Which of the following is the process where top management determines the overall organizational purposes and objectives?

Quality Glossary Definition: Total quality management

A core definition of total quality management (TQM) describes a management approach to long-term success through customer satisfaction. In a TQM effort, all members of an organization participate in improving processes, products, services, and the culture in which they work.

Primary Elements of tqm

TQM can be summarized as a management system for a customer-focused organization that involves all employees in continual improvement. It uses strategy, data, and effective communications to integrate the quality discipline into the culture and activities of the organization. Many of these concepts are present in modern quality management systems, the successor to TQM. Here are the 8 principles of total quality management:

1. Customer-focused: The customer ultimately determines the level of quality. No matter what an organization does to foster quality improvement—training employees, integrating quality into the design process, or upgrading computers or software—the customer determines whether the efforts were worthwhile.
2. Total employee involvement: All employees participate in working toward common goals. Total employee commitment can only be obtained after fear has been driven from the workplace, when empowerment has occurred, and when management has provided the proper environment. High-performance work systems integrate continuous improvement efforts with normal business operations. Self-managed work teams are one form of empowerment.
3. Process-centered: A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (internal or external). The steps required to carry out the process are defined, and performance measures are continuously monitored in order to detect unexpected variation.
4. Integrated system: Although an organization may consist of many different functional specialties often organized into vertically structured departments, it is the horizontal processes interconnecting these functions that are the focus of TQM.
   • Micro-processes add up to larger processes, and all processes aggregate into the business processes required for defining and implementing strategy. Everyone must understand the vision, mission, and guiding principles as well as the quality policies, objectives, and critical processes of the organization. Business performance must be monitored and communicated continuously.
   • An integrated business system may be modeled after the Baldrige Award criteria and/or incorporate the ISO 9000 standards. Every organization has a unique work culture, and it is virtually impossible to achieve excellence in its products and services unless a good quality culture has been fostered. Thus, an integrated system connects business improvement elements in an attempt to continually improve and exceed the expectations of customers, employees, and other stakeholders.
5. Strategic and systematic approach: A critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core component.
6. Continual improvement: A large aspect of TQM is continual process improvement. Continual improvement drives an organization to be both analytical and creative in finding ways to become more competitive and more effective at meeting stakeholder expectations.
7. Fact-based decision making: In order to know how well an organization is performing, data on performance measures are necessary. TQM requires that an organization continually collect and analyze data in order to improve decision making accuracy, achieve consensus, and allow prediction based on past history.
8. Communications: During times of organizational change, as well as part of day-to-day operation, effective communications plays a large part in maintaining morale and in motivating employees at all levels. Communications involve strategies, method, and timeliness.

These elements are considered so essential to TQM that many organizations define them, in some format, as a set of core values and principles on which the organization is to operate. The methods for implementing this approach come from the teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa, and Joseph M. Juran. 

More TQM Information

TQM Resources

You can also search articles, case studies, and publications for TQM resources.

Books

The Certified Manager of Quality/Organizational Excellence Handbook

From Quality to Business Excellence: A Systems Approach to Management

Insights to Performance Excellence 2021-2022

Juran, Quality, and a Century of Improvement

Articles

Why And How TQM Leads To Performance Improvements (Quality Management Journal) Evidence shows that TQM improves organizational performance, but researchers disagree on why and how such improvements occur and on who really benefits. This study tests hypotheses relating to TQM adoption and the path from wealth creation to wealth appropriation.

The Relationship Between ISO 9000 Certification, TQM Practices, And Organizational Performance (Quality Management Journal) There is no consensus among the research community about the relationship between ISO 9000 certification and TQM, and the effect of each of these quality management practices on organizational performance is still debated. This paper developed a conceptual model to study the relationships between ISO 9000 certification, TQM practices, and organizational performance.

The Role Of Strategic Planning In Implementing A Total Quality Management Framework: An Empirical View (Quality Management Journal) This empirical study examines the significant role of strategic planning as an important dimension in successfully implementing TQM and confirming that strategic planning is likewise extremely important. 

Videos

TQM: The History and the Now (ASQTV) This episode explores total quality management’s beginnings and how it’s used to build and sustain a culture of quality today. 

Certification

Manager of Quality/Organizational Excellence Certification - CMQ/OE

Courses

Certified Manager of Quality/Organizational Excellence Certification Preparation

Introduction to Quality Management

Quality 101 

Adapted from The Certified Manager of Quality/Organizational Excellence Handbook, ASQ Quality Press.

