Professional Documents
Culture Documents
Chapter 1
Introduction
In the world of commerce, businesses aim for quality, efficiency, and profit. The ISO
9000 is a family of standards that provide a vehicle for consolidating and communicating
concepts in the field of quality management (Hoyle, 2018). It contains some of the ISO’s
best-known standards that provide guidance and tools for companies and organizations that
want to ensure that their products and services consistently meet customer requirements
covers several aspects of quality management and it is possible to consider the content of
ISO 9000 as the formalization and rationalization of total quality management principles
(Rillo, 2010-2011).
ISO 9001 contains requirements for a quality management system. These are
requirements that the industry representatives of national standards bodies believe will
adversely affect the quality of products and services were they not to be met. A quality
management system is that part of an organization’s management system that creates and
retains customers by understanding their needs and designing and providing products and
services that satisfy those needs (Hoyle, 2018). Implementing quality management systems
affects the performance of an organization. It helps the organization meet its customers’
requirements as well as the organization’s requirements. It helps boost the confidence and
morale of an organization which leads to more customers and more repeated sales. It helps
ensure compliance and adherence to provisions and regulations of products and services
while being cost-efficient which allows them to expand (American Society for Quality, 2015).
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ISO 9001 is the most generic standard for a quality management system that is
applicable to many industries and has different versions. ISO 9001:2015 is the latest version
of the standard and it helps ensure that customers get reliable quality goods and services.
This version also focuses more on performance as compared to its older versions.
Many companies are now applying for ISO 9001 certification. And it is believed that it
commonly known as Metro Manila, is the National Capital Region (NCR) of the Philippines.
This is the most populated region in the Philippines with more than eleven million residents.
NCR is the center of education, government, culture, and economy of the country and is
designated as the Global Power City. It is also an important center for international
diplomacy in the country because it is the home to all consulates and embassies in the
research, fashion, art, media, finance, and commerce, both locally and internationally
The NCR is composed of four administrative districts. The First District is the Capital
District composed of the City of Manila, the capital city of the country. The Second District is
the Eastern Manila District which is composed of Mandaluyong City, Marikina City, Pasig
City, Quezon City, and San Juan City. The Third District is the Northern Manila District,
which is composed of Caloocan City, Valenzuela City, Malabon City, and Navotas City. The
Fourth District is the Southern Manila District, which is composed of Las Pinas City,
Muntinlupa City, Paranaque City, Pasay City, Taguig City, Makati City, and the Municipality
of Pateros (Madarang, 2019). Figure 1 presents the map showing the official administrative
The struggle of each company in Metro Manila to sustain its growth is a challenge.
Profit is driven by revenue and costs. Cost reduction is a result of efficient operation
(Madanhire and Mbohwa, 2016). Companies are expected to find solutions on how to be
more efficient and effective. ISO 9001 facilitates quality in operation which improves
efficiency in operations.
Since ISO 9001 aims to improve the quality in the delivery of service, operational
efficiency is anticipated, and profitability will follow. In this context, this study aimed to
establish whether there is a relationship existing between earning an ISO 9001 certification
and improvement in financial performance. Eastern Manila District, which has a very vast
economic environment, will be a good venue to test the relationship between these two
Theoretical Framework
Quality management system helps improve its overall performance and provides a
sound basis for sustainable development initiatives. It gives an organization the ability to
consistently provide products and services that meet customer and applicable statutory and
satisfaction and address risks and opportunities associated with its context and objectives.
management systems used by organizations to provide quality products and services and
defined as an evolving management system with tools, methodologies, and values which
are used to increase customer satisfaction (Omar, 2017). ISO 9001 and TQM are not
directly related to each other for TQM is a broader principle. But ISO 9001 can be an
excellent start to achieve TQM in an organization. There are several total quality
indicated, such as William Edward Deming’s Theory of Total Quality Management (TQM),
Philip B. Crosby’s Theory, Joseph Moses Juran Theory, European Foundation for Quality
Deming’s Theory of Total Quality Management is about the fourteen points of quality
management that he has identified called the Deming Model of Quality Management, the
system of profound knowledge and the Shewart Cycle, also known as the Plan-Do-Check-
Act (PDCA) Cycle. According to Deming’s Theory, quality is equal to the result of work
Philipp Crosby’s theory believes in the principle “Quality is free.” and “Doing it right
the first time.”. His whole concept of quality is full compliance with customer requirements.
This is based on four absolutes of quality management and the list of fourteen steps to
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quality improvement that he has developed called the basic elements of improvement
(Agrawal, 2019).
Joseph Juran Theory includes the Quality Trilogy, which is made up of the three
major activities of total quality management which are quality planning, quality improvement,
and quality control. This states that all quality improvement actions should be carefully
The EFQM Framework is based upon the criteria covering the basis of what a
company does and criteria covering what the company achieves. This framework refrains
from prescribing any one methodology because it recognizes that there is a diversity in
Dr. Kaoru Ishikawa’s Theory has pointed out the seven basic tools for quality
improvement: the Pareto analysis that identifies the big problems in the processes, the
Cause and Effect Diagrams, Stratification that analyzes how the information and data
collected fits together, Check sheets, Histograms, Scatter Charts and Process Control
ISO 9001 is based on quality management principles described in ISO 9000. These
Conceptual Framework
system practices and the financial performance of the target respondents. In order to
conduct the study, the framework is designed by following the flow based on the correlation
of two variables independent and dependent variables, which was used as a guide to the
study:
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INDEPENDENT VARIABLE
ISO 9001 Quality Management Principles
• Customer Focus DEPENDENT VARIABLE
• Leadership Financial Performance
• Employee Engagement • Revenue/Sales
• Process Approach • Cost Minimization
• Profitability
• Improvement
• Evidence-based Decision Making
• Relationship Management
The independent variable was the data controlled by the researcher in this study,
wherein the effects can be measured and compared. It contains the ISO 9001 quality
management.
The dependent variable should vary because of the changes in the independent
variable because that proves their relationship. This contains the financial performance of
This study used the conceptual framework in Figure 1 to assess the level of
compliance to ISO 9001 Quality Management Principles and its relationship to the financial
This study aimed to assess the level of compliance to ISO 9001 Quality Management
Principles and its relationship to the financial performance of companies in Eastern Manila
District.
2.2. Leadership
2.5. Improvement
3. How do the respondents assess their financial performance in terms of the following
aspects:
3.1. Revenues/Sales
3.3. Profitability
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Hypothesis
This study focused on the quality management principles in ISO 9001 and the
profitability of companies in the Eastern Manila District. This study involved customer focus,
decision making, and relationship management. This study also included financial
This study involved the publicly listed ISO 9001 certified companies in Eastern Manila
District that are in the Business World Top 1,000 Corporation for the year 2018 that are
engaged in different industries. These industries include banks, other financial institutions,
electricity, energy, power and water, food, beverage and tobacco, construction,
infrastructure and services, holding firms, property, media and retail. Individual respondents
were the employees in the financial department as the company’s representatives. This
study believed that these employees are in the right position to vouch about the compliance
The results of the study will provide insight and advance knowledge to serve the
Industry. This study may help them understand the role and importance of ISO 9001
Accreditation to their businesses and its impact on their financial performance. This may
also help them in future decisions regarding the processes of their companies and business
Investors. This study may help them have an idea of the true value of their
Customers. This study may help them understand the impact of ISO over the
ISO Accrediting Firms. This study may help them evaluate the practices that they
implement and guide them on the practices that they may implement in the future.
Government. This study may serve as an input or guidance to them if they will
Academe. This study may give them an insight on how to comply with ISO 9001 and
Future Researchers. This study may help as related literature if they decided to
conduct similar research about ISO 9001 and its correlation to profitability and other factors
Definition of Terms
For better understanding and interpretation of the study, the following terms are
defined:
Cost Minimization. It is a financial strategy that aims to achieve the most cost-
striving to exceed customer expectations and meeting the demands and requirements of the
customers.
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EMD. It refers to Eastern Manila District or the second district of Metro Manila.
principles of quality management that means people should be competent, empowered, and
engaged at all levels throughout the organization to enhance the capability of the
that means there will be desired results if the decisions will be based on analysis and
quality objectives will be achieved if the leaders at all levels establish unity of purpose and
Process Approach. It is one of the principles of quality management that means the
understood effectively and efficiently so that consistent and predictable results are achieved.
Profitability. The relationship between revenues and costs generated using the
organization should effectively manage its relationships with all interested parties to sustain
success.
company.
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Standard. This refers to the ISO 9001 Certification which is the international standard
that specifies the requirements for a quality management system. This also includes the
Chapter 2
This chapter presents the related literature and studies regarding ISO 9001
accreditation and financial performance. It aims to give a wider and better understanding of
ISO 9001 Accreditation, such as the related international standards and compliance to these
standards. This chapter also includes financial performance focusing on revenue/sale, cost
minimization, and profitability. These materials were gathered to understand deeper the
research, to answer the problems in the study, and analyze results and findings.
consensus among experts in every field. It has no power to enforce its certification for it is
voluntary for every organization. It just aims to provide international coordination and
United Nations Standards Coordinating Committee’s (UNSCC) union started the ISO in a
conference for standardizing organizations in London in 1946. The first proposed name of
by the English and the Americans at that time. But the Swiss did not like the word
“coordinating” because it limits the purpose and scope of the organization. In the end, all of
them unanimously chose ISO. It was chosen because “iso” is a Greek term meaning “equal”.
All things for the organization are sorted out in London. There were different subcommittees
composed of delegates and has different jobs and purpose (Kuert, et al., 1997).
