ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Business Administration)
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Course: Total Quality Management (5011) Semester: Autumn, 2022
Level: MSc Administrative Sciences
aiou course code 5011-1 solved assignment autumn 2022
- 1Explain the basic phenomena of total quality management framework. Discuss and evaluate the TQM framework keep in view in business environment in Pakistan.
TOTAL QUALITY MANAGEMENT (TQM)
Total Quality Management is a management approach that originated in the 1950s and has steadily become more popular since the early 1980s. Total Quality is a description of the culture, attitude and organization of a company that strives to provide customers with products and services that satisfy their needs. The culture requires quality in all aspects of the company’s operations, with processes being done right the first time and defects and waste eradicated from operations.
Total Quality Management, TQM, is a method by which management and employees can become involved in the continuous improvement of the production of goods and services. It is a combination of quality and management tools aimed at increasing business and reducing losses due to wasteful practices.
Some of the companies who have implemented TQM include Ford Motor Company, Phillips Semiconductor, SGL Carbon, Motorola and Toyota Motor Company.1
TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and organizational objectives.
TQM views an organization as a collection of processes. It maintains that organizations must strive to continuously improve these processes by incorporating the knowledge and experiences of workers. The simple objective of TQM is “Do the right things, right the first time, every time.” TQM is infinitely variable and adaptable. Although originally applied to manufacturing operations, and for a number of years only used in that area, TQM is now becoming recognized as a generic management tool, just as applicable in service and public sector organizations. There are a number of evolutionary strands, with different sectors creating their own versions from the common ancestor. TQM is the foundation for activities, which include:
Principles of TQM
- The key principles of TQM are as following:3
- Management Commitment
- Plan (drive, direct)
- Do (deploy, support, participate)
- Check (review)
- Act (recognize, communicate, revise)
- Employee Empowerment
- Suggestion scheme
- Measurement and recognition
- Excellence teams
- Fact Based Decision Making
- SPC (statistical process control)
- DOE, FMEA
TOPS (Ford 8D – team-oriented problem solving)
- Systematic measurement and focus on CONQ
- Excellence teams
- Cross-functional process management
- Attain, maintain, improve standards
- Customer Focus
- Supplier partnership
- Service relationship with internal customers
- Never compromise quality
- Customerdriven standards
The Concept of Continuous Improvement by TQM
TQM is mainly concerned with continuous improvement in all work, from high level strategic planning and decision-making, to detailed execution of work elements on the shop floor. It stems from the belief that mistakes can be avoided and defects can be prevented. It leads to continuously improving results, in all aspects of work, as a result of continuously improving capabilities, people, processes, technology and machine capabilities.
Continuous improvement must deal not only with improving results, but more importantly with improving capabilities to produce better results in the future. The five major areas of focus for capability improvement are demand generation, supply generation, technology, operations and people capability.
A central principle of TQM is that mistakes may be made by people, but most of them are caused, or at least permitted, by faulty systems and processes. This means that the root cause of such mistakes can be identified and eliminated, and repetition can be prevented by changing the process.1
There are three major mechanisms of prevention:
Preventing mistakes (defects) from occurring (mistake-proofing or poka-yoke).
Where mistakes recur, stopping production until the process can be corrected, to prevent the production of more defects. (stop in time).
Implementation Principles and Processes
A preliminary step in TQM implementation is to assess the organization’s current reality. Relevant preconditions have to do with the organization’s history, its current needs, precipitating events leading to TQM, and the existing employee quality of working life. If the current reality does not include important preconditions, TQM implementation should be delayed until the organization is in a state in which TQM is likely to succeed.
If an organization has a track record of effective responsiveness to the environment, and if it has been able to successfully change the way it operates when needed, TQM will be easier to implement. If an organization has been historically reactive and has no skill at improving its operating systems, there will be both employee skepticism and a lack of skilled change agents. If this condition prevails, a comprehensive program of management and leadership development may be instituted. A management audit is a good assessment tool to identify current levels of organizational functioning and areas in need of change. An organization should be basically healthy before beginning TQM. If it has significant problems such as a very unstable funding base, weak administrative systems, lack of managerial skill, or poor employee morale, TQM would not be appropriate.5
However, a certain level of stress is probably desirable to initiate TQM. People need to feel a need for a change. Kanter (1983) addresses this phenomenon be describing building blocks which are present in effective organizational change. These forces include departures from tradition, a crisis or galvanizing event, strategic decisions, individual “prime movers,” and action vehicles. Departures from tradition are activities, usually at lower levels of the organization, which occur when entrepreneurs move outside the normal ways of operating to solve a problem. A crisis, if it is not too disabling, can also help create a sense of urgency which can mobilize people to act. In the case of TQM, this may be a funding cut or threat, or demands from consumers or other stakeholders for improved quality of service. After a crisis, a leader may intervene strategically by articulating a new vision of the future to help the organization deal with it. A plan to implement TQM may be such a strategic decision. Such a leader may then become a prime mover, who takes charge in championing the new idea and showing others how it will help them get where they want to go. Finally, action vehicles are needed and mechanisms or structures to enable the change to occur and become institutionalized.
Steps in Managing the Transition
Beckhard and Pritchard (1992) have outlined the basic steps in managing a transition to a new system such as TQM: identifying tasks to be done, creating necessary management structures, developing strategies for building commitment, designing mechanisms to communicate the change, and assigning resources.
