Total Quality Management Research Paper
Total
Quality Management in Hotel Industry in Kuwait
1. TQM concept Introduction and Analysis
Total quality management (TQM) is a management philosophy that focuses on embedding the principles of quality and commitment of all company’s members to long-term success through customer satisfaction and corporate citizenship. Under TQM, stakeholders’ needs are met without violating ethical norms and rules. The foundations of TQM include customer-focused organization, leadership, employee involvement, process approach, system approach to management, continual improvement, factual approach to decision making, and mutually beneficial supplier relationships (Chartered Quality Institute, 2008).
The benefits of TQM are widely recognized by leading business consultants and practicing managers worldwide. These benefits are increased competitiveness; growth and longevity of an organization through more productive corporate culture; reduced stress, waste and friction; and partnership and cooperation at all levels of organization as well as with external stakeholders (Chartered Quality Institute, 2008).
The benefits of TQM are of great relevance for hospitality industry in Kuwait. Following the dot-com crash, four-star hotels and other premium services in the hospitality industry in Kuwait and around the globe found themselves losing business as corporate expense accounts became slim. By mid-2001, in some locations, one could get a room at the Biltmore, the Ritz, and others like the Waldorf-Astoria and the Plaza in New York for less than at such budget hotels as Holiday Inn, Comfort Inn, or Best Western. In the previous year, hotel overbuilding had prompted analysts to warn of lowered revenue from lower prices. The dot-com boom had hotels already committed to expansion. Similarly, key players in the cruise industry, also over-built following an ambitious expansion spree, found themselves in a quandary (Gibson, 2002).
Most firms instinctively reduce capacity during low demand periods and increase capacity during peak periods. The airline industry uses sophisticated methods to get customers committed early so that a certain level of demand is ensured for any given period. The 21-day and 14-day airfares ensure that airlines have a certain amount of capacity filled before prices are raised. Idle capacity is too expensive to carry. Hotels will charge their customers if they are a no-show and some will charge a fee for a late checkout. Upscale restaurants, too, will charge for no-shows and require cancellations to be made 24 hours in advance, just as hotels do. Underutilized capacity could be disastrous for any firm, especially for assets that produce services (Gibson, 2002).
The hospitality industry is a perfect example of capacity-constrained services that have to address the challenge of perishable revenue opportunity from their productive assets. An important consequence of the inherent characteristics of services and of service components in products is that the product cannot be produced without customer interaction—production and delivery processes of services are idle unless a customer is being served.
For a number of reasons, fluctuating demand is an inevitable fact of life for businesses (Gee, 2005). There are times when demand exceeds supply and at other times supply exceeds demand. For firms that produce services, the demand-supply mismatch results in situations where revenues and profits are not maximized. Every firm seeks to generate the maximum profits from its assets; this goal requires TQM for long-term profit maximization. The firm needs to manage demand and supply such that it attracts and serves the segment mix that provides the maximum total profitability.
This paper is about Total Quality Management (TQM) so as to maximize the returns from value-creating assets. Patronage and capacity of productive assets must be managed for maximum profitability. The pattern of the flow of customers dictates the utilization of the productive factors of the services. Thus, the firm should attempt to smooth peaks and fill valleys of fluctuating demand patterns. The first part of the paper is about how to understand the TQM and to study the capacity of the value-creating assets. Next, a method for assessment of the revenue-generating utilization of the firm’s assets is presented. Finally, ways in which the firm can improve the profitability of its value-creating assets are suggested.
The task for the firm with perishable assets is not just increasing demand, but increasing demand during low-demand periods (Barrick, Ryan, and Schmitt, 2003).
2. How TQM relates to the hotels
TQM concept has been initially applied to manufacturing; however, hospitality industry has been increasingly interested in TQM practices for several decades already. TQM is practiced extensively by airlines and hotels in the service sector, for example, as they seek to maximize the returns from assets by maximizing the utilization of capacity at maximum margins.
