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MSQ 15,5

Managing change: a barrier to TQM implementation in service industries

Ziaul Huq
College of Business Administration, University of Nebraska at Omaha, Omaha, Nebraska, USA
Abstract
Purpose This paper focuses on six change management issues that address quality management practices in the service sector, difculty in taking a holistic approach to total quality management (TQM) implementation in the service environment, and the challenges of delivering organizational reform through TQM. Design/methodology/approach The study employs a quasi-qualitative case study methodology. Twenty service companies from health care, insurance, consulting, and banking and nancial services were studied over a period of two years to assess their change management practices for implementing TQM. Findings The ndings point to a less than total implementation of TQM in the studied companies. Among other issues, unrealistic expectations of employee commitment, absence of process focus, lack of organization around information ow, holes in education and training, and failure to create a continuous improvement culture contributed signicantly towards failure. More successful companies focused on avoiding these potholes with strong leadership that emphasized strategic and tactical planning. Research limitations/implications Based on one successful company, the study provides a guideline for successful TQM implementation in a service setting. However, with only one successful company, it would be difcult to generalize to other companies unless future research investigates other successful companies in similar industries, similar economic environment, and market conditions. Originality/value The value of the paper lies in the lessons learned that when real and actual approaches to change management follow academic models and techniques of change management, the ability to develop and implement organization-wide change progresses more smoothly. Keywords Total quality management, Change management, Service industries, Process management Paper type General review

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Managing Service Quality Vol. 15 No. 5, 2005 pp. 452-469 q Emerald Group Publishing Limited 0960-4529 DOI 10.1108/09604520510617301

Introduction Total quality management (TQM) is a change effort that aims at simultaneous improvement of multiple components of an organization. One of the major challenges associated with TQM implementation is navigation, i.e. guiding the change journey as detailed in the implementation procedure. In most cases, TQM is implemented as a means to achieve improved business performance targets and help build human performance in an organization. The promise of dramatic improvements in business performance lured hundreds, possibly thousands, of TQM efforts and many have failed. In recent years, papers have started to appear in media and trade journals replete with failure stories (e.g. Butz, 1995; Shin et al., 1998, Vinzant and Vinzant, 1996). While there are many success stories, majority of the TQM adopters report marginal or no tangible improvement in productivity, competitiveness, or nancial returns.

Various reasons have been given for their failure, majority of the cited reasons boil down to managements inability to implement a total system (Boerstler et al., 1996; Brannan, 1998; Carman et al., 1996; Lewis and Lamprey, 1992; Shin et al., 1998; Shortell et al., 1995; Whalen and Rahim, 1994; Zabada et al., 1998). TQM implementation requires changes in structure, system, and process as a necessary precondition to achieve improved business performance and changes in employee behavior. For service operations, it is even more difcult to implement it because of its preoccupation with internal performance dimensions that cannot keep-up with the constantly changing perceptions and preferences of the customers. As opposed to manufacturing rms where companies can protect themselves from the unreasonable or capricious demands of the customers, service companies cannot musk their operation from their customers because of the marketplace choices available to them. There are evidences from literature (Choi and Behling, 1997; Scharitzer and Korunka, 2000) that many service managers prefer a developmental orientation in TQM adoption. These managers regarded TQM primarily as a tool for growing the rms business, not as a strategic and tactical instrument that permeates every segment of the company. In some service companies, where TQM was presented as a packaged formula (Huq, 1995), signicant problems in organizational effectiveness emerged simply for the reason that the business was in a mode of change. Many service operations are applying the TQM concepts selectively (Huq and Stolen, 1998) and are not as committed as manufacturing companies to apply the full range of TQM procedures. Even within manufacturing companies, non-manufacturing operations such as sales, marketing, accounting, and other intangible service departments regard the TQM concepts as marginally relevant to their activities. In service operations managers are inuenced by strategies to add value to customer service processes, and many fail to see how TQM addresses this issue. Although, TQM is preoccupied with internal excellence, it translates into better external performance because the whole principle is based on customer satisfaction. Quality in service operation means making the service experience easy, useful, complete, and even fun. Many service managers fail to see that the principles of TQM can create an environment that addresses the needs and aspirations of their customers. Companies that failed to overcome these problems suffered poor interdepartmental relations (Doyle, 1992). They appeared to focus more on competition within the enterprise than on competition in the marketplace. There is very little empirical research that focuses specically on quality management practices in the service sector, despite its prevalence in the descriptive literature. As was the case with material requirements planning (MRP) and just in time (JIT), it would seem that years of extensive TQM coverage have all failed to overcome the American entrepreneurs innate optimism that hidden within any complex, demanding approach to quality improvement like TQM lies a relatively quick, inexpensive, and easy solution to their business problems. The questions thus arise: can implementation of TQM in a service setting lead to fundamental changes the organizations structure, culture, and management processes; What are the factors that limit such pervasive changes in a service setting; Is it too focused on the internal process that external results are ignored; or what change management issues are important for delivering organizational reform in a service setting?