Task identification would include a study of present conditions (assessing current reality, as described above); assessing readiness, such as through a force field analysis; creating a model of the desired state, in this case, implementation of TQM; announcing the change goals to the organization; and assigning responsibilities and resources. This final step would include securing outside consultation and training and assigning someone within the organization to oversee the effort. This should be a responsibility of top management. In fact, the next step, designing transition management structures, is also a responsibility of top management. In fact, Cohen and Brand (1993) and Hyde (1992) assert that management must be heavily involved as leaders rather than relying on a separate staff person or function to shepherd the effort. An organization wide steering committee to oversee the effort may be appropriate. Developing commitment strategies was discussed above in the sections on resistance and on visionary leadership.6
To communicate the change, mechanisms beyond existing processes will need to be developed. Special all-staff meetings attended by executives, sometimes designed as input or dialog sessions, may be used to kick off the process, and TQM newsletters may be an effective ongoing communication tool to keep employees aware of activities and accomplishments.
Management of resources for the change effort is important with TQM because outside consultants will almost always be required. Choose consultants based on their prior relevant experience and their commitment to adapting the process to fit unique organizational needs. While consultants will be invaluable with initial training of staff and TQM system design, employees (management and others) should be actively involved in TQM implementation, perhaps after receiving training in change management which they can then pass on to other employees. A collaborative relationship with consultants and clear role definitions and specification of activities must be established.
In summary, first assess preconditions and the current state of the organization to make sure the need for change is clear and that TQM is an appropriate strategy. Leadership styles and organizational culture must be congruent with TQM. If they are not, this should be worked on or TQM implementation should be avoided or delayed until favorable conditions exist.
Remember that this will be a difficult, comprehensive, and long-term process. Leaders will need to maintain their commitment, keep the process visible, provide necessary support, and hold people accountable for results. Use input from stakeholder (clients, referring agencies, funding sources, etc.) as possible; and, of course, maximize employee involvement in design of the system.
Always keep in mind that TQM should be purpose driven. Be clear on the organization’s vision for the future and stay focused on it. TQM can be a powerful technique for unleashing employee creativity and potential, reducing bureaucracy and costs, and improving service to clients and the community
TQM encoureges participation amongst shop floor workers and managers. There is no single theoretical formalization of total quality, but Deming, Juran and Ishikawa provide the core assumptions, as a “…discipline and philosophy of management which institutionalizes planned and continuous… improvement … and assumes that quality is the outcome of all activities that take place within an organization; that all functions and all employees have to participate in the improvement process; that organizations need both quality systems and a quality culture.”
total quality management factors on organizational performance. Explanatory research type was used to examine the connection between total quality management factors and organizational performance, via using the deductive approach to test the claims. The data was collected for one time period only. A survey method was executed to gather the data from the shipping industry of Pakistan with a sample of 206. After the analysis of the congregated data, it has become evident that total quality management aspects including top management commitment as well as policy and strategy along with training and development, communication, and process management have a substantial influence on the performance of shipping-related organizations. Researchers have welcomed the concept of TQM in the last few decades very warmly, particularly in developed countries while Pakistan and other developing countries have paid scarce focus on this aspect of Management. So, therefore, shipping needs to put focus on the above-mentioned prospects to flourish in the competitive scenario. Thus, this study provides evidence to develop strategies for managers who are working in this setup to see how these factors can be implemented which in turn improves the organizational performance.
- 2 What is Deming Philosophy? Critically discuss the contribution of Deming Philosophy to TQM in detail.
Deming’s 14-Point Philosophy
The concept of quality is at the core of many of our ideas about effective management and leadership, and programs like Total Quality Management and Six Sigma have been at the heart of many companies’ success.
Before things like globalization and technological advances became so important, competitive pressures were typically much lower, and companies were usually satisfied with focusing their quality efforts on the production process alone.
Now, quality is often thought to start and end with the customer, and all points leading to and from the customer must aim for high-quality service and interaction.
But to be truly successful, quality needs to be built into every level of a company, and become part of everything the organization does. From answering the phone to assembling products and serving the end customer, quality is key to organizational success.
Deming’s 14-Point Philosophy is a great tool you can use to build quality in at every level of your business. In this article, we’ll look at Deming’s Philosophy in more detail and how you can use it.
What Is Deming’s 14-Point Philosophy?
Dr. W. Edwards Deming is largely credited with the focus on quality within business to achieve success. A statistician who went to Japan to help with the census after World War II, Deming also taught statistical process control to leaders of prominent Japanese businesses. His message was this: By improving quality, companies will decrease expenses as well as increase productivity and market share.
After applying Deming’s techniques, Japanese businesses like Toyota, Fuji, and Sony saw great success. Their quality was far superior to that of their global competitors, and their costs were lower. The demand for Japanese products soared – and by the 1970s, many of these companies dominated the global market. American and European companies realized that they could no longer ignore the quality revolution.
So the business world developed a new appreciation for the effect of quality on production and price. Although Deming didn’t create the phrase “Total Quality Management,” he’s credited with starting the movement. He didn’t receive much recognition for his work until 1982, when he wrote the book now titled “Out of the Crisis,” which summarized his famous 14-point management philosophy.
There’s much to learn from these 14 points. Study after study of highly successful companies shows that following the philosophy leads to significant improvements. That’s why these 14 points have since become a standard reference for quality transformation.
