Techniques Achieving service excellence: a new Japanese approach versus the European framework

Masoud A. Azhashemi and Samuel K.M. Ho

Introduction
In recent years top management of Japanese companies and western world organisations have realised that the productivity improvement programmes, total quality control systems, and other operational measures are no longer sufcient to improve bottom-line performance. Many senior executives worldwide are now focusing more on innovating frameworks that can enhance quality of management practice and decision making as a way of maximising corporate superiority and business performance. Total integrated management (TIM) is a new Japanese approach developed to examine and evaluate the quality of the multiple management factors affecting a company. TIM is introduced when a rm is concerned about each facet of the organisation and interrelates them into a comprehensive corporate management policy of innovation and excellence (Azhashemi and Ho, 1996). The UK/European model for Business Excellence is a framework developed by top European practitioners in order effectively to measure and improve management standards and corporate performance in any type of organisation. It is based on the fundamental concepts of total quality management which broadly concentrates on driving companies towards a culture of continuous improvement and customer satisfaction. The nine elements of the model enable companies to assess their management quality and business results with a view to benchmark against standards and business performance of leading companies or best in class in order to identify and exploit their strengths, recognise their own weaknesses and apply improvement initiatives to eliminate them.

The authors Masoud A. Azhashemi is Senior Lecturer in Operations Management at the Leicester Business School of De Montfort University, UK. Samuel K.M. Ho serves as Editor of this journal. He is Professor of Strategic and Quality Management at the International Management Centres, UK. He was the Professor of Strategy and Quality at Luton Business School, UK. At present he is visiting at the Hong Kong Baptist University. Keywords European Foundation for Quality Management, Integration, Japanese management styles, Management styles, Service quality Abstract Presents the Japanese initiative of total integrated management and identies the multiple factors which can inuence management quality and business performance in organisations. Explores the UK/European model for business excellence and the process of self-assessment that can be applied by organisations in all sectors to improve their business results and competitive superiority. Compares the main features of the Japanese and the European frameworks and notes their differences together with their benets and possible downsides. Uses case examples to demonstrate the application and the implications of these initiatives to practising managers. Concludes that for organisations to be effective they should use the dynamics of the integrated business excellence tools and value the quality level of the management policies and strategies as key success factors.

Total integrated management

Japanese companies have long ago mastered the concept that product quality is a single factor in the complicated reality of management. They are now more concerned with the broader issue of total management quality and the integration of the multiple factors that comprise management quality. In the early 1990s the Japanese have embarked on a dynamic new management practice that goes beyond total quality control. It is a comprehensively innovated, integrated, and well 40

Managing Service Quality Volume 9 Number 1 1999 pp. 4046 MCB University Press 0960-4529

Achieving service excellence

Managing Service Quality Volume 9 Number 1 1999 4046

Masoud A. Azhashemi and Samuel K.M. Ho

balanced corporate management style called total integrated management. As shown in Table I, the TIM framework has a checklist containing 12 primary factors. These factors are further divided into a minimum of two and a maximum of ve secondary factors. Based on the annual survey carried out by Yahagi Consultants (Yahagi, 1992) among 200 Japanese companies it has been found that of the 12 factors listed in Table I, six are critical to the success of an effective organisation. These are: management cycle, business structure, management resources, management design, corporate culture, and management performance (Peters, 1994). Figure 1 shows the interrelation between these factors. It illustrates that the quality of management cycle affects the four factors of structure, resources, design and culture. In turn the quality of these four affect management performance. Japanese experience shows that if the quality level of the management cycle is low, then the six factors generate a passive feedback loop in which management waits until poor results within management performance force
Table I Twelve factors of management quality

Figure 1 Circulatory system of management quality

2. Business Structure 1. Management Cycle 3. Management Resources 4. Management Design 5. Corporate Climate 6. Management Performance

reactionary feedback into the management ow. On the other hand, if the quality level of the management cycle is high, then the six factors generate an excellent feed-forward loop in which management perceives the plans and strategies needed for the success of each management factor, and then proactively formulates and implements them. TIM implementation The following actions should be taken when a company wishes to institute total integrated management. These are to: Evaluate multiple management factors quality levels.

