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Leadership and Management Quality

Leadership and Management Quality

Chapter 1


  1. The Concept of Leadership
    • Introduction to Leadership
  2. Leadership and Culture Change
    • Evolution of Product Quality to Management Quality
    • The Beginnings of the Concept
  3. Relationships of Total Quality and Management Quality
    • What is Quality?
    • Management Quality Defined
    • Management Quality is more than Meeting Requirements
    • What is Total Quality Management
    • Management Quality is Continued Improvement
    • Management Quality is Related to Speed
    • Management Quality leads to Cost Competitiveness
    • A Management Quality Organization is Wealth Creating

The Concept of Leadership

Introduction to Quality Leadership

A standard dictionary would define Leadership as follows: the capacity or ability to show the way by going in advance; the act of guiding a course, behavior or opinion of others by playing a principal or guiding role, especially in the creation of the excellent department or organization. The Malcom Baldrige leadership category examines senior executives personal leadership and involvement in creating and sustaining a customer focus along with clear and visible quality values. Also included is how the values are integrated into the companies management system and examiners are trained to look for the following evidences of personal leadership and visibility:

Competing in the future will require leaders and sets of managers who are adept at two kinds of management: organization maintenance management and organization development management One set of managers helps keep the organization together under the strains of continual change and challenge. The other set keeps the organization fit to exist through leading it into challenge and change. The terms leadership and excellence are therefore permanently intertwined.

Warren Bennis and Burt Namus in their book ‘Leaders: The Strategies for Taking Charge’ suggest that Empowerment– the ability to generate enthusiasm and vision, and communicate this to people around them– is critical to any leadership role. They draw the distinction between managers and leaders: ‘Managers do right things. Leaders do the right thing’. And leaders all have one thing in common- they achieve excellence through others.

So what is an ‘excellent department’ or organization? Just what does it look like?

In the seminal work on leadership ‘Managing For Excellence, by Bradford and Cohen, the ‘excellent department is described as follows : ‘It is a department that works close to its potential, instead of with inertia and resistance. Its members share a commitment to making the unit extraordinarily successful in accomplishing agreed-on organizational objectives. The focus is on quality, on genuinely collaborative team effort, on confronting differences about work without petty infighting, and on continual attention to the development of members as integral to achieving the task.

‘The concern for excellence in such an organization is not the exclusive property of the leader. Instead, all members share this concern and are prepared to do whatever is necessary in order to achieve expectations…In an excellent department, everyone worries about the whole system and takes initiative to see that problems are dealt with and objectives met…The concern for task accomplishment includes a strong emphasis on quality— of products, services, and members themselves.

‘There is a clarity about the departments and organizational goals which provides a clear focus on work. These goals are accepted by all and are used as a basis for making decisions and guiding actions. People are directly told about poor performance and are helped to improve while continued mediocre permanence leads to the search for a better job. Thus, there is no ‘deadwood’…In this type of organization, information is freely transmitted among members and the boss. Outstanding performers are encouraged to set even higher goals instead of being pulled down to the safe average. Finally, value is placed on diversity different views about how the goal is attained are allowed to surface and various approaches are encouraged, while conformity in thought in style is discouraged.’

Does all this sound a bit utopian? Although the portrait of Bradford and Cohen’s ‘excellent department’ is an idealized state, we have personally witnessed these conditions to some degree in occasional pockets of leadership, led by senior managers who do things in special ways. But what causes the discrepancy between actual and potential performance. The problem, according to the experts and verified by our own experiences, lies with the model of leadership used by most managers– a model appropriate to a previous era but now outdated and outmoded in eliciting the maximum performance in complex, contemporary organizations. This model is based upon the old command-and-control style where all power and authority flowed through the manger, who solved all the problems and called all the shots in the ‘Lone Ranger’ style of managing. In pointing out the problem with conventional management, we are not advocating that all the leadership development of the past decade be thrown out. Excellence demands budget and control systems, formalized ways to reward, prompt and appraise, as well as long-range planning and forecasting systems. The dilemma for the leader is not whether control needs to be exercised, but rather how to exercise control without weakening the motivation of those with energy, empowerment and enthusiasm. A new form of leadership is needed to move beyond mere ‘participative management ‘and into the realm of Leadership for Continuous Quality Improvement.