ISO was formed since 1947, companies across the world find that ISO has an impact
certain issues environmentally, social responsibility, and quality may need to be addressed
The first standard ever published was the ISO/R 1:1951 Standardization Reference
Temperature for Industrial Length Measurements. At this time, it was not referred to as a
standard but a recommendation. This standard has been updated numerous times and is
now called ISO 1:2002 Geometrical Production Specifications (GPS)- Standard reference
In 1987, ISO publishes its first quality management standard, the ISO 9000 family
(Kuert, et al., 1997). The application of ISO standards is based on products and services
reduction in variation. Because of this, trading organizations and countries have increased
confidence and decreased effort in verifying their suppliers, the products and services that
they have offered. This ensures acceptable and quality products and services (Hoyle, 2018).
ISO 9000 family is adapted to specific sectors and industries. The sector-specific
applications of ISO 9000 are ISO 13485: Medical Devices, ISO 17582: Electoral
Organizations at All Levels of Government, ISO 18091: Local Government, ISO/TS 22163:
Petroleum, Petrochemical and Natural Gas Industries and ISO/TS 90003: Software
The ISO 9000 family contains a series of standards such as ISO 9001: Quality
- Guidance to Achieve Sustained Success, and ISO 19011: Guidelines for Auditing
ISO 9000: Quality Management Systems-Requirements. The ISO 9000 contains the
description of terms, language, and basic concepts used to help the organizations to easily
adopt the ISO 9001 (Manders, de Vries, and Blind, 2015). This also includes a description of
specifies the basic requirements set for quality management systems (Manders, de Vries,
Sustained Success. ISO 9004 contains a description of the objectives for managing long
ISO 19011: Guidelines for Auditing Management Systems. The focus of ISO 19011 is
standards bodies of more than 160 countries, first published ISO 9000 in 1987. And since
then, the standard underwent many revisions. The standard underwent major revisions in
2000 and 2008. The most recent versions of the standard, ISO 9000:2015, and ISO
The ISO 9001 is based on seven quality management principles that senior
Customer Focus. This means that meeting customer requirements and striving to
exceed customer expectations is one of the primary focus of quality management. When an
organization attracts and retains customers and other interested parties’ confidence by
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understanding the current and future needs of customers and related parties, sustained
success is achieved. Customers and their satisfaction are one of the important drivers for
sustainable business because of the effect of the customers in driving the revenue. Giving
requirements of the customers is the primary purpose of quality management systems. This
does not concern only the current expectations and requirements of the customers, but also
the future. The principle of customer focus, if implemented in the company, has the following
benefits: it may increase customer value; it may increase customer satisfaction; it may
improve customer loyalty; it may enhance repetition of business; it may enhance the overall
reputation of the organization; it may expand customer base; and it may result to an
increase in market share and revenue (Attakora-Amaniampong, Salakpi, and Bonye, 2014).
the organization. These practices are: (1) company should recognize the direct and indirect
customers for they are the one who receives value from the organization; (2) company
should understand the current and future needs and expectations of the customers; (3)
company should link their objectives to the needs and expectations of the customers; (4)
company should communicate the needs and expectations of the customers to the whole
organization; (5) in order to meet the needs and expectations of the customers, the
company should plan, design, develop, produce/deliver and support goods and services; (6)
company should measure and monitor customer satisfaction and take appropriate actions in
accordance with the results; (7) company should determine and take actions on the needs
and expectations of the interested parties that can affect customer satisfaction; and (8)
company should manage actively its relationships with customers in order to achieve and
Leadership. To achieve the organization’s quality objectives, leaders at all levels are
needed to establish unity of purpose, direction, and engagement of people to align its
The organization’s quality objectives are achieved if the leaders at all levels establish
unity of purpose and direction and create conditions to engage its people. The principle of
leadership, if implemented in the company, has the following benefits: it may increase
effectiveness and efficiency in meeting the quality objectives of the organization; it may
improve the coordination of the processes of the organization; it may result to better
communication of the functions and levels in the organization; and it may improve and
develop the organization and its people in delivering desired results (Alharbi and Yusof,
2012)
organization. These practices are: (1) company should communicate its strategy, processes,
policies, mission and vision all throughout the organization; (2) company should create and
maintain fairness, shared values and behavioral ethical models at all levels in the
organization; (3) a culture of integrity and trust should be established by the company; (4) an
company should always make sure that the leaders at all levels are good and positive
examples to the members of the organization; (6) organization should provide its employees
with required resources, trainings and seminars and authority to act with accountability; and
(7) company should inspire, recognize and encourage the contributions of its employees
that it is important to involve competent, empowered, and engaged people at all levels
throughout the organization and respect them as individuals. The organization needs to
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recognize, empower and enhance the employee’s competence and capability to create and
deliver value that leads to the achievement of the organization’s quality objectives
(Nasomboon, 2014).
People should be competent, empowered, and engaged at all levels throughout the
organization for this will enhance the capability of the organization to create and deliver
value. The principle of engagement of people, if implemented in the company, has the
following benefits: it may improve the people’s understanding of the quality objectives of the
organization and increase their motivation to achieve them; people of the organization may
creativity, and initiatives of the people; it may enhance people satisfaction; it may enhance
collaboration and trust throughout the organization; and it may result to increased attention
to culture and shared values of the organization (American Society for Quality, 2015).
observed by the organization. These practices are: (1) company should let the people know
the importance of their contribution to the entity as an individual and promote such to
motivate its employees; (2) collaborations throughout the organization should be promoted;
(3) there should be open discussion and sharing of experiences and knowledge between the
employees of the company and it should be facilitated by the company; (4) company should
empower people for them to take initiatives without fear and determine the constraints to
their performance; (5) company should acknowledge and recognize the contributions,
performance against personal objectives; and (7) to assess and monitor employee
satisfaction, the company should conduct surveys, communicate the results and take
processes. Understanding how the results are produced by the processes and managing
to optimize the system and its performance. Consistent and predictable results will be
2015)
interrelated processes that must be managed and understood effectively and efficiently so
that consistent and predictable results will be achieved. The principle of process approach, if
implemented in the company, has the following benefits: it may shift the focus of all efforts
on the key processes and opportunities for improvement; it may result to having the system
of aligned processes produce consistent and predictable outcomes; there may be effective
process management, efficient use of resources and reduced cross-functional barriers which
sill optimize the system of the company; and there may be consistency, effectiveness, and
efficiency in the processes of the company that will enable the company to provide
observed by the organization. These practices are: (1) objectives of the system and the
processes needed to achieve them must be defined by the company; (2) company should
establish, accountability, responsibility and authority for managing processes; (3) capabilities
of the company should be understood and resource constraints prior to action should be
whole; (5) to achieve the organization’s quality objectives effectively and efficiently, the
company should manage their processes and the interrelations as a system; (6) company
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should make sure that all necessary information is available to operate and improve the
processes of the system and to analyze, evaluate and monitor the overall performance of
the system; and (7) company should manage all the risks that can affect the process outputs
and the overall outcomes of the quality management systems (International Organization for
Standardization, 2015).
performance, to react to changes in its internal and external conditions, and to create new
The principle of improvement means that the ongoing focus on improvement helps
benefits: it may improve the process performance, capabilities of the organization, and
customer satisfaction; it may enhance the focus on the root-cause investigation and
determination, and this may be followed by prevention and corrective action; it may enhance
the company’s ability to anticipate internal and external risks and opportunities and its ability
incremental improvement; it may improve the use of learning for improvement; and it may
enhance the drive for innovation (American Society for Quality, 2015).
observed by the organization. These practices are: (1) company should promote the
establishment and improvement objectives at all levels throughout the organization; (2)
company should train and educate its employees at all levels on how to apply basic
methodologies and tools to achieve improvement objectives; (3) company should make sure
that its employees are competent to successfully complete and promote improvement
projects; (4) company should develop and deploy processes to implement improvement
projects throughout the organization; (5) the planning, implementation, completion, and
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results of the improvement projects should be tracked, reviewed and audited; (6) in
developing new or modified goods, services and processes, the company should integrate
the analysis and evaluation of facts, evidence, and data analysis. This leads to greater
confidence and objectivity in decision making and eventually leads to producing desired
Desired results in the quality management systems are more likely to be produced if
the decisions will be based on the analysis and evaluation of gathered or available data and
company, has the following benefits: it may have a significant improvement on the decision-
making process of the organization; it may improve the entity’s process performance
assessment and its ability to achieve its objectives; it may also improve the organization’s
operational effectiveness and efficiency; it may increase the ability to review, challenge and
change decisions and opinions; and it may result to an improvement in the ability to
demonstrate the effectiveness of past decisions (American Society for Quality, 2015).
should be observed by the organization. These practices are: (1) company should
determine, measure, and monitor the key indicators to demonstrate the performance of the
organization; (2) company should ensure that all the data or information needed will be
available to the relevant people; (3) company should ensure the sufficiency, accuracy,
reliability, and security of all the data or information; (4) company should analyze and
evaluate the information or data using the appropriate methods; (5) company should make
sure that the people who will analyze and evaluate data as needed are competent; and (6)
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company should make decisions and actions that are based on pieces of evidence, and it
Standardization, 2015).
