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Wednesday, December 3, 2014

Quality Isn’t Fluff

According to a study covered in a recent Harvard Business Review article, companies with highly developed quality cultures spend, on average, $350 million less annually fixing mistakes than companies with poorly developed ones.

In the survey employees reported that it takes about two hours to correct a mistake. Assuming an hourly wage of $42.55 (the median for CEB client companies), a bottom-quintile quality firm with 26,300 employees (the median head count) spends nearly $774 million a year to resolve errors, many of them preventable. Top-quintile firms, on the other hand, spend about $424 million annually.

Although figures will vary according to industry and company, the report’s authors, suggested a broad rule of thumb: For every 5,000 employees, moving from the bottom to the top quintile would save a company $67 million annually.

Given this tremendous financial impact, the need for a true quality culture cannot be overstated. Building a quality culture is not an easy task. A quality culture starts with managers who understand and believe the implications of the systems view and know the necessity of serving customers in order to succeed. The result of that understanding is a culture where a positive internal environment and the creation of delighted customers go together. It is a culture that naturally emphasizes continuous improvement of processes, one that results in a healthy workplace, satisfied customers, and a growing, profitable company.

Here are a few vital points necessary for creating a climate focused on quality:

Commitment to Quality
Commitment from management is a “MUST”. In fact, it is the driving force. Procedures, tools, and database are all useless if the management do not want to see a Quality culture in the organization. The employees of the organization will not care, if the management themselves do not show the attitude to follow the right path.

Capability of Skill
Capability refers to having the skills to undertake work successfully. As is true with any successful implementation, you need the right team blend and capable people in the team, to execute these things. There will be a need to raise the basic knowledge, understanding, and maturity for each and every member of the organization.

Honest Communication
People function best in a culture where open, honest communication is understood. You may be surprised how many innovative solutions can be developed when the truth is consistently shared throughout the organization. An important way to encourage truth-telling is by creating a culture where people listen to one another.

Focus on Processes
Focus on processes helps everyone understand even further the importance of teamwork and cooperation and the interdependence of their work. It places a premium on implementing the tools that make management and improvement of processes more efficient and effective. The emphasis is on continuous improvement through the use of quality tools to measure process performance and teamwork

Understand Your Customer’s Needs and Expectation
For any business the customer is the lifeblood. Every process and every action internal or external should ultimately result in the value addition to the customer and the customer’s delight. Therefore it is essential that the customer needs, wants and expectations are identified before you embark on a quality building program

It is said that the quality of an organization can never exceed the quality of the minds that make it up. The key to success lies in how well each employee is motivated and inspired to deliver quality work.

To create a culture of quality, an organization must align its organizational processes with these vital points. Quality leadership starts with the leaders who plant the seeds, create the environment for success, empower others and deploy quality throughout the organization.

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  1. Hi Tim

    I would add one cultural extra to your list a Well Trained and Empowered work force, with clear guidelines as to how and who needs to handle problems when they occur.

    At Toyota there are two different ways to signal a problem, one immediately stops the line and is to be used when there is either a safety issue or an instant threat to the products being produced. The other is a signal to the team leader and managers in the area that there is an issue that needs to be addressed. If that issue can be fixed by them and the employees in that area without stopping the line it is handled, if they cannot fix it fast enough the line will stop before the vehicle leaves that area.

    Its through the empowerment and training of their employees and a highly defined set of guidelines they manage to maintain their high quality production, and their line rarely stops (most issues are fixed quickly), and those rare time they are not the delay gets minimized because of that rapid actions taken by their people.

    They relay upon their people knowing their job and the product they produce, so that end of line quality issues are rare, and they spend far less fixing those issues than do most of their competitors that have failed to empower and educate their employees. Toyota senior management look at this as an essential to building good products, and would get far more excited if something gets ignored than if the line is stopped.

    On the other hand management by numbers companies focus on pushing product out of the end of the line, and they couldn't careless about the quality of that product. You get exactly what you want from your employees if you want them to care you have to care, if you do not they won't care either and quality will be an after thought instead of something that gets built in.

    1. Great comments Robert. I agree without a well trained and empowered workforce changing the culture is not possible.