TQM Application in Financial TQM Application in Financial ServicesServices

By

Ali Al Mansour

January 6, 2007

CEM 515CEM 515

OutlineOutline

IntroductionService vs. Manufacturing Key Financial ServicesElements to Successful TQM

Implementation in Financial ServicesBenefits from TQM ImplementationBarriers to Implementing TQM

IntroductionIntroduction

Born in early 1980, Japanese Manufacturing Companies

Defined : “a quest for excellence, creating the right attitudes and controls to make prevention of defects/errors possible and optimize customer satisfaction by increased efficiency and effectiveness.”

Studies support TQM applicability in the service industry

Applicability in the financial institutions.

Service vs. Manufacturing Service vs. Manufacturing

Intangibility Difficult to measure and standardize Delivery and consumption happen

simultaneously Customers sensitivity to quality.

Service vs. Manufacturing Service vs. Manufacturing Literature ReviewLiterature Review Beamount et al (1997) found that service

firms use fewer quality management tools. Woon (2000) found lower level of TQM

implementation Hug and Stolen (1998) found that service

companies apply TQM selectively as opposed to manufacturing.

Literature Review cont’dLiterature Review cont’d

Study conducted by Daniel Prajogo, Monash University, Australia. 194 managers in service and manufacturing companies: Manufacturing (n=102) Service (n=92)Variables Mean SD Mean SD Mean difference

Leadership 3.69 0.76 3.82 0.89 -0.13Strategic planning 3.55 0.88 3.59 0.93 -0.04Customer focus 3.87 0.72 3.97 0.65 -0.10Information and analysis 3.55 0.84 3.53 0.92 -0.02People management 3.31 0.79 3.57 0.80 -0.26*Process management 3.63 0.71 3.56 0.70 0.07Product quality 4.22 0.51 4.17 0.59 0.05

Note: *Significant at p < 0.05 Source: Daniel I. Prajogo, International Journal of Service Industry Management

Key Financial ServicesKey Financial Services Processing time of key products e.g. loans, new accounts,

ATM cards, credit cards, cheque encashment Waiting time in a queue, downtime Handling customer complaints Staff friendliness and efficiency Diversity of products Hidden charges reasonability Accuracy and timeliness of statements and accounts

records Promptness in answering customers inquires through

phone, email, etc. Online system availability Diversity of investment products e.g. mutual funds, thrift

plans, trusts, mortgages, etc.

Elements for Successful TQM Elements for Successful TQM Implementation in Financial Implementation in Financial Services (“Soft” Aspects)Services (“Soft” Aspects) Customer focus- needs, loyalty Professional skills through well designed

training programs. New technology Process Innovation Top management commitment Communication Empowerment Attitudes and behaviors

Benefits from TQM to Financial Benefits from TQM to Financial OrganizationsOrganizationsQuality awareness in the organizationHigher quality services & productsSkillful employeesSatisfied employees-> satisfied customersCost effectivenessProfitability

Barriers to Successful TQM Barriers to Successful TQM Implementation In Financial Implementation In Financial Services Services Subjectivity External uncertainty Intangibility of productsLack of recoursesShort term goalsLack of trainingLack of communication

Questions?Questions?

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