for different
methods, a culture that underpins the continu-
ous improvement philosophy. Without pro-
cedures and direction, the new methods may or
may not be effective. The challenge is to
introduce formal procedures while retaining and
encouraging the entrepreneurial culture of the
enterprise.
It was thought that a broader approach to
training would have facilitated a more rapid
progress. The resource availability made it
difficult to adopt a broad approach. Another
problem centred around the fact that initially
sufficient emphasis was not placed on the
concept of prevention. The change in focus was
considered important in the development of
TQM. Size per se did not appear to be a factor
in this respect.
Lack of time in SMEs was signalled as an
important obstacle to the introduction of TQM.
At Renishaw lack of time hampered efforts to
 Omega, Vol. 24, No. 1
formalize and improve procedures, attendance
at team meetings and training courses, and
analysis of results and problem solving. To
counter this, a number of employees worked in
their own time on continual improvement
projects.
Renishaw's 1985 target of zero defects within
3 years was not attained. Two factors were
primarily responsible for Renishaw's inability to
meet this target: first, setting objectives without
understanding what was involved or required to
attain them; and second, the amount of effort
required to maintain the momentum and
impetus of a process aimed at changing the
culture of the company. Based on this evidence,
attainment of cultural change within SMEs is
not without difficulty.
CASE STUDY 3---VARIAN ONCOLOGY
B r i e f background
Varian TEM designs, engineers and manufac-
tures radiotherapy simulators for the treatment
of cancer. In addition, it manufactures couches
for radiotherapy treatment machines. It has a
turnover of approx. £25M, and employs around
130 people.
The quality improvement programme at
Varian was referred to as Operational Excel-
lence. Creating a TQM environment was the
organization's ultimate goal. Varian had
adopted an aggressive strategy coupled with
stretch goal setting in pursuit of TQM
environment. Their goal was internal and
supplier 'zero defects' within 3 years.
Why TQM and the main steps involved in its
implementation
The Operational Excellence programme at
Varian was launched in the second quarter of
1991. The quality improvement effort was
evolutionary building on the past success.
Several factors drove Varian to implement a
quality improvement programme: the appoint-
ment of a new chief executive committed to
quality; the realization that their manufacturing
technology and techniques were out of step with
modern thinking, and required significant
improvement; restructuring of the company;
and the need to comply with the European
Commission's Medical Devices Directive. To
meet this particular requirement Varian im-
plemented BS 5750 and received accreditation in
99
July 1991. The standard was also considered an
important element in the path to attainment of
the TQM goal.
Varian's quality improvement activity began
by examining the TQM implementation process
of the companies recognized for their quality
achievements. The outcome of this benchmark-
ing exercise was an implementation plan. The
main elements of the plan were drawn from the
European Quality Award model, Baldrige, and
the quality gurus' recommendations.
Training was one of the mainstays of the
quality improvement effort at Varian. A
cascading strategy was deployed for the TQM
training. Initially a group of employees were
trained by the Crosby Institute, they then
trained other trainers. Three different training
programmes were designed and delivered. These
included: (a) an awareness training for all
existing and new employees; (b) a detailed
training for managers and supervisors; and (c)
an in depth training off-site for the senior
managers, as a deep understanding by them was
considered to be one of the key determinants of
success. Job related training was also considered
to be an important element of the TQM
journey. Therefore, each employee received nine
hours of job related training per month. The
effort required to train employees at Varian was
modest.
Flatter organization and employee empower-
ment were among the other key elements of the
TQM at Varian. The structure of the organiz-
ation was altered to reduce the layers of
command and control. Fewer management
levels resulted in the downward devolution of
responsibility, thus empowering operatives and
other employees. Varian's experience suggested
that the problem of elongated management
hierarchy is not exclusive to large organizations,
but the issue typically is less complex in SMEs.
Empowerment is also an important issue in
small organizations. Small size does not
automatically lead to empowerment. SMEs, like
large organizations, need to work on this
problem.
Team working was another key element of the
TQM environment. To encourage and foster
team working several different types of problem
solving teams were established. These included
CATs--cross functional Corrective Action
Teams; KITTENs--similar to CATs but de-
signed to form spontaneously to solve a
100 Ghobadian, Gallear--TotalQuality Management
problem and dissolve; and CPITs--Continuous
Process Improvement Teams. Again, small
organizations like large organizations need to
create the right environment and infra-structure
to foster team working. Team working does not
occur by accident in small organizations.