relationship with all its interested parties, including their suppliers and partner networks, is
more likely to achieve sustained success because this optimizes the impact of related
The organization should effectively manage its relationships with all interested
parties which include its suppliers, partners, investors, employees, customers, and society
as a whole. This will help them sustain success. The principle of relationship management, if
implemented in the company, has the following benefits: it may enhance the performance of
the organization because the organization and its interested parties will be responding
constraints and opportunities relating to each other; it may result to the interested parties
having a common understanding of their values and goals; there may be shared resources
and competence and quality-related risks will be managed resulting to the significant
increase in capability to create value for interested parties; and there may be a well-
managed supply chain that will provide a stable flow of goods and services (American
be observed by the organization. These practices are: (1) relevant interested parties are
determined by the company and their relationship with the company; (2) interested party
relationships that needs to be managed should be determined and prioritize; (3) the
company should establish relationships that will balance their short-term gains and long-
term considerations; (4) the company and its related parties should pool and share important
information, resources and expertise; (5) company should measure and monitor
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performance and give feedback to its related parties, as appropriate, to enhance everyone’s
improvement activities with interested parties; and (7) improvements and achievements of
The ISO 9001 has four levels or tiers that are based on the companies’
Level 1: ISO 9001 Quality Manuals. The ISO 9001 Accreditation Level 1 states that
the company should have quality manuals which will be the rules of the house. This includes
method used to ensure compliance and quality in the processes of the company. This will
also define the responsibilities of each level and member of the organization.
describing the organization’s policies written in conformance with the ISO 9001 standards,
the scope of quality management systems, details of any exclusion from the scope, quality
policy and objectives, description of the organization or the company, process identification
business plans, and the standard operating procedures of the company. It is the flow of
The ISO 9001 Accreditation Level 2 contains time-dependent documents wherein the
overall processes and high-level procedures are described, the documents needed for
effective planning, implementing and monitoring of controls and the employee handbook.
the implementation of quality manuals in the lower-level procedural documents such as work
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directions and instructions, instructional computer screens, and reference charts all around
the company. It guides the members of the organization on the right procedures on a step
by step fashion. They are the necessary information needed to perform tasks.
instructions to complete tasks and training syllabus for employees or members of the
organization.
the implementation of quality manuals in the forms, templates used for data gathering that
are part of the processes of the company. It contains generally time-dependent documents
that specify data required, forms that are filled in at all levels for recording purposes, and
documentation that are pieces of evidence that work instructions are performed accordingly
(Schlickman, 2003).
Figure 3 presents the matrix that describes the four levels of ISO.
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The International Organization for Standardization are the ones developing the ISO
Standards but they are not, in any way, involved in granting certifications to companies.
They do not issue certificates. External certification bodies perform the issuance of
shows the steps in getting an ISO Certification from external certification companies.
The procedure starts with Audit Preparation. After signing an application, the auditor,
selected by the Head of the External Certification body following their approval and
qualifications, prepares for the audit based on the questionnaire filled out by the applicant.
documentation is audited. (2) Assessment of the site conditions of the applicant and discuss
the observations with the concerned personnel of the organization to have them prepared
for the Stage 2 Audit. (3) Assessment of the applicant’s status and its understanding of the
obligations, process and location and scope of the management system of the applicant. (5)
Review of the allocation process and agree with the details of Stage 2 Audit. (6) Create
special focus for Stage 2 Audit planning. (6) Evaluate if management review and internal
In Stage 1 Audit, if there are any weaknesses identified, the applicant must correct
In Stage 2 Audit or Certification Audit, the auditors review and assess the
effectiveness of the management system installed and implemented by the client based on
ISO 9001 Standards. They question the employees, examine relevant documents,
guidelines, records and orders, and visit relevant areas in the organization to assess the
fulfillment of the requirements of the standards. This will be documented in the audit report.
After the Certification Audit is the Issuance of the Certificate. The procedures for
certification are reviewed and released by the Head of the Certification Body. Only when the
identified non-conformities have been corrected by the applicant and accepted and verified
by the audit team, shall the certificate be issued to the applicant with a validity of three
years.
conducted by the external certification bodies to ensure compliance and monitoring except
when the recertification audit is performed. A recertification audit takes place before the
In the previous versions of the ISO 9001, there are requirements stated for a quality
manager. The quality manager is common to many companies, is often designated as the
The quality manager is tasked with the following: understanding the needs of
systems processes; customer focus and product conformity; responsibility and authority for
the quality management systems; monitoring quality objectives established and reporting its
status to the top management; managing internal and external communication; releasing of
products and services that successfully meet the quality requirements; internal audit
planning and management; and being in charge of nonconformity and corrective action
processes. These tasks are not the sole responsibility of the quality manager. The quality
management systems need to be supported by the top management and having a quality
manager does not replace a fully supportive top management, no matter how competent the
ISO 9001 is considered as a pillar of quality movement. It is a key tool that allows the
growing internationalization of organizations and the acknowledgment of the need for quality
excellence model. TQM and business excellence models are broad and most principles
present in them are not present in the ISO 9001. But this can be an excellent start in
Total quality management is a continuous effort by the company to ensure that there
is long-term customer satisfaction and customer loyalty. Many quality gurus contributed to
this movement. Some theories developed by quality gurus are Deming’s Theory of TQM,
Philip Crosby’s Theory, Joseph Juran Theory, EFQM Framework, and Ishikawa Theory.
collaborator of the Shewhart Cycle, which is named after the statistician Walter Andrew
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Shewhart, the main author. His theory revolves around three concepts including the
Shewhart Cycle, the fourteen points of quality management, and the system of profound
knowledge. His theory states that quality is equal to the result of work efforts over total costs
(Akhter, 2016).
The Shewhart Cycle is also known as the Plan-Do-Check-Act (PDCA) Cycle that is
usually used when starting or developing a new project, product or service, defining
repetitive work processes, planning data collection and analysis, and working for continuous
improvement (Akhter, 2016). Figure 5 presents the steps in the Shewhart Cycle.
Figure 6 illustrated on the next page presents the Fourteen Points on Quality
Management, which is also known as the Deming Model of Quality Management. It is a set
of management practices that helps increase the quality and productivity of companies.
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Philip Crosby’s Theory. Philipp Crosby is the former president of the American
Society for Quality (ASQ) known for his principle “Quality is free”, which means that money
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that an organization spent on quality is well spent. His principle is “Doing it right the first
time.” and defined quality as full and perfect conformance to the requirements of the
customers. Crosby’s theory of quality management is based on the four absolutes of quality
The four absolutes of quality management are principles that Crosby has defined to
achieve zero defects in the process of an organization (Silvestro, 2015). Figure 8 presents
organization build an effective quality program. The following are the fourteen basic
quality improvement team. (3) Measure the current processes to determine quality issues.
(4) Calculate the cost of poor quality. (5) Quality awareness is the key to success. (6) Take
corrective actions to quality issues. (7) Monitor the quality improvement progress and plan
for zero defects. (8) Effective trainings for supervisors about quality improvement. (9) Hold
zero defects days. (10) Involve the whole organization in the quality improvement goals. (11)
Eliminate the causes of errors in the process. (12) Recognize the efforts of every member of
the organization. (13) Create quality councils. (14) Repeat from step one because
Joseph Juran Theory. Joseph Juran defined quality as fitness for use that results from
the quality of design, quality of conformance, availability, safety and threat of harm, and field
of use. Juran broke down the requirements of successful total quality management intro
three major activities, such as quality planning, quality controlling and quality improvement,
also known as the Quality Trilogy (Neyestani, Principles and Contributions of Total Quality
Management Gurus on Business Quality Improvement, 2017). Figure 9 presents the quality
trilogy.
Figure 10 displayed on the next page presents the EFQM Model. The EFQM Model
was used to shape the quality policies of organizations and to detect areas that need
improvement This model consists of five enabler criteria and four result criteria.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 31
The enabler criteria show the organizational areas and the results criteria show the
Ishikawa Theory. Dr. Kaoru Ishikawa was a Japanese quality guru that proposed the
seven basic quality tools. Figure 11 shows the seven basic quality tools.
Financial Performance
revenues and costs generated using the firm’s assets-both current and fixed- in productive
activities. A firm can increase its profits by increasing revenues and/or decreasing costs
organization. In financial management, this objective is carried through together with wealth
maximization. As the company maximizes its profit it maximizes the value in the long run.
The challenge for the company is to sustain its profitable standing. The measurement used
by the companies in determining their profit is the earnings per share or EPS. EPS
represents the stake of each common or ordinary stockholder from the total earnings of the
company. Hence, the earnings are derived from the net income of the company for a
Profit can become exponential if you manage your assets well. New investments
better growth. It is expected that a wise investor will shed its capital for ventures that would
yield greater profits, shorter payback, and return on investment is tremendous in the long
So how does the profit being managed? Net profits are basically the remainder of the
revenues received from the expenses incurred. Revenues are the amount sold or services
rendered in a particular period. Expenses are the amount incurred for the same period as
you earn the revenues. The expenses could be categorized as the cost of goods sold or the
cost of sales for manufacturing or merchandising and service industry, respectively. Gross
profit is what matters to most companies for this is the pot that they can directly control.
Normally, the cost of goods sold and the cost of sales are directly proportional to the
revenues i.e. as the revenue increases these expenses increase as well (Harris, 2011).
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 33
economic benefits that are earned from the normal operations of an entity. This will take the
form of sale of goods, sales of services, interest earned, royalty fees received, dividends etc.
The economic benefits may take the form of cash, receivables, and other forms of assets.
These revenues must be measured using the fair value of the consideration received or to
be received. Revenue is recognized only if the following criteria were met: (1) there is a
probability that any future economic benefit associated with the revenue will flow in the
company or organization; and (2) the amount can be measured reliably (International
Another part of profit is cost or expenses. Expenses can be directly or indirectly. Per
internal revenue code, the expenses particularly the cost of services. Cost of services is part
of determining the gross receipts which will be taxable. Cost of services includes the
following: (a) personnel costs or labor-related expenses including cost of consultants and
other specialists directly rendering the revenue; and (b) cost of upkeeping the facilities and
plants used in the delivery of services, this cost includes depreciation if the assets are
owned or lease of the equipment being used in the operations (Villaluz, 2011).