1. Create a Constant Purpose Toward Improvement
- Plan for quality in the long term.
- Resist reacting with short-term solutions.
- Don’t just do the same things better – find better things to do.
- Predict and prepare for future challenges, and always have the goal of getting better.
2. Adopt the New Philosophy
- Embrace quality throughout the organization.
- Put your customers’ needs first, rather than react to competitive pressure – and design products and services to meet those needs.
- Be prepared for a major change in the way business is done. It’s about leading, not simply managing.
- Create your quality vision, and implement it.
3. Stop Depending on Inspections
- Inspections are costly and unreliable – and they don’t improve quality, they merely find a lack of quality.
- Build quality into the process from start to finish.
- Don’t just find what you did wrong – eliminate the “wrongs”
- Use statistical control methods – not physical inspections alone – to prove that the process is working.
4. Use a Single Supplier for Any One Item
- Quality relies on consistency – the less variation you have in the input, the less variation you’ll have in the output.
- Look at suppliers as your partners in quality. Encourage them to spend time improving their own quality – they shouldn’t compete for your business based on price alone.
- Analyze the total cost to you, not just the initial cost of the product.
- Use quality statistics to ensure that suppliers meet your quality standards.
5. Improve Constantly and Forever
- Continuously improve your systems and processes. Deming promoted the Plan-Do-Check-Act approach to process analysis and improvement.
- Emphasize training and education so everyone can do their jobs better.
- Use kaizen as a model to reduce waste and to improve productivity, effectiveness, and safety.
6. Use Training on the Job
- Train for consistency to help reduce variation.
- Build a foundation of common knowledge.
- Allow workers to understand their roles in the “big picture.”
- Encourage staff to learn from one another, and provide a culture and environment for effective teamwork.
. Implement Leadership
- Expect your supervisors and managers to understand their workers and the processes they use.
- Don’t simply supervise – provide support and resources so that each staff member can do their best. Be a coach not a policeman.
- Figure out what each person actually needs to do their best. For example, hardware, software, other tools, and training.
- Emphasize the importance of participative management and transformational leadership.
- Find ways to reach full potential, and don’t just focus on meeting targets and quotas.
8. Eliminate Fear
- Allow people to perform at their best by ensuring that they’re not afraid to express ideas or concerns.
- Let everyone know that the goal is to achieve high quality by doing more things right – and that you’re not interested in blaming people when mistakes happen.
- Make workers feel valued, and encourage them to look for better ways to do things.
- Ensure that leaders are approachable and that they work with teams to act in the company’s best interests.
- Use open and honest communication to remove fear from the organization.
9. Break Down Barriers Between Departments
- Build the “internal customer” concept – recognize that each department or function serves other departments that use their output.
- Build a shared vision.
- Use cross-functional teamwork to build understanding and reduce adversarial relationships.
- Focus on collaboration and consensus instead of compromise.
10. Get Rid of Unclear Slogans
- Let people know exactly what you want – don’t make them guess. “Excellence in service” is short and memorable, but what does it mean? How is it achieved? The message is clearer in a slogan like “Always be striving to be better.”
- However, don’t let words and nice-sounding phrases replace effective leadership. Outline your expectations, and then praise people face-to-face for doing good work.
11. Eliminate Management by Objectives
- Look at how processes are carried out, not just numerical targets. Deming said that production targets can encourage high output but result in low quality.
- Provide support and resources so that both production levels and quality are high and achievable.
- Measure the process rather than the people behind the process.
12. Remove Barriers to Pride of Workmanship
- Allow everyone to take pride in their work without being rated or compared.
- Treat workers equally, and don’t make them compete with colleagues for monetary or other rewards. Over time, the quality system will naturally raise the level of everyone’s work to an equally high level.
13. Implement Education and Self-Improvement
- Improve the current skills of workers.
- Encourage people to learn new skills to prepare for future changes and challenges.
- Build skills to make your workforce more adaptable to change, and better able to find and achieve improvements.
14. Make “Transformation” Everyone’s Job
- Improve your overall organization by having each person take a step toward quality.
- Analyze each small step, and ask yourself how it fits into the bigger picture.
- Use effective change management principles to introduce the new philosophy and ideas in Deming’s 14 points.
- 3 What is team management? Critically discuss common people problems in team management with examples and their solutions in detail.
Managers face a lot of team management challenges on a daily basis. So it is important for managers to be aware of all the team management challenges they may face and to know how to deal with them appropriately. Moreover, if you are a manager of a team it’s important to keep in mind that the success of your team depends on your approach to managing them.
It is a challenge to find the perfect balance between giving your team enough freedom to be creative and at the same time making sure they are accountable for their actions. Managing a team is not rocket science, but it’s not easy either. Here are some of the most common team management challenges you might face as a team lead or manager and some tips on how to overcome them.
01. Lack of Collaboration
Lack of collaboration is a huge obstacle for managers. They have to figure out how to work with people that they might not even like, and that’s not always easy. For instance, they might be working with someone who’s temperamentally different than them, or who they’re not as close to. If it becomes a regular occurrence, then they might get into the habit of just trying to do their work by themselves instead of facing the challenge head-on.
Lack of collaboration within a team can lead to tons of anxiety and stress for team members and managers. When members of a team do not want to share, the team’s ability to execute projects becomes more difficult. But there are ways to make sure your team is on the same page and fully collaborating with one another.
