Building and Sustaining Performance Excellence in Organizations Chapter 9 Building and Sustaining Performance Excellence in Organizations MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Building and sustaining performance excellence requires a readiness for change, the adoption of sound practices and implementation strategies, and an effective organizational infrastructure. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Why Adopt a Performance Excellence Philosophy? Reaction to competitive threat to profitable survival An opportunity to improve MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Selling the TQ Concept Learn to think like top executives Position quality as a way to address priorities of stakeholders Align objectives with those of senior management Make arguments quantitative Make the first pitch to someone likely to be sympathetic Focus on getting an early win, even if it is small Ensure that efforts won’t be undercut by corporate accounting principles Develop allies, both internal and external Develop metrics for return on quality Never stop selling quality MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Organizational Culture and Performance Excellence (Corporate) culture is a company’s value system and its collection of guiding principles Cultural values are often seen in mission and vision statements Quality and performance excellence must define and drive the culture of an organization MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Culture is reflected by the management policies and actions that a company practices. Therefore, organizations that believe in the principles of quality and performance excellence are more likely to implement the practices successfully. Conversely, actions set culture in motion. As quality practices are used routinely within an organization, its people learn to believe in the principles, and cultural changes can occur. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Baldrige Core Values and Concepts Focus on the future Managing for innovation Management by fact Social responsibility Focus on results and creating value Systems perspective Visionary leadership Customer Driven Organizational and personal learning Valuing employees and partners Agility MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Cultural Change Change can be accomplished, but it is difficult Imposed change will be resisted Full cooperation, commitment, and participation by all levels of management is essential Change takes time You might not get positive results at first Change might go in unintended directions MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Impatient managers often seek immediate cultural change by adopting off-the-shelf quality programs and practices, or by imitating other successful organizations. In most cases, this approach is setting themselves up for failure. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Building on Best Practices Universal best practices Cycle time analysis Process value analysis Process simplification Strategic planning Formal supplier certification programs MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Best Practices: Infrastructure Design (1 of 3) Low performers process management fundamentals customer response training and teamwork benchmarking competitors cost reduction rewards for teamwork and quality MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Best Practices: Infrastructure Design (2 of 3) Medium performers use customer input and market research select suppliers by quality flexibility and cycle time reduction compensation tied to quality and teamwork MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Best Practices: Infrastructure Design (3 of 3) High performers self-managed and cross-functional teams strategic partnerships benchmarking world-class companies senior management compensation tied to quality rapid response MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Implementing Total Quality: Key Players Senior management Middle management Workforce MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Organizations contemplating change must answer some tough questions, such as, Why is the change necessary? What will it do to my organization (department, job)? What problems will I encounter in making the change? and perhaps the most important one — What’s in it for me? MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Strategic vs. Process Change Strategic change is broad in scope and stems from strategic objectives, which are generally externally focused and relate to significant customer, market, product/service, or technological opportunities and challenges. Process change is narrow in scope and deals with the operations of an organization. An accumulation of continuously improving process changes can lead to a positive and sustainable culture change. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Contrasts MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea There are numerous barriers to transforming organizations to a sustained culture of performance excellence. Understanding these barriers can help significantly in managing change processes. Perhaps the most significant failure encountered in most organizations is a lack of alignment between components of the organizational system. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Common Mistakes in TQ Implementation (1 of 3) Quality initiative is regarded as a “program” Short-term results are not obtained Process not driven by focus on customer, connection to strategic business issues, and support from senior management Structural elements block change Goals set too low “Command and control” organizational culture MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Common Mistakes in TQ Implementation (2 of 3) Training not properly addressed Focus on products, not processes Little real empowerment is given Organization too successful and complacent Organization fails to address fundamental questions Senior management not personally and visibly committed MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Common Mistakes in TQ Implementation (3 of 3) Overemphasis on teams for cross-functional problems Employees operate under belief that more data are always desirable Management fails to recognize that quality improvement is personal responsibility Organization does not see itself as collection of interrelated processes MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Sustaining the Quality Organization View quality as a journey (“Race without a finish line”) Recognize that success takes time Create a “learning organization” Planning Execution of plans Assessment of progress Revision of plans based on assessment findings Use Baldrige assessment and feedback MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Organizations are dynamic entities. Managers must consider the dynamic component in order to deal with instability in the environment, imperfect plans, the need for innovation, and the common human desire for variety and change. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Activities of Learning Organizations Systematic problem solving Experimentation with new approaches Learning from their own experiences and history Learning from the experiences and best practices of others Transferring knowledge quickly and efficiently throughout the organization MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Self Assessment: Basic Elements Management involvement and leadership Product and process design Product control Customer and supplier communications Quality improvement Employee participation Education and training Quality information MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Self-assessment should identify both strengths and opportunities for improvement, creating a basis for evolving toward higher levels of performance. Thus, a major objective of most self-assessment projects is the improvement of organizational processes based on opportunities identified by the evaluation. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Importance of Follow-Up of Self-Assessment Results Many organizations derive little benefit from conducting self-assessment and achieve few of the process improvements suggested by self-study Reasons: Managers do not sense a problem Managers react negatively or by denial Managers don’t know what to do with the information MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Following up requires senior leaders to engage in two types of activities: action planning and subsequently tracking implementation progress. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Leveraging Self-Assessment Findings Prepare to be humbled Talk through the findings Recognize institutional influences Grind out the follow-up MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Implementing ISO 9000 Start with a quality policy that identifies key objectives and basic procedures Develop a quality manual to document the procedures Use internal audits to maintain procedures Provide adequate resources MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Implementing Six Sigma Committed leadership Integration with existing initiatives, business strategy, and performance measurement Process thinking Disciplined customer and market intelligence gathering A bottom line orientation Leadership in the trenches Training Continuous reinforcement and rewards MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing