This document provides an introduction to quality and performance excellence. It defines quality using terms like fitness for use, meeting customer expectations, and conformance to specifications. It discusses the importance of quality and provides a history of quality assurance. Key thinkers in the quality movement like Deming, Juran, and Crosby are introduced along with their philosophies and principles. The document outlines principles of total quality like customer focus, process orientation, continuous improvement, and leadership.

1. Chapter 1
Introduction to Quality and
Performance Excellence
1

2. Defining Quality
Perfection Fast delivery
Providing a good, usable product
Consistency
Eliminating waste
Doing it right the first time
Delighting or pleasing customers
Total customer service and satisfaction
Compliance with policies and procedures

3. Formal Definitions of Quality
• The totality of features and
characteristics of a product or service
that bears on its ability to satisfy given
needs – American Society for Quality
– Fitness for use
– Meeting or exceeding customer
expectations
– Conformance to specifications
3

4. Performance Excellence
• An integrated approach to organizational
performance management that results in
– delivery of ever-improving value to
customers and stakeholders, contributing to
organizational sustainability,
– improvement of overall organizational
effectiveness and capabilities, and
– organizational and personal learning.

5. Importance of Quality
• THE buzzword among business in the 1980s
and 1990s
• Quality problems still abound in many
industries, such as automotive
• Consumer expectations are high
• “We’ve made dependence on the quality of
our technology a part of life” – Joseph Juran

6. History of Quality Assurance
(1 of 3)
• Skilled craftsmanship during Middle Ages
• Industrial Revolution: rise of inspection
and separate quality departments
• Early 20th Century: statistical methods at
Bell System
• Quality control during World War II
• Post-war Japan: evolution of quality
management
6

7. History of Quality Assurance
(2 of 3)
• Quality awareness in U.S.
manufacturing industry during 1980s:
from “Little Q” to “Big Q” - Total Quality
Management
• Malcolm Baldrige National Quality
Award (1987)
• Disappointments and criticism
7

8. History of Quality Assurance
(3 of 3)
• Emergence of quality management in
service industries, government, health
care, and education
• Evolution of Six Sigma
• Current and future challenge: maintain
commitment to performance excellence
8

9. Quality Dimensions in
Manufacturing
• Performance – primary operating characteristics
• Features – “bells and whistles”
• Reliability – probability of operating for specific
time and conditions of use
• Conformance – degree to which characteristics
match standards
• Durability - amount of use before deterioration or
replacement
• Serviceability – speed, courtesy, and
competence of repair
• Aesthetics – look, feel, sound, taste, smell

10. Quality Dimensions in
Services
• Time – how much time must a customer wait?
• Timeliness – will a service be performed when
promised?
• Completeness – Are all items in the order included?
• Courtesy – do frontline employees greet each
customer cheerfully?
• Consistency – are services delivered in the same
fashion for every customer, and every time for the
same customer?
• Accessibility and convenience – is the service easy
to obtain?
10

11. Differences Between
Manufacturing and Services
• Customer needs and performance standards are often
difficult to identify and measure
• The production of services typically requires a higher
degree of customization
• The output of many service systems is intangible
• Services are produced and consumed simultaneously
• Customers often are involved in the service process and
present while it is being performed
• Services are generally labor intensive
• Many service organizations must handle very large
numbers of customer transactions.

12. New Frontiers of Quality
• Health care
• Education
• Government
• Not-for-Profits

13. Deming Philosophy
The Deming philosophy focuses on
continual improvements in product and
service quality by reducing uncertainty
and variability in design, manufacturing,
and service processes, driven by the
leadership of top management.

14. Deming Chain Reaction
Improve quality
Costs decrease
Productivity improves
Increase market share with better
quality and lower prices
Stay in business
Provide jobs and more jobs 14

15. Deming’s System of Profound
Knowledge
• Appreciation for a system
• Understanding variation
• Theory of knowledge
• Psychology
15

16. Systems
• Most organizational processes are
cross-functional
• Parts of a system must work together
• Every system must have a purpose
• Management must optimize the system
as a whole
16

17. Variation
• Many sources of uncontrollable
variation exist in any process
• Excessive variation results in product
failures, unhappy customers, and
unnecessary costs
• Statistical methods can be used to
identify and quantify variation to help
understand it and lead to
improvements
17

18. Theory of Knowledge
• Knowledge is not possible without
theory
• Experience alone does not establish
a theory, it only describes
• Theory shows cause-and-effect
relationships that can be used for
prediction
18

19. Psychology
• People are motivated intrinsically and
extrinsically; intrinsic motivation is the
most powerful
• Fear is demotivating
• Managers should develop pride and joy in
work
19

20. Deming’s 14 Points (Abridged)
(1 of 2)
1. Create and publish a company mission
statement and commit to it.
2. Learn the new philosophy.
3. Understand the purpose of inspection.
4. End business practices driven by price alone.
5. Constantly improve system of production
and service.
6. Institute training.
7. Teach and institute leadership.
8. Drive out fear and create trust.
20

21. Deming’s 14 Points (2 of 2)
9. Optimize team and individual efforts.
10. Eliminate exhortations for work force.
11. Eliminate numerical quotas and M.B.O.
Focus on improvement.
12. Remove barriers that rob people of pride
of workmanship.
13. Encourage education and self-improvement.
14. Take action to accomplish the transformation.
www.deming.org 21

22. Juran Philosophy
Juran proposed a simple definition of
quality: “fitness for use.” This definition
of quality suggests that it should be
viewed from both external and internal
perspectives; that is, quality is related
to “(1) product performance that results
in customer satisfaction; (2) freedom
from product deficiencies, which avoids
customer dissatisfaction.”

23. Juran’s Quality Trilogy
• Quality planning
• Quality control
• Quality improvement
www.juran.com 23

24. Crosby Philosophy
Quality is free . . .
“Quality is free. It’s not a gift, but it is
free. What costs money are the unquality
things -- all the actions that involve not
doing jobs right the first time.”

25. Crosby’s Absolutes of Quality
Management
• Quality means conformance to requirements
• Problems are functional in nature
• There is no optimum level of defects
• Cost of quality is the only useful
measurement
• Zero defects is the only performance
standard
www.philipcrosby.com 25

26. Principles of Total Quality
• Customer and stakeholder focus
• Process orientation
• Continuous improvement and learning
• Employee engagement and teamwork
• Management by fact
• Visionary leadership and a strategic
orientation
26

27. Customer and Stakeholder
Focus
• Customer is principal judge of
quality
• Organizations must first understand
customers’ needs and expectations
in order to meet and exceed them
• Organizations must build
relationships with customers
• Customers are internal and external
27

28. Process Orientation
• A process is a sequence of activities that is
intended to achieve some result
28

29. Cross-functional Perspective

30. Continuous Improvement and
Learning
• Incremental and breakthrough
improvement
– Products and services
– Work processes
– Flexibility, responsiveness, and cycle time
• Learning – why changes are successful
through feedback between practices and
results

31. Learning Cycle
1. Planning
2. Execution of plans
3. Assessment of progress
4. Revision of plans based upon
assessment findings

32. Employee Engagement and
Teamwork
• Engagement – workers have a strong
emotional bond to their organization,
are actively involved in and committed
to their work, feel that their jobs are
important, know that their opinions and
ideas have value, and often go beyond
their immediate responsibilities for the
good of the organization
• Teamwork must exist vertically,
horizontally, and interorganizationally
32

33. Management by Fact
• Organizations need good performance
measures to drive strategies and change,
manage resources, and continuously improve
• Data and information support analysis at all
levels
• Typical measures: customer, product and
service, market, competitive comparisons,
supplier, employee, cost and financial

34. Visionary Leadership and a
Strategic Orientation
• Leadership is the responsibility of top
management
• Senior leaders should be role models for
the entire organization
• Leaders must make long-term
commitments to key stakeholders
• Quality should drive strategic plans

35. TQ and Agency Theory
• Agency relationship: a concept in which
one party (the principal) engages another
party (the agent) to perform work
• Key assumption: individuals in agency
relationships are utility maximizers and will
always take actions to enhance their self-
interests.

