masoud a. azhashemi and samuel k.m. ho - achieving service excellence - a new japanese approach...

8/13/2019 Masoud a. Azhashemi and Samuel K.M. Ho - Achieving Service Excellence - A New Japanese Approach Versus T

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Introduction

In recent years top management of Japanese

companies and western world organisations

have realised that the productivity improve-

ment programmes, total quality control sys-

tems, and other operational measures are nolonger sufficient to improve bottom-line

performance. Many senior executives world-

wide are now focusing more on innovating

frameworks that can enhance quality of man-

agement practice and decision making as a

way of maximising corporate superiority and

business performance. Total integrated man-

agement (T IM) is a new Japanese approach

developed to examine and evaluate the quality

of the multiple management factors affecting

a company. T IM is introduced when a firm isconcerned about each facet of the organisa-

tion and interrelates them into a comprehen-

sive corporate management policy of innova-

tion and excellence (Azhashemi and Ho,

1996).

The UK/European model for Business

Excellence is a framework developed by top

European practitioners in order effectively to

measure and improve management standards

and corporate performance in any type of

organisation. It is based on the fundamentalconcepts of total quality management which

broadly concentrates on driving companies

towards a culture of continuous improvement

and customer satisfaction. The nine elements

of the model enable companies to assess their

management quality and business results with

a view to benchmark against standards and

business performance of leading companies or

best in class in order to identify and exploit

their strengths, recognise their own weakness-

es and apply improvement initiatives to elimi-nate them.

Total integrated manage ment

Japanese companies have long ago mastered

the concept that product quality is a single

factor in the complicated reality of manage-

ment. They are now more concerned with the

broader issue of total management quality and

the integration of the multiple factors that

comprise management quality. In the early

1990s the Japanese have embarked on a

dynamic new management practice that goes

beyond total quality control. It is a compre-

hensively innovated, integrated, and well

40

Managing Service Quality

Volume 9 Number 1 1999 pp. 4046

M CB Un iv ersi ty Press 0 96 0- 45 29

Techniques

Achiev ing serviceexcellence: a new

Japane se approachve rsus t he Europea nframework

M asoud A. Azhashemi and

Samuel K .M . H o

The authorsM asoud A. Azhashemi is Senior Lecturer in Operat ions

M anagement at t he Leicester Business School of De

M ontfo rt University, UK.

Samuel K.M . Ho serves as Edit or of t his journ al. He is

Professor of Strategic and Quality M anagement at the

International M anagement Centres, UK. He was the

Professor of Strat egy and Quali ty at Luto n Business Schoo l,

UK. At present he is visit ing at t he Hong Kong Baptist

University.

Keywords

European Foundation for Quality M anagement, Integration,

Japanese management styles, M anagement styles,

Service quality

Abstract

Presents the Japanese init iative of t otal int egrated man-

agement and identifi es the mult iple factors w hich can

infl uence management qualit y and business performance

in organ isations. Explores the UK/European m odel fo r

business excellence and t he process of self-assessment

that can be applied by organisations in all sectors to

improve their bu siness results and competit ive superiority.Compares the main features of the Japanese and the

European fram ewo rks and notes their differences togeth er

w ith t heir benefit s and possible dow nsides. Uses case

examples to demonstrate the application and th e implica-

tions of these init iatives to practising managers. Concludes

that f or organisations to be effective they should use the

dynamics of the int egrated business excellence too ls and

value the quality level of the m anagement pol icies and

strateg ies as key success factors.


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balanced corporate management style called

total integrated management.

As shown in Table I, the T IM framework

has a checklist containing 12 primary factors.

These factors are further divided into a mini-

mum of two and a maximum of five secondary

factors. Based on the annual survey carried

out by Yahagi Consultants (Yahagi, 1992)

among 200 Japanese companies it has been

found that of the 12 factors listed in Table I,

six are critical to the success of an effective

organisation. These are: management cycle,

business structure, management resources,

management design, corporate culture, and

management performance (Peters, 1994).

Figure 1 shows the interrelation between these

factors. It illustrates that the quality of man-

agement cycle affects the four factors of struc-

ture, resources, design and culture. In turn the

quality of these four affect management per-

formance.

