Chapter 14: Building and Sustaining Quality and Performance Excellence

Organizational Culture and Change

Changing Organizational Culture
Barriers to Change
Strategies for Quality and Performance Excellence
Best Practices
Principles for Effective Implementation
The Journey Toward Performance Excellence
The Life Cycle of Quality Initiatives
Organizational Learning
Self-Assessment
Challenges in Small Organizations and Non-profits
A View Toward the Future
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Building and Sustaining Quality and Performance Excellence

Building and sustaining performance excellence requires effective leadership, a commitment to

change, and long-term sustainability (the ability to address current needs and have the agility
and management skills and structure to prepare successfully for the future), the adoption of
sound practices and implementation strategies, and continual organizational learning.
Building quality and performance excellence into an organization requires change. Leadership
is critical, but just as important is a solid understanding of culture, organizational change,
learning, and self-assessment.

Organizational Culture and Change

Organizational Culture = An organization’s value system and its collection of guiding
principles.
Culture is a powerful influence on behavior because it is shared widely and because it operates
without being talked about, and indeed, often without being thought of. Therefore, organizations
that believe in the principles of performance excellence are more likely to implement the quality
practices successfully. As performance excellence practices are used routinely within an
organization, its people learn to believe in the underlying principles of total quality, and cultural
changes can occur.

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Changing Organizational Culture
Strategic Change: Changes resulting from strategy development and implementation.
Strategic change stems from strategic objectives, which are generally externally focused and
relate to significant customer, market, product/service, or technological opportunities and
challenges. An organization must change these aspects to remain or become competitive.
Strategic change is broad in scope, is driven by environmental forces, and is tided closely
organization’s ability to achieve its goals.

Process Change: Organizational changes resulting from internal operational assessment

activities. Process change deals with the operations of an organization. These changes can
have a lasting effect; however, the change tends to be narrow in scope. Process change is
often confined to a particular unit, division, or function of the organization. However, an
accumulation of continuously improving process changes can also lead to a positive and
sustainable culture change.

When organizations contemplate change, some tough questions must be answered:

Why is the change necessary?
What will it do to my organization (department, job, etc.)?
What problems will I encounter?
What’s in it for me?

Change makes people uncomfortable, thus managing change is seldom pleasant.

Most change processes include three basic stages:
1: Questioning the organization’s current state and dislodging accepted patterns of behavior.
2: A state of flux, where new approaches are developed to replace suspended old activities.
3: The final period consists of institutionalizing the new behaviors and attitudes.

A culture of performance excellence can be summarized as follows:

• A premium is placed on excellence in performance – obtaining desired behaviors and

results. That is, there is a clear focus on results that support the organization’s mission,
vision, and strategic objectives.

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 • Organizations acknowledge that their success is contingent upon the successful
performance of their employees. People are the most important drive of performance.
• Strategic outcomes drive the work. There is clear alignment at the organizational,
process, and individual levels.
• Management is strongly committed to creating conditions and consequences that
support and sustain strong performance. Finally, leadership is vital to success.

To drive change, organizations must change behavior as well as policies and procedures.
Juran and others suggest that an organization must foster five key behaviors to develop a
positive quality culture:
1: It must create and maintain an awareness of quality by disseminating results throughout the
organization.
2: It must provide evidence of management leadership, such as serving on a quality council,
providing resources, or championing quality projects (such as Six Sigma).
3: It must encourage self-development and empowerment through the design of jobs, use of
empowered teams, and personal commitment to quality.
4: It must provide opportunities for employee participation to inspire action, such as
improvement teams, product design reviews, or Six Sigma training.
5: It must provide recognition and rewards, including public acknowledgement for good
performance as well as tangible benefits.

Middle Management’s role in in creating and sustaining a culture of performance excellence is

critical. They must exhibit behaviors that are supportive of performance excellence as they act
as role models for first-level managers and employees. This includes listening to employees as
customers, creating a positive work environment, implementing quality improvements
enthusiastically, challenging people to develop new ideas and reach their potential, encouraging
empowerment, setting challenging goals, providing positive feedback, and following through on
promises.

Barriers to Change
Perhaps the most significant failure encountered in most organizations is a lack of alignment
and integration with the organizational system.

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Alignment = Consistency of plans, processes, information, resource decisions, actions, results,
and analyses to support key organization-wide goals. Effective alignment requires common
understanding of purposes and goals and use of complementarity measures and information for
planning, tracking, analysis, and improvement at each of the three levels of quality.

Integration = refers to the harmonization of plans, processes, information, resource decisions,

actions, results, and analyses to support key organization-wide goals. Integration goes beyond
alignment and is achieved when the individual components of a performance management
system operate as a fully interconnected unit.

Strategies for Quality and Performance Excellence

Organizations can take many routes to quality and performance excellence, but none of them
represents the “one best way”.

