Baldrige Award
The Baldrige Award is a scheme which measures the success of an organization’s implementation of TQM. It bases its judgment upon seven main criteria which includes: leadership, strategic planning, customer focus, workforce focus, process management, results and measurement, analysis and knowledge management. Each category specifies a set of marks that are awarded to organization based on their performance against the particular criteria.
Leadership
The concept of leadership is a crucial aspect of the Baldrige Award and assesses the ability of senior management to guide and address its responsibilities both to the public and as fellow citizens (Gitlow and Gitlow, 1994). Therefore, leadership is considered as management’s responsibility to maintain and endorse the vision of the organization, with a particular focus on customer satisfaction rather than internal management control. The responsibilities of senior management include: allocating resources, establishing strategic quality goals, reviewing quality indicators, estimating cost, ensuring employees’ efforts and providing adequate training (Andersin et al, 1994). However Sadikoglu suggests that the roles of management are far more proactive due to the fact that accountable for the production of products, which meet the changing needs of customers (Sadikoglu, 2008). Sadikoglu also suggest that leadership forces approximately 85% of business failure to rest on the shoulders of management (Sadikoglu, 2008). The advantage of such a situation is that it motivates employees due to added job security. Having said that, employees often play a crucial role decision making by suggesting innovations, improving products and solving problems (Prajogo and Sohal, 2001).
Strategic Planning
Strategic planning is a vital part of the Baldrige Award and an element of strategic management, which is the process of examining the internal and external environment in order to create strategies in order to achieve the organisation’s mission and satisfy key stakeholders (Steiss, 1985). According to Steiss, strategic planning is essentially to the development of objectives and strategies, and allocating resources in order to achieve these strategies (Steiss, 1985). In order to achieve success, TQM requires strategic plan must contain three elements; high levels of customer orientation, providing direction and context for TQM and the appropriateness of the organizations strategies which must ensure long term success and provide increased value to customers(Howard, 1995) . Juran advocates that all parts of an organization must be part of the creation a strategic plan in order to create a more effective method of implementation and should be engrossed within the organisation’s culture (Juran 1989).
Customer Focus
A central component to TQM and the Baldrige Award, customer focus is the theory that organizations must monitor and analyse customer behavior in order to create products, which satisfy their wants and needs (Steiss, 1985). . This is considered as a vital component of TQM due to the belief that a customer is drawn to a product because they perceive it to meet or exceed their expectations. Sadikoglu states that by focusing on customers, quality will increase as it requires a reduction in defective products and costs. In addition, this theory is particularly evident when the organization contains a large amount of internal customers (Sadikoglu, 2008). Usually these individuals are required for the creation of the end product. Therefore, in many organizations a balance must be established between external and internal customers in order to ensure quality. In order to achieve the main aim of customer focus, the organization must take necessary steps in an effort to understand the continual altering nature of customer needs and wants (Sadikoglu 2008).
Measurement, Analysis and Knowledge Management
Measurement, Analysis and Knowledge Management in the Baldrige Award is the measure how information is gathered, selected, analysed, managed, improved and stored. In addition, it also calculates the management of information technology and the effectiveness of the system within the organization. It highlights the effectiveness of collection and analyses of information on customer needs, operational issues and the accomplishments of improvement efforts. The outcome of consistently collecting and analyzing information is argued to yield more success in the long run as all decisions are informed. There are two main forms of analyzing information. The first is through the use of statistics as it is seen to be an effective base to make decisions upon. The second method is through a new form of analyzing called Data-mining which involves the utilization of software as a method of measurement.
The use of information and technology is a concept of TQM and the Baldrige Award which has grown in importance due to the fact that a greater amount of customers are becoming reliant on the internet to buy and uncover product to meet their needs. More than ever, it has become essential that defective-free software and the ability to make required changes to software is available and of a high quality of standard (Williams et al, 2004).
Workforce Focus
The workforce focus investigates the effectiveness of an organization in terms of its use, development and management of the workforce in order to fulfill their potential and create a TQM product. The Baldrige Award divides this category into two distinct branches; the workforce engagement and environment. The workforce environment can encompass a variety of factors such as the structure of work, the physical environment, and services and rights available to employees. The workforce environment in TQM encourages the need for employee fulfillment in their job. It is often argued that a positive impact on customer satisfaction can be achieved by treating employees as internal customers and can often result in greater loyalty. It is further argued that it is imperative to establish a high degree of employee well-being and satisfaction in order to establish effectiveness within the organization. The Baldrige Award encourages employee engagement advocates for greater employee autonomy and skill variety. The major methods to establish employee empowerment requires an organization to focus on open communication, team orientation and cooperation. In addition, as employees are considered an asset to the organization, it is vital that they have the opportunity to receive adequate training and education to work effectively. Furthermore, providing education and training will enable employees to ascertain a sense of satisfaction.