There are certain problems with the application of TQM in hospitality field in general and hotel industry in particular. As Jessome (1988) notes, service industries have less control over factors which affect quality; they are characterized by a higher level of external uncertainty (for the reason that services cannot be stored for later, and customers participate in the process of product creation); standards are difficult to set, to conform to, to measure due to intangible nature of services; expectations vary from customer to customers and often remain unknown or unstated; subjective nature of service quality makes it even more difficult to assess. As Witt and Muhlemann (1994) sum the issue up, ‘[t]he underlying problems…[of TQM in service industries]…are subjectivity of assessment and heterogeneity of customers, making measurement of effectiveness and quality extremely difficult’ (p. 420).
Despite all the difficulties with implementing TQM in service industry, many hotels have made their commitment to quality in the form of integrating the concepts and tools of TQM. Customer-focused firms base their TQM techniques of demand and capacity management on their knowledge of the customer behavior without losing sight of creating and delivering superior customer value and sustaining profits for the long term (Barrick, Ryan, and Schmitt, 2003).
Demand management within TQM should aim to manage volume and revenues generated by the firm for maximum long-term profits. Capacity management, at the same time, should aim to minimize the costs of production along with maximizing utilization for maximum profits. Customer-focused firms will seek to understand customer behavior to manage customer demand. They will also seek to cost-effectively adapt capacity to the demand level without affecting the customer experience. The objective of TQM is to manage customer behavior and the capacity utilization of the firm such that returns from assets are maximized)(Barrick, Ryan, and Schmitt, 2003).
3. How to achieve the TQM in hotels
This section will demonstrate how TQM can be implemented in hotel industry using the example of one of the hotel services, namely reception. The focus on this service is not incidental, since customer’s first impression of the hotel is formed specifically by reception services.
Achieving TQM in reception services will be discussed using the model of TQM in service industry proposed by Lakhe and Mohanty (1995). They argue that total service quality measurement (TSQM) is a function of Top management commitment response (CR), Product and process improvement (PPI), Human resource excellence, Customer orientation response (COR), and Economic advantage (EA). This functional relationship is represented by Equation 1.
Top management commitment response (CR) implies that managers and leaders of an organization incorporate quality into organization’s vision and mission. In addition, they make quality their personal preoccupation on the daily basis and allocate sufficient resources to quality management and measurement. Equation 2 represents Top management commitment response, where TD is the time devoted, RA is the resources allocated and PE is the personal efforts.
The second element of the model, Product and process improvement, consists of better reputation, reduced liability risks, decrease in number of customer complaints, smoother delivery of services and enhanced customer response. Equation 3 represents it mathematically, where R is the reputation, LR is the reduced liability risks, CC is smaller number of customer complaints, D is the smoother delivery system, and CR is the enhanced customer response.
Human resource excellence can be perceived as improvement in communication, training, information and accountability. Equation 4 represents this element of TQM model, where C, T, I and A stand for improvement in communication, training, information, and accountability.
Customer orientation response depends on customer satisfaction and cohesive workforce. However, it can be achieved through competent and committed staff. Therefore, Equation 5 presents customer orientation response as a function of customer satisfaction (CS), employee satisfaction (ES), and cohesive workforce (CWF).
The economic advantage relates TQM to positive change in sales, reduction in costs and increase in value of services. This can be represented mathematically as Equation 6, where CS is the change in sales, C is the reduction in costs and VS is the increase in value of service.
4. How TQM may be implemented in order to improve the standards of the hotel
This section will apply the theoretical model presented above to reception services in the hotel. While benchmarking is also an aspect of TQM, several examples of best practices from the most successful hotels worldwide will be discussed.
Starting with top management commitment response, managers of the hotel should make improving reception services their primary objective. Reception services should be on agenda at every high-level meeting. Top managers should devote their personal time, attention, and resources to improving reception services:
‘Top management should demonstrate continuously total commitment to quality and this should be used in part to motivate the rest of staff’ (Witt & Muhlemann, 1994, p. 422).
Product and process improvement should start with identifying major problems with reception services and looking for effective ways to correct them. Quality control should be implemented. However, processes should be ‘standardized wherever possible to ensure consistency of delivery but not to the extent of losing competitive advantage, or in conflict with the organization’s strategy’ (Witt & Muhlemann, 1994, p. 422).