Management factor 1 Corporate history

Sub-factor Past Present Future Core Climate Culture Objectives Coherence

Management factor 7 Management targets

Sub-factor Inputs Markets Technologies Products Business elds Business mix Market standing Money Materials Information People System Organisation Authority Responsibility Decision making Interrelationships Quality

2 Corporate climate

8 Business structure

3 Strategic alliances

9 Management resources

4 Channels

Suppliers Buyers

10 Management design

5 Management cycle

Vision Strategy Planning Control Operations Economic Social Global 41

11 Management functions

6 Environment

12 Management performance

Growth Scale Stability Market share

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Formulate a corporate vision with a ten year time span. Formulate corporate strategies to realise corporate vision. Formulate corporate plans to link vision and strategy to daily operations. Restructure business mix, relocate management resources, and drastically reform management organisation and responsibilities, based on corporate vision, strategy, and plan. Innovate other management factors, such as alliances, channels, and targets, to maximise the effectiveness of management performance. Case study 1 illustrates how the TIM concept has been applied in a European service organisation.
Case study 1: TIM at Scandinavian air system (1) Management cycle. Like many other successful airlines, SAS has the vision of providing extraordinary customer satisfaction. This is supported by sound strategic planning, effective control and efcient operations. (2) Business structure. In the airline business, one seat on an aeroplane is much like any other. It is passenger service quality that makes the big difference in the treatment by front-line personnel. This includes situations on board, at the ticket counter, and at the baggage area. The international airlines challenge is complex. What has to be done to ensure the travellers complete satisfaction with his long hours experience of ying 10,000m above sea level at 800km/h. (3) Management resources. Jan Carlzon, president of SAS, said that SAS is not the aeroplane or the airport gate, or the overhaul station. It is the contact between the employee and the passenger. The moments of truth occur when the customer, consciously or unconsciously, has a need and turns to an employee or the physical facilities for a solution. (4) Management design. In Scandinavian Air System (SAS), each time an employee interacts with a customer is noted as a moment of truth. Carlzon estimated that some 50,000 moments of truth occur daily as SAS personnel interact face to face with customers. (5) Corporate culture. The moment of truth is successful because the design of the physical facilities anticipated those needs, and the service plan provides anticipatory human intervention. Above all, the corporate culture takes into account the values, beliefs, customs, and behaviour of passengers and employees. (6) Management performance. The growth rate, scale, stability, prots and market share of the company have increased dramatically after the transition.

The UK/European model for business excellence

The Business Excellence Model provides an ideal framework against which any organisation or its component part can self-assess its management quality, process performance and business results and measure its progress towards excellence. The model is the gradual outcome of the initiatives originally taken by fourteen top companies (not academics) in Europe, who were dedicated to promoting total quality (TQM International Ltd, 1996). They established the European Foundation for Quality Management in Brussels in 1988, and subsequently the Foundation launched the European Quality Award (EQA) in 1992, in order to assess companies in Europe that demonstrate excellence in the management of quality and continuous improvement. The British Quality Foundation was formed in 1992 to enhance performance and competitive superiority of the UK organisations. The Foundation subsequently launched the UK Quality Awards in 1994, mainly to accelerate the acceptance of quality as a strategy for global competition and to stimulate and assess the development of quality improvement initiatives (Rae Tummala and Tang, 1994). Assessment model The UK/European Quality Award assessment model consists of nine elements for evaluation. The nine criteria is divided into two categories, enablers and results as shown in Figure 2 with relevant weightings. The enablers are policies, resources, and processes which transform inputs into outputs. The results are measures of the level of output and outcome achieved by the organisation (Ghobadian and Woo, 1996). These are described in Table II. The process of self-assessment Any organisation aiming to achieve world class status requires to take a close look at its entire operations, processes and its customers, and to compare itself with the best. Selfassessment is one of the fastest growing methods used by organisations to measure their standards and performance in order to achieve world class rating. It is a regular and systematic self application of the measure inherent in the UK/European model for business excellence which is internationally acknowledged as 42

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Figure 2 The UK/European model for business excellence

People Management 9% People Satisfaction 9%

Leadership 10%

Policy and Strategy 8%

Process 14%

Customer Satisfaction 20%

Business Results 15%

Resources 9%

Impact on Society 6%

Enablers 50%

Results 50%

Table II The enablers and results criteria

Elements 1 Leadership

Description

2 3 4 5 6 7 8 9

How the behaviour and actions of executive teams and all other leaders inspire, support and promote a culture of business excellence as the best way to achieve the organisations objectives Policy and strategy How the organisation formulates, deploys, reviews and turns policy and strategy into plans and actions People management How the organisation releases the full potential of its people Resources How the organisation manages resources effectively and efciently Processes How the organisation identies, manages, reviews and improves its processes People satisfaction What the organisation is achieving in relation to the satisfaction of its people Customer satisfaction What the organisation is achieving in relation to the satisfaction of its external customers Impact on society What the organisation is achieving in satisfying the needs and the expectations of the community at large Business results What the organisation is achieving in relation to its planned objectives and in satisfying the needs and expectations of everyone with an interest or other stake in the organisation Develop and implement actions on these opportunities. Review and repeat. The benets of self-assessment Self-appraisal for any organisation is: An objective assessment against credible and proven criteria. An assessment based on evidence. A continuous improvement process rather than a single shot which gives a measure of progress over time. An opportunity to focus improvement where it is most needed. An opportunity to promote sharing of good, effective approaches within the organisation. An opportunity to recognise both progress and outstanding levels of achievement. 43