It should be noted that there are differences in the way it is reported in compliance
with the tax laws vis-à-vis complying with the accounting standards, but one of the notable
differences is the timing in recognition of these expenses. Nevertheless, the expenses must
be recognized whether it is for tax purposes or for reporting. At the end of the day, tax itself
is a form of expense. The expense affects the results of the profit based on management
Management would like to make sure that the costs were controlled to maximize
profit. Costs have to be controlled in a way that is should remain committed to plan which is
called the budget. Budget is a formal presentation of the financial plans of the company. The
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 34
company designates someone in-charge called the controller. While the tasks of the
controller are broad, the profit needs to be protected by controlling the expenses. In the task
of the controller, they have to identify which are controllable and uncontrollable. Normally
uncontrollable are those affected by factors external to the company such as regulation,
laws, taxes, macroeconomic factors etc. Installing a controller allows the company to ensure
that the profit is maximized by reducing costs, certain activities were installed in the
company’s policies and processes. These activities were called controls. Cost control
mechanism can be installed primarily to the activities that are directly attributable to cash
(Weber, 2011).
Metropolitan Manila or NCR is the capital region of the Philippines and is located
directly below the Central Luzon Region. It lies along the land draining Pasig River and
Laguna de Bay and its territory extends to the Marikina Valley and stops at the low lying
edge of the Rizal Province. It has a total land area of 613.94 km2 and has a total population
The NCR has a total of 15, 028 establishments with total employees of 20 or more
based on the latest Census of Philippine Business and Industry. The economy was
accommodation and food service activities with a total of 2,662 establishments (Philippine
NCR is subdivided into four districts and one of them is the Eastern Manila District
composed of Mandaluyong City, Marikina City, Pasig City, Quezon City, and San Juan City.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 35
Mandaluyong City. The City of Mandaluyong is a highly urbanized city that has a land
area of 21.26 square kilometers. It is bound by San Juan City on the north, Quezon City on
the northeast, Pasig City on the East, Pasig River and Makati City on the south and
southwest and Pasig River and Manila City on west and northwest. The city has major
commercial strips including Bonifacio Avenue, Shaw Boulevard, Libertad-Sierra Madre Area,
Kalentong, San Francisco, Sgt. Bumatay towards Barangka Drive and Pinatubo towards
Edsa. The Central Business District of the city is the EDSA-Shaw-Pioneer Quadrangle and
Headquarters, Podium and the giant malls of SM Megamall and EDSA Shangrila. Majority of
the industrial activities in the city are from the manufacturing sector, followed by the service
Marikina City. The City of Marikina has a land area of 21.51 square kilometers. It is
referred to as the Shoe Capital of the Philippines. It lies in the Marikina Valley that is
bounded by Pasig City, Municipality of Cainta, Quezon City, San Mateo and Antipolo City
Rizal. The commercial center of the city is the Riverbanks Center wherein shopping malls
retail shops, and some major companies are developed along with Marcos Highway and
Pasig City. The City of Pasig has a total land area of 34.32 square kilometers that
lies along Marikina and Pasig Rivers. It is bounded by Quezon City and Marikina City on the
north, Taguig City, Municipality of Pateros, Makati City on the south, Mandaluyong City on
the west and Cainta and Taytay, Rizal on the south (Pasig City Government, n.d.). The
central business district of the city is the Ortigas Center wherein most of the business offices
of top companies, as well as commercial and residential buildings are established. Among
the establishments in this city are San Miguel, Integrated Bar of the Philippines, and Meralco
(Naniong, 2015).
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 36
Quezon City. It has a total land area of 166.20 square kilometers and is situated on
the northeast portion of Metro Manila. It is bounded by San Jose del Monte City in Bulacan
and Caloocan City on the north, San Mateo of Rizal and Marikina City on the east, Pasig,
San Juan, Manila and Mandaluyong on the south, and Caloocan, Manila and Valenzuela on
establishments engaged in basic services and distribution of finished products. The industry
of the city is dominated by the Service Sector with 27,922 companies engaged in
Wholesale/Retail, 17,461 companies engaged in Real Estate and Other Business Activities,
4,318 companies engaged in Hotel and Restaurant Activities and 3,947 companies engaged
in Other Community, Social and Personal Services; followed by Manufacturing Sector with a
total of 2,233 companies; the Construction sector with a total of 1,709 establishments,
Electric, Gas and Water Supply with a total number of 5 registered establishments. Other
business sectors operating in the city belong to financial intermediation, transport and
communication, health and social works and education sector (Quezon City Government,
n.d.).
San Juan City. The City of San Juan is formerly known as San Juan del Monte that
has a land area of 5.95 square kilometers. It is bounded by Mandaluyong City, Makati City,
Manila City, Pasig City, and Quezon City. Unlike other cities, San Juan is dominated by
micro, small and medium enterprises that are engaged in the service sector. Its main
commercial district is the Greenhills Shopping Center with over 2,000 stores reside for
The ISO 9000 family are adapted to specific sectors and industries. The sector-
specific applications of ISO 9000 are ISO 13485: Medical Devices, ISO 17582: Electoral
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 37
Organizations at All Levels of Government, ISO 18091: Local Government, ISO/TS 22163:
Petroleum, Petrochemical and Natural Gas Industries and ISO/TS 90003: Software
Engineering (ISO, 2015) The areas where the compliance to ISO must be met are Customer
focus (Attakora-Amaniampong, Salakpi, and Bonye, 2014), Leadership (Alharbi and Yusof,
2012), Employee Engagement (American Society for Quality, 2015), Process approach
(American Society for Quality, 2015), Improvement (American Society for Quality, 2015),
Evidence-based decision making (American Society for Quality, 2015), and Relationship
Enforcing quality management will enable the company to reduce the waste of
processes and activities. Hence improving the results (Sumaedi and Yarmen, 2015). The
results are recognized by the company to the return that they are realizing out of the
initiatives they went through. The returns take the form of profit which is driven by revenue
This study explored whether that relationship will hold true as the companies make
more investments to comply and pump-priming the returns they will realize in the long run.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 38
Chapter 3
METHODOLOGY
This chapter presents the research methodology used, the locale of the study,
description of the respondents, sampling techniques, the subjects and the sources of data,
the researcher’s instrument construction and validation, and the statistical treatment of data.
Method of Research
This study utilized the descriptive method of research. The descriptive method of
possible. The occurrence or current condition is already the available data that is collected
through the use of research instruments that could take the form of observation, interview,
study since this study aims to describe the relationship between the compliance degree of
compliance of certain companies to ISO 9001 accreditation and their financial performance.
This study also used the normative survey method of data collection and evaluation which is
commonly used to gather opinions of respondents that can appropriately represent the
population. The survey is appropriate in this study because it enables the researcher to
formulate generalizations.
The study used a descriptive method of research because it has the desire to
acquire data from the respondents firsthand that will be the basis of rational and sound
conclusions and recommendations. This is the most appropriate method for the study since
this study focused on the perception of accounting and finance personnel about their
companies’ level of compliance with ISO 9001 accreditation and financial performance.
The study used the quantitative approach to explore the attributes, knowledge on
ISO 9001 accreditation and the perception on the financial performance of the respondents.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 39
The quantitative approach that focused on obtaining numerical findings was used with the
survey method.
The research population in this study is the public-listed companies included in the
Business World Top 1,000 Corporations list of 2018 that conducted their operations in
Eastern Manila District. Their representatives were anyone from their finance and
model of each company (Price, 1980). Thus, the actual count of finance and accounting
Since the count is not standard, the population is found to be too large almost
indefinite. To determine the sample size, the study used Cochran’s formula. This formula is
appropriate for studies with unknown population (Singh and Masuku, 2014). Given that the
target respondents belonged to numerous companies in the target region, Cochran was
Where
q = 1-p
The confidence level of 95% and margin of error of 5% to determine the sample size
since a large population of businesses that have operations in Eastern Manila District were
observed.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 40
The study used two non-probability sampling techniques. First, a purposive sampling
technique was used since the study only selected certain companies in Eastern Manila
technique that is nonrandom, does not need a set number of participants, and does not
need underlying theories. This involves the selection of proficient and well-informed
technique was also employed since the subjects are selected because of their convenient
nonprobability and nonrandom sampling. It is used when the members of the target
Description of Respondents
The respondents for the study were the financial and accounting personnel employed
by the companies in Eastern Manila District that have knowledge of their financial
performance and the quality management practices of the company where they were
associated. The companies included were those ISO certified from levels 1 to 4, more than 4
years in operation, ideally with more than 9,000 employees but those smaller in size are also
The individual respondents in this study were those engaged with ISO certified
companies regardless of the length of service for as long as they are familiar with the
financial performance and quality management practices, hence it was expected that
majority of the respondents were rank and file, although employees of the higher rank may
respond, at least with bachelor’s degree, and most attended seminars in the last three
years.
Research Instrument
The data gathering method employed by this study is a survey method or using a
survey questionnaire to solicit the views of the respondents. The questionnaire is self-made
and was validated using 20 samples which are not part of this study. The questions on the
quality management systems practices were derived from the ISO 9001 Quality
Management Principles manual in which each of the principles was discussed thoroughly.
The items indicated the description of the principle, the explanation on why a particular
principle is important in an organization, the benefits that are associated with the principle,
and typical actions that an organization can take to improve their performance when
applying the principle. The questions on the financial performance of the company were
derived from the elements of the financial statements discussed in the Philippine Accounting
Standards.
The results of the study were tested for reliability. SPSS, a statistical application was
used as a tool to determine the reliability of the data samples gathered. Based on the data
processed, the Cronbach’s Alpha is 0.963. If the Alpha resulted in a number higher than
The questionnaire has three parts: the first part is the profile of the respondents,
which includes the industry/company profile and the individual respondents’ profile. The
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 42
industry/ company profile includes the level of ISO 9001 accreditation, number of years in
operation, number of employees, and the types of industry. The individual respondents’
profile includes the number of years in the company or the number of years employed in the
company, the job position level, highest educational attainment, and the number of
seminars/ trainings attended related to quality management systems in the last three years.