Now when it comes to effective team collaboration, there is a lack of collaboration that can be overcome with effective communication. A good way to overcome this lack of collaboration is by opening up to your teammates and talking to them about what their skills are. You can also get to know them on a personal level, which will help you build trust and make the teamwork better.
02. Lack of Vision Among Team Members
One of the top ten team management challenges is a lack of vision among team members. This is an especially common problem in startups where the founder or another person has led the company from its inception. They may have been responsible for most of the work and with little input from anyone else, they had to deal with strategic decisions and day-to-day operations. As the company grows, it’s important for employees to understand the company’s goals.
One of the common reasons why people take the plunge to start their own businesses is their idea. Entrepreneurs are often driven by strong visions and an optimistic outlook on how the world can be better. But your business idea won’t magically turn into a successful venture if you don’t have a team that can turn it into a reality. This is where lots of startups fail. Hiring the right team members has more than just economic benefits. It should also solve the vision problem.
It is good if each team member is able to identify where they fit into the team and how they are able to contribute to the vision of the team. It is also important to look at where the team is going. This will help the team to identify if they are on the right track. This vision should not be just about the short-term goals but also the long-term goals.
03. Team Members Not Listening to Instructions
Sometimes team members just don’t listen to instructions. They make a mess of the plan or don’t bother to complete a task. This is a very common issue and many managers have found that this is the most time-consuming area of management. But still, you will need to make sure that your employees are following the instruction and rules. One of the ways you can do this is by providing detailed instructions and learning to deal with the occasional setbacks without getting mad or frustrated.Secondly, even exceptional employees can’t grow and follow instructions without clear feedback. Often, when an employee is hard to manage they don’t know where they are falling short. Without clear, actionable feedback, they don’t know which way to go to improve. Some managers will spend months complaining about poor employees, but until they’re willing to do the work themselves and provide tough feedback in a respectful and professional manner, it really is only themselves that they have to blame for their employee’s failings.
Lastly, keeping documentation of the employee’s bad behavior at the time of its occurrence is really wise and essential. Documenting the problems with a team member or employee when they happen is crucial to solving them, or having enough information to solve them. If you’re able to solve the problem, you can stop worrying and finally put the documentation you’ve been working on back in the drawer. But if you need to take a harsh step of letting someone go without a fight, then you got to have the right documentation of their lackings and behavior to support your decision.
- Team Members Lack Ownership of Their Work
Team members lack ownership of their work because they are not collaborating enough or working as a team. Lack of communication can be attributed to this. In many cases, team members are not even aware of the work that is being done by other members of the team. A sense of isolation can result. The lack of shared knowledge and understanding between team members can lead to confusion over the purpose of various activities, the status of projects or issues at hand, and the need for quick decisions.
Moreover, a manager may also overcome this issue in the following ways:
- Involving them more in the company planning and goal setting activities
- Explaining why a certain task needs to be completed and why you have been chosen to get it done
- Letting the team member or person given the responsibility decide how to get the job done
- Delegating them with some leadership roles, not just task
- Showing constant & full trust in them to complete the assignment and boost their confidence
- Motivating them to solve their problems
- Holding them accountable for their action & meeting goals or deadlines to achieve a better result.
- Giving constructive feedback to their work every time
- Appreciating their courage for stepping and rising up to the occasion on the spot
05. Lack of Motivation Left Among Team Members
Another very common team management challenge is a lack of motivation. When employees lose interest in their work, they are not as productive as they should be. This can lead to mistakes and incomplete projects. A lot of employees are unmotivated in their jobs.
It can be hard to identify the cause, but it often boils down to personal issues from stress at home to feelings of isolation at work. Teams with low morale can produce less high-quality output which is also tied to poorer productivity and an increase in absenteeism.
- The Team Is Not Aligned to Company Goals and Processes
Every manager should know about the importance of making sure that the team is aligned with goals and processes for seamless implementation. This way, the team will be more effective and efficient. But one of the very common challenges to team management is when the team is not aligned with goals and processes. When this happens, it can lead to low morale, lack of engagement, and lack of productivity. The manager must figure out what is causing this and address the problem.
One of the most common causes is that team members are not clear on what they are trying to achieve and why. They may be feeling overwhelmed by the size of the challenge, or confused about how to tackle it. Other times the problem may be leadership style (in which case the manager will need to address this).Team alignment is a process that begins with forming the right team and ends with everyone on the team working together to achieve company goals. It’s a continuous process, one that leaders must continually manage. Be clear on what the team is trying to achieve before focusing on how to do it. If the team wants to get a project done faster, they need to understand what actions are required to get the job done. More essentially a manager can resolve this challenge in the following ways.
- Plan and execute your strategy by creating specific goals that align with your organization’s strategy.
- Provide feedback to employees consistently and transparently.
- Align roles with individual, team & organizational goals.
- Identify the gaps between strategy and performance
07. Not Communicating Enough With the Team Members
Coordination of tasks and workflow is a central part of being an effective manager. Communication is necessary for this coordination to occur. One key challenge for managers is that it can be difficult to know how much to communicate with team members. A balance needs to be found between enough information to keep everyone on the same page and too much information which may not be actionable.