If effective process standardization can be achieved without compromising quality and flexibility, it will immediately enhance organization’s competitive edge. For instance, Avant Hotel in the UK, the first hotel to received British Quality Standard 5750, focused on ‘quality specification for each product, determined assignable causes of error and identified ways of improving product performance’ (Motwani, Kumar, & Youssef, 1996, p. 9).
Simplification of processes can make them run more smoothly. The following example illustrates how check-in function (one of the key responsibilities of reception staff) can be simplified: Hilton International implemented an express check-in service system: it provides a Zip In Check in to all credit-card-paying guests when they book a room at the hotel (Motwani, Kumar, & Youssef, 1996).
Human resource excellence should be achieved through training reception employees in both technical and interpersonal skills. It is of vital importance that reception staff speaks perfect English, other global languages are preferred. An effective measure for reception staff can be self-assessment and assessment by colleagues. Together with customer feedback, it can be a way to ensure accountability.
Customer orientation response can be achieved through motivating staff to provide exceptional customer services. A sense of strategic direction, organizational alignment, and focus on effectiveness should be developed in all reception workers. Fostering a sense of belonging and increasing productivity can be achieved through ‘employee share-ownership, quality circles and excellence teams, joint labour-management consultative committees, autonomous work groups and other forms of worker participation’ (Baldacchino, 1995, p. 68).
Motivated and committed workforce is likely to translate into customer service excellence. For instance, Hilton International implemented TQM by studying ‘both customer and employee attitudes and expectations of service, changed their culture, empowering their employees to set their own customer-orientated standards, and set up what they believe are objective measures of guest satisfaction’ (Witt & Muhlemann, 1994, p. 421).
Ritz-Carlton hotels ensure human resource excellence by hiring the right people, orientation, teaching necessary skills and inculcating appropriate behavior. Choice Hotels made field education, with a special emphasis on empowerment, their priority in implementing TQM (Motwani, Kumar, & Youssef, 1996).
Following the aforementioned four steps, an assessment of the effectiveness of TQM implementation should be conducted by measuring the economic advantage.
5. The advantages and disadvantages of TQM in the hotel industry in Kuwait
Specifically for Kuwait, the productive factors of employees, equipment, and facilities, allocated over a period of time, determine the capacity of a firm. The amount of time that the productive factors are available divided by the average time it takes to serve a customer gives the number of customers that could be served. Essentially, this figure dictates the number of servable customers that any specific configuration of the people, facilities, and equipment in operation can serve (Gee, 2005). Since the capacity for a service depends on the various steps in the process, the weakest link in the process, or the bottleneck, determines the capacity of the whole process. Capacity for a multistep process is said to be balanced if all the steps in the process are about equal in the number of customers they can serve in the same amount of time (Gee, 2005).
In Kuwait, not all customer interactions with the firm are likely to be of critical importance in the customer experience. In order to prioritize the attention of capacity management practices, it is important to focus on those customer interactions that are likely to be critical incidents—the fail-points. Next, the cost of the productive factors for the value-creating processes for those critical incidents needs to be ascertained. The key question is: What is the feasibility of stretching or shrinking the productive factors? For each capacity-determining productive factor, an important input into capacity management decisions is how costs and customer value are affected by its shrinking or stretching (Mwaura, Sutton, and Davis, 2004).
There are several implementation considerations in determining which capacity management practice is appropriate in Kuwait. For example, what is the minimum capacity at which the firm must operate? The minimum capacity at which a firm must operate takes into account the volume of customers required to cover fixed costs (assuming variable costs are already covered in the pricing). The maximum capacity is, of course, the maximum number of customers that can be served. The optimum level of operation is not at the maximum capacity. Within this minimum-to-maximum range of capacity, there is an optimum capacity level at which both profits and customer satisfaction are maximized. Handling more customers than that could result in deteriorating quality. For example, there is a maximum tolerable waiting time at each interaction for most customers.
