“The 1960s and 1970s brought a dawning realization that market share is key to company’s growth and profitability. The 1980s have shown just as clearly that one factor above all others- Quality- drives market share.”
– Buzzell and Gale (The PIMS Principles)
A study by Kevin B Hendricks and Vinod R Singhal in 1997 titled ‘Empirical evidence from Firms that have won Quality Awards’ stated that their statistical tests provided strong evidence that firms that have won quality awards outperform the control firms on operating income-based measures. Study was conducted over a 10-year period, from 6 years before to 3 years after the year of winning the first quality award. Their study also evidenced that the firms which emphasized quality were more successful in controlling costs when compared with the firms in the control sample. Further, the results indicated that firms increased their capital expenditures over the time period prior to winning quality awards. In comparison to the control sample, these firms showed higher growth in both employment and total assets.
According to the study the award-winning companies experienced:
• 91% growth in operating revenue compared to 43% for the control group
• 69% increase in sales compared to 32% for the control group
• 79% increase in total assets compared to 37% for the control group
• 23% increase in the number of employees compared to 7% for the control group
• 8% rise in return on sales compared to no improvement for the control group
Based on this data, it is evident that effective implementation of quality principles leads to improvement in financial performance for most organizations. Lean Six Sigma can help an organization achieve quantifiable improvements by creating a sustainable quality culture and enhancing control over processes and improving customer satisfaction.
Moreover, Lean Six Sigma helps in the development of a sustainable quality culture involving all stakeholders in the continual improvement process. It further assesses business process performance objectively based on unbiased data and cost-effective solutions are implemented for breakthrough improvements.
Useful Tips To Create A Quality Culture
Maintaining high-quality standards in products or services isn’t just a criterion of a regulatory body. It is the compassion that humans should possess for each other by delivering quality products/ services.
An enterprise should clearly define its values for an in-depth understanding of the stakeholders regarding their investments. Employees also become alert about what they are supposed to achieve through their production efforts. Outlining the values also helps both the management and employees to determine if the values are enough for meeting the end goals or if they require improvement. This is the first step to introducing quality into an existing work culture.
One shouldn’t consider training as just any other activity following one’s company inspection or audit. Corporate training isn’t helpful either. Therefore, organizations require to form quality management systems that will include experts. These experts shall train the other employees from time to time and even monitor their actions. Investments in training employees outweigh the benefits a company will receive from their performance in the long run.
Compliance vs. quality
It is high time that businesses understood the difference between compliance and quality even though they are interrelated. Compliance is more of a compulsion to meet the quality standards as specified by regulation. Quality in itself is the end objective of an enterprise to satisfy consumers. It is more of a social contribution by industries in their respective production fields.
An organization must have a proper track of its procedures and policies in their documented format. This makes it earn the clients’ and customers’ confidence regarding its authenticity, especially in industries dealing with life risks. By enforcing document controls, no organization will ever miss out on any important record crucial for preventing project delays.
It is wise to work with the officials of the regulatory bodies to avoid the risks and consequences of non-compliance. The management must contact these officials the moment they are unable to interpret any particular guideline laid down by them. Company employees must develop the habit of using the terms given in the regulatory act, to define their tasks. This will automatically enforce a quality culture within an enterprise.
Every business organization should deploy multiple ways of extracting user feedback for its improvement. Improvement in a product/ service quality including its planning and design is only possible through the client and consumer opinion. The more an organization uses it in its practices, the better will be the quality of its production.
The significance of quality culture lies in prioritizing human interests above commercialism. Even business owners can take care of mankind and stick to profit-making at the same time. Consumers are willing to pay high for genuine products these days so quality compromise is out of the question.