36. Contrast With TQ (1 OF 2)
• TQ views the management system as one based on
social and human values, whereas agency theory is
based on an economic perspective that removes people
from the equation.
• Agency theory propounds the belief that people are self-
interested and opportunistic and that their rights are
conditional and proportional to the value they add to the
organization. TQ suggests that people are also
motivated by interests other than self, and that people
have an innate right to be respected.

37. Contrast With TQ (2 OF 2)
• Agency theory assumes an inherent conflict of goals
between agents and principals, and that agent goals
are aligned with principal goals through formal
contracts. In TQ, everyone in the organization shares
common goals and a continuous improvement
philosophy, and goals are aligned through adoption of
TQ practices and culture.
• TQ takes a long-term perspective based on
continuous improvement, whereas agency theory
focuses on short-term achievement of the contract
between the principal and agent.
• TQ leaders provide a quality vision and play a
strategic role in the organization; leaders in agency
theory develop control mechanisms and engage in
monitoring.

38. TQ and Organizational Models

39. Chapter 2
Frameworks for
Organizational Quality
39

40. Malcolm Baldrige National
Quality Award
• Help improve quality in
U.S. companies
• Recognize achievements
of excellent firms and
provide examples to others
• Establish criteria for
evaluating quality efforts Malcolm Baldrige,
former U.S. Secretary
• Provide guidance for other of Commerce
American companies
40

41. Criteria for Performance
Excellence
• Leadership
• Strategic Planning
• Customer and Market Focus
• Measurement, Analysis, and
Knowledge Management
• Human Resource Focus Baldrige
Award trophy
• Process Management
• Business Results
41

42. The Baldrige Framework –
A Systems Perspective
Organizational Profile:
Environment, Relationships, and
Challenges
5
2
Human
Strategic Resource
Planning Focus
7
1
Business
Leadership
Results
3
Customer & 6
Market Process
Focus Management
4
Measurement, Analysis, and Knowledge Management

43. Baldrige Web Site
www.baldrige.org
• Links to award recipients and
application summaries
• Updated criteria versions
• CEO issue sheets
• Other information

44. Baldrige Award Evaluation Process
Receive Applications
Stage 1
Independent Review
Judges Select for No Feedback report
Consensus Review?
to applicant
Stage 2
Consensus Review
Judges Select for No Feedback report
Site Visit Review?
to applicant
Stage 3
Site Visit Review
Stage 4
Judges Recommend Award Feedback report
Recipients to
NIST Director/DOC to applicant

45. Scoring and Evaluation
• Approach
• Deployment
• Results

46. Approach
• Appropriateness of methods
• Effectiveness of use of the methods.
Degree to which the approach is
– Repeatable, integrated, and consistently applied
– Embodies evaluation/improvement/learning
cycles
– Based on reliable information and data
• Alignment with organizational needs
• Evidence of innovation

47. Deployment
• Extent to which the approach is applied to
all appropriate work units

48. Results
• Current performance
• Performance relative to appropriate
comparisons and benchmarks
• Rate, breadth, and importance of
performance improvements
• Linkage of results measures to key
customer, market, process, and action
plan performance requirements

49. Criteria Evolution (1 of 2)
• From quality assurance and strategic quality
planning to a focus on process management and
overall strategic planning
• From a focus on current customers to a focus on
current and future customers and markets
• From human resource utilization to human
resource development and management
• From supplier quality to supplier partnerships
• From individual quality improvement activities
to cycles of evaluation and improvement in all
key areas

50. Criteria Evolution (2 of 2)
• From individual quality improvement activities to
cycles of evaluation and improvement in all key
areas
• From data analysis of quality efforts to an
aggregate, integrated organizational level review
of key company data
• From results that focus on limited financial
performance to a focus on a composite of
business results, including customer satisfaction
and financial, product, service, and strategic
performance
• From organizational achievement to
organizational sustainability

51. Self Assessment
A primary goal of the Baldrige program is
to encourage many organizations to
improve on their own by equipping them
with a standard template for measuring
their performance and their progress
toward performance excellence.
Boeing Airlift & Tanker
Programs – 1998 winner

52. International Quality Award
Programs
• Deming Prize
• European Quality Award
• Canadian Awards for Business Excellence
• Australian Business Excellence Award
• Chinese National Quality Award
• Many others!

53. Deming Prize
• Instituted 1951 by Union of Japanese
Scientists and Engineers (JUSE)
• Several categories including prizes for
individuals, factories, small companies, and
Deming application prize
• American company winners include Florida
Power & Light and AT&T Power Systems
Division
53

54. ISO 9000:2000
• Quality system standards adopted by
International Organization for
Standardization in 1987; revised in 1994
and 2000
• Technical specifications and criteria to be
used as rules, guidelines, or definitions of
characteristics to ensure that materials,
products, processes, and services are fit
for their purpose.
54

55. Rationale for ISO 9000
• ISO 9000 defines quality system standards,
based on the premise that certain generic
characteristics of management practices can be
standardized, and that a well-designed, well-
implemented, and carefully managed quality
system provides confidence that the out-puts will
meet customer expectations and requirements.

56. Objectives of ISO Standards (1 of 2)
• Achieve, maintain, and continuously
improve product quality
• Improve quality of operations to continually
meet customers’ and stakeholders’ needs
• Provide confidence to internal
management and other employees that
quality requirements are being fulfilled
56

57. Objectives of ISO Standards (2 of 2)
• Provide confidence to customers and other
stakeholders that quality requirements are
being achieved
• Provide confidence that quality system
requirements are fulfilled
57

58. Structure of ISO 9000 Standards
• 21 elements organized into four major
sections:
– Management Responsibility
– Resource Management
– Product Realization
– Measurement, Analysis, and Iimprovement
58

59. ISO 9000:2000 Quality
Management Principles
1. Customer Focus
2. Leadership
3. Involvement of People
4. Process Approach
5. System Approach to Management
6. Continual Improvement
7. Factual Approach to Decision Making
8. Mutually Beneficial Supplier Relationships

60. Six Sigma
• Six Sigma – a business improvement approach
that seeks to find and eliminate causes of
defects and errors in manufacturing and service
processes by focusing on outputs that are
critical to customers and a clear financial return
for the organization.
• Based on a statistical measure that equates to
3.4 or fewer errors or defects per million
opportunities
• Pioneered by Motorola in the mid-1980s and
popularized by the success of General Electric

61. Key Concepts of Six Sigma
(1 of 2)
• Think in terms of key business processes,
customer requirements, and overall strategic
objectives.
• Focus on corporate sponsors responsible for
championing projects, support team activities,
help to overcome resistance to change, and
obtaining resources.
• Emphasize such quantifiable measures as
defects per million opportunities (dpmo) that
can be applied to all parts of an organization

62. Key Concepts of Six Sigma
(2 of 2)
• Ensure that appropriate metrics are identified early
and focus on business results, thereby providing
incentives and accountability.
• Provide extensive training followed by project team
deployment
• Create highly qualified process improvement
experts (“green belts,” “black belts,” and “master
black belts”) who can apply improvement tools and
lead teams.
• Set stretch objectives for improvement.

63. Six Sigma as a Quality
Framework (1 of 2)
• TQ is based largely on worker empowerment
and teams; Six Sigma is owned by business
leader champions.
• TQ activities generally occur within a function,
process, or individual workplace; Six Sigma
projects are truly cross-functional.

64. Six Sigma as a Quality
Framework (2 of 2)
• TQ training is generally limited to simple
improvement tools and concepts; Six Sigma
focuses on a more rigorous and advanced set
of statistical methods and a structured
problem-solving methodology DMAIC—define,
measure, analyze, improve, and control.
• TQ is focused on improvement with little
financial accountability; Six Sigma requires a
verifiable return on investment and focus on
the bottom line.

65. Transactional Six Sigma
• Applications in service organizations
• Issues:
– The culture of services is usually less scientific and
service employees typically do not think in terms of
processes, measurements, and data. The
processes are often invisible, complex, and not
well defined or well documented.
– The work typically requires considerable human
intervention, such as customer interaction,
underwriting or approval decisions, or manual
report generation.

66. Chapter 3
Performance Excellence,
Competitive Advantage, and
Strategic Management
66

67. Competitive Advantage
• Competitive advantage: a firm’s ability to
achieve market superiority over its
competitors.
• Characteristics:
– Is driven by customer wants and needs
– Makes significant contribution to business success
– Matches organization’s unique resources with
opportunities
– Is durable and lasting
– Provides basis for further improvement
– Provides direction and motivation
67

68. Product Quality and Business
Performance - PIMS Studies
• Product quality is the most important determinant of
business profitability.
• Businesses offering premium quality products and
services usually have large market shares and were
early entrants into their markets.
• Quality is positively and significantly related to a
higher return on investment for almost all kinds of
products and market situations.
• A strategy of quality improvement usually leads to
increased market share but at a cost in terms of
reduced short-run profitability.
• High-quality producers can usually charge premium
prices.

69. Quality and Profitability
Improved quality Improved quality
of design of conformance
Higher perceived Higher Lower
value prices manufacturing and
service costs
Increased market Increased
share revenues
Higher profitability 69

70. Quality and Business Results
Studies
• General Accounting Office study of Baldrige
Award applicants
• Hendricks and Singhal study of quality
award winners
• Performance results of Baldrige Award
winners

71. GAO Study Model

72. Sources of Competitive
Advantage
• Cost Leadership
• Differentiation
• People

73. Quality and Differentiation
Strategies
• Superior product and service design
• Outstanding service
• High agility
• Continuous innovation
• Rapid response

74. Quality and Product Design
• Understanding customer needs and
expectations
• Systematic processes for design and product
improvement
• Tools and techniques
– Concurrent engineering
– Value analysis
– Design reviews
– Experimental design

75. Quality and Outstanding Service
• Key components of service quality:
employees and information technology
• Dimensions of service quality
– Reliability – ability to provide what was promised
– Assurance – knowledge and courtesy of
employees and ability to convey trust
– Tangibles – physical facilities and appearance of
personnel
– Empathy – degree of caring and individual
attention
– Responsiveness – willingness to help customers
and provide prompt service

76. Quality and Agility
• Agility – capacity for flexibility and rapid
change
– Continual monitoring and sensing of
changing customer needs and expectations
– Fast design changes
– Rapid roll out of new products and
processes
– Cross-functional cooperation and
coordination
– Good supplier relations

77. Quality and Innovation
• Innovation is vital to competing in today’s
world
• Innovation creates new customer needs
and expectations and leads to higher
levels of performance
• Creativity and breakthrough thinking are
encouraged

78. Quality and Time
• Cycle time – the time it takes to accomplish one cycle
of a process
• Success in today’s markets requires increasingly
shorter cycle times
• Major improvements in response time often require
work organizations, processes, and paths to be
simplified and shortened. Simplified processes
reduce opportunities for errors, leading to improved
quality.
• Improvements in response time often result from
increased understanding of internal customer-
supplier relationships and teamwork.

79. Information and Knowledge for
Competitive Advantage
• A supply of consistent, accurate, and
timely data across all functional areas of
business provides real-time information for
the evaluation, control, and improvement
of processes, products, and services to
meet both business objectives and rapidly
changing customer needs.

80. Need for Performance
Measurement
• To lead the entire organization in a particular
direction; that is, to drive strategies and
organizational change;
• to manage the resources needed to travel in
this direction by evaluating the effectiveness of
action plans; and
• to operate the processes that make the
organization work and continuously improve

81. Balanced Scorecard
1. Financial perspective
2. Internal perspective
3. Customer perspective
4. Innovation and learning
perspective
Leading measures Lagging measures

82. Baldrige Classification of
Performance Measures
• Product and service outcomes
• Customer-focused outcomes
• Financial and market outcomes
• Human resource outcomes
• Organizational effectiveness outcomes
• Leadership and social responsibility
outcomes
82

83. Strategic Planning
• Strategy – the pattern of decisions that
determines and reveals a company’s goals,
policies, and plans to meet the needs of its
stakeholders
• Strategic planning – the process by which
members of an organization envision its future
and develop the necessary procedures and
operations to carry out that vision

84. Goals of Strategic Planning
• Plan for the long term, and understand the key
influences, risks, challenges, and other requirements
that might affect the organization’s future
opportunities and directions.
• Project the future competitive environment to help
detect and reduce competitive threats, shorten
reaction time, and identify opportunities.
• Develop action plans and deploy resources—
particularly human resources—to achieve alignment
and consistency, and provide a basis for setting and
communicating priorities for ongoing improvement
activities.
• Ensure that deployment will be effective—that a
measurement system enables tracking of action plan
achievement in all areas.

85. Strategic Planning Process

86. Mission
• Definition of products and services,
markets, customer needs, and
distinctive competencies
• Example - Procter & Gamble: “We will
provide products of superior quality
and value that improve the lives of
world consumers.”

87. Vision
• Where the organization is headed and what
it intends to be
– Brief and memorable - grab attention
– Inspiring and challenging - creates excitement
– Descriptive of an ideal state - provides guidance
– Appealing to all stakeholders - employees can
identify with
• Example – Solectron: “Be the best and
continuously improve”

88. Values (Guiding Principles)
• Define attitudes and policies for all employees,
which are reinforced through conscious and
subconscious behavior at all levels of the
organization.
• Example – Federal express: “We will be helpful,
courteous, and professional to each other an the
public. We will strive to have a completely
satisfied customer at the end of each
transaction.”

89. Environmental Assessment
• Customer and market requirements,
expectations, and opportunities
• Technological and other innovations
• Organizational strengths and weaknesses
• Financial, societal, ethical, regulatory and
other potential risks
• Changes in global or national economy
• Factors unique to the organization, such as
partner and supply chain needs

90. Strategies and Action Plans
• Strategies are broad statements that set the
direction for the organization to take in realizing
its mission and vision.
• Strategic objectives are what an organization
must change or improve to remain or become
competitive.
• Action plans are things that an organization must
do to achieve its strategic objectives.

91. Strategy Implementation
• Developing detailed action plans, defining
resource requirements and performance
measures, and aligning work unit,
supplier, or partner plans with overall
strategic objectives.