Supplier management was considered an
important part of the TQM concept. To this end
Varian regarded their suppliers as part of the
business, and attempted to form a partnership
with them. It was usual for suppliers to take part
in the improvement team meetings. Varian
shared key information with its suppliers.
Events such as a supplier dinner were used to
familiarize the suppliers with Varian's current
marketing plans, and the key forthcoming issues
that may affect them. Moreover, Varian on a
regular basis discussed with the suppliers the
strengths, weaknesses, opportunities and threats
to their relationship. The relationship with the
suppliers had matured to the extent that
incoming goods were not inspected, and they
were delivered directly to the shop floor. Varian
also required that their core suppliers were
BS5750 registered, and more than 80% of
suppliers were BS5750 approved.
Impact lorganizational changes resulting from
TQM
At the outset it was recognized that the
success of the Operational Excellence pro-
gramme was critically dependent on the effective
management commitment and support. The
initial elaborate education and training pro-
gramme for the supervisors, middle and senior
mangers was instrumental in cementing this
understanding and ensuring that these em-
ployees knew how they could effectively support
the implementation of the quality improvement
process. The commitment and leadership of the
Chief Executive was another important factor.
Recognition of the need for change and the
vision of how to implement the change were
among the key requirements of the successful
introduction of the TQM concept.
Management recognized that TQM related
initiatives and projects had to be rolled out in
a planned and orderly fashion. A steering
committee was set up to plan the implemen-
tation process, to ensure that duplication of
effort did not occur, and to coordinate the
totality of the quality improvement efforts. The
enhanced operational flexibility, widespread
ownership of company goals, and better
understanding of needs and problems of peers
was attributed to the careful planning and co-
ordination of the quality improvement process.
All employees were considered to be contrib-
utors to the overall success of the organization.
Therefore, all employees were viewed as an asset
and were treated with respect. Open flow of
information underpinned this belief. Monthly
team briefings were used to communicate both
specific and company wide information. Com-
munication between employees was also deemed
important. To nurture effective communication
between employees Varian had created a family
atmosphere where all employees knew each
other. It is much simpler for small and to a lesser
extent medium size organizations to adopt this
strategy.
Timely and appropriate feedback does influ-
ence employees behaviour. To this end an
elaborate measurement system was designed
and implemented. This was referred to as
Varian Indicators. The measures covered a wide
span of activity from the shopfloor to the
corporate level. Corporate as well as local
indicators were displayed on both the shopfloor
and administrative offices. Small, and to a lesser
extent medium sized companies, often lack an
effective measurement system, making it more
difficult for them to plan rationally. Size did not
inhibit Varian from designing an effective and
elaborate measurement system.
Multi-skilling was achieved through pro-
vision of training programmes and systematic
job rotation. Empowerment allowed the operat-
ives to deal with problems as they arose rather
than having to refer them upwards. For
example, if there was a problem with purchased
parts or components, operatives were empow-
ered to call in the supplier and if they saw fit to
return the part. Job boundaries were constantly
shifting as empowerment took root. These
changes were initially viewed with a degree of
scepticism. The initial scepticism was quickly
overcome. The education and communication
programmes enabled employees to rapidly
comprehend the reasons for and the benefits of
the proposed changes. Lack of significant
resistance to change was also attributable to the
size of Varian.
Empowerment of employees had consider-
ably altered the content of management tasks.
They spent more of their time planning rather
 Omega, Vol. 24, No. I
than fire-fighting. Empowerment had also
boosted the self confidence of employees. It was
generally felt that employees showed greater
pride in their work and more interest in
company affairs. Regular employee surveys
backed these assertions. Management at Varian
believed that empowerment, team working, and
the creation of fear and risk free environment
had significantly contributed to improved
performance. The company had substantially
increased its market share, inventory turns had
increased by a factor of three, cycle times had
reduced by 75%, and defects had reduced by
80%.
Di~culties and problems of T Q M
The Operational Excellence programme was
Varian's second attempt to formally introduce
TQM. The first attempt had failed miserably.
The primary reason for the failure of the initial
attempt appears to have been the dictatorial
implementation strategy deployed. Despite the
fact that considerable time and effort was
devoted to training the most senior managers,
the quality message was not effectively commu-
nicated to the lower reaches of the organization.
The majority of employees lacked a clear
understanding. Moreover, their commitment to
the principles of TQM was at best tenuous. The
experience gained from the first attempt to
introduce TQM proved extremely useful second
time around. Small organizations should at-
tempt to avoid this pitfall by preparing
employees at all levels. Varian's management
was determined to implement TQM. Other
SMEs perhaps would not be so robust in the
face of the initial failure.