Managing change

453

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454

Research questions This paper examines the strengths and weaknesses of existing TQM programs in 20 service companies and looks for potential strategies for its successful implementation. The paper does not attempt to test any hypothesis to explain the impact of organizational interventions like TQM because we have not conducted any experiment with the studied organizations, nor does it attempt to explain the nancial loss/gain observed after TQM implementation. There are numerous evidences that successful TQM implementation were not followed by improved nancial performance (Harari, 1993; Sterman et al., 1997) because nancial performance is also tied with competitor actions, environment, technology, and nancial markets. This research focuses on six change management issues (Choi and Behling, 1997; Black and Porter, 1996; Flynn et al., 1994; Hall, 1999; Moosbruker and Loftin, 1998) that address quality management practices in the service sector, difculty in taking a holistic approach to TQM implementation in the service environment, and the challenges of delivering organizational reform through TQM. TQM practices represent a change from the way things were done in the past. Successful implementation of these practices means making them a permanent part of how things are to be done in the service settings. Most changes in organizations have a social component because the change usually involves people, and making the policies, procedure, and practices people friendly is the key to success (Sebastianelli and Tamimi, 2003; Huq and Martin, 2001; Vermeulen, 1997) in a service setting. Management must become cognizant and accordingly, plan for the social challenges that will arise from proposed change initiatives. Based on six change management issues the paper summarizes the current state-of-affairs in TQM implementation at 20 service companies in an effort to develop approaches that facilitate, integrate, and enhance the management tools needed to improve TQM programs. The six change management issues are leadership, implementation of change and control, barriers to change, communications, people culture factor, and change review. The following is a description of the six change management issues used to evaluate the TQM programs at these companies: Successful change requires a large commitment from top management, whether the change is occurring in a single department or in the entire organization. Leadership sets the stage for successful implementation and issues like how top-management buy-in was obtained, who is leading the change efforts, whether a solid business case was developed for the change, why change was needed, risks associated with the change determine the viability of the change project. In implementation of change and control hierarchy of decisions, dissemination of the change concepts, time scales and major checkpoints of the project, progress review, interventions to overcome obstacles, etc. are the issues of importance. Next comes, how the company has removed the barriers to change; by barrier we mean barriers to reaching consensus, barriers to learning, barriers to employee motivation, operational risks, etc. Need for communication is of paramount importance in any such project, company has to obtain support from employees, suppliers, and customers, develop end user documentation and technical manuals, determine the training needs of the employees involved, and develop a single point of contact for all employees. The fth change management issue is the people culture factor; overcoming cultural obstacles can be a challenge in many companies, in many cases a contingency plan is needed. Finally, there has to be periodic change reviews, company has to ask whether

proper steps were followed, an effective control system was used, all types of risks were managed, communications was effective, documentation was produced, and agreed deliverable benets were realized. Table I provides a summary of these change management dimensions.

Managing change

Dimension label (1) Leadership issues

Sample answers to t description Low score: Top management is relying on middle management for guidance. They have agreed to TQM forced by necessity High score: The executive suite is leading the change. Top management is making an effort to stay ahead of the market. They are guiding design, planning, controlling, and dissemination of the TQM initiative Low score: TQM is being implemented in a haphazard manner, majority felt that TQM is not relevant to their situation, many felt that their jobs are threatened High score: Checklist was prepared to identify the barriers, a hierarchy was established to facilitate decision making, teams were given specic responsibilities, and detailed time phased project outline was developed along with contingency plans Low score: No attempt was made to identify the barriers to change, no contingency plan to deal with employee resistance High score: Barriers to reaching consensus, barriers to learning, barriers to motivation, and barriers to operational success were identied. A cross-functional proactive approach was used to address each of these individually Low score: Employees were informed on an ad-hoc basis, no single point of contact was provided, use of media/portal etc. was minimal High score: High use of user manuals, technical documentations, media, and corporate portal to disseminate the TQM ideas. An effective feedback/suggestion system was used Low score: Failure to create a sense of TQM/CQI urgency among employees, lack of shared leadership, and inadequate rewards and incentives High score: Employees were empowered, they shared leadership, there was a concerted effort to remove barriers to reach consensus, use of problem solving tools, a reward system based on objective criteria Low score: No distinction is made between strategic, tactical, and control issues resulting in haphazard or no change review, absence of any measure of critical success factors High score: All strategic, tactical, and control issues relating to TQM were dened, objective measurement criteria was used to monitor processes and outcomes, progress reviews were well documented

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(2) Implementation of change and control

(3) Barriers to change

(4) Communications

(5) People culture factor

(6) Change review

Table I. Questionnaire response formats and sample items change management principles