92. Policy Deployment
(Hoshin Kanri)
• Top management vision leading to long-
term objectives
• Deployment through annual objectives
and action plans
• Negotiation for short-term objectives and
resources (catchball)
• Periodic reviews
92

93. Hoshin Planning

94. Linking Human Resource Plans
and Business Strategy
• Changes in strategy often require changes in HR
plans
• Examples
– Redesign of the work organization to increase
empowerment or teamwork
– Changes in labor/management partnerships
– Directed training and education
– Improved processes for knowledge sharing

95. Illustrative Example

96. Requirements for Effective
Strategic Planning
• A definable approach for developing company
strategy.
• A clear company strategy with action plans
derived from it, and human resource plans
related to the action plans.
• An approach for implementing action plans.
• An approach for monitoring company
performance relative to the strategic plan.
• Projections of strategy-related changes in key
indicators of company performance.

97. Case Studies
• Bronson Methodist Hospital
• Branch-Smith Printing Division
• Solectron

98. TQ and Strategic Management
Theory
• Classic strategy formulation addresses the
market environment, competitive
environment, and company capabilities
• Other TQ-related factors – financial and
societal risk, human resource capabilities,
and supplier/partner capabilities – are
addressed only indirectly in the literature

99. Chapter 4
Quality in Customer-
Supplier Relationships
99

100. The Value of Customers
• “The only value your company will ever create is
the value that comes from customers—the ones
you have now and the ones you will have in the
future. Businesses succeed by getting, keeping,
and growing customers. Customers are the only
reason you build factories, hire employees,
schedule meetings, lay fiber-optic lines, or
engage in any business activity. Without
customers, you don’t have a business.”
– Don Peppers and Martha Rogers

101. Deming’s Emphasis on
Customers

102. The Customer-Supplier Chain

103. Business Case for Customer
Focus
• “Satisfaction is an attitude; loyalty is a behavior”
• Loyal customers spend more, are willing to pay
higher prices, refer new clients, and are less
costly to do business with.
• It costs five times more to find a new customer
than to keep an existing one happy.
• A firm cannot create loyal customers without first
creating satisfied customers.
103

104. The Importance of Suppliers
• Quality of the supply chain affects the
quality that customers receive
• “Superior quality, consistent service, and
competitive pricing are just the price of
entry to get into the game.”
• Suppliers must continually improve and
align their operations with customer
needs.

105. Principles for Customer-
Supplier Relationships
• Recognition of the strategic importance of
customers and suppliers
• Development of win-win relationships
between customers and suppliers
• Establishing relationships based on trust

106. Practices for Dealing With
Customers
• Collect information constantly on customer
expectations
• Disseminate this information widely within the
organization
• Use this information to design, produce, and
deliver the organization’s products and services.
• Manage customer relationships
• Exploit CRM technology
• Don’t ignore internal customers

107. Collect Customer Information
• Comment cards and formal surveys
• Focus groups
• Direct customer contact
• Field intelligence
• Complaint analysis
• Internet monitoring
107

108. Understand Customer Needs –
the Kano Model
• Dissatisfiers: expected requirements
• Satisfiers: expressed requirements
• Exciters/delighters: unexpected
features
108

109. Disseminate Customer
Information
• Share information with employees
• Provide data to product designers and service
managers

110. Use Customer Information

111. Manage Customer
Relationships
• Develop close relationships
• Provide convenient access to information and to
employees
• Train customer contact employees
• Develop good service standards
• Deal with complaints
• Exploit CRM technology
• Don’t ignore internal customers

112. Moments of Truth
• Every instance in which a customer comes in
contact with an employee of the company.
• Example (airline)
– Making a reservation
– Purchasing tickets
– Checking baggage
– Boarding a flight
– Ordering a beverage
– Requests a magazine
– Deplanes
– Picks up baggage

113. Exploit CRM Technology (1 of 2)
• Segmenting markets based on demographic and
behavioral characteristics.
• Tracking sales trends and advertising effectiveness
by customer and market segment.
• Identifying and eliminated non-value-adding products
that would waste resources as well as those
products that better meet customers’ needs and
provide increased value.
• Identifying which customers should be the focus of
targeted marketing initiatives with predicted high
customer response rates.

114. Exploit CRM Technology (2 of 2)
• Forecasting customer retention (and defection) rates and
providing feedback as to why customers leave a
company.
• Studying which goods and services are purchased
together, leading to good ways to bundle them.
• Studying and predicting which Web characteristics are
most attractive to customers and how the Web site might
be improved.
• Streamlining processes around customers rather than
traditional functions, resulting in improved flow of
information and cycle times.

115. Guiding Principles in Supplier
Relationships
• Recognizing the strategic importance of
suppliers in accomplishing business objectives,
particularly minimizing the total cost of
ownership,
• Developing win-win relationships through
partnerships rather than as adversaries, and
• Establishing trust through openness and
honesty, thus leading to mutual advantages.

116. Practices for Dealing With
Suppliers
• Base purchasing decisions on quality as
well as cost
• Reduce the number of suppliers
• Establish long-term contracts
• Measure and certify supplier performance
• Develop cooperative relationships and
strategic alliances

117. Relationships to Organization
Theory
• Roles for customers
– Resource
– Worker (or coworker)
– Buyer
– Beneficiary (or user)
– Outcome or product of value-creating transformation
activities
• Resource dependence perspective
• Integrative bargaining

118. Chapter 5
Designing Organizations for
Performance Excellence
118

119. Factors Affecting Work
Organization
• Company and organizational guidelines
• Management style
• Customer influences
• Company size
• Diversity and complexity of product line
• Stability of the product line
• Financial stability
• Availability of personnel

120. Functional Structure

121. Problems With the Functional
Structure
• Separates employees from customers
• Inhibits process improvement
• Functional organizations often have a
separate function for quality

122. Redesigning Organizations for
Performance Excellence
• Focus on processes
• Make quality everyone’s job
• Recognize internal customers
• Create a team-based organization
• Reduce hierarchy
• Use steering committees
• Develop an agile organization
• Redesign work systems

123. Types of Processes
• Value-creation processes – those
most important to “running the
business”
– Design processes – activities that
develop functional product specifications
– Production/delivery processes – those
that create or deliver products
• Support processes – those most
important to an organization’s value
creation processes, employees, and
daily operations

124. Example of Process Focus:
Gold Star Chili

125. Make Quality Everyone’s Job
• Recognize that all jobs involve “managing
quality”
• Eliminate the quality department
– Example: Texas Nameplate Company

126. Recognize Internal Customers
• “Chains of customers” concept
• Process mapping to identify internal
customer-supplier relationships
• Create links between internal customers
and external suppliers

127. Create a Team-Based
Organization

128. Six Sigma Project Teams
• Champions – senior managers who promote Six
Sigma
• Master Black Belts – highly trained experts
responsible for strategy, training, mentoring,
deployment, and results.
• Black Belts – Experts who perform technical
analyses
• Green Belts – functional employees trained in
introductory Six Sigma tools
• Team Members – Employees who support
specific projects

129. Reduce Hierarchy
• Eliminate layers of middle management
• Empower frontline workers
• Benefits include improved communication
• Risks include impact on morale and loss
of valuable experience

130. Steering Committees

131. Develop Agile Organizations
• Faster reaction to competitive challenges
and changing customer demands
• Simplification of work processes and rapid
changeovers

132. Redesign Work Systems for
High Performance
Job Flexibility Compensation
descriptions and
Innovation recognition
Health and Knowledge and skill
safety sharing
Organizational Empowerment
Suggestion alignment
systems Customer focus
Employee
Training and Rapid response Involvement
Education
Teamwork and Cooperation

133. Enhancing Work Design
• Job enlargement – expanding workers’
jobs
• Job rotation – having workers learn
several tasks and rotate among them
• Job enrichment – granting more authority,
responsibility, and autonomy

134. Case Studies
• Boeing Airlift and Tanker Programs
• VA Hospitals
• Solar Turbines, Inc.
• General Electric Bayamon
• The San Diego Zoo

135. Comparisons to Organizational
Theory
• Structural Contingency Theory
– Mechanistic vs. organic
– Choice depends on organizational
environment and technology
• Institutional Theory
– Structure legitimizes purpose, even if they
may not provide value
– ISO 9000 and Six Sigma

136. Chapter 6
Designing, Controlling, and
Improving Organizational
Processes
136

137. Process Management
• Planning and administering the activities
necessary to achieve a high level of
performance in key business processes, and
identifying opportunities for improving quality
and operational performance, and ultimately,
customer satisfaction.