Process Management
A process is a compilation of activities that are essential in order to convert inputs into outputs or results. Many businesses establish a primary process, which entails a collection of cross functional activities that are vital in order to satisfy the organization’s stakeholders and meet the organizations goals and objectives. Therefore according to the Baldrige Award, process management involves the interrelationships of different departments in order to create a product in an organization. The three main practice of process management are mapping processes, improving processes and adhering to a system of improved processes. Deming’s theory is heavily centred around the concept of process management. He strongly believed that in order to continue to improve, a quality management process must be present in order to reduce variation and essentially increase quality. The result is positive in nature with increases in staff utilization, less resource wastage and a reduction of reworks and mistakes. In addition, it is also about improving a process to meet the needs of the customer. This can include processes under taken to source and control the quality of materials from suppliers.
Results
In the Baldrige Awards, results requires exploration of an organisations performance and improvement in all key areas including customer-focus, financial, market, leadership and process effectiveness outcomes compared to similar organisations (The Malcolm Baldrige National Quality Award, 2009). Sadikoglu suggests that a company’s performance is positively related to financial performance (Sadikoglu, 2008). This is done through improving quality performance which will see a return on assets and thus an increase profits results (Sadikoglu, 2008). It will also increase customer satisfaction, loyalty, the organisations reputation and competitiveness (Sadikoglu, 2008). In contrast, other authors suggest that innovation is the key to an organisation’s performance (Fuentes et al, 2004). New product design has that ability to meet customer demands, eliminate unnecessary cost and increase the product quality (Fuentes et al, 2004).
Application of Total Quality Management in an Organisation
Organisation
The organization that is to be examined is David Jones, a department store that sells a range of products from clothing to household appliances and furniture. David Jones competes in a competitive market as it sells a wide range of products covered by many smaller stores and its major competitor, Myers. An important element is that David Jones is a national organization therefore it deals with thousands of employees. In many states, its management and corporate structure work in a cross functional manner across all the stores as a result
Customer Focus
David Jones utilizes a high degree of market research in order to determine the strengths and weaknesses of the organization. Loyal customers, who either posses the business’s new American Express card or/and David Jones card, are frequently asked to complete a survey over the experiences they have had within the store and the general sentiment of the product range. The organisation’s website also provides the ability for customer’s to express their outlook over the business’s service and general product range. Customers also have the ability to express their concerns and gain assitance via the organizations help line. In addition, David Jones utilizes focus groups and a relatively new concept called a secret shopper, which is designed to investigate the service and product quality. The result of these customer surveys has been the introduction of 60 new brands which include FCUK, Witchery and Armani Jeans. David Jones have also introduced products into the market place which are untested and a relative risk, but necessary in order to compete with other such department stores. For example the introduction of DKNY wallets in 2007 yielded little success. Having said that, overall the organization has witnessed success from the introduction of the majority of new products and therefore the market research conducted. This is highlighted by the 1.3% increase in the organisation’s profit margin and an increase in market share of 1%. Furthermore, 79% of all customers are either well satisfied or delighted by the quality of the organization’s products.
The internal customer focus is somewhat addressed through education and training, and employee benefits. David Jones offer funded retail traineeships which deals with important tasks such as sales and services, and retail management. Every particpant of the course receives a national industry recognized qualification that puts them in a strong position to gain similar roles in other department stores. Employees are also given discount cards which can be used on the majority of items within the store. This encourages employees to make the majority of their purchases within the store therefore increasing their shared sense of direction with the business and overall service. In addition, some departments within the individual stores provide employees with a certain level of commission depending on their amount of sales in an effort to increase the quality of service. However, in the past David Jones has been forced to make drastic cut backs in terms of staff and the amount of hours they work which creates uncertainty and therefore a lack of motivation. According to Deming, the results can be detrimental to the overall quality service and success of the business. Having said that, 80% of management vacancies at David Jones are filled internally, which demonstrates a strong internal customer focus.