The second part is the level of compliance to ISO 9001 Quality Management
Systems which is the independent variable. This includes customer focus, leadership,
and relationship management. The range and interpretation of the five-point scale used are:
Scale Interpretation
The third part is the assessment of the profitability in terms of revenue/sales, cost
minimization, and profitability. The range and interpretation of the five-point scale used are
shown below:
Scale Interpretation
The researcher administered the survey questionnaire to the chosen sample of the
study through online survey forms due to limitations brought by the Enhanced Community
Quarantine in NCR. Online survey research is a technology that is young and evolving. The
cost of computer hardware and software is decreasing, and internet popularity increases
which led to more segments and organizations in society using the internet for
promote their presence using emails, online advertisements and banners, and search
engines. They did not only offer information to their consumers, but they have also
connected to these organizations. Online survey research also allows researchers to reach
thousands of people in a short amount of time regardless if they are separated by great
geographic distances (Wright, 2017). Given the COVID-19 situation in the Philippines,
The researcher used the contact details available on their official websites. Out of the
The contact details directed the researcher to an authorized representative of the respective
companies to whom the link to the online survey form containing the questionnaire was sent.
The authorized representative sent the link to the finance and accounting departments of the
respective companies.
Data were collected for four weeks. A total of 400 responses were gathered all of
which were found to be valid. Thereafter, the collected data were tabulated, interpreted, and
analyzed with the aid of an electronic spreadsheet. Any significant differences in the findings
were thoroughly analyzed through the use of related literature and studies. Based on the
Once the researcher had received the responses, the data were captured into a
Microsoft Excel spreadsheet. The data were checked and described using frequency tables
Frequency and Percentage Distributions Method. These were the tools used in
presenting the data gathered from the respondents. The Frequency presented the actual
responses of the respondent to each question or item in the questionnaire. On the other
hand, Percentage of the item is computed by dividing it with the sample size. The formula
used:
Percentage =
Where:
f = number of score in given category
Mean. This was used to calculate the average responses of the respondent. The
formula is:
Where:
X = mean
Weighted Mean. This was used in descriptive statistical analysis to measure the
general response of the survey sample, whether they agree to the given statement or not. It
was also used to determine average responses of the respondents to different statements in
the questionnaire.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 45
Pearson Relationship Test. It was used to measure the strength and relationships
variable and financial performance as the dependent variable. It was computed by the
following formula:
Where:
T-Test. This was used to test the relationship between the means of two variables. It
was employed to ascertain if there is any significant relationship between the means of two
classes of data.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 46
Chapter 4
Presented in this chapter are the data gathered through survey. These data were
analyzed and interpreted using statistical methods and treatment. This chapter answers the
questions in the statement of the problem and are tabulated for better examination and
Three Years
Table 1
Table 1 shows the frequency and distribution of the profile of the respondents in
It can be observed from the table that out of the 400 respondents, 145 or 36.2%
were at Level 4, 112 or 28% were at Level 1, 84 or 21% were at Level 3 and 59 or 14.8%
were at Level 2. The results showed that most of the companies were at Level 4 ISO 9001
Accreditation, which means that they have developed their quality manuals and these are
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 47
formatted documents. This is mainly because most of the companies that undergo this kind
of certification aim for the highest level that every single document involved in the business
Table 2
Table 2 presents the frequency and distribution of the profile of the respondents in
terms of company profile according to the number of years in operation. As seen, the
respondents of this study were all engaged in ISO-accredited companies that were
operating for more than 15 years. ISO was formed since 1947, companies across the world
find that ISO has an impact on sustaining their operations because of the impact of quality
management, however certain issues environmentally, social responsibility, and quality may
Table 3
Table 3 exhibits the frequency and percent distribution of the respondents according
to the number of employees. It may be noted that in Table 3, majority of the respondents
belonged to the companies that have more than 9,000 employees this comprised 45.7% or
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 48
183 of the respondents. In the Philippines, medium to large companies have employees of
more than 100 employees about 95% of which are a stock corporation (Albert, et al., 2017).
The Philippine economy is growing as well as its labor force. About 13% of the labor force is
in the National Capital Region; almost 50% of the labor force was in the services sector
(Rastogi, 2018).
Table 4
Table 4 displays the frequency and distribution of the respondents according to the
type of industry. It can be observed that 266 or 66.5% were from non-manufacturing
Based on the 2016 Annual Survey on Philippine Business and Industry, about 89%
trading of motor vehicles, accommodation, and food services activities remained to be the
Table 5
It can be gleaned from Table 5 that 150 or 37.5% of the respondents stayed in the
company for 4-6 years, 143 or 35.8% were employed for 3 years or less, and 107 or 26.7%
for 7 to 15 years. As noted in Table 2, all of the respondents in this survey were employed in
a company that is operating for more than 15 years. One of the key factors in sustaining the
Employee Satisfaction and Their Impact on the Organization, 2012). However, the level of
employee satisfaction decreases the longer they stay employed in the company. A survey
was done by Jobstreet Philippines in 2015 and it resulted to 62% of employees who stayed
with their respective companies for more than 5 years consider themselves happy while
62% of them answered that they are satisfied with their companies because of salary,
company benefits and incentives that are provided to them (Jobstreet Philippines, 2015).
Table 6
Table 6 shows the frequency and distribution of the respondents in terms of the
It may be noted in Table 6 that 361 or 90.2% of the respondents were rank and file
management employees. This may suggest that most of the employees of the respondent
companies in the finance and accounting department are rank and file employees. These
employees are non-managerial, lower lever employees that perform day to day tasks to
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 50
keep the company running. Organizations recognize the importance of the roles assumed by
the rank and file employees in the effective execution of their plans and policies (Zhang and
Zhou, 2014). Hence, the majority of the individual respondents belonged to the rank and file
because they have direct participation in the execution of the quality management systems.
Table 7
Table 7 presents the frequency and distribution of the respondents in terms of their
individual profile according to the highest educational attainment. Out of the 400
respondents, 380 or 95% had a bachelor’s degree and 20 or 5% earned a master’s degree.
For educators, employers and even parents, it is essential to have a bachelor’s degree to
succeed in the corporate world. Most companies require a bachelor’s degree for a position
the workplace because it is preferred by employers but not in the basic requirements to be
Table 8
Table 8 displays the frequency and distribution of the respondents in terms of their
management systems for the last three years. It can be noted in Table 8 that 389
systems for the last three years and 11 or 2.8% attended 4-9 seminars/trainings. Employees
must be aware and competent to execute and comply with requirements to maintain ISO
certification. There are no specified minimum requirements for the training, however, the
organizations must ensure that sufficient training is provided to ensure competency gaps
were addressed and continuity of process improvement was observed (Keen, 2020).
Table 9
Weighted Verbal
Customer Focus
Mean Interpretation
The company recognizes direct and indirect customers as those
4.31 Very Effective
who receive value from the organization.
The company understands the customers’ current and future needs
4.65 Very Effective
and expectations.
The company links the organization’s objectives to customer needs
4.40 Very Effective
and expectations.
The company communicates customer needs and expectations
4.22 Very Effective
throughout the organization.
The company plans, designs, develops, produces, delivers and
supports goods and services to meet customer needs and 4.24 Very Effective
expectations.
The company measures and monitors customer satisfaction and
4.28 Very Effective
takes appropriate actions.
The company determines and takes actions on interested parties’
4.19 Effective
needs and expectations that can affect customer satisfaction.
The company actively manages relationships with customers to
4.24 Very Effective
achieve sustained success.
GRAND MEAN 4.31 Very Effective
The statement “The company understands the customers’ current and future needs
and expectations.” obtained the highest weighted mean of 4.65 while the second-highest
weighted mean of 4.40 was obtained by the statement “The company links the
customer needs and expectations throughout the organization.” got the second lowest
weighted mean of 4.22 which is verbally interpreted as “Very Effective”, while the statement
“The company determines and takes actions on interested parties’ needs and expectations
that can affect customer satisfaction.” received the lowest weighted mean of 4.19, verbally
interpreted as “Effective”.
Overall, the respondents assessed the quality management system practices of their
companies in terms of customer focus were “Very Effective” with a grand mean of 4.31. The
key benefit of customer focus is customer satisfaction by meeting the requirements of the
services (Martin, 2017). When customers are satisfied it also leads to customer loyalty,
wherein the customers will have an attachment or affection for the company’s products and
services, as well as its people. This will cause customers to revisit the company to purchase
again or to avail of the services regularly. The company will have a stable market share and
Statements rated as “Very Effective” were “The company recognizes direct and
indirect customers as those who receive value from the organization.” with a weighted mean
of 4.31, “The company measures and monitors customer satisfaction and takes appropriate
actions.” with 4.28, “The company plans, designs, develops, produces, delivers and
supports goods and services to meet customer needs and expectations.” and “The company
actively manages relationships with customers to achieve sustained success.” both with
4.24.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 53
Table 10
Weighted Verbal
Leadership
Mean Interpretation
The company communicates the organization’s mission, vision,
4.24 Very Effective
strategy, policies and processes throughout the organization.
The company creates and sustains shared values, fairness and
4.33 Very Effective
ethical models for behavior at all levels of the organization.
The company has established a culture of trust and integrity. 4.38 Very Effective
The company encourages an organization-wide commitment to
4.34 Very Effective
quality.
The organization ensures that leaders at all levels are positive
4.20 Effective
examples to people in the organization.
The company provides people with the required resources,
4.16 Effective
training and authority to act with accountability.
The company inspires, encourages and recognizes people’s
4.21 Very Effective
contribution to the organization.