a way of assessing and recognising corporate excellence (Haykes, 1994). Self-appraisal requires an organisation to consider and assess for each of the nine elements of the model (Figure 2) , what do they do, and what do they achieve. The output of this is identied strengths and areas for improvement (together with a score). The company then chooses improvement actions to exploit its strengths and overcome its weaknesses. Any organisation aiming to carry out a selfassessment exercise needs to take the following steps: Plan and prepare for self-assessment. Collect views, information and data on where the company is now. Identify the strengths and areas for further improvement. Identify the priority opportunities.

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An opportunity for the organisation to compare itself with other companies and identify world class approaches. An opportunity to learn. Some examples of the improvement initiatives that can be introduced in each of the nine elements of the business excellence model are shown in Figure 3. Case Study 2 shows an example of the successful application of the UK European model for business excellence.
Case Study 2: Mortgage Express wins the 1996 Quality Award Mortgage Express was formed in 1986 as a subsidiary of TSB Bank and is now part of the Lloyds TSB Group. The company differs from traditional mortgage providers in that it has no branch network and raises nance direct from the money markets. The boom in the UK property market saw the company grow rapidly between 1986 and 1990, when it attracted 50,000 customers and accumulated mortgage assets of more than 3 billion. But bad debts led to losses by the end of 1990, and in 1991 TSB decided to wind up the company over the next two or three years. A new management team led by managing director Keith Greenough, had been installed in 1991 to oversee the process. But along with closing down the Sales and Marketing functions and redeploying staff into managing payment arrears, Mortgage Express embarked on its total quality journey. To promote efciencies focused on customer service, all employees were trained Figure 3 Example of improvement initiatives
1. Empowerment Communication Accessibility Critical Incidents 3. IIP Quality Circles Teamwork Suggestion Schemes 5. ISO 9000 Kaizen Quality Assurance Statistical Process Control Business Process Re-engineering Benchmarking

in the use of total quality tools and techniques, processes were re-engineered and information technology and management systems were upgraded. After conducting its rst self assessment against the business excellence model in December 1992, the company focused on continuous service improvement that underpinned its policy of staying close to customers and working closely with them to understand and solve their payment problems. Prompted by its 1993 self assessment, Mortgage Express decided to make total quality its driving force and involved all its people in redening the companys mission and values. Called The Way Ahead, The Mortgage Express mission was to be recognised as a top quality company in pursuit of four strategic goals (BQF, 1996): (1) Maximising the long term value for the companys shareholders. (2) Providing customers with a rst class service. (3) Enabling all employees to achieve their best. (4) Achieving a top quality rating through use of the business excellence model. Leadership and people management skills are highly prized at Mortgage Express, and are focused squarely on staff motivation and involvement activities. Strong internal communications form the backbone of the approach, with formal communication exercises including monthly team briengs and departmental communications meetings hosted by managers and attended by directors.

7. Surveys

9. Quality Costs Balanced Scorecard Benchmarking

2. Vision Mission Values Policy Deployment Hoshin Planning

6. Surveys Interviews Chartermark

4. JIT Information Technology Quality Costing

8. ISO 14000 Health & Safety

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Each member of the Mortgage Express staff has a guaranteed minimum of ve days every year for training and development. Despite its business turnaround, the company does not believe that it (or any company) can guarantee a long term career to its people. Rather, it promotes an employability concept which gives the company a responsibility to encourage, enable, facilitate, resource and recognise continuous development. For their part, employees are asked to be exible, seek out opportunities to contribute, take charge of their own development, learning continuously and to have fun. Self assessments against the business excellence model (known internally as quality tness reviews) are an integral part of the Mortgage Express planning process and led to the new market approach. Last years internal self assessment and report from the UK Quality Award assessors pointed the company against gaining a deeper understanding of the markets it wanted to be in and how it should execute its alternative strategy to closure. The assessments also led Mr Greenough and his team to recognise that too much of the companys customer research had been directed towards understanding the needs of the existing customers; it was time to look to the needs of perspective customers as well. New product development is a critical area. If we are a niche player we have to be very good at spotting new market opportunities and taking the business into new markets, Mr Greenough says. Risk management is a key process for Mortgage Express because its products take account of its customers changing circumstances. Customers are rewarded for the balance of the risk represented by their mortgage, not just at the start of their term but as their situation changes. Those with a higher equity-to-loan ratio will pay a lower interest rate, for example. Flexibility in process, systems and people is vital for a company aiming to create competitive advantage in any crowded market, in the mortgage market it is the key to survival. Over the past ve years Mortgage Express has demonstrated its ability to cope with change and to help its customers to do likewise. But the company is still more inclined to talk about survival than success. There is no doubt that the whole approach to business excellence is about becoming competitively better so that you secure a much better chance of surviving, Mr Greenough says we want to be recognised as a company that does it really well. I used to think that we had made total quality and the use of the model central to our mission just to create an energy, to give us a sense of being, of something to strive for. More recently I have come to think that it is deeper than that. You have to focus on business excellence if you are going to survive, whoever you are I dont think our situation is unique at all. You may be at the cliff edge in some other organisations and you