The most effective teams communicate on a regular basis. Some teams may have one-time, or yearly meetings, but other teams may have morning meetings, lunch meetings, and more. A great team will make sure that everyone is getting the information they need to do their job.
The communication gap is a real issue within modern teams, so it is important to be aware of some of the core issues here and to have a variety of methods at our disposal. The first point to remember here is that there may be a variety of reasons why a team member is not communicating effectively. The first step here is to find out what kind of communication problem it is, and what needs to be done to resolve the issue.A strong personal skillset makes you able to effectively communicate with others in your office, which makes you better at working with your team. Lack of good communication skills also affects how you interact with customers and can damage the business. So not communicating enough can never bring positive results for any business. Here are some effective tactics you may follow to encourage team members to communicate more & better.
- Make arrangements for regular team huddles at the beginning or end of every shift
- Treat each team member as a team player
- Try to address the problem instead of blaming on the person responsible for it
- Let every team member know eachother on personal level
- Assess intrapersonal relationships among team members those who are causing a problem always
- Introduce mentorship program to encourage communication among old & new team members
- Try to find a common ground for communication when you have culturally diverse team
- Use high-quality conference phones that help your company to reach a new level of communication
08. Conflict Among Team Members
Team members can become involved in a conflict with each other, which is a significant challenge to overcome as a manager. At a minimum, such conflict is stressful. At its worst, it can undermine the team’s performance and damage the reputation of the organization. The conflict could stem from anything from different personalities to different ways of working, and it is important to have strategies in place to help diffuse the situation.
The conflict can be caused by a variety of factors: Different expectations, Different personalities, Individual differences in communication, Different time-management skills, and interaction styles. Two team members may have very different ideas about how the work should be done. In some cases, these differences may not be critical to the success of the project. They can be handled by discussion and compromise. However, sometimes they may cause important delays or result in poorly designed products that do not meet customer needs.
There are numerous other ways to resolve this. One suggestion that has worked is to hold team meetings outside of work hours, where everyone can relax and be more open with one another. This also helps your team members develop a better understanding of one another and the value they bring to the team. Other steps to resolving the conflict include:
- Communicate: The first thing to do is communicate with the other person directly about their concerns. It is important that you are open and honest about your intentions and have a dialogue so they understand what you are trying to achieve.
- Defuse:The next step is to defuse the situation and diffuse the conflict. This usually involves coming up with a plan to resolve the issue. Take a few minutes away from the meeting so that you have time to think things through.
09. Not Being Proactive When It Comes to Hiri
If you’re not proactive about hiring, it will be an uphill battle to make up for your lack of employees. You need the right employees to help you reach your goals and do so in a timely manner. You’re going to have to recruit qualified candidates, interview them, and then offer them a job to entice them to come on board.
It’s not enough to just want them and say you want them. But the question I’m going to ask myself, is I have to make sure I’ve done my homework on what it takes to get those candidates, what they’re looking for, and then put all the pieces together in order to attract that employee.
Next, they would create a plan to contact potential candidates, including appropriate interview questions for the position. If they were going to post the position online, they would make sure to have a strong, catchy headline. They would also tailor their resume and cover letter to the specific company. This is how you can follow the proactive hiring strategy to get the right candidate.
10. Not Being Able to Get Your Team to Work as a Team
A team will not work as a team unless they are all on the same page. Team members have to be committed to making decisions together, sharing resources, and supporting each other. They also need to know their role within the team to execute their duties and responsibilities. One of the most important things for a team to do is to assign and delegate tasks.
Moreover, the leader should assign tasks with careful and clear instruction, and delegate them to the rest of the team, with a very clear and simple purpose. If the purpose is not clear to the person who receives the task, they will get confused and that can cause a great deal of frustration. The order of the tasks should be followed so that everything is completed in a timely manner. The elements of the task must also be stated clearly to avoid any confusion. Write it down If you have given the task verbally, you should write it down as soon as possible.
- 4 What is customer satisfaction? Critically discuss the service quality strategies used for customer satisfaction in detail. (20)
Customer satisfaction (CSAT) is a measure of how well a company’s products, services, and overall customer experience meet customer expectations. It reflects your business’ health by showing how well your products or services resonate with buyers.
If you asked a batch of business owners, “How would you define customer satisfaction?” you would most likely get a bunch of different answers. One thing is certain: High customer satisfaction means customers are happy and business is booming.
What does it take to satisfy the customer?
Customers are looking for effective and efficient customer service, but research shows that there may be a disconnect between what businesses think satisfies a customer and what actually does.
In our CX Trends Report, 60 percent of companies surveyed gave themselves high marks for service. But 68 percent of customers said there’s room for improvement, and 54 percent reported that customer service feels like an afterthought for most of the businesses they buy from.
A few other notable findings from our report:
Merely 18 percent of buyers are extremely satisfied with the number of communication channels businesses offer them.
- Less than 20 percent say resolution speeds are extremely strong.
- Only 21 percent report it’s easy to interact with businesses.
Now is not the time to settle for mediocre—especially when the quality of your customer service may earn you repeat customers or be the reason you lose out to competitors. By taking the time needed to understand what great customer service means to your unique audience, you can make the changes necessary to ensure that middle-of-the-road experiences don’t hold you back.
The importance of customer satisfaction
Customer satisfaction is important because it illustrates whether your customer base likes what you’re doing. Research shows that high satisfaction leads to greater customer retention, higher lifetime value, and a stronger brand reputation.