MSQ 15,5

456

The purposes of this study are multiple: (1) to investigate six change management principles based on a quasi-qualitative study of 20 service companies that attempted TQM; (2) to determine which of these six principles have the most profound impact on moving toward successful versus failed TQM implementation; and (3) to recommend a managerial perspective and a course of action that enhances successful implementation of TQM. There are a number of implicit assumptions underlying the statement of purposes for this study. First, by successful implementation of TQM we do not mean success of the business unit in terms of market share, protability, or customer satisfaction. There are examples of Malcolm Baldridge winners that eventually went bankrupt (Sterman et al., 1997), thereby, suggesting that implementation of TQM is more complex than rst thought. Second, implementing TQM practices represents a complex, continuous change process, not a change program, and there needs to be measurement on the progress of continuous change processes. The perspective taken in this study is that the ability to move toward successful implementation of TQM must incorporate management of change (Kano, 1993; McNabb and Sepic, 1995). The six change management principles represent the measurement criteria in this study, but they are not the conclusive measurement set for successful implementation. The nal implicit assumption is that the identication of barriers or obstacles to successful implementation is important in its own right. By identifying these barriers, service company management can increase their understanding of implementation failure and the subsequent removal of these barriers can lead to the possibility of successful implementation. Thus, any company that was rated as high performing was evaluated as moving toward successful implementation of TQM practices. Methodology and data collection This study employs a quasi-qualitative case study methodology. The study draws heavily on the qualitative evaluation of the state of TQM implementation in these companies. The use of qualitative research techniques is appropriate (Lincoln and Guba, 1985) for gaining information from those involved in TQM implementation. This approach gives the service company employees an opportunity to candidly respond to inquiries regarding their experiences. Out of the 20 studied companies ten are from health care, two each from insurance and consulting, and the rest are from banking and nancial services. The study was carried out over a period of two years. Groups of executive MBA students interviewed key TQM personnel in each company. The team members were familiar with TQM, and each team consisted of at least one member who actually worked in a managerial position within the selected company. Each team interviewed 3-4 key personnel directly involved with TQM planning and implementation in each of the companies. Each respondent was visited 1-4 times by the teams over the period of a semester and was interviewed by all members of the student group in one session. An open-ended questionnaire was developed as the format to be used in the (Table I) interview of company respondents regarding the six change management dimensions. If verbal responses were deemed inadequate, students left the question with the respondent for a written answer to be collected at a later date. Each questionnaire also

contained self-report information regarding the respondents degree of knowledge and involvement in the companys TQM process. The questionnaire did not contain Likert type scale categories as the interviews were direct and extensive. Finally, each team was required to prepare a 50 page case study on the companys TQM implementation process. Likert scores were assigned later based on a detailed analysis of the ndings. A sound qualitative study must satisfy four constructs: establishing the truth value of a qualitative study, its applicability, consistency, and neutrality (Lincoln and Guba, 1985). Truth value refers to the researchers ability to adequately and credibly reconstruct the respondents reality or meaning of a situation. Lincoln and Guba (1985) stressed the need to be sure that the ndings are reective of the subjects and the inquiry itself rather than the creation of the researchers biases or prejudices. Various strategies for controlling bias in data interpretation were included in this study. This was achieved by: . The principal researchers interpretation of the data was checked by the graduate teams four members. . The reports were subjected to informant checking in which informants were allowed to review the case study and its evaluation process. . The 50 page case study report (for each company) created an in-depth description enabling other readers to draw their own conclusions about the transferability of the ndings to their own setting. . The data were checked and rechecked by the respective informants and the principle researcher. The questionnaire was eld tested through a pilot study before allowing the student teams to administer it to the study companies. Finally, the principal researcher conducted an audit of the data collection and analytical procedure via the teams 50 page case study. All of these helped to conrm that the data themselves were objectively interpreted (e.g. Marshall and Rossman, 1995). The three criteria of credibility, ttingness and transferability, and dependability have been adequately met in this study and consequently, the fourth factor for establishing rigor in qualitative research has been met. The data analysis technique draws heavily on reporting qualitative interview information and the use of non-parametric analysis procedure as the distribution of the scaled observations on the change management dimensions were not expected to follow a normal distribution (Conover, 1980). An average score on each of the six dimensions was used as a representative performance indicator and coefcient of variation (CV) was used as a general measure of standardized dispersion on change management performance on each dimension. The CV is given by: CV St: Deviation of dimension scores Mean dimension scores

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A high average score with a low CV on a particular dimension is used as an indicator of excellent change management performance. On the other hand, if the average is relatively high, but with a high CV, then it is inferred that the performance on that dimension is disparate in the studied companies. A low average and a low CV are the indicators of consistently poor performance on a selected change management dimension in the studied companies.

MSQ 15,5

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Study results Table II presents the quantitative analysis of the ndings; however, the quasi-qualitative feature of this study provide some degree of quantitative assessment of the results on the six change management dimension, in addition, the qualitative case study reports provide some in-depth interpretation of these results. The numbers in the table reect signicant disparity in performance in all six dimensions. One may note the performances on implementation of change and control, barriers to change, and people culture factor are quite poor. The high coefcient of variation for implementation of change and control and barriers to change indicate widely varying performance among the studied companies. The performance on people culture factor is consistently low as indicated by the low average score and the low coefcient of variation. On other dimensions, the performance was average. Only one company, a hospital, scored high on all dimensions of change management. The following are the summarized comments on the performance indicators: On leadership issues, performances of the studied companies were better than any other change management dimension. The average score came out to be 4.6 (on a scale of 1-7) with low coefcient of variation (16 percent). In ve companies the executive suite was leading the change, in rest of the companies the change efforts were being carried out by middle management. In a small number of companies, the middle management was facing difculty in obtaining management buy-in although they had a clear mandate from top management. In several cases middle management failed to gain the much needed political support of the employees. Only in a small number of cases, special management structures (teams, measurement systems, etc.) were created to support the change efforts. In the case of most hospitals, physician indifference to TQM was a major obstacle, and given that physicians occupy the top leadership positions in a hospital middle management had a hard time in disseminating the TQM concepts, other similar studies support this (Carman et al., 1996; Lewis and Lamprey, 1992; Weiner et al., 1997; Zabada et al., 1998) nding. Only two companies were rated as high performers in the implementation of change and control, one of them is a hospital and the other is a consulting company. In both cases planning and implementation proceeded in a systematic manner, at the very outset of the project a checklist was prepared to identify the barriers, a hierarchy was established to facilitate decision making, teams were given specic responsibilities, and a detailed time phased project outline was developed along with contingency plans. The average score on this dimension is 3.2, but it reduces to 2.5 if the best two