GRAND MEAN 4.27 Very Effective
management system practices in terms of leadership. The statements “The company has
established a culture of trust and integrity.” and “The company encourages an organization-
wide commitment to quality.” obtained the highest weighted mean of 4.38 and 4.34,
respectively. Both statements were verbally interpreted as “Very Effective”. This may
suggest that respondent companies require the core principle of integrity to be embodied by
its employees. In business literature, integrity is not only defined as “being honest, not lying
and telling the truth”, it is also defined as “to act on one’s deepest commitment to fulfilling
one’s obligation to others even when they are tempted to compromise” (Bauman, 2013). By
embracing the value of integrity, the leader is also being trustworthy, fair, honest and caring
and this makes them ethical leaders. Ethical leadership promotes interaction between the
leaders and their followers thus, organizational trust is achieved. Because of this, work
engagement is present among the followers and employees. It means that the employees
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 54
are committed to their work and responsibilities in the company through a positive state of
mind and a focused energy. This encourages their commitment to quality (Engelbrecht,
The statements “The organization ensures that leaders at all levels are positive
examples to people in the organization.” and “The company provides people with the
required resources, training and authority to act with accountability.” acquired the weighted
mean of 4.20 and 4.16, respectively, which were the lowest among the statements. The
leadership as “Very Effective” with a grand mean of 4.27. This means that the employees of
the company noticed that the company is placing more emphasis on management and
leadership commitment. The top management and business leaders are greatly involved in
The statements “The company creates and sustains shared values, fairness and
ethical models for behavior at all levels of the organization.” with a weighted mean of 4.33,
“The company communicates the organization’s mission, vision, strategy, policies and
processes throughout the organization.” with 4.24 and “The company inspires, encourages
and recognizes people’s contribution to the organization.” with 4.21 were verbally interpreted
as “Very Effective.”
Table 11 shown on the next page presents the assessment of the respondents on
engagement.
and “The company facilitates open discussion and sharing of knowledge and experience.”
obtained the highest weighted mean of 4.34 and 4.28, respectively. These two statements
Table 11
Weighted Verbal
Employee Engagement
Mean Interpretation
The company communicates with people to promote
4.22 Very Effective
understanding of the importance of their individual contribution.
The company promotes collaboration throughout the
4.34 Very Effective
organization.
The company facilitates open discussion and sharing of
4.28 Very Effective
knowledge and experience.
The company empowers people to determine constraints to
4.25 Very Effective
performance and to take initiatives without fear.
The company recognizes and acknowledges people’s
4.19 Effective
contribution, learning and improvement.
The company enables self-evaluation of performance against
4.19 Effective
personal objectives.
The company conducts surveys to assess people’s satisfaction,
4.16 Effective
communicate the results and take appropriate actions.
GRAND MEAN 4.23 Very Effective
This may suggest that the respondent companies promote trust in the work
individuals or organizations that are working closely together to deliver outcomes and to
address problems of the company that cannot be effectively and efficiently achieved when
working alone. Different companies are composed of different people from different
backgrounds that need to work together. If people are working together as a team in
different situations, it helps to reduce any tension or friction among the members of the
organization and will help stabilize the company and the well-being of their employees
(Tariq, Aslam, Habib, Siddique, and Khan, 2012). This will eventually promote team
company towards its working environment. This will encourage the employees to share
knowledge and experience with each member of the organization (Maruping and Magni,
2015).
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 56
against personal objectives.” both attained the weighted mean of 4.19. Most companies
benefits, recognition, and appreciation based on their performance and behavior (The
Entrepreneur, 2020).
communicate the results and take appropriate actions.” received the lowest weighted mean
measure of the level of fulfillment of the needs and desires of the workers with their job and
make sure that this is fulfilled, the human resources department of every organization
frequently conducts employee satisfaction surveys. Most of them conduct this through an
online system in their company, others are conducted manually. This survey measures the
promotion and career growth, job satisfaction, job security, working condition and working
environment, employee’s relationship with supervisors and workgroups, and the leadership
styles. Personal variables include the personality, expectations, age, education of the
employee, and gender differences (Sageer, Rafat, and Agarwal, 2012). The results of the
employee satisfaction survey are communicated to the employees first by thanking the
employees for participating in the survey and giving them a copy of their responses. The
human resources provide an overview of the results to the employees and analyze these
results with the leadership. This will help them determine if there are certain issues that is
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 57
needed to be addressed inside the company to maintain employee satisfaction. The results
are announced to all of the employees and the leadership team of the company will initiate
team level results within the teams involved or personally with an employee. Good internal
practices in terms of employee engagement as “Very Effective” with a grand mean of 4.23.
Companies believe that engaged employees know what is expected of them. They also form
strong working and personal relationships with their co-workers and managers. They find a
sense of fulfillment and meaning to the work they’re doing. And they are more satisfied,
motivated, and productive. This will greatly help the company achieve its objectives
fear.” with a weighted mean of 4.25, and “The company communicates with people to
Table 12 presented on the next page displays the assessment of the respondents on
for managing processes.” got the highest weighted mean of 4.38 while the statement “The
individual processes on the system as a whole.” acquired the second highest weighted
mean of 4.33. Both statements were verbally interpreted “Very Effective”. This may suggest
that the respondent companies ensure that any employees engaged to perform a particular
task have their responsibility, authority and accountability defined and documented.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 58
Table 12
Weighted Verbal
Process Approach
Mean Interpretation
The company defines objectives of the system and processes
4.25 Very Effective
necessary to achieve these objectives.
The company establishes authority, responsibility and
4.38 Very Effective
accountability for managing processes.
The company understands the organization’s capabilities and
4.31 Very Effective
determines resource constraints prior to action.
The company determines process independencies and analyzes
the effect of modifications to individual processes on the system as 4.33 Very Effective
a whole.
The company manages processes and their interrelations as a
system to achieve the organization’s quality objectives effectively 4.31 Very Effective
and efficiently.
The company ensures the necessary information is available to
operate and improve the process and to monitor, analyze and 4.18 Effective
evaluate the performance of the overall system.
The company manages risks that can affect outputs of the
processes and overall outcomes of the quality management 4.22 Very Effective
system.
GRAND MEAN 4.28 Very Effective
They ensure that only employees with the required level of training, qualification,
certification and/or experience are engaged to perform the task. This will also ensure that
the processes, wherein those employees were involved in, will be standardized and will
produce consistent results (Reif, Kugler, and Brodbeck, 2018). Having a standardized
process will provide the management control system over the organization. The
management control system intends to provide the managers motivation to ensure that the
Other statements rated as “Very Effective” were “The company determines process
system as a whole” with a weighted mean of 4.33, “The company understands the
organization’s capabilities and determines resource constraints prior to action” and “The
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 59
organization’s quality objectives effectively and efficiently” both with 4.31, “The company
defines objectives of the system and processes necessary to achieve these objectives” with
4.25, and “The company manages risks that can affect outputs of the processes and overall
outcomes of the quality management system” with 4.22. The statement “The company
ensures the necessary information is available to operate and improve the process and to
monitor, analyze and evaluate the performance of the overall system” obtained the lowest
Table 13
Weighted Verbal
Improvement
Mean Interpretation
The company promotes establishment of improvement objectives at
4.31 Very Effective
all levels of the organization.
The company educates and trains people at all levels on how to
apply basic tools and methodologies to achieve improvement 4.30 Very Effective
objectives.
The company ensures that people are competent to successfully
4.28 Very Effective
promote and complete improvement projects.
The company develops and deploys processes to implement
4.30 Very Effective
improvement projects throughout the organization.
The company tracks, reviews and audits the planning,
4.20 Effective
implementation, completion and results of improvement projects.
The company integrates improvement considerations into the
4.04 Effective
development of new or modified goods, services and processes.
The company recognizes and acknowledges improvement. 4.17 Effective
GRAND MEAN 4.23 Very Effective
improvement objectives at all levels of the organization.” obtained the highest weighted
mean of 4.31 and the statements “The company educates and trains people at all levels on
how to apply basic tools and methodologies to achieve improvement objectives.” and “The
the organization.” gained the second-highest weighted mean of 4.30, verbally interpreted as
“Very Effective”. “The company recognizes and acknowledges improvement.” had the
second lowest weighted mean of 4.17 and “The company integrates improvement
considerations into the development of new or modified goods, services and processes.”
attained the lowest weighted mean of 4.04, both verbally interpreted as “Effective”.
The respondents rated the quality management systems practices of their company in
terms of improvement as “Very Effective” with a grand mean of 4.23. This may suggest that
companies value continuous improvement in the organization, not just its processes, but
also its employees. This will be achieved if learning a new skill set continuously will be a
competitive advantage for the company and its employees in the future and takes place
within the organization. Employees will have a sense of growth. Because of this, employees
will be encouraged to provide feedback to evaluate their performance. This will enable the
(Oliver, 2009).
Other statements include “The company ensures that people are competent to
successfully promote and complete improvement projects.” which obtained a weighted mean
of 4.28, verbally interpreted as “Very Effective” and “The company tracks, reviews and
audits the planning, implementation, completion and results of improvement projects.” which
Table 14
Weighted Verbal
Evidence-based decision making
Mean Interpretation
The company determines, measures and monitors key indicators to
4.32 Very Effective
demonstrate the organization’s performance.
The company makes all data needed available to the relevant
4.27 Very Effective
people
The company ensures that data and information are sufficiently
4.33 Very Effective
accurate, reliable and secure.
The company analyses and evaluates data and information using
4.29 Very Effective
suitable methods.
The company ensures that people are competent to analyze and
4.15 Effective
evaluate data as needed.
The company makes decisions and takes actions based on
4.16 Effective
evidence, balanced with experience and intuition.
