THE IMPACT OF TOTAL QUALITY MANAGEMENT ON EMPLOYEE MORALE IN PRODUCTIVITY

CHAPTER ONE

1.1       BACKGROUND TO THE STUDY

Total Quality Management (TQM) according to Lester, R.B. (1985), is a functional management concept responsible for defining and implementing professionally developed programmes of quality improvement, error control and defect prevention with an organization for the purpose of assuring that the products and services of the organization will conform to their requirements; that customers will be protected and satisfied and that the cost of quality will be continuously reduced.

This management concept evolved out of the need by organizations for continuous quality improvement and critical importance of increased profitability and survival in the face of challenges in the business environment where competition has become very stiff.  No business today can afford to ignore the two most important people; the customer and the competitor.

Thus organizations that focus very hard on the quality of products and services grow faster than their competitors.

Some Nigerian companies that have imbibed the TQM culture with tremendous success are Oceanic Bank, Skye Bank and Eco Bank to mention a few.

The modern trend in a volatile business environment is the adoption of TQM since the old view of quality, that is based on Acceptable Quality Level (AQL) which allows tolerable levels of faults in the system that leads to high frequency of re-testing, re-working or rejection which often is very costly, has been done away with.

However, TQM which is based on producing defect-free products or services that avoids mistakes by adopting preventive measures from the profit can only thrive where the following exist:

 Well defined policy statement and business objectives.

 An organization structure that support the Total Quality Management Process which promote sound leadership and effective communication.

 Training for all the key employees.

 Motivation to secure employees’ commitment.

(Evans, P. 1992)

There is no doubt that the rate of bank failures in Nigeria has risen sharply in recent years before the N25.0 Billion recapitalization.  The rapid increase in the number of distressed banks and the magnitude of distress has reached an alarming proportion.  Confidence and credibility are gradually and steadily being eroded.  As at December 1994, there were 55 cases of distressed banks compared with 38 in December 1993.  The number rose to an unsurpassed level of 60 at the year-end of 1996.(Ebhodaghe, 1996)

Following the distress in the banking industry there is therefore the need for banks to re-engineer and restructure their system for effective and efficient utilization of the resources available.  With the impact of increasing competition coupled with greater customer awareness and demand in an increasing complex and dynamic environment, it becomes more necessary for Skye bank to review and streakier its processes and services.  The bank’s management realized that this step was crucial for the long term survival and success of the bank and so had determined via the corporate mission,

“An industry leader through excellent customer service, leading to superior bottom line performance and first class return on investors capital, whilst contributing positively to staff development and to society”.

It was expected that achieving this mission would ultimately improve the bottom line of the bank, which is the principal objective of any business.

Because of the dynamic nature of the banking sector, which requires that banks be constantly staffed with competent personnel so as to achieve a high standard efficiency.  Many banks are now focused on providing their profitability through the quality products and services they offer.  As a result of this the banks now want:

 More satisfied customers who would be motivated to bring in more business into the bank.

 More enthusiastic, committed and productive employees.

 Fewer delays, mistakes, bottlenecks and missed opportunities.

 More work done right first time.

 Stream lined, efficient and cost effective systems and processes that reduce overheads and improve performance.

 Profitable opportunities to be identified and exploited faster than their competitors.

It is therefore against this background that these research wishes to scan the impact of TQM on employee morale and productivity in the banking industry using Skye bank as case analysis.