dont know it. The attitude of mind that we have pursued and we will continue to pursue is one of always assuming that you are up against it and we have to keep stretching ourselves because no one has God-given right to a customer base.

Comparison between TIM and business excellence model

The study of the Japanese and the European frameworks indicates that both approaches have committed themselves to the main concepts of total quality management (TQM), in order to improve product and service quality, management standards and business performance in all types of organisations. However, research in TQM has shown that the TQM concepts are based on the following requirements (Gilgeaus, 1997): Customer orientation. Supplier partnership. People development and involvement. Processes and information analysis. Continuous improvement and innovation. Leadership and consistency of purpose. Public responsibilities. Result orientation. An analysis of the TIM approach in relation to the above TQM philosophy shows that the TIM multiple management and business factors unlike the business excellence model do not directly address the customer orientation and the people satisfaction elements, which are the critical requirements for the total quality management or any type of change or improvement initiative to succeed in all types of organisations. The Policy and Strategy factor in the EQA criteria is rather vague and under-rated particularly in the areas of continuous improvement, innovation, and supplier partnership strategies, which are all too crucial to the effectiveness of any organisation. The TIM approach on the other hand, recognises the planning and strategy as the most important element among its twelve management factors. This is mainly because the Japanese have found that the level of quality that is present in the management policies and strategies will either pull up or push down the quality of all the other management and business factors. Furthermore, the European model provides a framework against which organisations can compete to achieve the highest standards. 45

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It is therefore regarded as an annual competition among UK and European companies in order to select outstanding organisations to attain the prestigious European Quality Award and become a role model for others to follow. This can encourage competitive benchmarking and continuous improvement among companies which are striving to become effective organisations. The competition among participants and winning quality awards is not the aim of the Japanese TIM approach.

customers and win against the increasing ranks of highly sophisticated competitors who now have easy access to European markets. For service organisations, survival these days depends on a list of crucial factors such as quality, exibility, efciency, dependability, effectiveness and a host of other virtues that can be grouped under the banner of service excellence.

References
Azhashemi, M.A. and Ho, S.K. (1996), Business process redesign and total integrated management, TQM Magazine, Vol. 8 No. 6, pp. 42-7. BQF (1996), Return to positive equity, Journal of the British Quality Foundation, December, pp. 8-12. Ghobadian, A. and Woo, H. (1996), Characteristics, benets and shortcomings of four major quality awards, International Journal of Quality and Reliability Management, Vol. 13 No. 2, pp. 10-35. Gilgeaus, V. (1997), Operations and the Management of Change, Pitman, Marshman, MA. Haykes, C. (1994), The Self-assessment Handbook for Measuring Corporate Excellence, Chapman and Hall, London. Peters, J. (1994), Japanese turn spotlight on management quality, Management Decision, Vol. 32 No. 5, pp. 6-7. Rae Tummala, V.M. and Tang, C.L. (1994), Malcolm Baldrige and European Quality Awards and ISO 9000 Certication: core concepts and comparative analysis, Strategic Quality Management. TQM International Ltd (1996), UK/European Model: An Appreciation /Training Manual. Yahagi, S. (1992), After product quality in Japan: management quality, National Productivity Review, August, pp. 501-15.

Conclusions
Successful organisations must have dynamic, world class management practices and quality leadership. That means using a comprehensive portfolio of measures and internal systems to effect an unrelenting improvement in the efciency and effectiveness of the organisation as a whole. Today it is evident that more and more companies are using the European Quality Award model as the means of assessing corporate excellence. Through comparative study of relevant cases, it has been shown that TIM can provide a new dimension for such assessments. Managers can therefore concentrate on using the dynamics of these integrated business excellence tools in order to achieve higher levels of total management quality and business results factors. They should also value the quality of the management planning and strategies as the key success factor within the business ow. If organisations want to survive through the next decade, they must attract

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