138. AT&T Process Management
Principles
• Process quality improvement focuses on the end-to-
end process.
• The mind-set of quality is one of prevention and
continuous improvement.
• Everyone manages a process at some level and is
simultaneously a customer and a supplier.
• Customer needs drive process quality improvement.
• Corrective action focuses on removing the root cause
of the problem rather than on treating its symptoms.
• Process simplification reduces opportunities for errors
and rework.
• Process quality improvement results from a
disciplined and structured application of the quality
management principles

139. Process Design: Motorola
Approach
1. Identify the product or service: What work do I do?
2. Identify the customer: Who is the work for?
3. Identify the supplier: What do I need and from
whom do I get it?
4. Identify the process: What steps or tasks are
performed? What are the inputs and outputs for
each step?
5. Mistake-proof the process: How can I eliminate or
simplify tasks? What “poka-yoke” (i.e., mistake-
proofing) devices (see Chapter 13) can I use?
6. Develop measurements and controls, and
improvement goals: How do I evaluate the process?
How can I improve further?

140. Design for Agility
• Close customer relationships
• Empower employees
• Use effective technology
• Maintain close supplier and partner
relationships
• Breakthrough improvement

141. Service Processes
• Outputs not as well defined as in
manufacturing
• Higher interaction with customers

142. Service Process Design
• Three basic design components:
– Physical facilities, processes and procedures
– Employee behavior
– Employee professional judgment

143. Key Service Dimensions
Customer contact and interaction
Labor intensity
Customization 143

144. Process Control
• Control – the activity of ensuring
conformance to requirements and taking
corrective action when necessary to
correct problems and maintain stable
performance

145. Components of Process Control
Systems
• Any control system has three
components:
1. a standard or goal,
2. a means of measuring accomplishment, and
3. comparison of actual results with the
standard, along with feedback to form the
basis for corrective action.

146. Control vs. Improvement
146

147. Kaizen
• Kaizen – a Japanese word that means
gradual and orderly continuous
improvement
• Focus on small, gradual, and frequent
improvements over the long term with
minimum financial investment, and
participation by everyone in the
organization.

148. Importance of Process
Improvement
• Customer loyalty is driven by delivered value.
• Delivered value is created by business
processes.
• Sustained success in competitive markets
requires a business to continuously improve
delivered value.
• To continuously improve value creation ability, a
business must continuously improve its value
creation processes.

149. Structured Problem Solving
• Redefine and analyze problems
• Generate ideas
• Evaluate ideas and select a solution
• Implement the solution

150. Eastman Chemical
Improvement Process
• Focus and pinpoint
• Communicate
• Translate and link
• Create a management action plan
• Improve processes
• Measure progress and provide
feedback
• Reinforce behaviors and celebrate
results

151. The Deming Cycle
151

152. Plan (1 of 2)
1. Define the process: its start, end, and what it does.
2. Describe the process: list the key tasks performed and
sequence of steps, people involved, equipment used,
environmental conditions, work methods, and materials
used.
3. Describe the players: external and internal customers
and suppliers, and process operators.
4. Define customer expectations: what the customer wants,
when, and where, for both external and internal
customers.
5. Determine what historical data are available on process
performance, or what data need to be collected to better
understand the process.

153. Plan (2 of 2)
1. Describe the perceived problems associated with
the process; for instance, failure to meet customer
expectations, excessive variation, long cycle
times, and so on.
2. Identify the primary causes of the problems and
their impacts on process performance.
3. Develop potential changes or solutions to the
process, and evaluate how these changes or
solutions will address the primary causes.
4. Select the most promising solution(s).

154. Do
1. Conduct a pilot study or experiment to
test the impact of the potential
solution(s).
2. Identify measures to understand how
any changes or solutions are successful
in addressing the perceived problems.

155. Study
1. Examine the results of the pilot study or
experiment.
2. Determine whether process performance
has improved.
3. Identify further experimentation that may
be necessary.

156. Act
1. Select the best change or solution.
2. Develop an implementation plan: what needs to
be done, who should be involved, and when
the plan should be accomplished.
3. Standardize the solution, for example, by
writing new standard operating procedures.
4. Establish a process to monitor and control
process performance.

157. DMAIC Methodology
1. Define
2. Measure
3. Analyze
4. Improve
5. Control

158. Define
• Describe the problem in operational terms
• Drill down to a specific problem statement
(project scoping)
• Identify customers and CTQs,
performance metrics, and cost/revenue
implications

159. Measure
• Key data collection questions
– What questions are we trying to answer?
– What type of data will we need to answer the
question?
– Where can we find the data?
– Who can provide the data?
– How can we collect the data with minimum
effort and with minimum chance of error?

160. Analyze
• Focus on why defects, errors, or
excessive variation occur
• Seek the root cause
• 5-Why technique
• Experimentation and verification

161. Improve
• Idea generation
• Brainstorming
• Evaluation and selection
• Implementation planning

162. Control
• Maintain improvements
• Standard operating procedures
• Training
• Checklist or reviews
• Statistical process control charts

163. Lean Production and Six Sigma
• The 5S’s: seiri (sort), seiton (set in order), seiso
(shine), seiketsu (standardize), and shitsuke
(sustain).
• Visual controls
• Efficient layout and standardized work
• Pull production
• Single minute exchange of dies (SMED)
• Total productive maintenance
• Source inspection
• Continuous improvement

164. Breakthrough Improvement
• Discontinuous change resulting from
innovative and creative thinking, motivated
by stretch goals, and facilitated by
benchmarking and reengineering

165. Benchmarking
• Benchmarking – “the search of industry best
practices that lead to superior performance.”
• Best practices – approaches that produce
exceptional results, are usually innovative in
terms of the use of technology or human
resources, and are recognized by customers or
industry experts.

166. Types of Benchmarking
• Competitive benchmarking - studying
products, processes, or business
performance of competitors in the same
industry to compare pricing, technical quality,
features, and other quality or performance
characteristics of products and services.
• Process benchmarking – focus on key work
processes
• Strategic benchmarking – focus on how
companies compete and strategies that lead
to competitive advantage

167. Benchmarking Process
1. Determine what to benchmark
2. Identify key performance indicators to measure
3. Identify the best-in-class companies
4. Measure the performance of best-in-class and
compare to your own performance
5. Define and take actions to meet or exceed the
best performance

168. Reengineering
• Reengineering – the fundamental
rethinking and radical redesign of
business processes to achieve dramatic
improvements in critical, contemporary
measures of performance, such as cost,
quality, service, and speed.