CASE STUDY 4---BETTS PLASTICS
(WREXHAM)
Brief background
Betts Plastics (Wrexham) manufactures high
volume plastic components for the packaging
industry. Injection moulding formed the main
3ATeachingCompanyProgrammeis part of a schemein the
UK in which a Higher Education Institution team
participates in a company plan intended to achieve
substantial and comprehensivechangein techniquesand
procedures. The scheme was devised in 1974/75 by a
working party appointed jointly by the then Science
Research Counciland the Departmentof Industry.The
scheme supports well over 400 current programmes
spread over all regions of the UK.
OME 24/I--H
101
manufacturing process. Its products include
closures, thin walled containers and pharmaceu-
tical products. Betts serves the food and
beverages, pharmaceutical, and cosmetics and
toiletry industries. In the last financial year,
turnover was approx. £8 million. The company
employs 97 people.
Why TQM and the main steps involved in its
implementation
The installation of a new managing director
in 1992 resulted in the formulation of a new
corporate strategy. Its main aims were to
increase profitability, enhance competitiveness,
and increase market share. Thus, the new top
management provided the impetus for change.
The next problem was how to change and what
to change. A Teaching Company Programme 3
was established to deal with these issues. The
available options were carefully examined with
the help of the academics involved. It was
consequently decided that the TQM concept
provided the best vehicle for the attainment of
corporate objectives. The company had gained
BS5750 accreditation in 1991.
Betts Plastics adopted the implementation
strategy described earlier in the paper. A cross
functional steering committee was established to
plan, implement, and control the introduction
of the Continuous Improvement (CI) pro-
gramme. Below the steering committee five
cross functional coordinating teams were set-up
to examine, for each area, the key issues, the
existing positions, the strengths and weaknesses
of the existing practices, the desired position if
different, the strengths and weaknesses of the
desired position, actions required to move
towards the desired position, financial and
human resources required to bring about the
required change, order of priorities, milestones,
and the timescale for the implementation.
Coordinating teams were chaired by members
of the steering committee. The recommen-
dations of each coordinating team were
discussed by the steering committee to ensure
consistency of purpose and to facilitate the
coordination of various initiatives. The outcome
of this process was an implementation frame-
work. As an initial step, the following ten
projects were identified as having a high
priority:
Introduce all Betts personnel to the concept
of continuous improvement via presentations.
102 Ghobadian, Gallear--Total Quality Management
Employ brainstorming sessions to gather
suggestions for improvement projects.
Perform a communication audit to establish
the current state of the documentation system.
Perform a supplier review.
Use news sheets to communicate the continu-
ous improvement message.
Arrange visits to customers for Betts em-
ployees, to help establish stronger links.
Introduce machine monitoring.
Introduce scrap graphs.
Perform a customer survey to ascertain
customer perceptions.
Form continuous improvement teams.
A 12 month time scale was established for
the implementation of the above improvement
projects. The task of the coordinating teams was
to establish quality improvement teams to carry
out the required project. Moreover, they were
required to instigate and launch new projects
following the green light from the steering
committee. The cascading approach ensured
that all employees participated in the continu-
ous improvement programme. Team work and
participation released the creativity of em-
ployees hitherto not fully utilized.
To monitor the success of the various
initiatives a number of quantitative measures
were developed. These included level of scrap
reduction, frequency of on-time deliveries,
conformance levels, and cost of quality.
Emphasis was placed on establishment of
positive measures to which all employees could
readily relate.
Impact~organizational changes resulting from
TQM
The initial education programme helped to
overcome scepticism and lay the foundation for
the introduction of the CI programme. This was
augmented with problem solving and team
working training. Training helped to clarify the
role and responsibility of employees in the CI
programme and the quality improvement effort.
Moreover, it helped to overcome the fear that the
CI process was a forerunner for the introduction
of a redundancy programme. The experience at
Betts indicated that small size in itself is not a
sufficient condition for openness, absence of
fear, or clarity of individuals' roles and contri-
butions. However, given the desire by the top
management it is relatively easy to overcome
these difficulties in a small organization.
Training was carried out by the Teaching
Company Associates. The effort and the span of
time required to train employees is size
dependent. Despite the existence of a continen-
tal shiftworking system it took Betts 6 weeks to
train all its employees, while it took the Royal
Mail 2 years to achieve this goal [37]. Resource
availability was not deemed to be a significant
obstacle to employee training. On the other
hand tight staffing levels at the shopfloor made
it difficult for some employees to take on
responsibility for quality. This limitation is
likely to be more prevalent in smaller compa-
nies.
