TQM Application in Financial Services CEM 515 By Ali Al Mansour January 6, 2007 Outline Introduction Service vs. Manufacturing Key Financial Services Elements to Successful TQM Implementation in Financial Services Benefits from TQM Implementation Barriers to Implementing TQM Introduction 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 Intangibility Difficult to measure and standardize Delivery and consumption happen simultaneously Customers sensitivity to quality. Service vs. Manufacturing Literature 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’d Study conducted by Daniel Prajogo, Monash University, Australia. 194 managers in service and manufacturing companies: Variables Leadership Strategic planning Customer focus Information and analysis People management Process management Product quality Note: *Significant at p < 0.05 Manufacturing (n=102) Mean SD 3.69 3.55 3.87 3.55 3.31 3.63 4.22 0.76 0.88 0.72 0.84 0.79 0.71 0.51 Service (n=92) Mean SD 3.82 3.59 3.97 3.53 3.57 3.56 4.17 Mean difference 0.89 0.93 0.65 0.92 0.80 0.70 0.59 Source: Daniel I. Prajogo, International Journal of Service -0.13 -0.04 -0.10 -0.02 -0.26* 0.07 0.05 Industry Management Key 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 Implementation in Financial 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 Organizations Quality awareness in the organization Higher quality services & products Skillful employees Satisfied employees-> satisfied customers Cost effectiveness Profitability Barriers to Successful TQM Implementation In Financial Services Subjectivity External uncertainty Intangibility of products Lack of recourses Short term goals Lack of training Lack of communication Questions? Thanks!