Employee Involvement:Quality Circles, Total Quality Management

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Organization Development MGMT 628

Lesson 37

Employee Involvement

Quality Circles:

Quality circles or "employee involvement teams" as they are often called in the United States, were at one

time the most popular parallel structure approach to EI. Originally developed in Japan in the mid-1950s,

quality circles consist of small groups of employees who meet voluntarily to identify and solve productivity

problems. The group method of problem solving and the participative management philosophy associated

with it are natural outgrowths of Japanese managerial practices. The Japanese emphasize decentralized

decision making and use the small group as the organization unit to promote collective decision making

and responsibility. Various estimates once put the total circle membership at as many as ten million

Japanese workers.

Quality circles were introduced in the United States in the mid-1970s. Their growth through the early I

980s was nothing short of astounding, with some four thousand companies adopting some version of the

circles approach. The popularity of quality circles can be attributed in part to the widespread drive to

emulate Japanese management practices and to achieve the quality improvements and cost savings

associated with those methods. What may be overlooked, however, is the Japanese philosophy of

decentralized, collective decision making, which supports and nurtures the circles approach. Thus, quality

circles may be more difficult to implement in the more autocratic, individualistic situations that characterize

many American companies.

Although quality circles are implemented in different ways, a typical program is illustrated in Figure 49.

Circle programs generally are implemented with a parallel structure consisting of several circles, each having

three to fifteen members Membership is voluntary, and members of a circle share a common job or work

area. Circles meet once each week for about one hour on company tune, several consulting companies have

developed training packages as part of standardized programs for implementing quality circles. Members

are trained in different prob1cm identification and analysis techniques and they apply their training to

identify, analyze, and recommend solutions to work-related problems. When possible, they implement

solutions that affect only their work area and do not require higher management approval.

Each circle has a leader, who is typically the supervisor of the work area represented by circle membership.

The leader trains circle members and guides the weekly meetings, setting the agenda and facilitating the

problem-solving process.

Facilitators can be a key part of a quality circles program. They coordinate the activities of several circles

and may attend the meetings, especially during the early development stages. Facilitators train circle leaders

and help them start the circles. They also help circles obtain needed inputs from support groups and keep

upper management apprised of progress. Because facilitators are the most active promoters of the program,

their role may he full time.

A steering committee is the central coordinator of the quality circles program. Generally, it is composed of

the facilitators and representatives of the major functional departments in the organization. The steering

committee determines the policies and procedures of the program and the issues that tall outside of circle

attention, such as wages, fringe benefits, and other topics normally covered in union contracts. The

committee also coordinates training programs and guides program expansion. Large quality circles

programs might have several steering committees operating at different levels.

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Figure 49

Application 8 presents a classic example of a quality circles program in the warehouse department of the

HEB Grocery Company. The study reports mixed results but identifies the organizational conditions

needed to implement effective quality circles.

Application 8: Quality Circles at H.E.B Grocery Company

A quality circles program was implemented as a pilot project at a large warehouse of the HE-B Grocery

Company in Texas. Department management of this eighty-person, two- shift warehousing operation

volunteered to adopt the program, which was part of a larger corporate strategy to increase employee

involvement. This choice emerged from a survey in which employees indicated a desire to be better

informed about department events and to have greater involvement in problem solving. All but four

workers volunteered to be part of the pilot circles.

The program consisted of four circles, each composed of ten people representing a cross section of

workers familiar with the warehousing operation. The circles met for two hours at two-week intervals.

Because of the large number of workers who wished to participate in the program, management held

periodic rotations, replacing some circle members with new volunteers. One rotation occurred after five

months: twelve workers dropped out, several more left the department, and twenty-nine employees joined

the circles.

Each circle had a worker-leader trained in communication techniques, group process, and problem-solving

skills. The leaders also formed a leader circle that met regularly to exchange ideas, concerns, and

information and to coordinate the four circles. Supervisors were trained and served as resources to the

circles. Similarly, members of the corporate human resources department served as facilitators. They helped

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the leaders train circle members, attended the meetings, and provided process facilitation. The department

head and several top managers formed the steering committee to guide the project. Circle suggestions were

reported to department management, which worked closely with employees to implement the suggestions.

Researchers conducted a thorough evaluation of the quality circles program. They compared the warehouse

department with a similar control group that had not participated in the program. Comparison measures

included survey data at three points in time: five months before the program, three months after its

beginning, and ten months after the program started, Also included were unobtrusive measures of

productivity, absenteeism, and accidents collected at four- week intervals beginning one year before the

program. The researches also conducted formal, open-ended interviews with selected warehouse managers

and circle members and observed the circles in action once a month. All documentation that emerged from

the circles was examined.

