For affluent investors who make independent investment decisions, the Company offers research, analytic tools and access to fee-based portfolio consultations and financial planning services. Schwab also provides various Internet-based research and analysis tools that are designed to help clients achieve better investment outcomes (Besterfield, 36).
For highly active traders, CyberTrader offers integrated software-based trading platforms, CyberX2 and CyberTrader Pro, which utilize direct access and intelligent order routing technology. Schwab also offers Velocity, a desktop trading software, and StreetSmart Pro, which leverages CyberTrader's trading technology and combines Nasdaq Level II quotes, real-time streaming news, unlimited watch lists and real-time streaming interactive charts with account management features, risk management tools, multi-channel access and dedicated personal support (Goetsch, 125).
The Company also provides client financing by lending a client a portion of the market value of certain securities up to the limit established by the Board of Governors of the Federal Reserve System, which, for most equity securities, is initially 50%. These loans are collateralized by the securities in the client's account. Schwab also performs clearing services for all securities transactions in its client accounts. Schwab clears the vast majority of client transactions through the facilities of The Depository Trust & Clearing Corporation or the Options Clearing Corporation.
Institutional Investors
Schwab provides custodial, trading, technology, Web and other support services to IAs, whose services are integral to the Company's advice offerings, through the Institutional Investor segment. To attract the business of these advisors, Schwab has a dedicated business unit that includes registered representatives assigned to individual advisors.
The Company serves individuals through their workplace in a variety of ways. It provides 401(k) recordkeeping and other retirement plan services directly through a sales force, as well as indirectly through alliances with third-party administrators. SchwabPlan, the Company's 401(k) retirement plan product, offers plan sponsors a wide array of investment options, participant education and servicing, trustee services and participant-level recordkeeping. SchwabPlan Select is a comprehensive bundled 401(k) plan designed specifically to meet the needs of 401(k) programs with between $2 million and $20 million in participant assets.
Stock option plan and restricted stock services are offered to companies, and trade execution and education services are offered to their employees. These services include online tools such as Schwab OptionCenter, which allows access to stock option accounts where employees can research, model and exercise their options, and StockPlanManager, which allows companies to search, view and run reports on stock option data (Crosby, 79).
Capital Markets
The Company provides its clients with quick and efficient access to the securities markets by offering trade execution services in Nasdaq, exchange-listed and other securities through its market maker and specialist operations. Clients also have the ability to access extended-hours trading through the Company's participation in Archipelago, an electronic communication network, and analyze and trade a variety of fixed income securities through Schwab's multi-channel delivery systems.
Schwab has specialist operations on the Boston Stock Exchange to make markets in exchange-listed securities (Goetsch, 129). The majority of trades originated by the clients of Schwab in exchange-listed securities for which it makes a market are directed to this operation. As of December 31, 2002, Schwab had three specialists on the Boston Stock Exchange that made markets in 156 securities. In addition, SCM makes markets in Nasdaq stocks, which totaled over 5,000, as of December 31, 2002.
U.S. Trust
U.S. Trust provides an array of financial services for affluent clients and their families. These services include investment and wealth management, trust, custody, financial and estate planning and private banking. U.S. Trust provides both individually managed balanced portfolios (portfolios that are invested in several different asset classes, with the overall goal of preserving and enhancing those assets) and specialized investment management services to clients with $2 million to $50 million in assets at U.S. Trust. U.S. Trust offers Wealth Advisory Accounts, an investment advisory service that utilizes the Excelsior family of mutual funds, to clients that have over $250,000 in assets at U.S. Trust. In addition to investment management services, U.S. Trust provides specialized fiduciary, financial planning, enhanced master custody and philanthropic consulting services to clients that have over $50 million in assets at U.S. Trust (Besterfield, 37).
U.S. Trust also offers private banking services to assist in meeting the credit and liquidity requirements of its clients. These services include mortgage and personal lending vehicles and an array of deposit-taking products. In addition, affluent investors may receive referrals to U.S. Trust from Schwab. U.S. Trust also offers to its institutional clients investment, consulting and fiduciary services for employee stock ownership plans. Special fiduciary services include trustee services for non-qualified or supplemental employee benefit plans (rabbi trusts). In November 2003, U.S. Trust acquired the private asset management business of State Street Corporation.
TQM at Charles Schwab is an approach to management that seeks continual improvement in everything we do (Goetsch, 160). It is concerned with the performance of all the processes in the organisation and the products and services that are the outcomes of those processes. TQM at Charles Schwab stresses the creative involvement of everyone from the Chief Executive Officer down, in the quest for quality. It emphasises team activity, brings pride in performance to all levels of the organisation, develops more informed and supportive managers and supervisors, and so leads to an improved climate in the workplace. It offers lower costs and improved productivity, leading to greater effectiveness, long-term competitive advantage, and improved job prospects (Crosby, 81).
Please view the Principles of TQM as applied to Charles Schwab.
Quality Pays
- Improved quality means greater customer satisfaction, lower costs, increased productivity and long-term competitive advantage. Quality pays.
Focus on the Customer
- Ultimately the customer determines the quality of a product and service (Schargel, 54).
- Good quality is quality that consistently pleases the customer, at low cost to us.
- We all serve customers inside, as well as outside, our organisation. The next person in a process is a customer (Goetsch, 165).
- We must aim to please customers at each stage of the process, though external customers are especially important.
- Our customers are not all the customers. We should not confine our attention to our customers although existing customers are particularly valuable.
TQM and People at Charles Schwab.
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Quality is everyone’s responsibility – not just the concern of managers or quality control specialists (Crosby, 83).
- People doing the work know it best. We need their knowledge and creative input to improve that work (Schargel, 56).