Japanese experience shows that if the quali-

ty level of the management cycle is low, then

the six factors generate a passive feedback

loop in which management waits until poor

results within management performance force

reactionary feedback into the management

flow. On the other hand, if the quality level of

the management cycle is high, then the six

factors generate an excellent feed-forward

loop in which management perceives the

plans and strategies needed for the success of

each management factor, and then proactivelyformulates and implements them.

TIM implementation

The following actions should be taken when a

company wishes to institute total integrated

management. These are to:

Evaluate multiple management factors

quality levels.

41

Achieving service excellence

M asoud A. Azhashemi and Samuel K.M . Ho


Volume 9 Number 1 1999 4046

Table I Tw elve factors of management q uality

M anagem ent fact or Sub-fact or M anagem ent fact or Sub-fact or

1 Co rp o ra t e h ist o ry Past 7 M a na ge me nt Inputs

Present targets Markets

Fut ure Technologies

Products

2 Co rp o ra t e cl im a t e Core 8 Business structure Business fi elds

Clim ate Business m ix

Cult ure M arket stand ing

3 St r at eg ic a l li ances Objectives 9 M a na ge me nt Money

Coherence resources Mater ia ls

In format ionPeople

4 Cha nne ls Suppliers 1 0 M a na ge me nt System

Buyers design Organisation

Author i ty

Responsibility

5 M a n ag em e nt cycle Vision 1 1 M a na ge me nt Decision making

Strategy functions Interrelationships

Planning Qualit y

Control

Operations

6 En viro nm e nt Economic 1 2 M a na ge me nt Growth

Social performance Scale

Global St abil i t y

M arket share

2. Business Structure

3. M anagement Resources

4. M anagement Design

5. Corporate Climate

1. M anagement Cycle

6. M anagement Performance

Figure 1 Circulatory system of m anagement qualit y


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Formulate a corporate vision with a ten

year time span.

Formulate corporate strategies to realise

corporate vision.

Formulate corporate plans to link vision

and strategy to daily operations.

Restructure business mix, relocate man-

agement resources, and drastically reform

management organisation and responsibili-

ties, based on corporate vision, strategy,

and plan.

Innovate other management factors, such

as alliances, channels, and targets, to max-

imise the effectiveness of management

performance.

Case study 1 illustrates how the T IM concept

has been applied in a European service organ-isation.

Case study 1: TIM at Scandinavian air system

(1) M anagement cycle. Like many other successful

airlines, SAS has the vision of providing extra-

ordinary customer satisfaction. T his is support-

ed by sound strategic planning, effective control

and efficient operations.

(2) Business str ucture. In the airline business, one

seat on an aeroplane is much like any other. I t

is passenger service quality that makes the big

difference in the treatment by front-line

personnel. This includes situations on board,at the ticket counter, and at the baggage area.

The international airlines challenge is com-

plex. What has to be done to ensure the trav-

ellers complete satisfaction with his long

hours experience of flying 10,000m above sea

level at 800km/h.

(3) M anagement resources.Jan Carlzon, president

of SAS, said that SAS is not the aeroplane or

the airport gate, or the overhaul station. I t is

the contact between the employee and the

passenger. T he moments of truth occur

when the customer, consciously or uncon-

sciously, has a need and turns to an employee

or the physical facilities for a solution.

(4) M anagement design. In Scandinavian Air

System (SAS), each time an employee inter-

acts with a customer is noted as a moment of

truth. Carlzon estimated that some 50,000

moments of truth occur daily as SAS person-

nel interact face to face with customers.

(5) Corporate culture. T he moment of truth is

successful because the design of the physical

facilities anticipated those needs, and the

service plan provides anticipatory human

intervention. Above all, the corporate culture

takes into account the values, beliefs, customs,

and behaviour of passengers and employees.(6) M anagement performance. T he growth rate,

scale, stability, profits and market share of the

company have increased dramatically after the

transition.

The UK/Europe an m odel f or b usinessexcellence

The Business Excellence Model provides an

ideal framework against which any organisa-

tion or its component part can self-assess its

management quality, process performanceand business results and measure its progress

towards excellence. T he model is the gradual

outcome of the initiatives originally taken by

fourteen top companies (not academics) in

Europe, who were dedicated to promoting

total quality (T QM International Ltd, 1996).

They established the European Foundation

for Quality Management in Brussels in 1988,

and subsequently the Foundation launched

the European Quality Award (EQA) in 1992,

in order to assess companies in Europe that

demonstrate excellence in the management of

quality and continuous improvement.