In contrast to the control group, the warehouse department showed slightly more positive trends in

productivity during the course of the circles program. Specifically, the quantity of production increased

slightly, and small decreases were shown in costs, absenteeism, labor expense, overtime, and accidents. The

survey data showed that the attitudes of warehouse employees changed little during the program but,

unexpectedly, the attitudes of members of the control group suffered in regard to feeling informed, being

involved in decision making, and receiving feedback from super4sors. The researchers attributed this

deterioration in morale to the disruption caused by a rapid expansion in the workload of the comparison

unit. Because the expansion affected both the warehouse and the control group, the researchers concluded

that the circles program might have buffered warehouse employees during this disruption, accounting for

the stability of attitudes during the program.

Examination of the interview and observational data revealed a more negative assessment of the circles

program. Its initial months were marked by a flurry of activity and improvement suggestions. Among the

outcomes were efforts to improve equipment maintenance procedures, reduce warehouse congestion, and

prevent damage. After several months, attendance at the meetings began to wane, and the circle members

found it increasingly difficult to identify significant issues within their sphere of expertise and influence.

Supervisors also started to admit that the circles were draining time and energy from the department.

A second flurry of activity and enthusiasm for the program took place soon after the voluntary rotation of

members into and out of the program. With time, this energy also subsided as members became frustrated

with the difficulty of systematic problem solving, the slowness of any implementation of ideas, and the

failure of the program to affect their jobs. As the workload of the warehouse increased, management

allowed the circles to become inactive by neglecting the project.

Interview data showed that participants in the program felt they had accomplished something worthwhile,

had learned a lot, and had enjoyed the circles. Non-participants or those who dropped out of the circles felt

that the program never really dealt with significant issues, it is interesting that those who didn't participate

or dropped out showed a marked worsening of attitudes during the program, compared with active

participants. This unexpected downturn was attributed to disillusionment with the program and to feelings

that some participants were wasting time. Supervisors felt that the payback was not worth the time spent in

the meetings. The human resources personnel judged the program a successful step toward employee

involvement in H.E.B.

Observations and interviews suggested several reasons why the program gradually died. The level of group

functioning did not noticeably improve during the program, and there was no indication that systematic

problem-solving techniques were followed. implementation of several ideas was unduly delayed in

bureaucratic channels, resulting in member perceptions of low management commitment to the program-

Although many circle members reported satisfaction with the program, little indication was evident that

their enthusiasm translated into greater motivation on the job. Indeed, many of the most active participants

became disenchanted with their jobs and sought ways to enter the supervisory ranks. Some members also

felt that they were being inadequately compensated for generating moneysaving ideas for the company.

The researchers concluded that, as a pilot project, the quality circles program was successful. The company

learned about the level of commitment and energy required to sustain such programs and continued to

experiment with other approaches to employee involvement, holding more realistic expectations. The

rigorous and contradictory nature of the assessment measures strongly suggests that research on quality

circles must go beyond glowing testimonials and superficial reports of worker enthusiasm to include

whether such programs effect valued individual and organization outcomes.

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High-Involvement Organizations:

Over the past several years, an increasing number of employee involvement projects have been aimed at

creating high-involvement organizations (HIOs). These interventions create organizational conditions that

support high levels of employee participation. What makes HIOs unique is the comprehensive nature of

their design process. Unlike parallel structures that do not alter the formal organization, in HIOs almost all

organization features are designed jointly by management and workers to promote high levels of

involvement and performance including structure, work design, information and control systems, physical

layout, personnel policies, and reward systems.

Features of High Involvement Organizations:

High-involvement organizations are designed with features congruent with one another. For example, in

HIOs employees have considerable influence over decisions. To support such a decentralized philosophy,

members receive extensive training in problem-solving techniques, plant operation, and organizational

policies; in addition, both operational and issue-oriented information is shared widely and is obtained easily

by employees. Finally, rewards are tied closely to unit performance, as well as to knowledge and skill levels.

These disparate aspects of the organization are mutually reinforcing and form a coherent pattern that

contributes to employee involvement. Table 18 presents a list of compatible design elements characterizing

HIOs and most such organizations include several if not all of the following features:

Flat, lean organization structures contribute to involvement by pushing the scheduling, planning, and

controlling functions typically performed by management and stall groups toward the shop floor. Similarly,

mini-enterprise, team-based structures that is oriented to a common purpose or Outcome help focus

employee participation on a shared objective. Participative structures, such as work councils and union--

management Committees, create conditions in which workers can influence the direction and policies of

the organization.

