Quality Management:

Creating and Sustaining

Organizational
Effectiveness
Chapter 1

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Figure 1-1
Achieving Organizational Success

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
• Brief History of the Quality Management

– Skilled Craftsmen/Artisans supervised by masters of the trade

• Small volume: Parts fitted ‘by eye’
– 1798- Eli Whitney
• Designed and manufactured guns with interchangeable parts (quality control)
– 1911 - Frederick Taylor
• Principles of scientific management defines role of inspector
– 1914 - Henry Ford
• Creates the assembly line on a big scale (Quality = Inspection)
– 1924- Juran, Dodge, Romig, Edwards
• Western Electric IE department:
– 1931- Shewhart
• publishes control chart concepts
– 1950-1980’s- Wake-up call for U.S. manufacturing
– 1980’s-1990’s -
• Total Quality Management – including ISO
• 1987 Malcolm Baldrige National Quality Award created
– 1990’s to today
• Six Sigma and its variations

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
Why do we care?
• Historic
– Short term/Quick Fix focus
– Fire fighting
– We’ve always done it this way
– Random improvement efforts
– Inspect for errors
– Reactive
– Opinions not facts
– Motivated by profit
– Rely on programs
– Localized competition
– Reasonable cost
– Large budgets
– Resources available
– Compete
– Individual efforts
– Strong management
Summers: Quality Management, 2nd. ed.
• Now
– Long term focus
– Structured problem solving
– Innovation and change
– Structured improvement
– Error identification and prevention
– Proactive
– Facts not opinions
– Motivated by customers
– New way of life
– Intense global competition
– Lowest possible cost
– Small budgets
– Limited resources
– Cooperate
– Team efforts
– Strong leadership
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness

• Efficiency focuses on
activities
• Effectiveness focuses on
results

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
• What is an effective organization?
– An effective organization, one that excels, is
one that continually strives to identify and
focus on factors critical to its customers and
improves its processes in order to provide the
highest-quality product or service possible.

– Every company wants to do this, it’s

not easy!

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
• What is an effective organization?
– Organizations try different strategies in order
to achieve their goals.
• Disjointed efforts
• Flavor of the month
• Most efforts are successful in the short run
– How can an organization sustain effective
performance?

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
• What is an effective organization?
– How can an organization sustain effective
performance?
• Generating success requires an organization-wide
approach that improves and enhances the whole
process of providing a product or service, enabling
the organization to exceed customer expectations,
each time and every time.

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
• What is an effective organization?
– How can an organization sustain effective
performance?
• People need a sense of how to pull a variety
of knowledge and skills together to make
improvements in a complex environment.
– “umbrella coverage”

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Umbrella coverage
Customer Focus Six Sigma

Value Chain management Lean Manufacturing

Leadership Business Results

Strategic Planning Information and Knowledge

Management
Quality Assurance
Organizational Philosophy
Project Management
Value Engineering
Elimination of Waste
Teams
Human Resource
Management Just-in-time

Quality Tools Process Management Improvement

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Figure 1-2
Organizational Effectiveness

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Figure 1-3
Factors Affecting Organizational
Success
Strategic Factors Organizational Factors
Market Strategic Deployment
Product Effective Leadership
Technology Policies
Customers Procedures
Suppliers Processes
Vision Continuous Improvement Culture
Value Creation Strategy Problem-solving
Commitment
Culture
Measures of Performance
People Factors Trust, Honesty, & Ethical Behavior
Employee Involvement
Education
Training
Internal Supplier-Customer Relations Environmental Factors
Motivation Social
Teamwork Economic
Communication Competitive
Safety Technology

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
• How is an effective organization created?
– What is the mission of the organization?
– What is the business the organization is really in?
– What are the primary products or services the
organization provides to their customers?
– Who are their customers?
– What do their customers expect and need?
– How does the organization know what the customers’
needs and expectations are?

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
• How is an effective organization created?
– How well does the organization meet the needs and
expectations of their customers?
– How does the organization know how well it is doing? What is
the proof? What are the indicators?
– Do management’s strategies and actions support the business
and support the organization in meeting the customers’ needs
and expectations?
– Do the employees know how the work they do specifically
benefits the ultimate, external, customer?
– What improvements have been made based on the answers to
these questions?
– What is management doing to support improvement efforts?

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
• What benefits can be gained from creating an
effective organization?
– Improved profitability
– Increased customer retention
– Reduced customer complaints and warranty claims
– Reduced costs through less waste, rework
– Greater market share
– Increased employee involvement and satisfaction,
lower turnover

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Organizational Effectiveness
• What benefits can be gained from creating an
effective organization?
– Increased ability to attract new customers
– Improved competitiveness
– Improved customer satisfaction
– Improved management-employee relations
– Improved focus on key goals
– Improved communication
– Improved teamwork

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Figure 1-4
The Journey to
Organizational Effectiveness

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved
 Figure 1-5
Benefits of Creating and Maintaining
an Effective Organization
Improved:
• profitability
• competitiveness Reduced:
• customer satisfaction • customer complaints
• management-employee relations
• focus on key goals • warranty claims
• communications • cost
• teamwork
• employee morale • waste
• company image • rework
• revenue
• service to customers (internal & • employee turn-over
external)
• effectiveness
• planning Increased:
• work environment
• employee involvement
• decision making
• employee satisfaction
Greater:
• ability to attract new customers
• market share
• adaptability

Summers: Quality Management, 2nd. ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.
All rights reserved