Average score Change management dimensions Leadership issues Impl. of change and control Barrier to change Communications People culture factor Change review (Likert scale) 4.60 3.20 3.10 3.83 2.55 3.90

No. of companies in category High Medium Low (6-7) (4-5) (1-3) 5 2 2 6 1 6 11 10 9 12 8 11 4 8 9 2 11 3

CV as a percent of mean 16.3 36.0 33.0 27.4 18.6 23.8

Table II. Study results and analysis

are deleted; the high CV (36 percent) reect this wide variation. Only a small number of companies adopted a process-focused approach for implementing TQM they dened the relationships between core processes (CP) and key enabling processes (KEP), so that tasks and their relationship between processes can be improved. In cases where the processes were reengineered by the process teams, it worked better than the situation where process improvement was attempted without making any process changes. Except one hospital, most of the studied companies were yet to develop measures of cost of quality. Knowledge of the costs of quality is important because it can inuence employee behavior towards the process. Many lacked focus and detailed implementation planning. Most had physical limitations on the number of activities that could be planned, managed, and executed. Some of the poor performers among the studied companies had the tendency to do too many things too quickly. Performance on barrier to change dimension ranged from average to low, with only two companies (a consulting company and a hospital) scoring high. The average score (3.10) and high coefcient of variation (33 percent) reect this. Activities to remove barriers for consensus encompasses a wide range of activities including leadership, decision-making tools, and other tools or tactics to restructure culture and/or to re-motivate employees to the TQM paradigm. Companies that organized its activities around information ow, and used consensus building tools, i.e. criteria rating forms, pro/con charts, list reduction techniques, weighted voting, and nominal group techniques, fared well on this dimension. Some failed to create a sense of urgency among their employees for adopting a TQM culture. Others failed to share leadership roles across the major company constituents or develop rewards and incentives related to TQM criteria. The study results make it clear that the implementation framework needs to address issues such as barriers to TQM culture, vested interests in the existing system, and consensus on issues and problems. Many did not have rewards and incentives (group, prot sharing, gain sharing) based on factual information related to objective criteria. This dimension communications involves dissemination of the principles of TQM and its importance for the company. More successful companies created awareness through development of information systems, iers, bulletins, notices, and, of course, through education and training. The high performers in this category provided a single point of contact for their employees through the company intranet, and in case of absence of an intranet through a project champion, they also developed project user manuals and technical documentations. Performance on this dimension was average (3.83), but some low performers caused the coefcient of variation (27 percent) to be high. Consistent with Clinton et al. (1994) the study indicates that employees require training in three basic areas: (1) instruction in the philosophy and principles of TQM; (2) specic skills training such as the use of statistical process control; and (3) interpersonal skill training to improve problem-solving abilities appropriate for service environments. Newall and Dale (1990) have reported that poor education and training present a major obstacle in the development and implementation of a quality endeavor. More successful companies in the study had ongoing education and training programs, and empowered employees to the extent of shared leadership. In most cases management

Managing change

459

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460

had expressed their belief in the need for empowerment, but expected that it would evolve naturally through the involvement of employees in teams. This has not happened for two reasons. First, there were a limited number of teams with limited membership in most companies. Owing to the types of problems initially studied, management level personnel were predominantly selected as team members. Second, many employees felt that by implementing TQM, they were jeopardizing their continued employment and that management was implementing TQM merely to reduce costs so that more could be done with less employees. TQM practices represent a change from the way things were done in the past. If the companys culture refuses to accept the changes required by TQM usage, then these initiatives will fail regardless of the desires and efforts of top management. Successful implementation of these practices require making them a permanent part of how things are to be done in the company. Only one company scored high on this dimension, the average for the dimension was only 2.55 with a CV of 18 percent. Many companies scored quite poorly on this dimension, and the low CV indicates low performance across the studied companies. That means employees in these companies were not sure of the effectiveness of TQM, and they did not trust management. Changing the culture can only be done when employees learn new sets of behaviors (McNabb and Sepic, 1995; Thompson and Luthans, 1990). That did not happen in a majority of the cases. TQM adopters need to create a working culture in which employees can utilize TQM practices more effectively (Kano, 1993; McNabb and Sepic, 1995). Schein (1992) classies organizational culture on three levels: (1) artifacts; (2) values and beliefs; and (3) underlying assumptions. It is the latter level that serves as the fundamental denition of culture in this study. A key point in organizational culture change is that if inadequate emphasis is placed on employee involvement or their needs and aspirations regarding change initiatives, the change attempt is ultimately destined to be unsuccessful. Change review measured whether the studied companies had followed the proper documentation procedures, had developed measurable critical success factors, and had a system to ascertain whether the deliverable benets were realized at the appropriate times. More successful companies had a systematic process to identify the strategic, tactical, and control issues in its TQM implementation, and had developed the associated metrics to nd the level of its success. Performance was reasonably good at the more successful companies, with majority falling in the average category. The average score for this dimension was 3.90 with a CV of 23 percent. Some low performers did not make an assessment as to how the new system works across functional boundaries, and some did not have a contingency plan for any unforeseen obstacles. Discussion of the results The qualitative and quantitative results of our study indicate that all too often, service companies that adopt TQM attempt to identify concepts that apply only to service organizations, looking for the short cut to success without investing the time and costs associated with full-edged TQM. The root problems with this myopic view