Table 18

Design Features for a participative System

Organization Structure

Job Design

Information System

Flat

Individually enriched

Open

Lean

Self-managing teams

Inclusive

Minienterprise-oriented

Tied to jobs

Team-based

Decentralized; team-based

Anticipatively set goals and

Participative council or structure

standards

Career System

Selection

Training

Tracks and counseling available

Realistic job preview

Heavy commitment

Open job posting

Team-based

Peer training

Potential

and

process-skill Economic education

oriented

Interpersonal skills

Reward System

Personnel Policies

Physical Layout

Open

Stability of employment

Around organizational structure

Skill-based

Anticipatively established through Egalitarian

Gain sharing or ownership

representative group

Safe and pleasant

Flexible benefits

All salaried workforce

Egalitarian perquisites

Job designs that provide employees with high levels of discretion, task variety, and meaningful feedback

can enhance evolvement. They enable workers to influence day-to-day workplace decisions and to receive

intrinsic satisfaction by performing work under enriched conditions. Self-managed trains encourage

employee responsibility by providing cross-training and job rotation, which give people a chance to learn

about the different functions contributing to organizational performance.

Open information systems that are tied to jobs or work teams provide the necessary information tar

employees to participate meaningfully in decision making. Goals and standards of performance that are set

participatively can provide employees with a sense of commitment arid motivation for achieving those

objectives.

Career systems that provide different tracks for advancement and counseling to help people choose

appropriate paths can help employees plan and prepare for long-term development in the organization.

Organization Development MGMT 628

Open job posting, for example, makes employees aware of jobs that can further their development.

Selection of employees for high-involvement organizations can be improved through a realistic job

preview providing information about what it will be like to work in such situations. Team member

involvement in a selection process oriented to potential and process skills of recruits can facilitate a

participative climate.

Training employees for the necessary knowledge and skills to participate effectively in decision making is a

heavy commitment in HIOs. This effort includes education on the economic side of the enterprise, as well

as interpersonal skill development. Peer training is emphasized as a valuable adjunct to formal, expert

training.

Reward systems can contribute to employee involvement when information about them is open and the

rewards are based on acquiring new skills, as well as sharing gains from improved performance. Similarly,

participation is enhanced when people can choose among different fringe benefits and when reward

distinctions among people from different hierarchical levels are minimized.

Personnel policies that are participatively set and encourage stability of employment provide employees

with a strong sense of commitment to the organization. People feel that the policies are reasonable and that

the firm is committed to their long-term development.

Physical layouts of organizations also can enhance employee involvement. Physical designs that support

team structures and reduce status differences among employees can reinforce the egalitarian climate needed

for employee participation. Safe and pleasant working conditions provide a physical environment

conducive to participation.

These HIO design features are mutually reinforcing. "They all send a message to people in the organization

that says they are important, respected, valued, capable of growing, and trusted and that their understanding

of and involvement in the total organization is desirable and expected." Moreover, these design

components tend to motivate and focus organizational behavior in a strategic direction, and thus can lead

to superior effectiveness and competitive advantage, particularly in contrast to inure traditionally designed

organizations.

Total Quality Management:

Total quality management (TQM) is the most recent and, along with high-involvement organizations the

most comprehensive approach to employee involvement. Also known as "Continuous process

improvement" and "continuous quality," TQM grew out of a manufacturing emphasis on quality control

and represents a long- term effort to orient all of an organization's activities around the concept of quality.

Quality is achieved when organizational processes reliably produce products and services that meet or

exceed customer expectations.

Like high-involvement designs, TQM increases workers' knowledge and skills through extensive training,

provides relevant information to employees, pushes decision-making power downward in the organization

and ties rewards to performance. When implemented successfully. TQM also is aligned closely with a firm's

overall business strategy and attempts to change the entire organization toward continuous quality

improvement.

Characteristics of TQM:

TQM is a philosophy and a set of guiding principles for continuous improvement based on customer

satisfaction, teamwork, and empowerment of individuals. TQM applies human resources and analytical

tools to focus on meeting or exceeding customer's current and future needs. There are a series of planned

improvements that will ultimately influence the quality and productivity of the organization.

Like high-involvement designs, TQM increases workers' knowledge and skills through extensive training,

provides relevant information to employees, pushes decision-making power downward in the organization

and ties rewards to performance.