Size of organization is likely to influence the
method and complexity of the communication.
Despite its size both horizontal and vertical
communications at Betts were considered to be
less than ideal. Information was guarded
jealously by some line managers, and communi-
cation between shifts was ineffective. To address
the perceived inadequacies, two new forms of
communication were introduced. The first was
a white board system to enable direct communi-
cation between production managers and
production personnel. This facilitated a free
flow of information between the two parties. In
addition, to further promote the CI programme
a series of monthly local news sheets were
published. As well as informing employees, the
news sheets offered a vehicle for recognizing
individual's efforts. This addressed another
problem area, namely lack of recognition. News
sheets helped to foster greater understanding.
The fiat structure and short decision making
process was an asset. Absence of multiple layers
of management meant that senior manage-
ments' enthusiasm was readily evident to
employees. Relatively simple and short com-
munication and decision making channels
allowed timely and effective distribution of
information. Moreover, absence of serious
political manoeuvring and functional fiefdoms
facilitated a reasonable degree of convergence
between individuals' objectives and corporate
objectives.
Attainment of customer satisfaction is one of
the primary objectives of TQM. This, in turn, is
dependent on all employees focusing their
attention on meeting customers' needs. To
improve the employees' understanding of the
value of their work to the customer and to
 Omega, Vol. 24, No. I
increase their understanding of customers'
requirements a series of group visits to key
customers were organized. The visits helped to
heighten the fledgling awareness that was in
existence.
Improvement projects have led to a number
of changes. Following a review the number of
suppliers were reduced. Order placement pro-
cedures, the moulding process, and order
dispatch processes were benchmarked against
customers and suppliers processes. The results
were used to improve various facets of these
activities. Process control was introduced in the
personal care moulding area.
Betts has achieved notable success. Customer
complaints are down by 40%. Machine up-time
shows 15% improvement. Material scrap has
been reduced by 90%, from £28,000 to £2,800
per month. After 24 months the culture change
is also very perceptible. Top managers and
employees alike are grasping the initiatives for
change. The show of commitment and under-
standing by top management was an essential
ingredient of the CI programme. However, the
programme has matured and now is employee
rather than management driven. Small size
helped to expedite the attainment of the
maturity stage.
Difficulties and problems of TQM
The implementation of the CI programme
was relatively smooth with few snags. It took a
little while to educate and convince the middle
managers and supervisors of its benefits. The
small size of the organization speeded up this
process and contributed towards its effective-
ness. It also took some effort to overcome
operatives' suspicions and convince them that
the CI programme was beneficial. Furthermore,
team working was not instantly embraced by all
employees. Early wins, readily visible in a small
organization, were important in overcoming mis-
givings and encouraging team work. Visibility
of teams made them highly effective agents of
change. The communication programme readily
overcame the problem of dissemination through
rumour and hearsay, thus, raising employees
understanding and interest. Coordination of
activities among cross-functional groups was
easily accomplished. Because of small number
of interest groups serious resistance to proposed
changes was not encountered. Functional
integration was readily achieved.
103
The simple organizational structure, newly
found open culture, and improved communi-
cation proved decisive in mobilizing operatives,
and bringing together cross functional teams.
Lack of internal specialist knowledge was not an
issue, nor was the difficulty of finding external
support.
CONCLUSIONS
Deductive research led the authors to put
forward a series of propositions regarding: (a)
the match between the inherent characteristics
of SMEs' and TQM; and (b) the impact of the
size on the strategy adopted for the implemen-
tation of TQM. These propositions were
examined with the help of four detailed case
studies. Two of the case studies were conducted
in small organizations, while the other two were
conducted in medium sized organizations. The
propositions put forward were inherently
complex and impalpable, and case methodology
therefore provided the most appropriate vehicle
for examining these suggestions.
It is argued with some justification that
management concepts appropriate to the needs
of large organizations may prove ineffective in
SMEs. Furthermore, application of unmodified
concepts developed in large organizations by
SMEs is likely to produce adverse results [21].
Therefore, the first aim of the primary research
was to examine the applicability of the TQM
concept in SMEs. The fieldwork clearly
indicated that the TQM concept could be used
by SMEs with considerable success. Introduc-
tion of TQM had helped the companies studied
to sharpen their market focus, to become more
efficient, to better harness their human re-
sources, and to improve their competitiveness.