Process managment
David Jones aims to create continuous improvement to meet customer needs by improving processes. The main frontline process involves 5 basic steps: greet customers, ask if they are looking for anything in particular, ask probing yet considerate questions, advice them on products and finally create a friendly transaction. Having said that, there have been a number of reports that employees have not followed this simple process. Furthermore, efficiency within the process is greatly reduced due to the use of outdated and old software. This has been highlighted by customer-based research, particularly from David Jones cardholders. The process of selecting employees ensures that the organization fills any vacancies with the most qualified individuals. The process can take up to 6 weeks and involves rigorous interviews and consultation with the human resources. The target market of the organization has forced David Jones to ensure the high quality of its products. In an attempt to attract wealth individuals, the organization contains exclusive brands such as Giorgio Armani and Gucci. This market was chosen primarily due to the lack of competition and the consistent spending pattern of such a group.
The collection data and statistics are a continual process and one that is vital in order to achieve success. The two main avenues for the reporting of collected information and data come via the general meeting (which is usually in late November) and the annual report (which is normally released in late March). David Jones also creates company vision reports and half year presentations in order to allow stakeholders to see the progress of the organization. This is also utilized in the examination of other process due to its cross functional nature. Therefore it is imperative for determining the selection of new products along with adjustments to the organization’s vision, mission, goals and objectives.
People Focus
Leadership is a crucial aspect of the Baldrige model and vital to the success of the business. According to David Jones, top management has an integral role in finding and creating innovative products in the market place. This is examined through that fact a growing number of David Jones department stores are now creating gourmet food halls to compete with cafes and delis. In order to remain a dominant force within the market, the organization’s leadership style is to keep the company focused on its objectives and vision. This is achieved by continually engaging employees and customer to understand the way in which customer and employee’s needs are met. For example, head management regularly visits all the David Jones stores in Australia to make sure the national standards of the organization are being followed. Decisions of this magnitude are often outlined to the ACCC in order to establish an ethical and legal base for these decisions to be made. While the bulk of the major business risk fall on the shoulders of senior management, David Jones encourages supervisors and frontline staff in each department to make more decisions. This not only motivates employees, which in turn produces greater quality service, but also maintains stability within each section.
Both internal and external customers as required by the Baldrige Model drive David Jones’ strategic plan. The expansion of the business and/or product range requires greater training and objectives, which are based on a strategic plan. David Jones has established a strategic plan, which has been designed in order to establish more customers. The 14-point plan is set to be finished in 2012 and involved the opening of 8 new stored, the launch of a credit card and general cost cutting. It is estimated that by next year, this strategic plan will yield 5%-10% profit and a sharp increase in the organization’s share price. This strategic plan has begun to transcend each department store more well rounded with a range of products from luxury to low quality.
The wellbeing and motivation of staff is of paramount concern as is seen with management ensuring that staff are take all their outlines breaks regardless of the rush within the store. In addition David Jones also provides opportunities to move up and across in the company from a sales assistant to CEO as is demonstrated by the career path of the current head of David Jones. The organization also provides facilities for employees including break rooms and dry cleaning privileges. Therefore it is evident that David Jones follows the criteria of the Baldrige Award in terms of working environment. The organization has a strong culture of employee engagement which is evident through the fact that management talks to all new and current staff on a regular basis. This is in order to gain a different perspectives over visible and unknown opportunities. Having said that unless employees are within top level management, it is extremely difficult for their opinions to be heard. Training is a vital aspect of the Baldrige Model and David Jones have responded by providing a two day training seminar on how to process transactions and deal with transactions. However many employees states that this training is not sufficient and it often takes many shifts in order to work efficiently in such situations.
Conclusion
David Jones has been an immense success for a number of decades partly due to the fact that it closely follows the Baldrige Model. The organization has a strong customer focus due to its wide spread market research. In addition, David Jones effectively utilize this information in order to establish a level of service and a product range which would appeal to the target market. This has resulted in greater profit and market share. Employees have also been greatly motivated due to the high importance place on internal customers. Training, education and concessions and benefits have allowed the customers to establish a shared identity with the customers and the organization. To some degree the process management within David Jones is quite poor. This is primarily due to the lack of effective software and technology utilized. Having said that, the quality of staff is quite high due to the rigorous methods of choosing employees. In addition the continual examination of the business in terms of finance and market share has been a vital component to the efficient operation of the business. This is primarily due to the cross functional nature of the business. The concept of people focus contains the key theories of leadership, strategic planning and workforce focus. These concepts have very much been appropriately approached by the management of the organization. It has inevitably increased the success of the business. This is particularly visible when examining the strategic plan of the business. Therefore it is evident that David Jones uphold the intricacies of the Baldrige Model which has been the main reason for the business’s high success.
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