GRAND MEAN 4.25 Very Effective
The statement “The company ensures that data and information are sufficiently
accurate, reliable and secure.” obtained the highest weighted mean of 4.33 and the
statement “The company determines, measures and monitors key indicators to demonstrate
the organization’s performance.” attained the second-highest weighted mean of 4.32. Both
statements were verbally interpreted as “Very Effective”. The statement “The company
makes decisions and takes actions based on evidence, balanced with experience and
intuition.” had the second lowest weighted mean of 4.16 while the statement “The company
ensures that people are competent to analyze and evaluate data as needed.” got the lowest
Managers were expected to make sound decisions and produce better results if it is based
the management to base their decision on validated pieces of evidence and educate them
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 62
on how these pieces of evidence were generated (Baba and HakemZadeh, 2012). The
analyses and evaluates data and information using suitable methods.” with a weighted mean
of 4.29 and “The company makes all data needed available to the relevant people.” with
4.27.
Table 15
Weighted Verbal
Relationship Management
Mean Interpretation
The company determines relevant interested parties (such as
suppliers, partners, customers, investors, employees, and society 4.23 Very Effective
as a whole) and their relationship with the organization.
The company determines and prioritizes interested party
4.37 Very Effective
relationships that needs to be managed.
The company has established relationships that balance short-term
4.24 Very Effective
gains with long-term considerations.
The company pools and shares information, expertise and
4.24 Very Effective
resources with relevant interested parties.
The company measures performance and provides performance
feedback to interested parties, as appropriate, to enhance 4.32 Very Effective
improvement initiatives.
The company has established collaborative development and
improvement activities with suppliers, partners and other interested 4.16 Effective
parties.
The company encourages and recognizes improvements and
4.20 Effective
achievements by suppliers and partners.
GRAND MEAN 4.25 Very Effective
Table 15 that the statement “The company determines and prioritizes interested party
relationships that needs to be managed.” received the highest weighted mean of 4.37 and
weighted mean of 4.32, both verbally interpreted as “Very Effective”. The statement “The
partners.” gained the second lowest weighted mean of 4.20, and the lowest weighted mean
of 4.16 was acquired by the statement “The company has established collaborative
development and improvement activities with suppliers, partners and other interested
parties.” Both statements were verbally interpreted as “Effective”. This may suggest that the
respondent companies believe that their relationship with every individual and every entity in
the society, especially interested parties, may contribute to their continuing success.
Interested parties may include internal parties, the employees and executives that are within
the organization, and external parties, the company’s supplier, creditor and customer. This is
why companies explore the concept of supply chain quality management, wherein they
combine the concept of supply chain management for the external parties and the concept
of quality management for internal parties. Supply chain management and quality
management has one common goal, customer satisfaction. These companies seek to
facilitate collaborations between interested parties for a more effective and efficient flow and
sharing of information, products and services (Bastas and Liyanage, 2018). The overall
Other statements rated “Very Effective” were “The company has established
relationships that balance short-term gains with long-term considerations.” and “The
company pools and shares information, expertise and resources with relevant interested
parties.” both with the weighted mean of 4.24 and “The company determines relevant
society as a whole) and their relationship with the organization.” with 4.23.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 64
Table 16
Weighted Verbal
Revenue/Sales
Mean Interpretation
Increase in average monthly volume sold or services
4.21 Strongly Agree
rendered
Increase in average number of new customers or
4.25 Strongly Agree
clients
Decrease in Sales returns or number of client’s
4.04 Agree
complains
Conveniently increase in prices or service fees 3.87 Agree
Customers satisfaction on the goods sold or services
4.09 Agree
rendered
GRAND MEAN 4.09 Agree
It can be seen in Table 16 that the “Increase in average number of new customers or
clients.” obtained the highest weighted mean of 4.25 and the statement “Increase in average
monthly volume sold or services rendered.” gained the second-highest weighted mean of
4.21. These two statements were verbally interpreted as “Strongly Agree”. The statements
verbally interpreted as “Agree” were “Customers satisfaction on the goods sold or services
rendered.” with a weighted mean of 4.09, “Decrease in Sales returns or number of client’s
complains.” with 4.04 and “Conveniently increase in prices or service fees.” with the lowest
Revenue or sales is defined as income arising in the course of the entity’s ordinary activities.
This is a transaction made with a counterparty called a customer. A customer is a party that
has contracted with an entity to avail goods and services that are an output of the
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 65
company’s ordinary business activities in exchange for a consideration which is the sales
price (International Accounting Standards Board, 2018). To get the total revenue/sales,
sales volume is multiplied by sales price. Thus, an increase in revenue/sales can be caused
by an increase in the volume of sales or an increase in the selling price per unit/service
availed. An increase in sales volume suggests that there may be new clients/customers
availing products and services from the companies and this also shows that customer
satisfaction is achieved (Gitman and Zutter, 2012). Overall, the respondents’ level of
Table 17
Weighted Verbal
Cost Minimization
Mean Interpretation
Decrease in spoilage or loss in production or complains in
1.74 Strongly Disagree
services
Decrease in cost of reprocessing 2.10 Disagree
Decrease in cost of product costs per unit or direct cost of
1.80 Strongly Disagree
services
Decrease in direct overhead costs 1.75 Strongly Disagree
the highest weighted mean of 2.10 and the statement “Decrease in average labor costs.” got
the second-highest weighted mean of 1.81. These statements were verbally interpreted as
“Disagree”. The statements “Decrease in average monthly repairs and maintenance costs.”
with a weighted mean of 1.68 and “Decrease in average utility expenses.” with the lowest
weighted mean of 1.64 were verbally interpreted as “Strongly Disagree”. Cost or most
known as expense is one of the elements of the financial statements that relate to a
increase in liability that results in a decrease in equity, other than those relating to the
distribution of shareholder equity claims. Cost includes the cost of goods sold or services
performed and the selling expenses, general expenses, and administrative expenses. It is
deducted to revenue or sales to get the net income of the entity (International Accounting
Standards Board, 2018). One of the company’s goals when it comes to financial
management is to minimize costs. But due to the general increase in prices of the inputs
used, especially the labor cost, the costs and expenses incurred were increasing throughout
the year. On December 31, 2019, the country’s headline inflation increased by 2.5 percent
(Mapa, 2020). Overall, the respondents’ level of agreement on their company’s financial
performance in terms of cost minimization was “Strongly Disagree” with a grand mean of
1.78.
“Decrease in cost of product costs per unit or direct cost of services.” with a weighted mean
of 1.80, the statement “Decrease in direct overhead costs.” with a weighted mean of 1.75,
weighted mean of 1.74 and the statement “Decrease in other controllable expenses.” with a
Table 18
Weighted Verbal
Profitability
Mean Interpretation
Increase in profit margin 2.72 Neutral
Increase in return on equity 2.75 Neutral
Increase in return on assets 2.89 Neutral
GRAND MEAN 2.78 Neutral
It can be seen in Table 18 that the statement “Increase in return on assets.” received
the highest weighted mean of 2.89 while the statement “Increase in return on equity.”
obtained the second-highest weighted mean of 2.75 and the lowest weighted mean of 2.72
was attained by the statement “Increase in profit margin.”. Profitability is defined as the
relationship between revenue and costs generated by using the company’s current and non-
ratios.
This study used three profitability ratios: the profit margin, return on equity, and
return on assets. Profit margin which is the other term for net profit margin is the percentage
of each peso sale remaining after all the cost and expenses have been deducted. The
higher the net profit margin, the better. Return on equity or return on common equity is the
measure of profit earned on the investment of the company. As investors, it is better for
them if there is a higher return on equity. Return on assets or return on total assets, often
management’s utilization of the available assets of the company. The higher the company’s
return on assets, the better. It can be observed in Table 16 that the respondents agreed that
the revenue/sales of their respective companies have increased. In Table 17, the
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 68
respondents agreed that costs were not minimized. Overall, the respondents’ level of
Financial Performance
Table 19
Quality
Financial
Management r p-value Decision Remarks
Performance
Practices
Not
Customer Focus -0.013 0.790 Accept Ho
Significant
Not
Leadership 0.052 0.301 Accept Ho
Significant
Employee
Versus 0.199 0.000 Reject Ho Significant
Engagement
Process Revenue/Sales Not
0.077 0.125 Accept Ho
Approach Significant
Improvement 0.387 0.000 Reject Ho Significant
Evidence-Based
0.232 0.000 Reject Ho Significant
Decision Making
Relationship
0.275 0.000 Reject Ho Significant
Management
and revenue (r=0.387), relationship management and revenue (r=0.275) and evidence-
based decision making and revenue (r=0.232). Very weak positive correlations existed
between employee engagement and revenue (r=0.199), process approach and revenue
(r=0.077) and leadership and revenue (r=0.05). A positive correlation indicated that if one
variable increases (or decreases), the other variable also increases (or decreases).
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 69
A very weak negative correlation existed between customer focus and revenue (r=-
0.013). This indicated that as customer focus increases (or decreases), revenue decreases
(or increases).
evidence-based decision making, and employee engagement all have p-values of 0.000.
Since these p-values were less than the assumed level of significance of 0.05, the null
hypothesis was rejected. This means that, statistically, these aspects of quality management
approach (p=0.125), leadership (p=0.301) and customer focus (p=0.790) were statistically
Revenues or sales of the company is based on how the consumers or the clients for
the service-oriented companies patronize their products or services. A related study shows
that their decisions are based on the following factors: economic, technology, cultural,
social, and personal. Economic is more on the level of supply and demand for that particular
product or service; Technology is whether the brand, in particular, are empowered by new
technologies; Cultural factors affects the decision based on what was considered acceptable
based on their values and traditions; Social is depending on what is required of their social
class; and Personal are dependent on the general profile of the consumer (Madhavan and
products or services, respectively, are not heavily affected on the manner how these were
produced or rendered but it remains to be the factors normally affecting their behavior.