The British Quality Foundation was

formed in 1992 to enhance performance and

competitive superiority of the UK organisa-

tions. T he Foundation subsequently launched

the UK Quality Awards in 1994, mainly to

accelerate the acceptance of quality as a strat-

egy for global competition and to stimulate

and assess the development of quality

improvement initiatives (Rae Tummala and

Tang, 1994).

Assessment model

The UK/European Quality Award assessment

model consists of nine elements for evalua-

tion. T he nine criteria is divided into two

categories, enablers and results as shown in

Figure 2 with relevant weightings.

The enablers are policies, resources, and

processes which transform inputs into out-

puts. The results are measures of the level of

output and outcome achieved by the organisa-tion (Ghobadian and Woo, 1996). These are

described in Table II.

The process of self-assessment

Any organisation aiming to achieve world

class status requires to take a close look at its

entire operations, processes and its customers,

and to compare itself with the best. Self-

assessment is one of the fastest growing meth-

ods used by organisations to measure their

standards and performance in order to achieve

world class rating. It is a regular and systemat-

ic self application of the measure inherent in

the UK/European model for business excel-

lence which is internationally acknowledged as

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a way of assessing and recognising corporate

excellence (Haykes, 1994).

Self-appraisal requires an organisation to

consider and assess for each of the nine ele-

ments of the model (F igure 2) , what do they

do, and what do they achieve. T he output of this

is identified strengths and areas for improve-

ment (together with a score). The company

then chooses improvement actions to exploit its

strengths and overcome its weaknesses.

Any organisation aiming to carry out a self-

assessment exercise needs to take the follow-

ing steps:

Plan and prepare for self-assessment.

Collect views, information and data on

where the company is now.

Identify the strengths and areas for further

improvement.

Identify the priority opportunities.

Develop and implement actions on these

opportunities.

Review and repeat.

The benefits of self-assessment

Self-appraisal for any organisation is:

An objective assessment against credible

and proven criteria.

An assessment based on evidence.

A continuous improvement process rather

than a single shot which gives a measure of

progress over time.

An opportunity to focus improvement

where it is most needed.

An opportunity to promote sharing of

good, effective approaches within the

organisation.

An opportunity to recognise both progress

and outstanding levels of achievement.

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Results50%

Enablers50%

PeopleManagement

9%

Policy andStrategy

8%

Resources9%

Leadership10%

Process14%

PeopleSatisfaction

9%

CustomerSatisfaction

20%

Impact onSociety

6%

BusinessResults

15 %

Figure 2 The UK/European m odel fo r business excellence

Table I I The enablers and result s criteria

Elem ent s Descript ion

1 Le ad ersh ip How the behavio ur and actions of executive teams and all other leaders inspire,

support an d prom ote a cultu re of business excellence as the best w ay to achieve

the organisations objectives

2 Po l icy and st r a t egy How the organisation f ormulates, deploys, reviews and t urns policy and strategy

into plans and actions

3 Pe op le m a n ag em e nt How the organisation releases the ful l potential of i ts people

4 Re so urce s How the o rganisation manages resources effectively and efficiently

5 Pro ce sse s How the organ isation ident ifi es, manages, review s and im proves its processes

6 Peop le sat i sf act i on What the organisation is achieving in relation to the satisfaction of i t s people

7 Cust om er sa ti sf act i on What the organisation is achieving in relation to the satisfaction of i t s externalcustomers

8 I m pa ct o n so ci et y What the organisation is achieving in satisfy ing the n eeds and t he expectations

of the commun ity at large

9 Business resul ts What the organisation is achieving in relation to i ts planned objectives and in

satisfy ing t he needs and expectations of everyone w ith an int erest or ot her stake

in the organisation


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An opportunity for the organisation to

compare itself with other companies and

identify world class approaches.

An opportunity to learn.

Some examples of the improvement initiatives

that can be introduced in each of the nineelements of the business excellence model are

shown in Figure 3.

Case Study 2 shows an example of the

successful application of the UK European

model for business excellence.

Case Study 2: Mortgage Express wins the 1996

Quality Award

Mortgage Express was formed in 1986 as a

subsidiary of T SB Bank and is now part of the

Lloyds TSB Group. The company differs from

traditional mortgage providers in that it has nobranch network and raises finance direct from

the money markets. T he boom in the UK

property market saw the company grow rapidly

between 1986 and 1990, when it attracted

50,000 customers and accumulated mortgage

assets of more than 3 billion. But bad debts led

to losses by the end of 1990, and in 1991 T SB

decided to wind up the company over the next

two or three years.