The Baldridge Criteria

ISO 9000
Six Sigma
PDCA Cycle

Best Practices
Practices that are recognized by the business community to lead to successful performance.
Research suggests that only five best practices are universal:

1: Cycle-time analysis
2: Process value analysis
3: Process simplification
4: Strategic planning
5: Formal supplier certification programs

Fundamentals:
• Departmental and cross-functional teamwork;
• Training in customer relationships;
• Problem solving and suggestion systems;
• Using internal customer complaint systems for new product and service ideas;

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 • Emphasizing cost reduction when acquiring new technology;
• Using customer satisfaction measures in strategic planning;
• Increased training for all levels of employees;
• Focusing on a quality strategy of building quality into the design and/or process.

The Toyota Production System:

They stayed the course and developed, implemented, and tweaked the system until it fit the
organization like a glove.
They did not spend their time looking for a prefabricated answer to all their problems that might
or might not work in their organization.
They took the time to understand their organization and their business and created a system
that delivered the things they knew would make them a force in their industry.

Principles for Effective Implementation (of quality strategies and performance excellence)
• Committed leadership from top management.
• Integration with existing initiatives, business strategy, and performance measurement.
• Process thinking. A process focus is a necessary prerequisite.
• Disciplined customer and market intelligence gathering.
• A bottom-line orientation.
• Leadership in the trenches.
• Training.
• Continuous reinforcement and rewards.

The Journey Toward Performance Excellence

Sustaining performance excellence requires the ability to overcome barriers and frustration, to
view performance excellence as a journey, not an end, and the ability to develop into a “learning
organization.” Successful organizations realize that quality and performance excellence is a
never-ending journey.

The Life Cycle of Quality Initiatives

Six Stages:
1: Adoption: The implementation stage of a new quality initiative.

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2: Regeneration: When a new quality initiative is used in conjunction with an existing one to
generate new energy and impact.
3: Energizing: When an existing quality initiative is refocused and given new resources.
4: Maturation: When quality is strategically aligned and deployed across the organization.
5: Limitation or stagnation: When quality has not been strategically driven or aligned.
6: Decline: When the initiative has had a limited impact, is failing, and is awaiting termination.

Organizational Learning
The learning organization = Sustainability requires continual learning. Both the culture and
the organizational structure should be designed to support the established direction in which the
organization is moving, and modified whenever that direction changes significantly.
Learning organizations have become skilled in creating, acquiring, and transferring knowledge
and in modifying the behavior of their employees and other contributors to their enterprises.

The key to developing learning organizations is effective leadership. Researchers have

suggested that both transactional and transformational leadership support organizational
learning; in times of change, organizational learning benefits more from transformational
leadership while in times of stability, organizational learning processes serve to refresh and
reinforce current learning – a task best suited to transactional leadership.

Learning organizations have to become good at performing five main activities:

• 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

Self-Assessment
Answers the questions: How are we doing? What are our strengths? What areas require
improvement?
Self-assessment should involve the following:
• Management involvement and leadership. To what extent are all levels of management
involved?

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 • Product and process design. Do products meet customer needs? Are products
designed for easy manufacturability?
• Product control. Is a strong product control system in place that concentrates on defect
prevention before the fact, rather than defect removal after the product is made?
• Customer and supplier communications. Does everyone understand who the customer
is? To what extent do customers and suppliers communicate with each other?
• Quality improvement. Is a quality improvement plan in place? What results have been
achieved?
• Employee participation. Are all employees actively involved in quality improvement?
• Education and training. What is done to ensure that everyone understands his or her job
and has the necessary skills? Are employees trained in quality improvement
techniques?
• Quality information. How is feedback on quality results collected and used?

After the self-assessment, the senior leaders need to engage in two types of activities; action
planning and subsequently tracking implementation progress.

To leverage self-assessment, managers must do four things;

Prepare to be humbled.
Talk through the findings.
Recognize institutional influences.
Grind out the follow-up.

Challenges in Small Organizations and Non-profits

Many characteristics of small firms adversely affect the implementation of Total Quality
principles:
• The lack of market clout, which may impact a small firm’s ability to get suppliers involved
in quality efforts
• Not recognizing the importance of human resource management strategies in quality,
and therefore experiencing lower levels of employee empowerment, involvement, and
quality-related training
• Lack of professional management expertise and the short-term focus, which often
results in inadequate allocation of resources to Total Quality efforts

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 • Lower technical knowledge and expertise, making it difficult for smaller firms to
effectively use quality tools and improvement techniques
• The informal nature of communication and lack of structured information systems, which
inhibit implementation of Total Quality

Nevertheless, many successful small businesses have shown that quality initiatives can be
successfully accomplished. Small businesses often come to this conclusion as they grow or
face critical market challenges; they simply cannot afford to be managed as they were in the
past, and require a more systematic process-oriented infrastructure.

Among the key challenges that not-for-profits face are overcoming the fear of change, changing
the mindset that not-for-profits are different and cannot effectively apply quality principles,
identifying a vision and customers, understanding work processes, dealing with limited
resources, and understanding relationships with the government and large corporations.
However, many not-for-profit organizations are adopting Total Quality principles because of their
impact on the public and society – their major customers and stakeholders.

A View Toward the Future

Read at your leisure…

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