Low customer satisfaction scores are important, too. They can reveal customer pain points and provide data-backed insights on how to improve your product, service, and overall customer experience.
- It drives customer loyalty
It’s a truth universally acknowledged: an unhappy customer is more likely to tell others about their negative experience than a happy customer is to share a positive one.
And considering 79 percent of people in the United States use social media, sharing is easier than ever before. If a customer has a bad experience with your company, they can broadcast it to millions of people before they’re even out the door.
Prioritizing customer satisfaction and making changes based on negative feedback can help your business get better reviews—and, in turn, more customers.
Example: A customer makes a Twitter thread about their poor experience with your company, leading their followers to also distrust your brand. To help save the interaction, respond to the customer as quickly as possible. Apologize for the error and ask them to direct message you so you can get more information and remedy the situation.
- It helps reflect team performance
Customer satisfaction benchmarks and metrics don’t just help you gauge how your audience is feeling—they also tell you how your support team is doing.
The following metrics can be useful in understanding customer satisfaction levels:
Initial response time: In our CX Trends Report, respondents said that long wait times were the most frustrating part of bad customer service. This metric can help you identify pain points in your team’s ability to respond promptly.
Resolution time: If it’s taking your support agents hours to resolve issues that could be dealt with swiftly, it might be time to tweak your internal processes. Don’t just strive to respond quickly—resolve quickly, too.
Number of transfers: Few things are more frustrating than being transferred to a new agent and repeating your issue all over again. If transfer occurrence drops, customer satisfaction should rise.
Considering our report found that fast issue resolution was the No. 1 aspect of good customer service, your team’s efficiency in those three areas directly impacts customer satisfaction.
Example: If your negative reviews mainly revolve around agent response time, you may want to consider training employees on how to deliver quicker support. Use software with built-in analytics to observe how well your support team serves customers.
- It encourages repeat purchases
A satisfied customer is a loyal customer. Our CX Trends Report agrees: 57 percent of consumers say excellent customer service is a factor in their brand loyalty.
Conduct polls to gauge buyers’ excitement and likeliness to tell others about your brand.
Observe customer behavior by tracking repeat purchases, reading reviews, and looking at how customers were referred to your site.
These methods allow you to get input directly from your target market while also seeing how their words compare to their actions.
Example: Customers who repeatedly experience good service in your store are more likely to come back and also encourage their friends to visit.
- It increases customer lifetime value
Satisfied customers are not only more likely to remain loyal and stick around but they’re also more likely to increase your bottom line. According to our CX Trends Report, more than 90 percent of consumers will spend more with companies that offer streamlined customer experiences.
Example: Even if a coffee shop around the corner is more convenient, customers will be more likely to walk to (and spend money at) a shop that gives them better, more personalized service.
measure customer satisfaction
- It boosts customer acquisition
Great customer service isn’t just important for supporting existing customers; it’s key to attracting new ones, too. Nowadays, consumers expect premium service to be built-in throughout the customer journey—from the first sales or marketing interaction to any support they need down the road.
To position themselves for success, businesses must integrate high-quality customer service into every interaction point.
Example: If a customer receives top-notch support after experiencing a product issue months after purchase, they’re likely to recommend your brand to friends and family.
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Why measure customer satisfaction
If you were the captain of a sinking ship, wouldn’t you want to know exactly why you were taking in water? Measuring customer satisfaction is similar. Keeping tabs on how buyers are (and aren’t) satisfied allows you to identify pain points and solve any problems.
Customer satisfaction keeps your business afloat in other ways, too. Improving satisfaction can help identify, attract, and empower loyal customers. But you won’t know how to satisfy your audience unless you start measuring CSAT scores.
- When you take a data-centric approach to customer satisfaction, you can:
- Save an unhappy customer from leaving your brand for a competitor.
- Discover customer pain points and learn how to improve your product, service, or overall customer experience.
- Drive repeat purchases by ensuring customer happiness.
- Monitor and improve brand reputation by discovering how likely customers are to recommend your company to a friend.
- Build customer trust by showing customers that their feedback matters.
- How to measure customer satisfaction: 4 key metrics
Measuring customer satisfaction is critical to growing your business. It enables you to uncover how well your company’s products and services meet your customers’ expectations. Here’s how to do it.
- CSAT surveys
CSAT surveys are typically one- to two-question surveys offered at the end of a business transaction. A classic question is, “How satisfied are you with the product?” with answers ranging from “very satisfied” to “very unsatisfied.”
- Net Promoter Score® (NPS) surveys
The goal of a Net Promoter Score® (NPS) survey is to determine whether customers are promoters, detractors, or passives. To measure this, send a survey asking customers how likely they are to promote your brand on a 1-to-10 scale.
Customer satisfaction scores and Net Promoter Scores are discussed frequently in the CX world. Watch the video to understand how they differ.
- Customer service data
Collect customer service data around specific features on your site, resolution times, and support requests. If you’re seeing an increase in tickets around a particular task, for example, that’s a sure sign that something needs fixing. You can also infer customer satisfaction from your call resolution rates and average issue-handling time.
- Quantitative customer satisfaction metrics
To understand customer satisfaction from every angle, perform both qualitative and quantitative research. One qualitative way to understand buyers’ motives and behaviors is through a client advisory group, a panel of customers who meet to discuss your business’ products and services.