A new management team led by managing

director K eith Greenough, had been installed in

1991 to oversee the process. But along with

closing down the Sales and M arketing functionsand redeploying staff into managing payment

arrears, M ortgage Express embarked on its total

quality journey. To promote efficiencies focused

on customer service, all employees were trained

in the use of total quality tools and techniques,

processes were re-engineered and information

technology and management systems were

upgraded.

After conducting its first self assessment

against the business excellence model in

December 1992, the company focused oncontinuous service improvement that under-

pinned its policy of staying close to customers

and working closely with them to understand

and solve their payment problems.

Prompted by its 1993 self assessment,

Mortgage Express decided to make total quality

its driving force and involved all its people in

redefining the companys mission and values.

Called The Way Ahead, The Mortgage

Express mission was to be recognised as a top

quality company in pursuit of four strategic

goals (BQF, 1996):

(1) Maximising the long term value for thecompanys shareholders.

(2) Providing customers with a first class

service.

(3) Enabling all employees to achieve their best.

(4) Achieving a top quality rating through use

of the business excellence model.

Leadership and people management skills are

highly prized at Mortgage Express, and are

focused squarely on staff motivation and involve-

ment activities. Strong internal communications

form the backbone of the approach, with formal

communication exercises including monthly

team briefings and departmental communica-

tions meetings hosted by managers and attended

by directors.

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1.

Empowerment Communication Accessibil i ty Critical Incidents

3.

IIP Quality Circles Teamw ork Suggestion Schemes

5.

ISO 9000 Kaizen Quality Assurance Statistical Process

Control Business Process Re-engineering Benchmarking

7.

Surveys

9.

Quality Costs Balanced Scorecard Benchmarking

2.

V is ion M ission Values Policy Deployment Hoshin Planning

6.

Surveys Interv iews Chartermark

4.

J IT Information Technology Quality Costing

8.

ISO 14000 Health & Safety

Figure 3 Example of improvement init iatives


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Each member of the Mortgage Express staffhas a guaranteed minimum of five days every

year for training and development. Despite itsbusiness turnaround, the company does notbelieve that it (or any company) can guarantee a

long term career to its people. Rather, it pro-motes an employability concept which gives

the company a responsibility to encourage,enable, facilitate, resource and recognise con-tinuous development. For their part, employ-

ees are asked to be flexible, seek out opportu-nities to contribute, take charge of their own

development, learning continuously and to havefun.

Self assessments against the business excel-

lence model (known internally as qualityfitness reviews) are an integral part of the

Mortgage Express planning process and led tothe new market approach. Last years internalself assessment and report from the UK Quality

Award assessors pointed the company againstgaining a deeper understanding of the markets it

wanted to be in and how it should execute itsalternative strategy to closure. T he assessmentsalso led Mr Greenough and his team to recog-

nise that too much of the companys customerresearch had been directed towards understand-

ing the needs of the existing customers; it wastime to look to the needs of perspective cus-tomers as well. New product development is a

critical area. I f we are a niche player we have tobe very good at spotting new market opportuni-ties and taking the business into new markets,

Mr Greenough says.

Risk management is a key process for M ort-gage Express because its products take accountof its customers changing circumstances.Customers are rewarded for the balance of the

risk represented by their mortgage, not just atthe start of their term but as their situation

changes. Those with a higher equity-to-loanratio will pay a lower interest rate, for example.

Flexibility in process, systems and people is

vital for a company aiming to create competitiveadvantage in any crowded market, in the mort-

gage market it is the key to survival. Over thepast five years Mortgage Express has demon-

strated its ability to cope with change and to helpits customers to do likewise. But the company isstill more inclined to talk about survival than

success.There is no doubt that the whole approach

to business excellence is about becoming

competitively better so that you secure a muchbetter chance of surviving, M r Greenoughsays we want to be recognised as a company

that does it really well. I used to think that wehad made total quality and the use of the

model central to our mission just to create anenergy, to give us a sense of being, of some-thing to strive for. More recently I have come

to think that it is deeper than that. You have tofocus on business excellence if you are going

to survive, whoever you are I dont think oursituation is unique at all. You may be at thecliff edge in some other organisations and you

dont know it. T he attitude of mind that we

have pursued and we will continue to pursueis one of always assuming that you are up

against it and we have to keep stretching

ourselves because no one has God-given right

to a customer base.