Although quality management may attract their behavior especially if they use innovations
Table 20
Quality
Financial
Management R p-value Decision Remarks
Performance
Practices
Customer Focus -0.062 0.215 Accept Ho Not Significant
As presented in Table 20, very weak negative correlations existed between cost
The test of significance revealed that improvement had a p-value of 0.000, while
a p-value of 0.024, and employee engagement acquired a p-value of 0.118. Since these p-
values were less than the assumed level of significance of 0.05, the null hypothesis was
rejected. This means that, statistically, these aspects of quality management practices were
hand, process approach, customer focus, and leadership received the p-values of 0.692,
0.215, and 0.112 respectively. Since these were higher than the assumed level of
Cost management and controls are highly internal to the companies. This is
dependent on the management strategies and control systems they put in place. The
changes that the management incorporates or implements to their systems are always
driven to make the company more efficient in terms of process, people, and tools being used
in the organization (Fullerton, Kennedy, and Widener, 2013). This shows that the quality
relationship management, and employee engagement had an impact on how the company
Table 21
Quality
Financial
Management r p-value Decision Remarks
Performance
Practices
Customer
-0.062 0.214 Accept Ho Not Significant
Focus
Leadership -0.012 0.807 Accept Ho Not Significant
Employee
0.029 0.561 Accept Ho Not Significant
Engagement
Versus
Process
0.009 0.859 Accept Ho Not Significant
Approach Profitability
Improvement 0.037 0.460 Accept Ho Not Significant
Evidence-
Based Decision 0.082 0.102 Accept Ho Not Significant
Making
Relationship
0.053 0.286 Accept Ho Not Significant
Management
In Table 21, very weak positive correlations existed between profitability in terms of
While very weak negative correlations existed between profitability and customer focus (r=-
decision making attained p-values of 0.859, 0.807, 0.561, 0.460, 0.286, 0.214, and 0.102,
respectively. Since these p-values were higher than the assumed level of significance of
There is a thin line relationship between profitability and quality management. In other
Internal improvements may be seen but since the results vary among the companies tested
it remains to be not conclusive (Sampaio, Saraiva, and Monteiro, 2012). It is apparent in the
results of this study that the correlations between quality management practices and the
results of profitability were between negative weak and positive weak therefore the impact is
Chapter 5
systems practices and financial performance of companies in the Eastern Manila District.
Summary of Findings
This study aimed to establish whether there is a relationship existing between earning
research method was used employing a researcher-made questionnaire as the main tool in
gathering the necessary data from respondents who were knowledgeable of the identified
Based on the data and information gathered, the following findings were drawn:
Out of the 400 respondents, 145 or 36.2% were employed in a company with a Level
companies operating for more than 15 years. Majority of the respondents, 183 or 45.7%,
belonged to the companies with more than 9,000 employees; 266 or 66.5% were employed
firm. Most of the respondents stayed in the company for 4-6 years with a frequency of 150 or
37.5%. In terms of job position level, 361 respondents or 90.2% were rank and file
related to quality management systems, 389 or 97.2% have attended 0-3 seminars/trainings
In terms of customer focus, the most effective practice was having the company
understand the customers’ current and future needs and expectations with the highest
weighted mean of 4.65 while the lowest was having the company determine and take
actions on interested parties’ needs and expectations that can affect customer satisfaction
with a weighted mean of 4.19. In terms of leadership, establishing a culture of trust and
integrity is the most effective quality management systems practice got the highest weighted
mean of 4.38, while providing people with required resources, training and authority to act
with accountability was the least effective with the lowest weighted mean of 4.16.
practice was promoting collaboration throughout the organization with the highest weighted
mean of 4.34 while the least effective was conducting survey to assess the people’s
satisfaction, communicating results and taking appropriate actions with the lowest weighted
mean of 4.16.
In terms of process approach, the most effective practice was establishing authority,
responsibility and accountability for managing process with the highest weighted mean of
4.38 and ensuring that necessary information is available to operate and improve the
process and to monitor, analyze and evaluate the performance of the overall system was the
levels of the organization is the most effective quality management systems practice
received the highest weighted mean of 4.31 while integrating improvement considerations
into the development of new or modified goods, services and processes acquired the least
In terms of evidence-based decision making, ensuring that data and information are
sufficiently accurate, reliable and secure is the most effective quality management systems
practice gained the highest weighted mean of 4.33 while the least effective practice with the
lowest weighted mean of 4.15 was ensuring that people are competent to analyze and
and prioritizing interested party relationships that need to be managed with the highest
activities with suppliers, partners and other interested parties got the least effective practice
revenue/sales, the respondents strongly agreed that there was an increase in the average
minimization, the respondents disagreed that there was a decrease in the cost of
reprocessing with a weighted mean of 2.10 and they strongly disagreed that there was a
profitability, the respondents were neutral when it comes to increase in return on assets with
a weighted mean of 2.89, increase in return on equity with a weighted mean of 2.75 and
Performance
practices and financial performance in terms of revenue/sales, there was a weak positive
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 76
value of 0.000 which was less than the assumed level of significance of 0.05. The null
practices and financial performance in terms of cost minimization, there was a very weak
improvement got a p-value of 0.000 which was less than the assumed level of significance
practices and financial performance in terms of profitability, there was a very weak positive
evidence-based decision making acquired a p-value of 0.102 which was more than the
Conclusions
Based on the research findings, the study has concluded the following:
operating for more than 15 years, had more than 9,000 employees and in a non-
6 years, rank and file employees, earned a bachelors’ degree and attended 0-3
2. The respondents assessed that the quality management system practices in terms of
However, Employee Engagement and Improvement obtained the lowest grand mean of
4.23.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 77
3. Based on the overall assessment of the respondents on the financial performance of the
“Neutral”.
decision making and relationship management. This goes the same with cost
Recommendations
After the analysis of data and information collected and based on the conclusions
1. The companies should avail or conduct more seminars to their employees regarding
individual in the organization and to be more familiar with the processes in which quality
2. Companies should retain quality management system practices since this study found
that these practices were very effective. Quality management practices affect the
effectiveness and efficiency of the processes of the company. However, while this study
concluded that these practices to be very effective, companies should find ways to
3. Companies should consider an extensive analysis of the benefits and costs in making
timely and effective feedback mechanism across the organization which will support the
reward system to keep the employees engaged and motivated. Since improvement and
engagement have been noted to have a significant relationship with revenue/sales and
cost minimization.
controls internally and continuous improvement and goal congruence from management
to the employees, however, do not expect a drastic effect on their profitability. While
effect on cost minimization. This does not necessarily affect their overall financial
5. ISO certified companies should find ways on how to maximize their quality management
that serve as a guide to the whole organization to avoid losses and increase productivity.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 79
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Appendix 1
RESEARCH INSTRUMENT
Dear Respondent,
I am conducting a research about the compliance to ISO 9001 and its relationship with the
profitability of companies in Eastern Manila District. In line with this, may I ask few minutes
of your time to respond to this survey. Rest assured that the information gathered here will
be handled with utmost confidentiality and will be used for academic purposes only. Thank
you very much.
The Researcher
5 – Very Effective
4 – Effective
3 – Somewhat Effective
2 – Less Effective
1 – Not effective
5 4 3 2 1
2.1. Customer Focus
2.1.1. The company recognizes direct and indirect customers as those who
receive value from the organization.
2.1.2. The company understands the customers’ current and future needs
and expectations.
2.1.3. The company links the organization’s objectives to customer needs
and expectations.
2.1.4. The company communicates customer needs and expectations
throughout the organization.
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 88
5 – Strongly Agree
4 – Agree
3 – Neutral
2 – Disagree
1 – Strongly Disagree
5 4 3 2 1
3.1. Revenues / Sales
3.1.1. Increase in average monthly volume sold or services rendered
3.1.2. Increase in average number of new customers or clients
3.1.3. Decrease in Sales returns or number of client complains
3.1.4. Conveniently increase in prices or service fees
3.1.5. Customers satisfaction on the goods sold or services rendered
3.2. Cost Minimization
3.2.1. Decrease in spoilage or loss in production or complains in services
3.2.2. Decrease in cost of reprocessing
3.2.3. Decrease in cost of product costs per unit or direct cost of services
3.2.4. Decrease in direct overhead costs
3.2.5. Decrease in average labor costs
3.2.6. Decrease in average monthly repairs and maintenance costs
3.2.7. Decrease in average utility expenses
3.2.8. Decrease in other controllable expenses
3.3. Profitability
3.3.1. Increase in profit margin
3.3.2. Increase in return on equity
3.3.3. Increase in return on assets
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 91
Appendix 2
CORRESPONDENCE
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 92
Appendix 3
In medical devices industry, safety and quality are non-negotiable. We deal with
equipment, machines, implant, instrument or in vitro reagent that are used in surgeries,
restoring lives, reaching patients for prevention, diagnosis and treatment. This is the reason
why ISO 13485 is designed and used by many companies in this industry (Jalnasow, 2019).
ISO 13485 is a quality management system standard that is used by organizations
involved in the design, production, installation and servicing of medical devices and related
services. It can also be used by internal and external parties, such as certification bodies, to
help them with their auditing processes (ISO, 2015).
Appendix 4
Appendix 5
CERTIFICATION OF EDITING
P O L Y T E C H N I C UN I V E R S I T Y O F T H E P H I L I P P I N E S 96
Appendix 6
BIOGRAPHICAL STATEMENT
faculty member of the College of Accountancy and Finance of the Polytechnic University of
the Philippines handling subjects on Auditing Theory and Problems, Financial Accounting