Leadership and Culture Change

Recent analysis of organizational culture change identified the fact that leadership is intertwined with culture formation, evolution, transformation, and reconstruction. Culture is created in the first place by the actions of leaders; it is also embedded and strengthened by leaders. When culture becomes dysfunctional, leadership is needed to help the group ‘unlearn’ some of its cultural assumptions and learn new ones. Schein believes that such transformations require what amounts to deliberate and conscious reconstruction of cultural elements, and it is this aspect of cultural dynamics that makes the leadership tasks both important and difficult to define.

Let us examine the roles of leadership more closely to see what culture change is needed at each stage of development. Kouzes and Posner have developed some original research work which studied the cultural behaviors of leaders who achieved exceptional results. Their studies of these high-achievers revealed a pattern showing that in 80% of the time they engaged in activities that fell into the following categories of behavior:

Challenge the process: leaders are pioneers who seek out new opportunities and are willing to change the status quo. They realize that the failure to change and adapt leads to mediocrity so they innovate and experiment in order to improve the organization.

Inspire a shared vision: leaders look to the future and beyond the horizon with dreams of what can and might be. They believe that if people work together, they can achieve the excellent organization that others just dream about. They are expressive and attract followers through genuine and skillful communication. And they are truthful- they do not deceive. They show others how common interests can be met through commitment to shared goals.

Enable others to act and succeed: leaders realize that they are rewarded for enabling others to achieve results. They can’t do it alone and they infuse people with enthusiasm and commitment. They are persuasive people who develop relationships based upon mutual trust and work towards collaborative goals. They stress participation in decision making and problem solving and they actively involve others in planning- allowing them to make decisions even if it means making mistakes. Reasonable risk taking is encouraged and much discretion is allowed. Finally, leaders empower others to become leaders in their own way and not just do as they are told. This requires an ability to manage and take responsibility for others.

Model their values and beliefs: Leaders are clear about their values and beliefs and have standards which are clear to all. They stand up for what they believe in and they communicate this to all their people. They keep things on course by behaving consistently with these values and model how they expect others to act. In other words, they ‘walk their talk’.

Persuade to new heights: Leaders persuade us that the impossible is within reach and the unimaginable is just around the corner. They break down projects into small achievable steps creating opportunities for small wins. They make it easier for others to achieve goals by focusing on these steps and identifying key priorities, often setting examples and behaving in ways consistent with their values and beliefs.

Encourage and support: leaders encourage people to achieve difficult goals and targets. They persist in their efforts by relating recognition to accomplishments and give frequent feedback. They let others know that their efforts are appreciated and go out of their way to say ‘thank you’ for a job well done. They communicate the successes and celebrate the wins. Finally, leaders nurture a team philosophy and a sustained effort by encouraging others to put even more into what they do.

Focus on the customer: Leaders have learned how to make the customer feel like a ‘king’ and keep them satisfied for ‘life’.

Evolution of Product Quality to Management Quality

“Quality is free. It’s not a gift, but it is free. What costs money are the unquality things–all the actions that involve not doing jobs right the first time.”

Philip B. Crosby

The beginnings of the concept of Management Quality (MQ) can be traced back to the early 1950’s Chapter 1 of J.M. Juran’s first Quality Control Handbook published in 1951, titled “The Economics of Quality.” It contained discussions of the various dimensions of Management Quality and the now famous analogy of “gold in the mine.” This need for a new approach was first met by the concept of cost of quality and the resultant “Gold in the Mine.” This was defined as the “total of avoidable costs of quality.” Behind the concept was the implication that costs resulting from defect were a gold mine in which profitable digging could be done. This concept became widely used to demonstrate that programs for defect reduction could be carried out at a good return on investment in staff manpower.

It was not given much attention, however, until early 1970s when COQ pioneer, Philip B. Crosby, found a way to systemize this concept in a corporate environment. The opening paragraph quoted above from Crosby’s book, Quality Is Free, (1979) expresses the understanding and direction that was given by ITT’s chairman, Harold S. Geneen, in 1969. Mr. Geneen, one of the early U.S…. CEOs to embrace MQ said “Quality is not only right, it is free. And it is not only free, it is the most profitable product line we have.”

