T
he role of the quality practitioner has changed from "protect the customer" to "ensure that all of the organization's stakeholders' needs and requirements are met." Many of you might disagree with this statement and that's OK with me. We all have the right to our own opinions; differences of opinion are good for both parties, for it's only through differences that our eyes can be opened to new opportunities.
ISO 9000:2000 points out the need for the quality professional to address all stakeholders, and this emphasis is long overdue. To place the customers above all other goals and objectives is simply not good business practice. If General Motors were to put the customer ahead of profits, it would have sold me a new Buick Park Avenue for $3,000 instead of the $35,000 that I paid for it. Life is a balance: You have to give a little and take a little; it cannot be one-sided.
The first obligation that all private organizations have is to provide a fair return on the money that stakeholders have entrusted to them. IBM's first obligation is to the 90-year-old person who has invested his or her life savings in the company in order to have a continuous flow of dividends, which is needed to pay the bills.
Of course, one way to ensure this continuous flow of quarterly dividends is to have happy customers who rebuy IBM's products. IBM is an excellent example of an organization that's not stakeholder-focused. During Louis V. Gerstner's term as leader of this great organization, the dividend payments to retired IBM employees have been cut by more than 75 percent, while executives' pay has continued to increase. Throughout their careers, most of IBM's now-retired employees invested 10 percent of each paycheck in IBM stock so that the dividends could be used to supplement their meager retirement pay. Now, in place of living "high on the hog," they are struggling along at a heavily decreased living standard. IBM is not alone in this lack of focus on all stakeholders; it's the rule, rather than the exception.
One of the TQM's fundamentals is continuous improvement. The question that we must address is, "How does each stakeholder measure continuous improvement related to the organization's performance?" In order to accomplish this, you need to define who the stakeholders are and then survey them to determine what their views of continuous improvement are. In McGraw-Hill's 1995 book Total Improvement Management--The Next Generation in Performance Improvement, lists of the top five things that six different stakeholders rate as important were provided. They are as follows:
 Management: return on assets, value-added per employee, stock prices, market share and reduced operating expenses
Investors: return on investment, stock prices, return on assets, market share and successful new products Customers: reduced cost, new or expanded capabilities, improved performance, ease of use and improved responsiveness
Suppliers: increased return on investment, improved communications/fewer interfaces, simplified requirements/fewer changes, longer contracts and longer cycle times
Employees: increased job security, increased compensation, improved growth potential, improved job satisfaction and improved morale
Community/humanity: employment of people, increased tax base, reduced pollution, support of community activities and safety of employees
Many organizations talk about having a balanced score card, but they don't. In fact, I've only seen one organization that does. Other organizations, even though they claim to have balanced score cards, really have established measurement systems that address only two or three of the stakeholders. A truly balanced score card has measurements that reflect the needs of all of their stakeholders.
From a quality standpoint, once the stakeholders have been defined and their improvement needs quantified, the challenge is to mold your TQM process around these needs, which is made difficult when some of the stakeholders' needs conflict with those of other stakeholders. For example, management wants to increase value-added per employee. To accomplish this, they try to increase productivity so that the same job can be done with fewer employees. On the other hand, the employees want increased job security.
The good old days of simply sorting out the bad from the good are long past. Today's quality professional is a businessperson first and a statistician or inspector second. He or she must take a much more active role in the strategic planning and high-level decision-making processes than ever before. We need to understand all of the stakeholders' needs and be sure that they are considered in every decision. It's a new role, one that most of the quality professionals are not prepared to undertake because it involves managing conflict between different stakeholders' needs. And it requires a balance between quality and productivity that represents maximum value to all stakeholders.
About the author
H. James Harrington is COO of Systemcorp, an Internet-software development company. He has more than 45 years of experience as a quality professional and has authored 20 books. E-mail him at
jharrington@qualitydigest.com . Visit his Web site at www.hjharrington.com . |