When implemented successfully TQM also is aligned closely with a firm's overall business strategy and

attempts to change the entire organization toward continuous quality improvement.

TQM usually have several principles or components in common:

TQM is organization-wide. The production line is natural and obvious place to improve quality, but

TQM also takes place in the accounting, human resource management, house-keeping, marketing, sales,

and in other service and staff areas of an organization.

The CEO and other top managers support it. Everyone, from top managers to hourly employees,

operates under TQM. There is a reward system in place that ensures continual support.

Organization wide TQM generally takes three or more years. So allocation of significant resources for

training is a crucial aspect. Motorola company has developed a University, a training organization, that

teaches in twenty-seven languages. It allocates at least 1.5 percent of its budget to education, and every

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employee must take a minimum of forty hours of training a year. This effort supports the Company's goals

of "six sigma" quality -a statistical measure of product quality that implies 99.9997 % perfection. Having a

work-force that is able to read, write, solve problems, and do math at the seventh-grade level or above.

TQM is an ingrained value in the corporate culture. Continuous improvement penetrates the culture

and values of the organization. Quality is seen as "how we do things around here."

Partnership with customers and suppliers. The organization encourages partnerships with suppliers and

customers. The product or service must meet or exceed the customer's expectations. Results not slogans

represent quality.

For example, a leading garments company found that the retailers were out of stock on 30 percent of their

items 100 percent of the time. In response, the company revamped its systems to fill orders within twenty-

four hours 95 percent of the time.

Everyone in an organization has a customer. The customer may be internal or external. The next

person on the production line, another department, and someone outside the organization who purchases

the product are all seen as customers.

Reduced cycle time. Cycle times for products, services, as well as support functions, focus on doing the

job faster.

Techniques range in scope. The techniques used in TQM include statistical quality control, job design,

empowerment, and self-managed work teams.

Do it right the first time. Quality is not obtained by rejecting a product at the end of a production line;

rather it is built in at every stage of the production process.

Organization values and respects everyone. This includes customers, suppliers, employees, owners,

community, and the environment. These parties are often called stakeholders.

No single formula works fit everyone. Every organization is unique, and off-the-shelf programs tend not

to work. "What was successful at one company may not work in another."

Application 8: Total Quality Management at L.L. Bean

Customers of L.LBean know that they are the boss. They can order hunting equipment twenty-four hours a

day. They can request fishing poles to arrive, via Federal Express, within two days--at no extra charge. And

they can return broken car racks after years of use. To say that the Maine-based mail- order company has a

reputation for superior customer service is an understatement. The company's history is replete with stories

of employees who went out of their way for a customer. L.L.Bean has a reputation that dates back to 1912,

when founder Leon Leonwood Bean made good on nearly an entire shipment of hunting shoes that came

back to him with defective stitching.

That reputation prompted Leon Gorman, the grandson of Bean and current chairman of L.L.Bean, to

apply for the Malcolm Baldridge National Quality Award in the service category in 1988, the first year the

award came out. Despite its reputation, L.L.Bean won no award that year, although it was one of two

companies that qualified for a site Visit. No award was given that year in the service category.

At the time, German noted that L.L.Bean "will be under a great deal of pressure to renew and enhance our

quality improvement efforts to make sure we live up to our reputation." Consequently, the company used

feedback from the Baldridge committee as diagnostic information to carry out Gorman's desire to renew

and enhance the company's quality improvement efforts. This resulted in a change program that focused

first on employee involvement and then on process improvement.

The Baldridge feedback prompted Bean to take a hard look at its quality culture, Although members of the

award committee had been impressed with Bean's customer service and cited it as "world class," they

thought that the firm was not achieving customer satisfaction in a productive way. Bean had been satisfying

customers through a guarantee-based approach to quality; in fact, they pioneered the "no-questions asked"

guarantee. The Baldridge committee members thought that Bean should not rely on a guarantee but should

ensure that things happen right the first time. A favorite company story illustrates the situation: A customer

service representative in Freeport, Maine, once strapped a canoe on his car and drove it to a customer in

New York, who was leaving the next morning for a hunting trip. Although this certainly demonstrated

exemplary customer service, the award committee noted that it also served as a sign that something was

wrong. The canoe had been ordered in plenty of time to be shipped; had the order been processed properly

in the first place, there would have been no need for heroics.