Broadly, it appeared that the introduction of
TQM improves the likelihood of an SME's
long-term survivability and growth.
Gurus of quality and many practitioners
suggest that introduction of TQM heralds a
significant cultural change [15]. A comparison
between the experience of the SMEs studied
with that of larger organizations [14] revealed
that it was easier for SMEs to affect cultural
change. There are two likely explanations for
this observation. First, larger organizations
have more deep rooted and at the same time
diverse cultures. Furthermore, these organiz-
ations are more regimented. These combine to
104 Ghobadian, Gallear--Total Quality Management

make it more difficult for the larger organiz- individuals by the organizations studied. Em-
ations to affect cultural change. Second, the powerment of staff increases the credibility of
inherent characteristics of SMEs in some key TQM processes. It conveys the seriousness of
areas such as market focus, proximity of the intention to change the organization's focus
individuals and corporate goals, the extent of and adopt TQM principles and trust. Size of
the functional integration, employees aware- organization is not a guarantor of empower-
ness, and team spirit, are likely to be closer to ment. The organizations studied had to plan
the requirements of the TQM environment. The and implement changes to empower their
case studies showed that, in these respects, employees. However, this appeared to present
SMEs possessed the basic core, but needed to no particular difficulty.
build on the existing foundation. In broad terms, the inductive research
In line with the laws of motion, where there appeared to support the analysis depicted in
is change, there is also resistance to change. In Fig. 3. Certain inherent characteristics of TQM
the SMEs studied, the small number of appeared to more readily fit the characteristics
management layers, lack of strong functional most prevalent in SMEs, while others appeared
interests, and absence of rigid structures and to be independent of size. Generally, large
formalization dampened the ferocity of the organizations as well as SMEs need to adapt
resistance to change. It appeared that employees to the requirements imposed by TQM, but
accepted the need for change and the remedy in some key areas the necessary nucleus for
offered by the change. Possible reasons for this the implementation of TQM is present in
phenomenon were put forward previously. The SMEs.
case studies largely substantiated those argu- When it comes to the implementation of
ments. In addition, it appeared that the inherent TQM, most gurus point out the importance of
flexibility of SMEs, and the proximity between top managements' visible support and involve-
the requirements of TQM and the inherent ment. The case studies showed that the distance
characteristics of SMEs, were also important in between the SMEs' strategic apex and the coal
this respect. face was small. This gave the management
Change can realistically occur if management significant visibility and the opportunity of
recognizes its necessity. Arguably recognition managing by example, a significant advantage
can occur more easily in large organizations when implementing TQM. In general, it
because of their plethora of resources, extended appeared that it was relatively easy for the
management structure, and wide range of management to communicate its vision, set the
contacts. The recognition that change is direction, and provide leadership.
required is a necessary but not a sufficient In SMEs, the strategic apex is also close to
condition for the implementation of change. It customers and suppliers. This makes it easy to
is also necessary: (a) to identify the nature and develop market focus in SMEs. Nevertheless,
the type of change required; (b) to plan and the companies studied had instigated a variety
implement the necessary change; and (c) to have of programmes to improve their relationship
the desire and persistence to see change through. and communication with their customers and
Based on this evidence, SMEs experienced suppliers. In a market focused company all
difficulties in relation to points (a) and (b). The employees should ideally be aware of market
top management of SMEs appeared to play a requirements. In SMEs operators are normally
decisive role in relation to point (c). In SMEs an close to customers, and the case studies showed
enlightened top management could readily that it was relatively simple to improve
implement far reaching change. On the other operators' market awareness.
hand a backward looking top management Development of deep understanding of the
could effectively block progress indefinitely. concepts underpinning the quality issues and
Recognizing the importance of individuals, TQM philosophy and how to introduce the
trust, and empowerment of staff were among concept is by common consent an important
other issues, where SMEs were thought to be element of the implementation processes. The
close to the requirements of TQM. The Varian case showed that the development of
overwhelming impression we formed in con- clear understanding among managers and
ducting the studies was the high value placed on supervisors will increase the likelihood of
 Omega, Iiol. 24, No. 1 105

acceptance and smooth the implementation implement. Size was an important factor both in
path. It is a necessary but not a sufficient the design of the system and its effectiveness.