- People are our key resource. We should invest in them through education and training, and then empower them to put their knowledge to work.
- Supervisors should help people to do a good job, as ‘coaches’, not ‘policemen’ or ‘referees.
- Encourage teamwork at all levels to improve work.
- Aim to work smarter, rather than harder. Work becomes easier when waste and error are removed.
The guiding principles of TQM at Charles Schwab include promoting a quality focussed environment, recognising customer satisfaction as a key indicator of quality services, and changing systems, attitudes and processes in order to bring about step-by-step and continuous improvement in the goods and services provided by an organisation. A quality focussed environment is one where the provision of a service that addresses the clients' needs and requirements at a reasonable cost is foremost in the minds of all of the organisation's members. At the heart of such an approach is the satisfaction level of the customers with the service, which itself defines the effectiveness of the service (Goetsch, 167).
Key to addressing the above challenges is promoting change in the management systems and organisational behaviour of the agency providing the service. This includes building commitment to change at Charles Schwab, promoting participation of all stakeholders and an empowered workforce. Commitment to changing an organisation's approach to service provision begins at senior levels but the change manifests itself at all levels of staff. TQM is more likely to succeed in organisations where the leader's role is supportive and enabling and not paternalistic and controlling (Crosby, 85).
For TQM to be successful at Charles Schwab, both clients and the workforce must be active partners in the development of the services. In particular, staff need to have the necessary skills and sense of ownership of the service if customers are to be satisfied. Also, employees at all levels must be able to exercise wide discretion in meeting customer needs, both within and outside the organization (Schargel, 59). In Indonesia, civil servants have had little scope for making decisions on their own, as they have always had to wait for permission from their supervisors. To shift from a very structured, hierarchical environment to one based on employee empowerment requires a substantial change in attitudes and new skills and knowledge. It also requires gradual change and longer-term vision.
Some key structural changes at Charles Schwab needed to support this process include the recognition and reward of creativity and innovation, introducing continuous and progressive improvements and providing ongoing staff training (Besterfield, 41).
The importance of ongoing training and education at Charles Schwab cannot be underestimated. To achieve an empowered workforce, a TQM environment requires everyone to gain additional capabilities to improve the process and perform the work. Specific job skills training must be provided and constantly updated to reflect the improved processes. In an era of budget cutbacks and competing priorities, staff training is often the first "victim" (Crosby, 85). While this may resolve short-term budget pressures, in the long-term it is the quality of services that will suffer (Goetsch, 168).
TQM at Charles Schwab deals with Continual Improvement of Process, Product and Service
- Continual Improvement. There is always a better way. We must constantly work at improving what we do.
- Process Thinking
- All work is a process. We improve the work by improving performance at each stage in the process (Schargel, 62).
- Focus on the process rather than the outcome. If we get the process right we get the outcome right.
- Don’t just ‘fix the problem’ – improve the process (Goetsch, 173).
- Remove barriers between departments to allow people to work together more effectively and reduce waste.
- Seek to understand the complex interrelationship of processes. If you optimise the sub-process, you cannot optimise the process as a whole.
- Seek long-term improvement, not the short-term fix.
- Understanding Variation and Waste
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The inputs and outcomes of a process always vary (Crosby, 87).
- Variation creates waste. As a general rule, the more the variation the more the waste.
- Most variation comes from process design. The process is generally the problem, not the operator.
- 30% or more of the cost of goods and services is waste.
- Much of the waste in our work will never surface as a ‘problem’. It lies hidden in the accepted way of doing things (Goetsch, 178).
- Standardisation
- Standardise on the optimum (best, everything considered) way of doing things, minimising variation to reduce waste (Schargel, 65).
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Reducing Inspection (Crosby, 89)
- Cease depending on inspection to achieve quality. Instead ‘build-in’ quality at every step in the process.
- Much inspection is costly and counter-productive. Eliminate inspection that does not add value.
TQM at Charles Schwab is a client-oriented approach that introduces systematic management changes and continuous improvements to an organisation's processes, products and services.
As the diagram below indicates, the TQM process at Charles Schwab begins with the customer and ends with the customer (Goetsch, 179). The TQM process takes specific inputs (the customer's wants, needs and expectations), transforms (processes) these inputs within the organisation to produce goods or services that, in turn, satisfy the customer (output).
Diagram I: The TQM Process at Charles Schwab.
TQM in the Public Sector
While the impact of TQM on improving services in the private sector is no longer disputed, there are still questions about its application in the public sector. Most private profit-oriented organisations have clear missions, face competition and are accountable to their customers. In contrast, government organisations often have multiple missions and there is a bureaucratic work culture, lack of accountability, and little direct competition. These differences will have implications for how to bring about change in the public sector (Schargel, 69).
In conclusion I would like to note that The primary, long-term benefits of TQM in the public sector include better services, reduced costs and satisfied customers. Progressive improvement in the management systems and the quality of services offered result in increasingly satisfied customers. In addition a number of other benefits are observable including improved skills, morale and confidence among public service staff, enhanced relationships between government and its constituents, increased government accountability and transparency and improved productivity and efficiency of public services.
Bibliography:
Schargel, Franklin,Transforming Education Through Total Quality Management: A Practitioner's Guide (The Leadership & Management Series ; 3), McGraw Hill, 2002.
Goetsch, David, Quality Management: Introduction to Total Quality Management for Production, Processing, and Services (4th Edition), Prentice Hall, 2001.
Crosby, Philip, Quality Is Free: The Art of Making Quality Certain, penguin books, 2001.
Besterfield,Dale,Total Quality Management (2nd Edition), Oxford University Press, 2002.