appear to be twofold: insisting on viewing TQM from a limited, industry specic perspective rather than a generic perspective; and overvaluing past experience and success corporate and individual so that they take precedence over desired TQM behavior. As a result, many of the key precepts and demands of TQM, and their inherent benets, are rationalized away. It was also apparent there was resistance to change in many of the studied organizations. The propensity to resistance was expressed through resentment about managements approach, doubts and uncertainty, and fear that employees may be working their way out of their jobs. Some mid-level managers also resented the increased responsibility, and felt guilty that they may survive while others may lose their jobs. They also complained that the communications of the intended changes in the organization was not as adequate as it should have been. In many cases the top management failed to provide the resources to assist all levels of personnel to deal constructively with change, i.e. time management, stress reduction/relaxation, family welfare programs, tness, etc. While major components of empowerment have been vigorously pursued by many of the studied companies, the lack of cultural transformation within the company precluded full empowerment. Commitment of resources to a long-term process like TQM implementation is especially challenging during times of company downsizing and cost cutting. It is difcult to garner employee commitment to an organizations TQM plan when they feel that a leaner system threatens their job. Furthermore, hospitals are facing a new challenge. There is a shift in health care from a focus on disease to a focus on wellness and prevention. Mastering such change, along with TQM, requires a great deal of effort on the part of the employee who may already be feeling stressed. As a result, TQM performance in these service companies (hospitals) has been less than ideal. For proper implementation and control team building is of supreme importance. Teams not only bridge the gap between top management and the lower echelons of the workforce structure, they also help create employee ownership of the project. Most of the studied companies had employed at least three types of teams that ranged from management teams to functional/process teams to problem-solving teams. Teams were more successful in companies of smaller size with higher levels of education, two consulting companies fall in this category where the 85-90 percent of the employees had a college degree. In larger companies, i.e. insurance and large hospitals, it was more challenging to involve the staff personnel. Measures of cost of quality and causes of quality variation are two problem areas for most of the studied companies. They still face serious difculty dening these aspects of TQM. In a service operation a product leaves the system immediately after it is produced. Therefore, it is quite difcult to appraise the product and quality problems become evident only after a customer complains. In addition, since all service operations focus on human interaction and process, management can easily overlook systemic problems and blame the workers when something goes wrong. Although costs of quality do not appear to be change management variables on the surface, knowledge of the costs involved can alter the employees behavior towards the change initiative. When, for example, service providing teams realize that a complaint may not only mean a lost customer, but could also mean a lawsuit resulting in eventual loss of market share (external failure cost), they tend to become more cautious.

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Diminished attention to key contenders in the company power structure, lack of strategic planning, failure to create a sense of TQM urgency among employees, lack of shared leadership, and inadequate rewards and incentives were among the cultural barriers for successful implementation. Standardization of work methods and established procedures, clear job expectations, and a better understanding of the system, its components, their interactions, and individual roles in quality improvement played a vital role for success/failure of TQM in the studied companies. Satisfaction of internal customers surfaced as a key variable for program success. In the case of hospitals, physicians played a key role as internal customers and leaders of the TQM implementation protocol. In many cases, the top management failed to provide the resources to assist all levels of personnel to deal constructively with change, i.e. time management, stress reduction/relaxation, family welfare programs, tness, etc. In the case of at least ve companies, after an initial success of their TQM efforts, the program was abandoned because the new management did not believe in it or wanted to do something else that set them apart from the previous management. The contribution of this study is that it investigates the specic relationships of six change management dimensions affecting the process and the employees at the studied companies. The overall ndings from the non-parametric results indicates that about one fourth of the 20 companies was categorized as highly successful (Likert score 6-7) in terms of leadership issues, communications, and change review. Their performance in other dimensions is at best marginal. Only one companys performance was rated as highly successful across all dimensions. The remaining companies were categorized as low to medium in achieving successful implementation of their TQM change initiatives. The quantitative data at six of the unsuccessful companies indicate that some managers were experiencing disappointment because their hopes were too high. This was the result of unrealistic expectations they had regarding employee participation. Some managers in three companies viewed TQM as just another passing fad that diverted the employee efforts from more traditional and productive uses. The companies in question are hospitals where nursing and care process managers had little management background. They were more concerned with the technical aspects of customer service. Hospitals that failed to overcome this problem suffered poor interdepartmental relations. These managers were expecting fast results as opposed to what it took some Japanese companies over 30 years to achieve (Doyle, 1992). A shrinking market in the cases of three companies triggered downsizing in all of the functional areas. Corporate slogans, such as employee empowerment and creation of an atmosphere of trust and cooperation, had little value to the employees in these companies. While many were looking for jobs elsewhere, these companies were soliciting their cooperation and involvement in launching the TQM initiative. Many TQM features seemed confusing and threatening to employees, thus, enhancing their stress and declining motivation to participate. These companies were in a crisis situation, and they failed to use the crisis to their advantage by implementing a recovery program such as TQM. Additionally, education and training were insufcient in eight of the twenty studied companies. Staff-level education had been limited to one to three hour introductory sessions; however, this education and orientation to TQM was only given to few staff