Crosby continues in his second paragraph with “Quality is not only free, it is an honest-to-everything profit maker. Every penny you don’t spend on doing things wrong, over, or instead becomes half a penny right on the bottom line. In these days of ‘who knows what is going to happen to our business tomorrow,’ there aren’t many ways left to make a profit improvement. If management concentrates on making quality certain, you can probably increase your profits by an amount equal to 5 to 10 percent of your sales. That is a lot of money for free.” This was the beginning of the concept of understanding the Management Cycle as the driver for Management Quality.

An associate of mine worked with Crosby at ITT from 1969 until 1974. He was the Director of Manufacturing Operations for the Consumer Products Group in Europe. During the time of writing his book, Crosby was VP of Quality for ITT Corporation in New York. ITT employed 350,000 people with sales over $15 billion in both manufacturing and service organizations. Crosby’s early approach started with eliminating surprise non-conformance problems and reducing the cost of quality. He embarked on a deliberate strategy of establishing a cultural revolution–Quality would have to be recognized as a genuine “first among equals.”

The plan for ITT in Europe was to start with the Management Cycle followed by design of the product and redesign quality into every phase. By 1971, with Crosby’s guidance, ITT established Management Quality Circles in each operation. As the group continued to prosper, other consumer services were added. ITT purchased Sheraton Hotels and Avis Rent-A-Car. ITT found the same quality techniques used for product oriented companies worked for the service industry.

Crosby continued writing about quality and measurement based upon some of his earlier research started ten years earlier. “Quality is free, but no one is ever going to know it if there isn’t some sort of agreed-on system of measurement.” ITT’s controller, Frank Cheshire, stated that the Management Quality can’t be like the typical cost improvement program. His example was the study in England where one operator saved so much money going around the office after work and picking up dropped paper clips to use over again that the boss, after seeing the reported savings, hired another girl to go around in the morning dropping paper clips.

At ITT an accounting system started to evolve. The first step was to put together the fully loaded Management Quality System of indicators consisting of the following items in the Management Cycle (1) all efforts involved in doing work over, including clerical work; (2) all scrap; (3) warranty (including in-organization handling of returns); (4) after service warranty; (5) complaint handling; (6) inspection and test; and (7) other costs or errors such as wrong telephone messages, mixed up reservations, wrong prices on menus, etc.

It was during this time that the telephone business of ITT was expanding into the electronic switch and Europeans wanted a telephone and a television set. Forecast warranty cost were very high due to the increasing demand for service technicians by the government telephone offices which paid more. ITT had to improve quality and reduce both internal and external failure costs. In particular, the external failure cost was “eating them alive”. To survive they had to prevent defects from happening in the first place.

This called for continued evaluation and revision of quality cost categories: prevention costs to prevent defects in design and development, purchasing, labor and other aspects of beginning and creating a new product or service; appraisal costs while conducting inspections, tests and other planned evaluations used to determine whether products or services conform to their requirements; and failure costs associated with things that have been found not to conform or perform to the requirements, as well as the evaluation, disposition and consumer-affairs aspects of such failures.

Crosby went further with his drive towards “zero defects.” It had not yet become obvious that “zero variability of the Management Cycle components” was the target goal, not zero defects. Both Juran and Deming spoke out quite forcibly against “zero defects,” and Crosby’s influence was never to reach the same dimension that it has in the ‘Quality Is Free’ arena. Armand Fiegenbaum brought another dimension to Management Quality with his concept of the hidden plant, which was very similar to Juran’s ‘Gold in the Mine’ , which was an attempt to optimize the Management Cycle at the point of Control- which is the end point- instead of at the point of Vision- which is the beginning point. In any case, it was a start.

Relationships of Total Quality and Management Quality

What Is Quality?

A standard dictionary would define quality as follows: quality (kwal’ete) n., 1. any of the features that makes something what it is, characteristics, attribute; 2. basic nature, character, kind; 3. the degree of excellence which a thing possesses; 4. excellence, superiority; 5. [archaic] a) high social position; b) people of such position; 6. the property of a tone determined by its overtones, timbre.

Management Quality Defined

Management Quality has moved beyond product quality to an emphasis on Management Quality, or what is being called Total Innovative Management (TIM), TIM simply means leadership concerned about each facet of the company and interrelating them into a concerted, comprehensive corporate management policy of innovation.