condition that the top manager or the owner Aligning the organization's structure and
develops a thorough understanding of the management procedures and practices with the
concepts and issues. This understanding should needs of the TQM environment is considered of
be extended to other managers and supervisors. paramount importance in models propagated
The case studies showed that the necessary by the various quality awards and the model
understanding can initially be developed proposed by Ghobadian [13]. Three of the
through execution of careful education and companies examined made some organizational
training programmes. The organizations studied change. Despite the popular belief, at least
recognized that education and training of all medium size organizations also may suffer from
employees was a fundamental element of a the problem of extended layers of management.
successful TQM journey and despite their size Team-work is another important dimension of
made a significant investment in this area. It TQM environment. The closeness of employees
appeared that SMEs did not face major created the platform to introduce team work.
difficulties in delivering the necessary training. However, the SMEs that were studied had to
In some cases training was augmented by work hard to create effective teams. Team spirit
discussion with organizations that have success- and team work do not automatically happen
fully implemented TQM and examination of just because an organization is small, but the
their approach. case studies suggest that it is easy to achieve
Successful implementation of TQM requires these in SMEs. Another aspect of TQM
company wide awareness and early converts. environment is cross-functional and integrated
The case studies showed that it was relatively operations. The organizations studied were able
easy to create company wide awareness in to introduce cross-functional teams without
SMEs. Furthermore, early wins were highly much difficulty. The operations were to a large
visible in the SMEs. This helped to create trust degree integrated. However, the case study
and build momentum. Furthermore, teams companies, by making a number of simple
enjoyed a high level of visibility. This made their changes, were able to improve the extent of
work more effective. vertical and horizontal integration.
Effective communication is an integral part of The perception that BS5750 is a step towards
the implementation process. The complexity of TQM was a common factor in the four
the communication problem increases with size. organizations studied. Implementation of
Moreover, for a variety of reasons large BS5750 appeared to give these organizations a
organizations are less open than SMEs. In the degree of standardization and procedural
SMEs studied both vertical and horizontal control. The introduction of BS5750 was not
communications appeared to be informal but without problems and close control should be
reasonably effective. Employees are the engine exercised in its implementation. It is important
of a small business--they determine how far and that SME's do not regard the standard as a
how fast the business will grow [26]. They need 'quick fix' to retaining customers. This type of
to clearly know what is expected of them and attitude could prove harmful, as often it will
how they can contribute to the attainment of lead to senseless implementation of unnecessary
organizations goals. Establishment of effective systems and procedures that are detrimental to
communications is an important factor in this effectiveness of the organization and incapable
respect. Management of Wallace Inc, a Baldrige of supporting the creation of a TQM environ-
Award winner, think that the close proximity ment.
and constant communication between manage- Contrary to most quality gurus' philosophies,
ment and staff in small companies is critical to two of the organizations studied did not employ
the TQM implementation process [5]. Each of a formal recognition scheme. In large organiz-
the organizations studied appeared to have ations individual efforts can easily be lost in the
recognized the importance of good communi- bureaucracy and hence there is a greater need
cations and established systems for this purpose. for recognition schemes. In SMEs individuals
The necessary improvements to the communi- can see their efforts translated into tangible
cations system were relatively simple to results. This can also be seen by their peers and
106 Ghobadian, Gallear--Total Quality Management
fellow workers. Therefore, recognition schemes
are not as useful in SMEs [7]. The experience of
the companies studied did not support the
proposition that SMEs cannot develop sophisti-
cated measurement systems because of resource
problems.
It was argued that recognition by manage-
ment was a key to the diffusion of TQM in
SMEs. The case studies did not allow us to
identify the factors that inhibit recognition.
Availability of resources was identified as
another inhibiting factor. The experience of the
companies studied suggests that financial
resources did not present any difficulties.
Availability of time and to a lesser extent
in-company knowledge, appeared to have both
delayed the introduction of TQM and slowed
down its progress once introduced. In general,
resource issues did not appear to preclude the
implementation of TQM in SMEs.
It is also easy in an SME for management and
staff alike to become over ambitious in their
quality improvement efforts. Unrealistic objec-
tives lead to a situation where expectations start
to exceed achievements. This in turn is likely to
de-motivate employees and hinder the success-
ful implementation of TQM. Unrealistic targets
were a problem in three of the cases studied.
REFERENCES
1. Anon. (1978) A National Strategy for Quality, GB
Department of Prices and Consumer Protection,
London.
2. Anon. (1988) Quality Management--A Guidefor Chief
Executives. DTI, London.
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ADDRESSFOR CORRESPONDENCE:Professor Abby Ghobadian,
Centre for Interdisciplinary Strategic Management
Research, Middlesex University Business School, The
Burroughs, London NW4 4BT, UK.