169. The Key Role of Process

170. Principles of Process Redesign
• Reduce handoffs
• Eliminate steps
• Perform steps in parallel rather than in
sequence
• Involve key people early

171. Organizational Issues
• Resistance to change
• Top management support
• Diversity of human resources
• Methodological rigor
• Payoffs and benefits

172. Case Studies
• Chugach School District
• Froedtert Hospital
• The Walt Disney Company
• General Electric

173. Chapter 7
Tools and Techniques for
Performance Excellence
173

174. Tools for Quality Design
• Quality Function Deployment
• Concept engineering
• Design failure modes and effects analysis
(DFMEA)

175. Quality Function Deployment
• A process of translating customer requirements
into technical requirements during product
development and production. QFD benefits
companies through improved communication
and teamwork between all constituencies in the
value chain, such as between marketing and
design, between design and manufacturing, and
between purchasing and suppliers

176. House of Quality
Interrelationships Customer
requirement
priorities
Technical requirements
Voice of
Relationship
the
matrix
customer
Technical requirement Competitive
priorities evaluation
176

177. Building the House of Quality
1. Identify customer requirements.
2. Identify technical requirements.
3. Relate the customer requirements to the
technical requirements.
4. Conduct an evaluation of competing products
or services.
5. Evaluate technical requirements and develop
targets.
6. Determine which technical requirements to
deploy in the remainder of the
production/delivery process.

178. Example

179. Quality Function Deployment
Process
technical
requirements
component
characteristics
process
operations quality plan
179

180. Concept Engineering
• Understanding the customer’s
environment.
• Converting understanding into
requirements.
• Operationalizing what has been learned.
• Concept generation.
• Concept selection.

181. DFMEA
• Design failure mode and effects analysis
(DFMEA) – identification of all the ways in
which a failure can occur, to estimate the effect
and seriousness of the failure, and to
recommend corrective design actions.

182. DFMEA Specifications
• Failure modes
• Effect of failures on customers
• Severity, likelihood of occurrence, and
detection rating
• Potential causes of failure
• Corrective actions or controls

183. Tools for Quality Planning
• The Seven Management and Planning
Tools

184. Affinity Diagram

185. Interrelationship Digraph

186. Tree Diagram

187. Other Planning Tools
• Matrix diagrams
• Matrix data analysis
• Process decision program chart
• Arrow diagrams

188. Process Decision Program
Chart

189. Tools for Process Analysis
1. Flowcharts
2. Check sheets
3. Histograms
4. Cause-and-effect diagrams
5. Pareto diagrams
6. Scatter diagrams
7. Control charts

190. Flowcharts
• A flowchart or process map identifies the
sequence of activities or the flow of
materials and information in a process.
Flowcharts help the people involved in the
process understand it much better and
more objectively by providing a picture of
the steps needed to accomplish a task.

191. Benefits of Flowcharts
• Shows unexpected complexity, problem
areas, redundancy, unnecessary loops, and
where simplification may be possible
• Compares and contrasts actual versus ideal
flow of a process
• Allows a team to reach agreement on
process steps and identify activities that
may impact performance
• Serves as a training tool

192. Check Sheets
• Check sheets are special types of data
collection forms in which the results may
be interpreted on the form directly without
additional processing.

193. Benefits of Check Sheets
• Creates easy-to-understand data
• Builds, with each observation, a clearer
picture of the facts
• Forces agreement on the definition of
each condition or event of interest
• Makes patterns in the data become
obvious quickly xx
xxxxxx
x

194. Histograms
• Histograms provide clues about the
characteristics of the parent population
from which a sample is taken. Patterns
that would be difficult to see in an ordinary
table of numbers become apparent.

195. Benefits of Histograms
• Displays large amounts of data that are difficult
to interpret in tabular form
• Shows centering, variation, and shape
• Illustrates the underlying distribution of the data
• Provides useful information for predicting future
performance
• Helps to answer “Is the process capable of
meeting requirements?

196. Pareto Diagrams
• A Pareto distribution is one in which the
characteristics observed are ordered from
largest frequency to smallest. A Pareto
diagram is a histogram of the data from
the largest frequency to the smallest.

197. Benefits of Pareto Diagrams
• Helps a team focus on causes that have the
greatest impact
• Displays the relative importance of problems
in a simple visual format
• Helps prevent “shifting the problem” where
the solution removes some causes but
worsens others

198. Cause-and-Effect Diagrams
• A cause-and-effect diagram is a simple
graphical method for presenting a chain of
causes and effects and for sorting out
causes and organizing relationships
between variables.

199. Benefits of Cause and Effect
Diagrams
• Enables a team to focus on the content of a
problem, not on the history of the problem or
differing personal interests of team members
• Creates a snapshot of collective knowledge and
consensus of a team; builds support for solutions
• Focuses the team on causes, not symptoms
Effect
Cause

200. Scatter Diagrams
• A scatter diagram is a plot of the
relationship between two numerical
variables.

201. Benefits of Scatter Diagrams
• Supplies the data to confirm a hypothesis
that two variables are related
• Provides both a visual and statistical means
to test the strength of a relationship
• Provides a good follow-up to cause and
effect diagrams
*
* *
* *
*

202. Control Charts
• Control charts show the performance and
the variation of a process or some quality
or productivity indicator over time in a
graphical fashion that is easy to
understand and interpret. They also
identify process changes and trends over
time and show the effects of corrective
actions.

203. Benefits of Control Charts
• Monitors performance of one or more processes
over time to detect trends, shifts, or cycles
• Distinguishes special from common causes of
variation
• Allows a team to compare performance before and
after implementation of a solution to measure its
impact
• Focuses attention on truly vital changes in the
process
* *
* *
* * *

204. Poka-Yoke (Mistake-Proofing)
• An approach for mistake-proofing processes
using automatic devices or methods to avoid
simple human or machine error, such as
forgetfulness, misunderstanding, errors in
identification, lack of experience,
absentmindedness, delays, or malfunctions
204

205. Three Levels of Mistake-
Proofing
• Design potential errors out of the product or
process – Eliminates any possibility that the
error or defect might occur
• Identify potential defects and stopping a process
before the defect is produced – Requires time to
stop a process and take corrective action.
• Find defects that enter or leave a process –
Eliminates wasted resources that would add
value to nonconforming work, but clearly results
in scrap or rework.

206. Common Poka-Yoke Examples
(from John Grout’s Poka-Yoke Web Page)

207. Kaizen Blitz
• A kaizen blitz is an intense and rapid
improvement process in which a team or a
department throws all its resources into an
improvement project over a short time
period, as opposed to traditional kaizen
applications, which are performed on a
part-time basis.

208. Creativity and Innovation
• Creativity – the ability to discover useful
new relationships and ideas
• Innovation – practical implementation of
creative ideas

209. Fostering Creativity
• Remove or reduce obstacles to creativity.
• Match jobs to individuals’ creative abilities.
• Tolerate failures and establish direction.
• Improve motivation to increase productivity and solve
problems creatively.
• Enhance the self-esteem and build the confidence of
organization members.
• Improve communication so that ideas can be better
shared.
• Place highly creative people in special jobs and
provide training to take advantage of their creativity.