The main consideration is how these waits affect customer value. For example, in-process waiting is a less significant contributor to customer dissatisfaction than preprocess waiting. Adjusting capacity requires an analysis of wait time and its effect on customer experience.
Many operations optimization techniques seeking to minimize costs allow firms to ignore customer satisfaction unless specifically built into the algorithm. These TQM techniques ought to be designed and implemented with the primary consideration being their effect on customer value and customer relationships.
6. Developing a culture of TQM
As Witt and Muhlemann (1994) note, ‘[c]ulture change and commitment of employees are two other facets of TQM’ (p. 420).
Culture change is a challenging task for management. Effective communication is essential at times of change. It is important that employee perceive culture of TQM as a necessary and beneficial element of providing customer service. Furthermore, culture change should not be presented as a top-down initiative: employees should be encouraged to take part in implementing TQM and maintaining service excellence:
‘No coercive instrument is likely to be devised to promote and ensure total customer care, total employee commitment and a thorough ‘problem-owning’ disposition which spills over from management to the rank and file’ (Baldacchino, 1995, p. 67).
Witt and Muhlemann (1994) emphasize that developing a culture of TQM involves communicating TQM strategy to all employees and stakeholders, determining clear internal and external expectations, promoting job enrichment, using team working wherever possible, encouraging workers to take over ownership of the processes which they work with and be responsible for satisfactory delivery, empowering employees to make decisions to respond to requests to customize the service and handle local difficulties, a culture of continuous improvement and be role models should be developed, outdated values should he eliminated, and all difficulties should be recorded and analyzed and appropriate corrective action taken.
A successful example of developing a culture of TQM is Four Seasons hotels. A focus on comprehension, corporate culture, compromise, credibility, control of quality standards, creativity and continuity ensures that the culture of TQM penetrates all organizational processes (Motwani, Kumar, & Youssef, 1996).
7. SWOT Analysis
Strengths
An apparent strength of TQM is increased company’s competitiveness, achievable through higher levels of customer satisfaction and organizational efficiency. TQM should not be regarded as a goal in itself but as a means to enhance economic advantage.
Weaknesses
Since TQM requires employee empowerment, management might be reluctant to give up a part of its power, especially in the country with hierarchical power structures. A case study of implementation of TQM in a luxury five-star hotel (Baldacchino, 1995) has revealed that despite the focus on quality, the problem of low customer satisfaction index has not been eliminated. One of the reasons for that was management as problems switching from a disciplinary and inspectorial function to one which is supportive, preventive and facilitative. A very low level of employee turnover has further complicated the issue, since power relationship has been established and cemented for many years. Another factor hindering the implementation of TQM was job insecurity: at times of change, employees often experience fear and weakened sense of belonging in their organization.
Opportunities
While resistance to change might be a major problem associated with TQM implementation, an effective strategy to manage resistance to change can be employed. The strategy should focus on engaging employees in the design and implementation of TQM, organizing informational and career planning sessions for employees affected by the change, and offering support and training to workers in the times of transformation.
Threats
The aforementioned case study of TQM in a luxury five-star hotel has cited another reason why TQM was not an overwhelming success in the hotel in question. There, TQM has never left the conceptual realm: it remained a ritualized slogan rather than an ongoing process at all levels of an organization. Such activities as seminars, employee-of-the-month awards, and an in-house newsletter were perceived as ends and not means to achieve TQM. It is a major threat in the hotel industry that TQM will remain a mere ritual instead of being a commitment of all employees.
8. Conclusion
Implementing TQM in hotel industry can significantly and positively affect the company’s competitive advantage. While there are certain difficulties associated with implementing TQM in service industry, there are numerous examples from hospitality industry indicating that these difficulties can be overcome.
TQM implementation should start with top management’s commitment to quality that should be communicated to all employees. Process improvement and human resource training should follow. Customer experience should be enhanced, and effectiveness of TQM should be analyzed in light of economic advantage.
Developing a culture of TQM happens gradually through involving employees in decision making and empowering them to take independent decisions aimed at increasing customer satisfaction. While resistance to the culture change might be persistent, effective HR strategies can help to overcome it.
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