How to improve customer satisfaction
The benefits of focusing on customer satisfaction are clear, but truly making customers happy can take some trial and error. The key is persistence. Always aim to go above and beyond for customers, and lean on other departments to help boost your customer experience. Here are a few ways to start improving your customer satisfaction scores.
- Become obsessed with customer feedback
Become a student of your customer feedback. Don’t just collect it—analyze it and apply it to what your customers are saying. Commit to learning about buyers’ pain points, and then make a plan to alleviate them in ways that set you apart from competitors.
A CRM is a great way to assess your reviews. But even without one, you can still keep close tabs on customer feedback. Social media and online review boards are especially good places to monitor buyer attitudes.
Tip: Use customer feedback software. This tool includes analytics for agent performance and customer surveys, so you can study complaints and compliments about your business.
- Meet customers where they are
If you need Advil in the middle of the night, you’ll be relieved by the glowing neon sign of a 24-hour drugstore. That’s why customers enjoy places with flexible hours and at-will availability.
To build the same sense of convenience as a brick-and-mortar store online, you must have a digital presence on the platforms your customers already use. Make it easy for buyers to reach out and ask support questions on their channels of choice.
Tip: Offering support via messaging apps (like WhatsApp, Twitter, and Facebook) helps businesses create that same sense of 24-hour availability. These are the same channels customers use to interact with friends and family, so it gives you a chance to meet them where they already are.
- Deliver fast responses
Our CX Trends Report revealed that 60 percent of buyers have higher customer service standards now than ever before. In a constantly connected world, customers don’t want to have to wait a day—or even more than a few hours—for a response.
Here are some ways to provide faster responses:
Pre-written responses ensure agents don’t have to write common answers repeatedly.
Messaging channels enable agents to help more customers at once because they’re communicating asynchronously. Data backs this up: Support teams with the fastest resolution times are 42 percent more likely to be messaging with their customers.
AI-powered bots can intercept would-be tickets when agents are off the clock.
Bots can also gather customer details upfront (such as city or account type) before an agent takes over.
Tip: Communication is key. If a customer sends a request when your team isn’t available, they should get an auto-reply saying their message was received. It’s also beneficial to provide an approximate response time, so the customer isn’t left wondering when someone might get back to them.
- Make customer satisfaction a company-wide focus
To improve overall customer satisfaction, you have to put time and effort into a customer-centric business strategy. You can (and should) incorporate customer satisfaction into your company mission and value proposition. That keeps it top-of-mind with every employee, regardless of their position.
When employees can see the impact of their work and all stakeholders feel committed to a goal, they can achieve high customer satisfaction levels.
Tip: A great first step is using a tool like the balanced scorecard. It guides companies in thinking about their operations from four different perspectives:
- Internal business
- Innovation and learning
It also helps businesses consider how all their activities are working toward the goal of high customer satisfaction.
- Invest in agent training
Supporting customers starts with supporting your people. Customer service agents are the beating heart of any customer service team, so investing in their professional knowledge and well-being establishes a crucial foundation on which to build your customer satisfaction scores.
According to our Trends Report, companies with high customer satisfaction are 6.4x more likely to have plans to greatly extend education and training opportunities for their support team. As a result, their agents are over 8x more likely to be extremely satisfied with the frequency of training.
Tip: Build a mentorship program for new employees, who can then learn from the best. Reevaluate your customer service training program, too, to see what you can improve or add.
- Enable customers to help themselves
Consumers today have adopted a “Google-it” mantra. For basic queries, they prefer to find answers themselves online.
Our CX Trends Report found that 70 percent of customers expect companies to have a self-service portal where they can get answers quickly, without having to interact with an agent.
Tip: You can also use an AI-powered chatbot to point customers to help center or knowledge base articles. Customers are increasingly willing to turn to chatbots for simple problems. And more tickets solved by bots mean more time for agents to focus on complex problems.
- Lead with empathy
If there’s one thing the COVID-19 pandemic taught us, it’s that empathy is an essential skill for support professionals—it’s even more valuable than customer service experience.
Support leaders can provide empathy training, but it’s also a good idea to hire support reps who already possess this soft skill.
Tip: Businesses might also consider allowing agents to make exceptions to certain policies in situations that require customer empathy
- 5 What is six-sigma approach? Critically discuss the six-sigma approach in the continuous quality improvement process of a business organization in detail.
Six Sigma is a quality management methodology used to help businesses improve current processes, products or services by discovering and eliminating defects. The goal is to streamline quality control in manufacturing or business processes so there is little to no variance throughout.
Six Sigma was trademarked by Motorola in 1993, but it references the Greek letter sigma, which is a statistical symbol that represents a standard deviation. Motorola used the term because a Six Sigma process is expected to be defect-free 99.99966 percent of the time — allowing for 3.4 defective features for every million opportunities. Motorola initially set this goal for its own manufacturing operations, but it quickly became a buzzword and widely adopted standard.
Six Sigma is specifically designed to help large organizations with quality management. In 1998, Jack Welch, CEO of GE, helped thrust Six Sigma into the limelight by donating upwards of $1 million as a thank you to the company, recognizing how Six Sigma positively impacted GE’s operations and promoting the process for large organizations. After that, Fortune 500 companies followed suit and Six Sigma has been popular with large organizations ever since.