Management by objectives (MBO) is a strategic management model that aims to improve the performance of an organization by clearly defining objectives that are agreed to by both management and employees. According to the theory, having a say in goal setting and action plans encourages participation and commitment among employees, as well as aligning objectives across the organization.

• Management by objectives (MBO) is a process in which a manager and an employee agree on specific performance goals and then develop a plan to reach them.
• It is designed to align objectives throughout an organization and boost employee participation and commitment.
• There are five steps: Define objectives, share them with employees, encourage employees to participate, monitor progress, and finally, evaluate performance and reward achievements.
• Critics of MBO argue that it leads to employees trying to achieve the set goals by any means necessary, often at the cost of the company.

Management by objectives (also known as management by planning) is the establishment of a management information system (MIS) to compare actual performance and achievements with the defined objectives. Practitioners claim that the major benefits of MBO are that it improves employee motivation and commitment and allows for better communication between management and employees.

However, a cited weakness of MBO is that it unduly emphasizes the setting of goals to attain objectives, rather than working on a systematic plan to do so. Critics of MBO, such as W. Edwards Deming, argue that setting particular goals like production targets leads workers to meet those targets by any means necessary, including shortcuts that result in poor quality.

In his book that coined the term, Peter Drucker set forth several principles for MBO. Objectives are laid out with the help of employees and are meant to be challenging but achievable. Employees receive daily feedback, and the focus is on rewards rather than punishment. Personal growth and development are emphasized, rather than negativity for failing to reach objectives.

MBO is not a cure-all but a tool to be utilized. It gives organizations a process, with many practitioners claiming that the success of MBO is dependent on the support from top management, clearly outlined objectives, and trained managers who can implement it.

MBO outlines five steps that organizations should use to put the management technique into practice.

1. Either determine or revise organizational objectives for the entire company. This broad overview should be derived from the firm’s mission and vision.
2. Translate the organizational objectives to employees. In 1981, George T. Doran used the acronym SMART (specific, measurable, acceptable, realistic, time-bound) to express the concept.
3. Stimulate the participation of employees in setting individual objectives. After the organization’s objectives are shared with employees from the top to the bottom, employees should be encouraged to help set their own objectives to achieve these larger organizational objectives. This gives employees greater motivation since they have greater empowerment.
4. Monitor the progress of employees. In step two, a key component of the objectives was that they are measurable for employees and managers to determine how well they are met.
5. Evaluate and reward employee progress. This step includes honest feedback on what was achieved and not achieved for each employee.

The term “management by objectives (MBO)” was first used by Peter F. Drucker in his 1954 book titled The Practice of Management.

MBO comes with many advantages and disadvantages.

• Employees take pride in their work and are assigned goals they know they can achieve that match their strengths, skills, and educational experiences.
• Assigning tailored goals brings a sense of importance to employees, boosting their output and loyalty to the company.
• Communication between management and employees is increased.
• Management can create goals that lead to the success of the company.

• As MBO is focused on goals and targets, it often ignores other parts of a company, such as the culture of conduct, a healthy work ethos, and areas for involvement and contribution.
• Strain is increased on employees to meet the goals in a specified time frame.
• Employees are encouraged to meet targets by any means necessary, meaning that shortcuts could be taken and the quality of work compromised.
• If management solely relies on MBO for all management responsibilities, it can be problematic for areas that don’t fit under MBO.

Management by objectives (MBO) uses a set of quantifiable or objective standards against which to measure the performance of a company and its employees. By comparing actual productivity to a given set of standards, managers can identify problem areas and improve efficiency. Both management and workers know and agree to these standards and their objectives.

A company can set various goals with its employees. In the case of a call center, an MBO could be to increase customer satisfaction, say, by 10%, while reducing call times by one minute. The onus is now on finding ways to achieve this goal. Once that’s decided on, it’s important to get employees on board and then monitor their progress, provide feedback, and reward those who do a good job.

As MBO is entirely focused on goals and targets, it often ignores other parts of a company, such as the corporate culture, worker conduct, a healthy work ethos, environmental issues, and areas for involvement and contribution to the community and social good.

In management by exception (MBE), management only addresses instances where objectives or standards are transgressed. Thus, workers are left alone until and unless proficiency is not met.

As a theory, MBO makes a lot of sense: Help employees to get involved in setting company goals and they are more likely to share management’s objectives, work harder, and deliver.

However, there’s also a good reason why MBO is widely criticized. Like most things that look good on paper, it doesn’t always work in practice. The key is to be aware of its drawbacks, customize the plan according to your organization, and make sure that everyone is fully on board and that the objectives are clear and reasonable before commencing.