The diagnostic information also revealed that Bean needed to have more employee involvement. This came

as a surprise to management because the firm prided itself on a participative culture. L.L.Bean had been

one of the first organizations in the United States to implement quality circles ten years earlier. Certainly,

managers argued, the employee who delivered the canoe was involved. What members of L.L.Bean had

trouble understanding was the practice of letting people take responsibility for their work and the work

quality. In fact, decision making at L.L.Bean had usually taken place at a high level.

Based on the diagnostic feedback, the organization first developed a definition for what was referred to as

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"total quality" (TQ). It proposed that "total quality involves managing an enterprise to maximize customer

satisfaction in the most efficient and effective way possible by totally involving people in improving the way

work is done." In short, the company defined TQ as the way to involve its people and to improve

customer-service processes.

Next, L.L.Bean focused on training. It spent approximately ten months familiarizing its three thousand

employees with TQ methods and what quality means to the firm. First, all salaried employees in the

organization received three days of TQ training, and then all hourly workers received one day. Senior

executives were trained first so that each level within the company was capable of supporting total quality

as the next level down learned about it.

During this training period, Bean's human resources department explored ways to change the infrastructure

of the company to support greater employee involvement in decisions that affect quality. It concluded that

because L.L.Bean is a service organization, decisions that influence quality occur every time a customer calls

one of its phone centers and talks to a customer service representative. Thus, frontline, customer-contact

employees needed to be knowledgeable and empowered. This would require a new managerial role aimed at

involving employees and helping them develop the necessary expertise.

Soon after the training, Bean enlisted seventy members to devise ways to put the knowledge into action and

to challenge the status quo. They formed seven cross-functional teams composed of both managers and

workers. One team defined the manager's role in a quality-oriented organization as that of coach and

developer, and created a program to help managers acquire the knowledge and skills to fill this new role.

Another team constructed a feedback instrument as part of a management development process. The tool

eventually became part of a performance management process that linked managers' compensation to

improvements in such behaviors as being "aspiring and focused, ethical and compassionate, customer

focused and aligned, effective and efficient, challenging and empowering, open and innovating, and

rewarding and developing."

Employee involvement also paid big dividends in L.L.Bean's process improvement efforts. At the

manufacturing division, a manager of footwear production shut down an entire work line, despite

tremendous productivity pressures, and spent the morning teaching workers how a shoe is costed out. He

explained each of the operations involved in making a shoe and described the cost of each task and of the

materials involved. He then took employees back to the production line and asked them to discover ways

that they could save money based on what they had learned in the morning. Employees found enough

savings that day to pay for all the training conducted in the department for the entire year. In another case,

stockers who replenish shelves in Bean's retail store swapped jobs temporarily with pickers who gather

store orders from inventory in the distribution center. They applied TQ methods, such as work-flow

mapping, to understand the work relationship between the store and the distribution center. In the old

process, retail workers placed orders with the distribution center for items running low in the store. Pickers

at the distribution center gathered those items on rolling carts, packed them in boxes, and loaded them

onto trucks. `When the items arrived at the store, stockers unloaded and unwrapped them and put them on

rolling carts for transportation to the shelves. When the employees saw both sides of the work process,

they realized that there was no reason for packaging the items. Now, the pickers simply roll the carts

holding items directly on to trucks so that stockers can roll them right off.

To support these process improvements, L.L.Bean's staff groups also changed. The human resources

department, for example, expanded its role to help employees understand and manage the TQ process. The

department reengineered itself from a functional structure to a customer-oriented organization. Now,

service teams made up of human resources specialists support each of LL.Bean's major divisions with

process improvement techniques, health and safety advice, employee relations help, and training.

Most gratifying to L.L.Bean is that through all the changes, customer satisfaction remained high and job

satisfaction among the workforce increased more than 12 percent. Although L.L.Bean is only halfway

through its TQ intervention, it has experienced increased profitability, return on sales, and return on equity.

TQM and OD have Similar Values:

TQM & OD share certain values. Both are system-wide, depend on planned change, believe in

empowerment and involvement, are self-renewing and continuous, base decision-making on data-based

activities, and view people as having inherent desire to contribute in meaningful ways.

There are differences, however, between OD and TQM. Some OD practitioners argue that their core

values differ, and they caution against OD practitioners assuming the role of "quality management expert."

The OD practitioner has to enter the organization as a neutral party and resists advocating any particular

method of change. OD practitioners view organization problems as having a variety of causes with no

predefined solutions. TQM consultant, on the other hand, views organization problems as having TQM

solutions.

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TQM can be applied as one change methodology along with an accompanying array of other interventions.

TQM is more likely to be successful when combined with employee involvement. The two are

complementary, and the impact of either is diminished by the absence of the other.

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