Six Sigma principles
The goal in any Six Sigma project is to identify and eliminate any defects that are causing variations in quality by defining a sequence of steps around a certain target. The most common examples you’ll find use the targets “smaller is better, larger is better or nominal is best.”
Smaller is Better creates an “upper specification limit,” such as having a target of zero for defects or rejected parts.
Larger is Better involves a “lower specification limit,” such as test scores — where the target is 100 percent.
Nominal is Best looks at the middle ground — a customer service rep needs to spend enough time on the phone to troubleshoot a problem, but not so long that they lose productivity.
The process aims to bring data and statistics into the mesh to help objectively identify errors and defects that will impact quality. It’s designed to fit a variety of business goals, allowing organizations to define objectives around specific industry needs.
Six Sigma methodologies
In practice, Six Sigma follows one of two sub-methodologies: DMAIC and DMADV:
Six Sigma DMAIC
- The Six Sigma DMAIC project methodology includes five phases, each represented as a letter in the DMAIC acronym. These include:
- Define the problem, the customer, the project requirements and the ultimate goals and expectations of the customer.
- Measure performance of the current process by establishing a data collection plan to determine defects and gather metrics.
- Analyze the process to establish root cause of variations and defects to identify issues with the current strategy that stand in the way of the end goal.
- Improve the process by eliminating the root causes of defects through innovative solutions.
- Control the new process to avoid falling into old habits and to ensure it stays on track.
Six Sigma DMADV
The Six Sigma DMADV, also known as the Design For Six Sigma (DFSS), includes five stages:
- Define realistic goals that suit the customer’s requirements or the business strategy.
- Measure and identify the customer’s critical to quality (CTQ) requirements and translate them into clear project goals.
- Analyze multiple options and alternatives for the customer along with the estimated total life cycle of the project.
- Design the process at a high level before moving onto a more detailed version that will become the prototype to identify errors and make modifications.
- Verify that the final iteration of the product or process is approved by all customers and clients — whether internal or external.
DMAIC vs. DMADV
The DMAIC and DMADV methodologies seem similar, but they have different use cases. The DMAIC methodology is designed for existing process or products that aren’t meeting customers’ needs or performing to standards. When a business needs to develop a product or process that doesn’t already exist or when a product has been optimized but still falls short, that’s when you want to use DMADV.
Each project needs to have a clear process of inputs and outputs.
Don’t go into the project with a pre-determined solution — that means you already know the fix.
Focus on reducing “operation variation” to make it easier for untrained operators.
Project needs to be approached with knowledge of variations in process inputs and how to control and eliminate defects.
Six Sigma implementation roles
A key concept in Six Sigma is the idea of establishing clear leadership roles and a hierarchy for quality management. The key roles for Six Sigma implementation include:
Executive leadership: This includes the CEO and other executive management who are charged with developing the vision for Six Sigma implementation. Leaders should also be responsible for encouraging new ideas and supplying the resources to act on innovation.
Champions: Typically found in upper management, Champions are the people responsible for acting on executive leadership’s vision and acting as mentors to black belts.
Master Black Belts: These workers spend all their time on Six Sigma methodology, either by guiding Black or Green Belts or helping Champions. They’re picked out by Champions and are tasked with ensuring consistency in the Six Sigma strategy.
Black Belts: Working below Master Black Belts, Black Belts are responsible for executing on the Six Sigma strategy and typically act as leaders for specific tasks.
Green Belts: Guided by Black Belts, Green Belts are new to the Six Sigma methodology and start learning it while maintaining their other job responsibilities.
You may find other belts — like white, yellow and orange. These are adopted by organizations to represent employees with some Six Sigma training, but aren’t involved in the overall project.
Six sigma certification and training
Certification and training are offered directly by businesses, with GE and Motorola paving the way by being the first to develop Six Sigma certification programs to verify proficiency in the Six Sigma methodology. After that, large companies and universities followed suit, offering their own version of a Six Sigma certification program.
However, there isn’t much oversight to what qualifies as Six Sigma certification and the criteria for Green Belt and Black Belt certification can vary. Certification programs are offered through businesses, universities, professional associations and for-profit training organizations. Some notable organizations include:
- American Society for Quality
- Dartmouth College
- Boston University
- Cornell University
- Motorola Solutions
- Purdue University
Some organizations offer Six Sigma accreditation — the IASSC offers Lean Six Sigma credentialing and accredited training providers. The Council for Six Sigma Certification also offers a list of accredited Six Sigma providers. Ultimately, when choosing a Six Sigma certification or training program, it’s important to do your research to ensure the organization, university or third-party vendor offers the right training for your needs and has the right qualifications.
Six Sigma criticisms Six Sigma is popular with large organizations, but it’s not as realistic for businesses with less than 500 employees. While certain aspects of the methodology can certainly apply to small businesses, it’s not as relevant. There are also cautions around a growing industry catering to Six Sigma certifications and training. You want to do your research to ensure any third party offering Six Sigma services are highly qualified to do so.
Other cautions point to Six Sigma’s focus on improving what already exists, while much of the business world is pivoting to innovating around new technology. So, while it might help uphold legacy systems and current products, it doesn’t leave much room for disrupting an industry or developing fresh products and services. Although, iSixSigma counters this claim, pointing out that it can help bring efficiency to process, reducing waste and cost, which allows businesses to find the funds for innovation