members on teams. In the case of hospitals (except one hospital), physician involvement on teams was also minimal, except those who served on the medical executive committees. Physician education on TQM was limited to these team members only. A model of success The only company where TQM was successful across all change management dimensions was a teaching hospital. The successful hospital used TQM as a strategic tool to develop its distinctive competencies, as opposed to hospitals that were forced to adopt it because their customers wanted it or healthcare insurers or competition forced it on them. The managers and the physicians in this hospital considered TQM primarily as a strategic tool for improving quality and price competitiveness of the business. They were fully aware of the inter-relatedness among different TQM activities. The managers of this hospital focused on the future with many of their decisions not only improving the current performance, but also better positioning the hospital for future competition. Unlike other hospitals that adopted TQM as a defensive strategy but lacked the commitment needed to make it successful, this hospital was committed to transforming the hospital as the best in the business. The leadership of the hospital that included both physicians and executives went through detailed planning before the program was launched. Once the framework for the overall strategy and guidelines for TQM were established, the task of integrating this new vision into the corporate culture began. Strategies for dening data requirements and information systems support were developed during the initial planning process, along with strategies for effectively dealing with the cultural barriers. At the very outset of the program, the implementation team was concerned with TQM leadership, vested interest in the existing system, internal competition, consensus on issues or problems, and recognition or reward for change. Only after detailed plans were developed to effectively deal with these problems did management look into other barriers such as education and training, denial of problems (we are already doing it right), and continuous improvement. After the strategic issues in TQM were resolved, the hospital proceeded to address the tactical and the control issues to get everyone involved. They launched a data-driven, decision-making process based on objective measurement criteria to monitor processes and outcomes. Seminars and group discussions were held to help employees better understand the existing systems and processes and individual roles in quality improvement. To keep the employees informed, the hospital provided a single point of contact through its intranet, where all meeting minutes and memos were posted. A comprehensive training program was launched in which rst the department heads and the directors were trained within a year. Next, all managers and supervisors were trained within a span of two years, and nally, all employees were trained within three years. Creation of cross-functional teams with the goals to ensure that jobs, systems, and roles in quality improvement were understood helped eliminate barriers within and among units. These cross-functional teams continuously evaluated systems and processes to ensure that they worked efciently and effectively to meet customer expectations. Creation of the cross-functional teams also helped in reengineering of several business and care processes that focused on formation of systems and procedures that were simple and user-friendly.

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This hospitals public relations department developed an internal communications plan that portrayed the employees as internal customers. This plan placed great emphasis on employee satisfaction and motivation and tried to address the well-being and developmental needs of the employees. Hospitals management recognized that empowerment meant respect for the employees as well as drawing upon everyones expertise, talents, and ideas. This hospital took the additional step to implement a comprehensive, cohesive interdisciplinary system that would support the identication and measurement of specic patient care processes. The result was the development and documentation of a critical path for each volume care process, e.g. coronary artery bypass surgery, that maps out treatments, diagnostics, education, and discharge planning details. The key concept is to rapidly identify any variance, or deviation from the outlined care activities that may alter expected outcomes. Based on a need assessment, the critical path teams were staffed with surgeons, physicians, nurse specialists, pathologists, lab managers, representatives from the nance department, representatives from the human resources department, and other needed staff members. Physician involvement and direction from the beginning of TQM implementation was the key to success because the pathway was driven by the physicians order set. In the end, this hospital revealed an implementation pattern that adopted TQM as a strategic, developmental approach, not as a defensive strategy to control costs or meet customer specications. Consequently, everyone involved in TQM perceived this initiative as a passport to remain competitive and grow. Managerial implications The study of these service company TQM implementations from a change management perspective and the previously-mentioned model of success bring out several important managerial implications. One important implication is that when real and actual approaches to change management follow academic models and techniques of change management, the ability to develop and implement organization-wide change progresses more smoothly. The earlier (Choi and Behling, 1997; Moosbruker and Loftin, 1998) and the more recent models of organization-wide change management (Cummings and Worley, 2005; Haines et al., 2005) include six major components, that include: (1) market factors that cause the motivation for change (leadership); (2) creating a vision for the change (leadership); (3) planning, control, and managing the change transition; (4) identication of the barriers to change; (5) developing political support for the change by focusing on workforce culture and communication; and (6) effective change review so that the momentum for change is maintained (Cummings and Worley, 2005). As illustrated by these case studies, the quantitative scores on the change management dimensions indicate inadequate planning, communication, and leaderships inability to garner political support for the change initiative. In most of these companies there seemed to be little sense of urgency to change, especially among the employees in