210. Statistical Thinking
• All work occurs in a system of
interconnected processes
• Variation exists in all processes
• Understanding and reducing variation
are the keys to success

211. Wisdom from Texas
Instruments
“Unless you change the process, why
would you expect the results to change”
211

212. Statistical Process Control
(SPC)
• A methodology for monitoring a
process to identify special causes of
variation and signal the need to take
corrective action when appropriate
• SPC relies on control charts
212

213. Control Chart Example

214. Chapter 8
Quality Teamwork
214

215. Teams
• Team - a small number of people with
complementary skills who are committed to a
common purpose, set of performance goals,
and approach for which they hold themselves
mutually accountable
215

216. Types of Teams
• Leadership teams
• Problem solving teams (departmental or
cross-functional)
• Natural work teams
• Self managed teams
• Virtual teams
• Project teams
216

217. Leadership Teams
• Steering committees
• Quality councils
• Executive leadership teams

218. Problem-Solving Teams
• Corrective action teams
• Quality circles
– Typically composed of workers at lower levels
of the organization

219. Natural Work Teams
• Organized to perform a complete unit of
work
• Extensive cross-training and sharing of
responsibilities
• Job rotation

220. Self-Managed Teams
• Also known as self-directed teams or
autonomous work groups
• Have broad responsibilities, including the
responsibility to manage themselves
• Generally more productive than
conventional teams

221. Virtual Teams
• Groups of people who work closely
together despite being geographically
separated
• Use technology to share information
• Importance because of globalization,
knowledge work, and need for diverse
skills

222. Six Sigma Project Teams
• Champions – senior managers who promote Six
Sigma
• Master Black Belts – highly trained experts
responsible for strategy, training, mentoring,
deployment, and results.
• Black Belts – Experts who perform technical
analyses
• Green Belts – functional employees trained in
introductory Six Sigma tools
• Team Members – Employees who support
specific projects

223. Cross-Functional Teamwork
• Common in leadership teams, virtual
teams, and project teams
• Useful for process improvement and for
implementing large-scale organizational
changes

224. Team Effectiveness Criteria
• Teams must achieve their goals
• Teams should make progress quickly
• Teams must maintain or increase their
strength as units
• Teams must preserve or strengthen their
relationships with the rest of the
organization

225. Ingredients for Successful
Teams (1 of 2 )
• Clarity in team goals
• Improvement plan
• Clearly defined roles
• Clear communication
• Beneficial team behaviors
225

226. Ingredients for Successful
Teams (2 of 2)
• Well-defined decision procedures
• Balanced participation
• Established ground rules
• Awareness of group process
• Use of scientific approach
226

227. Reasons for Team Participation
• Have a say in decisions that affect work
• Enhance promotion or job opportunities
• Learn more information
• Enhance feeling of accomplishment
• Address personal agendas
• Want to genuinely help the organization
• Enjoy recognition and rewards associated with
team activity
• Be in a comfortable social environment

228. Team Processes
• Problem Selection
• Problem Diagnosis
• Work Allocation
• Communication
• Coordination
• Organizational Support

229. Boeing A&T Team Development
Process

230. Teams and Organizational
Behavior Theories
• Sociotechnical systems approach
• Organizational development (OD)
• Homogeneous and heterogeneous groups
• Cultural values and support/resistance
• Diversity

231. Chapter 9
Engagement, Empowerment,
and Motivation
231

232. Employee Engagement
• Strong emotional bond to their organization
• Are actively involved in and committed to their
work
• Feel that their jobs are important, know that their
opinions and ideas have value
• Often go beyond their immediate job
responsibilities for the good of the organization

233. How Engagement Leads to
Quality

234. Advantages of Employee
Engagement
• Replaces the adversarial mentality with trust and
cooperation
• Develops the skills and leadership capability of
individuals, creating a sense of mission and
fostering trust
• Increases employee morale and commitment to the
organization
• Fosters creativity and innovation, the source of
competitive advantage
• Helps people understand quality principles and
instills these principles into the corporate culture
• Allows employees to solve problems at the source
immediately
• Improves quality and productivity

235. Employee Involvement
• Any activity by which employees
participate in work-related decisions and
improvement activities, with the objectives
of tapping the creative energies of all
employees and improving their motivation.

236. Empowerment
• Empowerment – giving people
authority to do whatever is necessary
to satisfy customers, and trusting
employees to make the right choices
without waiting for management
approval.
“A sincere belief and trust in people.”

237. Examples of Empowerment
• Managing work as individuals or teams
• Making traditional “managerial” business
decisions
• Going outside of job descriptions to help
customers
• Taking risks for the good of the
organization even at a short-term cost

238. Management Action Needed for
Empowerment
1. Identify and change organizational
conditions that make people powerless,
and
2. increase people’s confidence that their
efforts to accomplish something
important will be successful.

239. Theoretical Basis for
Empowerment
• Customer satisfaction is correlated to
employee satisfaction
• Employee attitudes correlate strongly to
higher profits
• Empowerment leads to improved
motivation and morale, as well as better
quality, productivity, and speed of decision
making

240. Principles of Empowerment
• Empower sincerely and completely
• Establish mutual trust
• Provide employees with business
information
• Ensure that employees are capable
• Don’t ignore middle management
• Change the reward system

241. Case Studies
• DynMcDermott Petroleum Operations
Company
• The Ritz-Carlton Hotel Company, L.L.C.
• Los Alamos National Bank

242. Reasons for Failure of
Empowerment
• Management support and commitment is nonexistent or
not sustained.
• Empowerment is used as a manipulative tool to ensure
employees complete tasks and assignments without
giving them any real responsibility or authority.
• Managers use empowerment to abdicate responsibility or
task accountability, accepting accolades for successes
and assigning fault to others for failure.
• Empowerment is deployed selectively, segmenting the
workforce into those who are empowered and those who
are not.
• Empowerment is used as an excuse to not invest in
training or employee development.
• Managers fail to provide feedback and do not recognize
achievements.

243. Successful Empowerment
• Provide education, resources, and
encouragement
• Remove restrictive policies/procedures
• Foster an atmosphere of trust
• Share information freely
• Make work valuable
• Train managers in “hands-off” leadership
• Train employees in allowed latitude
243

244. Motivation
• Motivation - an individual’s response to
a felt need
• Views
– Extrinsic
– Intrinsic

245. Compensation
• Effect on motivation
• Merit versus capability/performance
based plans
• Gainsharing
245

246. Recognition and Rewards
• Monetary or non-monetary
• Formal or informal
• Individual or group

247. Effective Recognition and Reward
Strategies
• Give both individual and team awards
• Involve everyone
• Tie rewards to quality
• Allow peers and customers to nominate and
recognize superior performance
• Publicize extensively
• Make recognition fun
247

248. Work Environment
• Quality of working life
• Ancillary services

249. Engagement and Theories of
Motivation
• Job Characteristics Theory
• Acquired Needs Theory
• Goal-Setting Theory

250. Hackman-Oldham Model

251. Chapter 10
Leadership for
Performance Excellence
251

252. Importance of Leadership
• Deming’s 14 Points
• Driver of performance excellence in the
Baldrige Award criteria

253. Leadership – Some
Perspectives
• vision that stimulates hope and mission that transforms
hope into reality;
• radical servanthood that saturates the organization;
• stewardship that shepherds its resources;
• integration that drives its economy;
• the courage to sacrifice personal or team goals for the
greater community good;
• communication that coordinates its efforts;
• consensus that drives unity of purpose;
• empowerment that grants permission to make mistakes,
encourages the honesty to admit them, and gives the
opportunity to learn from them;
• conviction that provides the stamina to continually strive
toward business excellence

254. Executive Leadership
• Defining and communicating business directions
• Ensuring that goals and expectations are met
• Reviewing business performance and taking
appropriate action
• Creating an enjoyable work environment
• Soliciting input and feedback from customers
• Ensuring that employees are effective contributors
• Motivating, inspiring, and energizing employees
• Recognizing employee contributions
• Providing honest feedback

255. Roles of a Quality Leader
• Establish a vision
• Live the values
• Lead continuous improvement

256. Case Studies
• Branch-Smith Printing Division
• SSM Health Care

257. Leadership Theory –
Mintzberg’s Model
• Interpersonal roles
– Figurehead
– Leader
– Liaison
• Informational roles
– Monitor
– Disseminator
– Spokesperson
• Decisional roles
– Entrepreneur
– Disturbance handler
– Resource allocator
– negotiator

258. Consideration and Initiating
Structure
• Consideration (also known as socioemotional
orientation) – taking care of subordinates,
explaining things to them, being
approachable, and generally being concerned
about their welfare.
• Initiating structure (also known as task
orientation) means getting people organized,
including setting goals and instituting and
enforcing deadlines and standard operating
procedures.