Seiichiro Yagahi of Japan has developed an expert system which measures the 12 factors that determine management quality, which is ultimately sub-divided into 41 detailed factors.(See footnote #6). Of the twelve, there are 6 factors which are critical to the success of a company: the management cycle, business structure, management resources, management design, corporate culture, and management performance. The Yagahi consulting organization conducts an annual survey of the management practices of Japanese firms, and they published the results of the most recent survey, which represented input from about 200 firms. Graphs and charts show comparisons between the worst-scoring and best-scoring companies, and Yagahi uses creative graphics to illustrate his analytical technique and to summarize questionnaire responses.

From this comparison a number of principles can be derived: (a) management quality factors must be well-balanced, (b) the management cycle is the key to the management quality loop, and (c) the dynamics of total integrated management must be considered. Yagahi recommends using an annual questionnaire to first analyze management factors within a company, and then develop a multiphase action plan to restructure an organization for Management Quality.

In the context of Total Quality Management, Management Quality is the leading edge which goes far beyond the original definitions that the experts offered for product quality. For many years managers have been drilled on the definition given by Phil Crosby that “quality is conformance to customer requirements.” While this definition represented a breakthrough in thinking from the idea that quality was simply meeting some product reliability standard, it is now inadequate for defining Management Quality as the following aspects illustrate.

Management Quality is more than meeting customer requirements

Sometimes it is a good idea to surprise your customer, before he is surprised by one of your competitors. The following excerpt is from the Miller Consulting Group manual, “Design for Total Quality:” A scientist who was in charge of a research lab asked sales representatives from three different companies to come and present their test equipment. The Hitachi salesman came and offered to run a test on some of the customer’s actual materials on the very piece of equipment that would be delivered to him if he bought. He returned the test results the very next day. He made the sale and the equipment was delivered within the week. The other two salesmen were presented the challenge of matching the Hitachi service, but their system was not prepared to respond with this speed.

The customer did not have a requirement to see test results on the very piece of equipment they would purchase within 24 hours. This exceeded customer requirements. This was a surprise in the quality of service. By establishing this new level of service, the Hitachi salesman created a new requirement in the Management Cycle for the other suppliers to deal with. He who establishes a new requirement is likely to leave his competitors behind.

Management Quality is anticipating, conforming to and exceeding customer requirements.

It is important that all of our employees understand that the world is in dynamic motion. Nothing stands still. Requirements are constantly shifting. Our expectations for computers, cars, homes and personal services are dramatically different today than they were ten years ago. The same will be true ten years from now. It is management’s job to anticipate those requirements and design the Management Cycle to respond to future requirements.

What is Total Quality Management (a.k.a. TQC)?

“…a process-oriented way of thinking (which) develops strategies (to) assure continuous improvement involving people at all levels of the organizational hierarchy.”

Kaizen, pp.4-5

Management Quality is continued improvement beyond the product and process and consists of Total Integrated Management

Every system of work has its outputs. Outputs are products or services. The goal of the Management Cycle is to go beyond optimizing the quality of products and services; focusing on the product or service itself is inadequate. Outputs are the result of a set of processes, and quality must be built into the process. The process of hiring and training employees may determine the quality of service in a restaurant. Concentration on the service itself is too late in the flow of the processes. Management Quality must be built into the system beginning with the creation of a vision and strategies and extended to hiring process.

Similarly, quality of a product is often determined during the design process for that product. Is it designed in a way that reduces the probability of variances in the manufacturing process? Are the materials specified materials that reduce the variability in the manufacturing process? Has it been designed in a way that will meet the customer needs of tomorrow? Again, we can see that quality is largely a function of the process of work, as well as the Management Cycle consisting of: vision, strategies, planning, organizing, implementing and controlling

Job #1 is to continuously improve not only the product but the Management Cycle itself.

Management “organized ‘Kaizen’ activities involving everyone in a company–managers and workers–in a totally integrated effort toward improving performance at every level. This improved performance is directed toward satisfying such cross-functional goals as quality, cost, scheduling, manpower development, and new product development. It is assumed that these activities ultimately lead to increased customer satisfaction. (Kaizen, p.XXV).