the lower echelon of the company hierarchy. As the results indicated, without satisfactorily performing in all six change management dimensions the TQM efforts had no chance of achieving success and maintain the momentum for change. As was mentioned earlier, the preoccupation of TQM with internal processes does not make it an attractive choice for companies in a service setting, although most TQM principles can benet any company. The problem arises when TQM is used to increase sales and market share in the short term. When implemented properly, TQM can have a dramatic impact on performance and culture of an organization (Hackman and Wageman, 1995; Lawler et al., 1998). The failures in the studied companies can be attributed to failures in implementation, not to TQM theory and method. First of all, top management must put all its efforts into developing commitment to TQM through effective dialogue with the workforce as to why TQM should be adopted as a permanent solution to companys quality and management problems. The interim nature of the TQM implementation in most of the studied companies, and managements unwillingness to reveal discrepancies between current and future change states or to provide credible positive expectations for the change (Cummings and Worley, 2005) resulted in failed attempts to inculcate TQM in the company psyche. Second, managerial capabilities an essential requirement for successful TQM transformation must exist in all company units and subunits for the TQM seed to take root. These managerial capabilities include, among others, steering the company towards a cross-functional team-based organization, and arrangements within the organization that alter behavior towards system, processes, and people for successful implementation. Edmondson (2003) report that new managerial training take root only when the managers have the inclination, background, and the skill to absorb them. Among the studied companies, one hospital and a consulting company had these managerial capabilities, it is no wonder that these companies were relatively more successful compared to the other studied companies. Finally, market conditions in many service industries, where the basis of competition change rapidly, make TQM the wrong approach for achieving competitive advantages in the short term. Despite clear injunctions that TQM is not a quick x, and that its really signicant rewards are often years after adoption, many of the studied companies implemented TQM with visions of short-term success. When quick payback was not achieved, support for TQM dwindled. Another issue that seriously undermined the quality of service at these companies was their emphasis on the outcome, not on the process of services offered, for total quality both should be emphasized. As an organization moves forward with TQM implementation, the emphasis moves from defect detection to defect prevention. Ideally, once the source of the problem is identied, the system can be changed in such a way that it foolproofs itself to prevent the problem from reoccurring. Service industries, which are job shops, are limited in their ability to foolproof their operations. The manufacturing industry can automate many of its tasks, the opportunities are much fewer in service organizations. However, information technology today holds great promise for automation of many service company processes. Errors in information, whether they be on the patients chart, or failure to communicate necessary information to the patients insurance company, or processing of a claim at an insurance company could be reduced by establishing transaction information systems and management information systems, or better yet with an integrated

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465

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enterprise system. At the time of our survey, all of the studied companies, except two, had fragmented sub-optimal information systems that needed a major overhaul. All stakeholders in such change effort need to recognize that initially there may be an actual worsening in performance while employees go through start-up training and new processes are debugged. Perseverance, along with ongoing feedback exibility, and regular booster shots are needed to maintain the momentum (Haines et al., 2005). There is a need to conduct future annual reviews/audits to make sure the change is having the expected results, management and employees are comfortable with the change and recognize it as permanent, current documentation is available and being followed, training is available and current with change documentation (Williams, 2001). Negative ndings from these reviews/ audits will require management to be exible, and update or modify their original change plans and perhaps commit more budget and resources to booster the efforts of various stakeholders to the change effort (Haines et al., 2005). Finally, there is a need to plan for and celebrate successes that show progress (Haines et al., 2005; Williams, 2001), and successful implementation is enhanced by hiring, recognizing, rewarding, and promoting people who have acceptance of and are committed to the change vision (Haines et al., 2005). Conclusions This survey-based research investigated 20 TQM implementations in service settings to get a snapshot of the change management practices in the service industry. The results of the study appear to support, consistent with the results reported in the literature, the hypothesis that most obstacles to TQM can be linked to ineffective change management. Shifting to a TQM paradigm, requires a new administration perspective in which the company is viewed as an open system where participative management is emphasized, strategic leadership is advocated, and explicit focus on external and internal customers is mandated. The basic internal processes necessary for this paradigm shift includes: (1) changing organization structure in order to remove the barriers; (2) better implementation and control through hierarchical decision-making; (3) better communication through multiple media and information systems; and (4) empowering employees and/or creating cross-functional teams to take charge of their work operations in a manner that encourages continuous learning as well as empowerment and personal responsibility. The poor implementation in some of the studied companies can be attributed to viewing TQM not as a strategic imperative but as something that is forced on the company because others are doing it. Such follow the market mentality result in unplanned/hasty implementations. Service companies must realize that better implementations of foolproof processes may not necessarily lead to immediate customer delight, and improved cost performances may not lead to quick changes in customer perception. It is only through continuous improvements a company can consolidate its competitive position in the marketplace. In analyzing the ndings from this study, it is important to be cautious regarding the recommended lessons for change management. With only one successful company, it would be difcult to generalize to other companies unless future research