259. Transformational Leadership
Theory
• Inspirational motivation — providing followers
with a sense of meaning and challenge in
their work;
• Intellectual stimulation — encouraging
followers to question assumptions, explore
new ideas and methods, and adopt new
perspectives;
• Idealized influence — behaviors that followers
strive to emulate or mirror;
• Individualized consideration — special
attention to each follower’s needs for
achievement and growth.

260. Situational Leadership
• Leadership styles might vary from one person to
another, depending on their “readiness,” which is
characterized by their skills and abilities to
perform the work, and their confidence,
commitment, and motivation to do it.
• Levels of readiness
– 1. Unable and unwilling
– 2. Unable but willing
– 3. Able but unwilling, and
– 4. Able and willing

261. Complementary Leadership
Styles
• Directing
• Coaching
• Supporting
• Delegating

262. Chapter 11
Performance Excellence
and Organizational
Change
262

263. Organizational Change Realities
Organizations contemplating change must answer
some tough questions, such as, Why is the
change necessary? What will it do to my
organization (department, job)? What problems
will I encounter in making the change? and
perhaps the most important one — What’s in it
for me?

264. Strategic vs. Process Change
• Strategic change is broad in scope and stems
from strategic objectives, which are generally
externally focused and relate to significant
customer, market, product/service, or
technological opportunities and challenges.
• Process change is narrow in scope and deals
with the operations of an organization. An
accumulation of continuously improving
process changes can lead to a positive and
sustainable culture change.

265. Strategic vs. Process Change

266. Cultural Change
• Culture – the set of beliefs and values
shared by the people in an organization.
• Cultural values often seen in mission and
vision statements
• Firms pursuing TQ often need cultural
change

267. Elements of a Performance
Excellence Culture
• Visionary leadership • Focus on the future
• Customer Driven • Managing for
• Organizational and innovation
personal learning • Management by fact
• Valuing employees • Social responsibility
and partners • Focus on results and
• Agility creating value
• Systems perspective

268. Why Adopt a Performance
Excellence Philosophy?
• Reaction to competitive threat to
profitable survival
• An opportunity to improve
268

269. Requirements for Building and
Sustaining Performance Excellence
• Readiness for change
• Sound practices and implementation
strategies
• Effective organization

270. Perspectives on Cultural
Change
• Change can be accomplished, but it is difficult
• Imposed change will be resisted
• Full cooperation, commitment, and participation
by all levels of management is essential
• Change takes time
• You might not get positive results at first
• Change might go in unintended directions

271. People Roles in
Organizational Change
• Senior management
• Middle management
• Workforce
271

272. Transforming Middle Managers
to Change Agents
• Empower
• Create a common vision of excellence
• Create new organizational rules
• Implement continuous improvement
• Develop and retain peak performers

273. Common Mistakes in
Implementation (1 of 3)
• Change is regarded as a short-term “program”
• Compelling results are not obtained quickly
• Process not driven by focus on customer,
connection to strategic business issues, and
support from senior management
• Structural elements block change
• Goals set too low
• “Command and control” organizational culture
273

274. Common Mistakes in
Implementation (2 of 3)
• Training not properly addressed
• Focus on products, not processes
• Little real empowerment is given
• Organization too successful and complacent
• Organization fails to address fundamental
questions
• Senior management not personally and
visibly committed
274

275. Common Mistakes in
Implementation (3 of 3)
• Overemphasis on teams for cross-functional
problems
• Employees operate under belief that more
data are always desirable
• Management fails to recognize that quality
improvement is personal responsibility
• Organization does not see itself as collection
of interrelated processes
275

276. Building on Best Practices
• Universal best practices
– Cycle time analysis
– Process value analysis
– Process simplification
– Strategic planning
– Formal supplier certification programs

277. Best Practices: Infrastructure
Design (1 of 3)
• Low performers
– process management fundamentals
– customer response
– training and teamwork
– benchmarking competitors
– cost reduction
– rewards for teamwork and quality
277

278. Best Practices: Infrastructure
Design (2 of 3)
• Medium performers
– use customer input and market
research
– select suppliers by quality
– flexibility and cycle time reduction
– compensation tied to quality and
teamwork
278

279. Best Practices: Infrastructure
Design (3 of 3)
• High performers
– self-managed and cross-functional
teams
– strategic partnerships
– benchmarking world-class companies
– senior management compensation tied
to quality
– rapid response
279

280. Quality Engines of Baldrige
Winners

281. Self Assessment: Basic
Elements
• Management involvement and leadership
• Product and process design
• Product control
• Customer and supplier communications
• Quality improvement
• Employee participation
• Education and training
• Quality information

282. Importance of Follow-Up of Self-
Assessment Results
• Many organizations derive little benefit from
conducting self-assessment and achieve few of
the process improvements suggested by self-
study
• Reasons:
– Managers do not sense a problem
– Managers react negatively or by denial
– Managers don’t know what to do with the information

283. Leveraging Self-Assessment
Findings
• Prepare to be humbled
• Talk through the findings
• Recognize institutional influences
• Grind out the follow-up

284. Knowledge Management
• The process of identifying, capturing,
organizing, and using knowledge assets to
create and sustain competitive advantage.
• Knowledge assets refer to the accumulated
intellectual resources that an organization
possesses, including information, ideas,
learning, understanding, memory, insights,
cognitive and technical skills, and
capabilities.

285. Types of Knowledge
• Explicit knowledge includes information
stored in documents or other forms of
media.
• Tacit knowledge is information that is
formed around intangible factors resulting
from an individual’s experience, and is
personal and content-specific.

286. Organizational Learning
• Create a “learning organization”
– Planning
– Execution of plans
– Assessment of progress
– Revision of plans based on assessment
findings

287. Key Activities of Learning
Organizations
• Systematic problem solving
• Experimentation with new approaches
• Learning from their own experiences and
history
• Learning from the experiences and best
practices of others
• Transferring knowledge quickly and
efficiently throughout the organization

288. Internal Benchmarking
• The ability to identify and transfer best
practices within the organization
• Process:
– Identify and collect internal knowledge and
best practices
– Share and understand those practices
– Adapt and apply them to new situations and
bringing them up to best-practice performance
levels.

289. Organizational Change for Six
Sigma
• Committed leadership
• Integration with existing initiatives, business
strategy, and performance measurement
• Process thinking
• Disciplined customer and market intelligence
gathering
• A bottom line orientation
• Leadership in the trenches
• Training
• Continuous reinforcement and rewards

290. Organizational Change, Learning,
and Organizational Theory
• Reason for change
– Traditional: productivity or job satisfaction
– TQ: customer satisfaction
• Source of change
– Both: top management
• Types of change
– Traditional: limited in scope and duration
– TQ: continuous improvement over a long period of
time

291. Principles for Managing Change
• Unfreeze attitudes and behavior
• Have effective leadership
• Manage interdependence
• Involve the people
• Refreeze to make gains permanent