----------------------------------------------------Business Index & ASAP------ AUTHOR(s): Juran, Joseph M. TITLE(s): Acing the quality quiz. (improving quality management) (Research Roundup: Quality Management) Summary: Quality management involves both increasing income and decreasing costs. Income generation is enhanced when the company can offer quality products and services that satisfy customers. On the other hand, cost-reduction comes from lessened errors, defects, troubles, and jobs to be redone which result from greater efficiency. Companies planning to implement quality improvement programs must first ensure that the whole organization understand what 'quality' is and what it involves. Any quality initiative needs to be supervised by a quality council group, often composed of the CEO and upper management to demonstrate the firm's commitment to quality. Another essential consideration is the restructuring of the reward system to make it more supportive of the quality program. More importantly, quality improvement should be integrated into everyday operations in such a way that it becomes part of the regular work. Across the Board p58(1) July-August 1992 v29 n7-8 When quizzed about the meaning of "quality," a dismaying number of companies that are undergoing quality initiatives get failing grades. They are unable to define what they mean by it. There are two definitions of quality that are critical to managers. The first is that it is "oriented to income." Here, quality means the features of the product that make customers willing to buy your product instead of a competitor's. High quality under this definition means more products sold and thus more income for your company. The second definition of quality is "freedom from trouble, from errors, from defects, from redoing, from field failures." This definition is cost oriented; the more trouble there is, the more it costs. If the trouble occurs in your organization, it costs only you. If it occurs when the product is used in a customer's organization, it also costs the customer--and that intersects with your income, because it makes the customer less willing to buy that same product in the future, despite its wonderful features. Many managers debate whether higher quality costs more or less. But too often they literally do not know what the other person is talking about because one of them is thinking of the first definition of quality and the other of the second. As a result, they are going to reach different conclusions. Before beginning a quality initiative, companies must be sure that the word "quality" is well defined and understood within the organization. There are enormous differences in the methods needed to improve the two kinds of quality. Where improvements are geared to developing new features and new products, the method is already well structured in most companies. Often there is a committee that oversees the funding of new products. That committee periodically reviews progress and decides whether to continue funding, abort a project, or change directions. Typically, a department is devoted full time to developing the product. We may move through the product-development process poorly, but at least the structure is there. By contrast, quality in the sense of eliminating defects and product failures has no established method; we don't find it in the business plan and most of the time there is no infrastructure for it. Responsibility for this type of quality is vague and improvement voluntary, despite the fact that wastes are huge. Corporations need to concentrate on improving the process needed to increase this second type of quality. The dollar amounts at stake here are just as large as the amounts at stake when we attempt to increase sales by developing new products. Until the 1980s, many CEOs and senior officers steered clear of managing for quality, leaving that task to the quality manager. Today, executives cannot afford such a laissez-faire attitude. Upper managers need to get firsthand experience by serving on some quality project teams themselves. Leadership should be by example. Too many top executives have said the right words but have not taken any action personally. That is cheerleading, not leading. Any serious quality improvement initiative requires setting up a presiding group--a quality council--to get it off the ground. The quality council is usually comprised of the CEO and his immediate assistants. The upper managers play a particularly critical role. They need to personally serve on the quality council, thereby signaling that quality has high priority in the company; be directly involved in establishing the quality goals; provide the needed resources for the initiative; and regularly review the progress made. In addition, it's important for senior managers to give recognition publicly for work well done, whether by awarding employees certificates or plaques, holding testimonial dinners, or featuring workers in employee publications. Another vital element: When a quality improvement program is initiated, the reward system must be revised accordingly. Every time we assign somebody to be on a project team, we are adding to his workload and function. If the reward system does not change to recognize that, it is a signal to the rest of the organization that nothing has really changed. Of course, setting up a quality council and a new reward system are just some of the steps. Total quality management cannot be achieved unless you identify the actions and decisions that are needed to make things different from the way they were and integrate these goals into the business plan at all levels. It all boils down to the fact that quality improvement should not be in addition to the regular job; it to the regular job; it should become part of the regular job. We have done a lot of training in the past two decades and most of it has been misdirected. Instead of changing behavior, it has consisted mainly of rote memorization that has been rapidly forgotten. To train workers in quality improvement, we should not lecture them on the use of tools in the classroom and then leave them on their own to apply the tools to the workplace. Instead, we should assign workers to a team and give them an improvement project to tackle. The training they are given should be directed to helping the team get that specific project done. Knowledge acquired that way will not be forgotten.