investigates other successful companies in similar industries, similar economic environment, and market conditions. This study emphasizes that empowerment of lower level employees is useless unless adequate training is provided. Problem-solving tools are ineffective unless employees understand the overall purpose of TQM; and the whole project is defeated if employees feel that they are working their way out of their jobs. Furthermore, companies should remain open to understanding their unique organizational culture and adopting essential aspects of successful implementation practices relevant to their culture. An off-the-shelf, one-size-ts-all implementation program is not applicable in all companies. There are many mediating contextual variables that can affect TQM implementation such as leadership style in the company, level of technology, and the competitive situation in the market, not to mention the differing degrees of emphasis placed on the six change management dimensions investigated in this study.
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Hall, J. (1999), Six principles for successful business change management, Management Services, April, pp. 1-5. Harari, O. (1993), Ten reasons why TQM doesnt work, Management Review, Vol. 82 No. 1, pp. 33-8. Huq, Z. (1995), A TQM evaluation framework for hospitals: observations from a study, International Journal of Quality and Reliability Management, Vol. 13 No. 6, pp. 59-76. Huq, Z. and Martin, T.N. (2001), Workforce cultural factors in TQM/CQI implementation in hospitals, Quality Management in Health Care, Vol. 9 No. 2, pp. 43-57. Huq, Z. and Stolen, J.D. (1998), Total quality management contrasts in manufacturing and service industries, International Journal of Quality and Reliability Management, Vol. 15 No. 2, pp. 138-61. Kano, N. (1993), A perspective on quality activities in American rms, California Management Review, Vol. 35 No. 3, pp. 12-31. Lawler, E.D., Mohrman, S.A. and Ledford, E. Jr (1998), Strategies for High Performance Organizations: Employee Involvement, TQM and Reengineering Programs in Fortune 1000 Corporations, Jossey-Bass, San Francisco, CA. Lewis, A. and Lamprey, J. (1992), Averting CQI failure: ve early warning signs, Health Care Strategic Management, Vol. 10 No. 7, pp. 9-12. Lincoln, Y. and Guba, E. (1985), Naturalistic Inquiry, Sage, Newbury Park, CA. McNabb, D.E. and Sepic, F.T. (1995), Culture, climate, and total quality management: Measuring readiness for change, Public Productivity & Management Review, Vol. 18 No. 4, pp. 369-82. Marshall, C. and Rossman, G.B. (1995), Designing Qualitative Research, 2nd ed., Sage, Thousand Oaks, CA. Moosbruker, J.B. and Loftin, R.D. (1998), Business process redesign and organizational development: enhancing success by removing the barriers, The Journal of Applied Behavioral Science, September, pp. 1-14. Newall, D. and Dale, B. (1990), The introduction and development of a quality improvement process: A study, International Journal of Production Research, Vol. 29 No. 9, pp. 1747-60. Scharitzer, D. and Korunka, C. (2000), New public management: evaluating the success of total quality management and change management interventions in public services from the employees and customers perspectives, Total Quality Management, Vol. 11 No. 7, pp. 941-50. Schein, E.H. (1992), Organizational Culture and Leadership, Jossey-Bass, San Francisco, CA. Sebastianelli, R. and Tamimi, N. (2003), Understanding the obstacles to TQM success, The Quality Management Journal, Vol. 10 No. 3, pp. 45-56. Shin, D., Kalinowski, J.G. and El-Enein, G.A. (1998), Critical implementation issues in total quality management, SAM Advanced Management Journal, Vol. 63 No. 1, pp. 10-14. Shortell, S.M., OBrien, J.L., Carman, J.M., Foster, R.W., Hughes, E.F.X., Boerstter, H. and OConnor, E.J. (1995), Assessing the impact of continuous quality improvement/total quality management: concept versus implementation, Health Services Research, Vol. 30 No. 2, pp. 377-90. Sterman, J.D., Repenning, N.P. and Konan, F. (1997), Unanticipated side effects of successful quality programs: exploring a paradox of organizational improvement, Management Science, Vol. 43, pp. 503-21. Thompson, K.R. and Luthans, F. (1990), Organizational culture: a behavioral perspective, in Schneider, B. (Ed.), Organizational Climate and Culture, Jossey-Bass, San Francisco, CA.

Vermeulen, W. (1997), Cultural change: crucial for the implementation of TQM, Training for Quality, Vol. 5 No. 1, pp. 40-7. Vinzant, J.C. and Vinzant, D.H. (1996), Strategic management and total quality-management: challenges and choices, Public Administration Quarterly, Vol. 20 No. 2, pp. 201-19. Whalen, M.J. and Rahim, M.A. (1994), Common barriers to implementation and development of a TQM process, Industrial Management, Vol. 36 No. 2, pp. 19-24. Weiner, B.J., Shortell, S.M. and Alexander, J. (1997), Promoting clinical involvement in hospital quality improvement efforts: the effects of top management, board, and physician leadership, Health Services Research, Vol. 32 No. 4, pp. 491-510. Williams, D. (2001), Mining the Middle Ground: Developing Mid-level Managers for Strategic Change, St Lucie Press, Delray Beach, FL. Zabada, C., Rives, P.A. and Munchus, G. (1998), Obstacles to the application of total quality management in health-care organizations, Total Quality Management, Vol. 9 No. 1, pp. 57-66. Further reading Lee, S.M., Luthans, F. and Hodgetts, R.M. (1992), Total quality management: implications for central and eastern Europe, Organizational Dynamics, Vol. 20 No. 4, pp. 42-55. Parasuraman, A., Berry, L.L. and Zeithaml, V. (1991), Understanding customer expectations of service, Sloan Management Review, Vol. 32 No. 3, pp. 39-48.

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