There are many definitions of Total Quality Control (TQC). One of the best was presented by Dr. Noriaki Kano in 1987: TQC is “a scientific, systematic and company-wide way of managing a business that emphasizes expansion of sales and growth of the company through achievement of customer satisfaction in its products and services.” If we add the phrase, “in the speediest possible manner,” then the next definition is applicable.

Management Quality is related to speed

Every process can be measured both in terms of its output and in terms of the time required for the completion of the process or its cycle time. Cycle time is a critical element in quality. Our society has become conditioned to expect speed, whether in food service, car service or telephone service.

Speed has another effect. The faster a cycle time, the higher the learning rate, therefore, the more continuous the improvement. It has long been understood by educators that the more frequent the quizzes and the more feedback to the student, the greater the learning. This is also true in business. The faster the service is to the clients, the more opportunities to improve the process. The faster the process of product design, the more frequently that product can be redesigned to meet customer needs.

There is one more critical importance to speed. Speed and cost are directly related. The faster the cycle time, the less cost. Finally, the notion of cost and value must be considered if our understanding of quality is complete and forward thinking.

Management Quality leads to cost competitiveness.

The Malcolm Baldrige National Quality Award and the European Quality Award have specifically recognized cost improvements as an element of quality. In the past, it was assumed that the production of a higher quality product or service required additional expense. While that was true when quality improvement was a result of increased cost being inputted into the system, we now know that true quality products cost less due to decreased rejects, rework and other associated factors. The interesting paradox is that, while costing less, quality products can often be sold at a higher price. For example, a gold watch would necessarily cost more because of the high input cost. However, most customer requirements are met as a result of the process that transforms input to output. It is the system that produces quality.

When costs are driven out of the system, quality is improved. For example, Just-In-Time (JIT) inventory procedures and interruption-free manufacturing processes reduce the costs of goods in process. However, they also tend to improve quality. They improve quality when the entire system is designed to eliminate interruptions by placing responsibility at the first level, where employees take responsibility for quality, doing their jobs right the first time. JIT cannot succeed if an employee must check out the decision to reject a bad part with his manager, who in turn must check with quality control, etc.

The more checks, the less individual responsibility, the slower the system and the lower the quality. Thus the notion of going beyond product and into the integrated management quality areas are where the breakthroughs of the future will be found.

A Management Quality organization is wealth creating

Business fulfills a noble purpose in society. That social purpose is the creation of real wealth. Real wealth is created when a new product or new service is created. This creates new jobs and adds wealth to the aggregate of society.

Wealth building is a creative act. It is the result of human initiative and risk taking. Dr. Deming’s Fourteen Points include “drive out fear.” Why is it important to drive out fear? Fear is the nemesis of both quality and creativity. When one lives in an environment of control through fear, one does not experiment, initiate or create. One avoids risk.

The revolution against the bureaucratic communist states of Eastern Europe and the Soviet Union is a revolution against fear. These societies have not been wealth creating because their citizens have been controlled through fear and, therefore, avoided the risks of creativity. They have developed the habits of avoiding the very risks that are required for wealth creation.

Similarly, bureaucratic companies drive out quality and creativity, destroying the wealth-creating mechanism of human initiative and risk taking. A management quality organization builds wealth through the integration of human initiative within the management cycle.

24 Competencies of a Leader

Strategic Focus

  • Change Management
  • Technology Management and Application
  • Vision

Business Focus

  • Budgeting
  • Business Knowledge
  • Creativity and Innovation
  • Quality Centered
  • Planning and Education
  • Problem Solving and Decision Making

Workforce Focus

  • Coaching and Mentoring
  • Commitment to Diversity
  • Human Resource Management
  • Team Leadership

Interpersonal Focus

  • Conflict Resolution and Negotiation
  • Interpersonal Skills
  • Influencing
  • Oral Communication
  • Writing

Personal Focus

  • Action Orientation
  • Flexibility
  • Results Focus
  • Role Modeling
  • Time Management
  • Self Development
Strategy Associates Team Performance Skills

Interpersonal Skills

  • Using Team Members Abilities
  • Communicating Effectively
  • Resolving Team Conflict

Analytical Skills

  • Solving Problems
  • Reaching Consensus in Decision Making
  • Measuring Team Process

Management Skills

  • Creating a Shared Purpose
  • Planning for Team Results
  • Managing Team Meetings
  • Evaluating Team Performance