Comp arison bet w een TIM and businessexcellence mo del

The study of the Japanese and the European

frameworks indicates that both approaches

have committed themselves to the main con-

cepts of total quality management (T QM), in

order to improve product and service quality,

management standards and business perfor-

mance in all types of organisations. However,

research in T QM has shown that the TQM

concepts are based on the following require-ments (Gilgeaus, 1997):

Customer orientation.

Supplier partnership.

People development and involvement.

Processes and information analysis.

Continuous improvement and innovation.

Leadership and consistency of purpose.

Public responsibilities.

Result orientation.

An analysis of the TIM approach in relation

to the above TQM philosophy shows that the

T IM multiple management and business

factors unlike the business excellence model

do not directly address the customer orienta-

tion and the people satisfaction elements,

which are the critical requirements for the

total quality management or any type of

change or improvement initiative to succeed

in all types of organisations.

T he Policy and Strategy factor in the

EQA criteria is rather vague and under-rated

particularly in the areas of continuousimprovement, innovation, and supplier part-

nership strategies, which are all too crucial to

the effectiveness of any organisation. The

T IM approach on the other hand, recognises

the planning and strategy as the most

important element among its twelve manage-

ment factors. T his is mainly because the

Japanese have found that the level of quality

that is present in the management policies

and strategies will either pull up or push

down the quality of all the other managementand business factors.

Furthermore, the European model pro-

vides a framework against which organisations

can compete to achieve the highest standards.

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It is therefore regarded as an annual competi-

tion among UK and European companies in

order to select outstanding organisations to

attain the prestigious European Quality

Award and become a role model for others to

follow. T his can encourage competitive

benchmarking and continuous improvement

among companies which are striving to

become effective organisations. T he competi-

tion among participants and winning quality

awards is not the aim of the Japanese T IM

approach.

Conclusions

Successful organisations must have dynamic,

world class management practices and quali-

ty leadership. T hat means using a compre-hensive portfolio of measures and internal

systems to effect an unrelenting improvement

in the efficiency and effectiveness of the

organisation as a whole. Today it is evident

that more and more companies are using the

European Quality Award model as the means

of assessing corporate excellence. T hrough

comparative study of relevant cases, it has

been shown that TIM can provide a new

dimension for such assessments. M anagers

can therefore concentrate on using thedynamics of these integrated business excel-

lence tools in order to achieve higher levels of

total management quality and business

results factors. They should also value the

quality of the management planning and

strategies as the key success factor within the

business flow. I f organisations want to survive

through the next decade, they must attract

customers and win against the increasing

ranks of highly sophisticated competitors

who now have easy access to European

markets. For service organisations, survival

these days depends on a list of crucial factors

such as quality, flexibility, efficiency, depend-

ability, effectiveness and a host of other

virtues that can be grouped under the banner

of service excellence.

References

Azhashemi , M .A. and Ho, S.K. (1996), Business process

redesign and total integrated management , TQM

Magazine, Vol. 8 No. 6, pp. 42-7.

BQF (1996), Return to posit ive equity , Journal of t he

Brit ish Quality Foundat ion, December, pp. 8-12.

Ghobadian, A. and Woo, H. (1996), Characteristics,benefit s and shortcomings of four major quality

awards , International Journal of Quality and

Reliabil ity Management, Vol. 13 No. 2, pp. 10-35.

Gilgeau s, V. (1997), Operations and the Managem ent of

Change, Pitman, M arshman, M A.

Haykes, C. (199 4), The Self-assessment Handbook for

M easuring Corporate Excellence, Chapman and

Hall, London.

Peters, J. (1994), Japanese turn spotlight on m anagement

qua li t y , Management Decision, Vol. 32 No. 5,

pp. 6-7.

Rae Tumm ala, V.M . and Tang, C.L. (1994), M alcolm

Baldrige and European Quality A wards and ISO

9000 Certification : core concepts and comparative

analysis , Strategic Quality Managem ent.

TQM International Ltd (1996), UK/European M odel: An

Appreciation /Training Manual.

Yahagi, S. (1992), A fter product quality in Japan: manag e-

ment qual i ty , National Productivity Review,

August, pp. 501-15.

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