INTERNAL CUSTOMER JOB SATISFACTION AND ROLE OF TQM PRACTICES ABSTRACT

Transcription

1 Far East Journal of Psychology and Business Vol. 6 No. 2 February 2012 INTERNAL CUSTOMER JOB SATISFACTION AND ROLE OF TQM PRACTICES Dr. Aamir Ijaz Institute of Quality and Technology Management University of the Punjab, Lahore, Pakistan ijazaamir@yahoo.com Dr. Kee, D.M.H University of Sains Malaysia, Malaysia daisy@usm.my S. M. Irfan COMSATS Institute of Information Technology, Lahore, Pakistan irfansyed36@yahoo.com ABSTRACT In Pakistan, industry both in manufacturing and industrial sector is facing a number of internal as well as external challenges to sustain and maintain their survival. Quality is the only way that enables them to face these challenges by utilizing the available talent to gain the competitive edge. This study aims to investigate the relationship between total quality management (TQM) practices and internal customer (employees) satisfaction at workplace. TQM focuses on delivering quality and innovative product or services at the lowest cost first time and every time to their external customers (directly affected by company s products) but it cannot be achieved without the satisfaction of internal customers means employees of the organization. Five most common and basic TQM practices were selected from the available literature; Leadership role, training and education, empowerment, reward and recognition, employees involvement and cooperation and teamwork for this study. Only ISO implemented service and manufacturing organizations were selected for this study. The questionnaire includes 23 items representing six construct that includes five constructs representing TQM practices and one construct representing internal customer satisfaction. The study sample of this study was comprised of 243 respondents working at officer, managerial and supervisor level positions. Data was analyzed using the most advanced data analysis tools; structural equation modeling (AMOS 16.0) and SPSS Results of this study provide a strong relationship among TQM practices and internal customer satisfaction. Key words: TQM Practices, Internal Customer Satisfaction, Structure Equation Modeling, Job Satisfaction Paper Type: Research Paper INTRODUCTION During the last couple of decades, it has been explored in a number of studies that total quality management (TQM) had benefited the organizations in improving quality of products and services, increased market share, high sales volumes, reduced costs, increased efficiency and 1

2 Far East Research Centre effectiveness, and improving business competitiveness (Rajagopal et al. 1995; Youssef et al., 1996; Zhang et al., 2000; Chapman & Al-Khawaldeh, 2002). Today, TQM has been successfully implemented in many organizations around the globe to gain sustainable advantages and since 1980 s it has become globally implemented management technique (Trappey, 1995). Quality gurus like Deming, Juran, Crosby, Feigenbaum, Ishikawa, Tauguchi and Shingo had set the foundation and develop guiding principles of quality management for the Japanese industry in order to gain order to gain sustainable advantages through TQM philosophy in order to meet customer expectations and perceptions. TQM is not limited to gain competitive advantage and organizational effectiveness but it also helps to provide superior quality products to their customers and increased organizational performance (Ahire et. al, 1996). TQM is a combination of both technical hard side of TQM and the management system especially focusing on employee s management mean soft side of TQM (Wilkinson, 1992; Evans and Lindsay, 1996). Technical aspect of TQM is comprised of quality tools and techniques like QFD, FMEA, SPC etc. whereas the people factors like employee involvement, commitment, teamwork, leadership, customer focused etc. It is evident from the literature that several gurus in the field of TQM believed that the soft aspects of TQM are critical for the success of an organization (Juran, 1964; Ishikawa, 1985; Deming, 1986; Dale and Cooper, 1992; Cruickshank, 2000) and major reasons of failure of TQM implementation in many of the organizations is due to the reason that soft side of TQM were not rightly addressed (Lowery et al., 2000; Wilkinson et al., 1998; Cruickshank, 2000). It is also evident from the literature that, organizations focusing on soft elements of TQM can outperform than their competitors (Powell, 1995). Employees are considered as an asset for the organization that helps to deliver innovative and quality product or services for them and contribute in organizational performance. It requires effective management of people by creating an environment that provides motivation, increased commitment and satisfaction among the employees. Number of studies explored that there is an association between TQM practices and HRM functions (Sinclair and Zairi, 1995; Wilkinson et al., 1998) and also there is a significant relationship among TQM practices and job satisfaction (Guimaraes, 1996, 1997; Noorliza and Zainal, 2000; Boselie and Wiele, 2002; Boon et al., 2005, 2007b). In Pakistan, survival of the industry is becoming more and more critical as the local industry in Pakistan is facing dozen of issues that are considered as a barrier for their growth which include; energy crisis, political instability, economy crisis, heavy taxes, cheap Chinese product and worst natural disasters during the last one decade and had put adverse effects on the local industry. Effective implementation of TQM principles in this worst situation is the only way that provides the local industry a road map of success. Japanese, Korean and Chinese industries are evident that TQM guiding principles provide them a road map of success. Hundreds of organizations in Pakistan during the last one decade both in manufacturing and service sector have successfully implemented the ISO 9000 series standards and now quality is considered as a part of strategic planning. This study aims to investigate the linkage between TQM practices and employees job satisfaction in Pakistani organizations. Studied organizations have implemented TQM practices to some extent but majority of these organizations have implemented ISO systems in order to 2

3 Far East Journal of Psychology and Business Vol. 6 No. 2 February 2012 make their systems effective and efficient and it is considered to be the first step towards their success. In TQM implemented environment, everything is documented that enables everyone to understand their roles and responsibility for organizational objectives. Uniqueness of this study is that no such study is conducted on this topic before. This study will help to assess the employee s perceptions about the effective implementation of TQM practices as an input that leads towards employees job satisfaction as an output. LITERATURE REVIEW TQM has a rich history that enables the Japanese companies to gain marvelous success within a very short span of time between 1950 s and 1980 s; Japanese industry recognized themselves by providing high quality products at lowest cost and considered as a global leader in electronics and automobiles. Founder of this philosophy was the Dr. Edward Deming, who first visited Japan in 1950 s to address the Japanese and since then the success of Japanese is still continue. A number of other countries were benefited by implemented this philosophy to achieve a landmark for their industry, Korean industry can be a one example. Abdullah Kaid Al-Swidi, Rosli Mahmod (2011) pointed out that studies provides evidences that TQM is a universal approach and it has been successfully implemented in almost all types of organizations like manufacturing, services, SME s, higher education and public service organizations. According to Okland (1995), TQM is an approach that enables the organizations in order to improve their competitiveness, increased effectiveness for the whole organization. TQM can be defined as a systematic approach consisting of guiding principles that helps the organizations to gain excellences in business through continuous improvement in all aspects (Short and Rahim, 1995; Boon et al., 2005). TQM is both a philosophy and set of guiding principles that helps the organizations to effectively manage all its resources and benefit to all the stake holders (Dale, 1999). According to ISO 9000, quality management is set of eight guiding principles which include: customer focus, leadership, involvement of people, process approach, system approach, continual improvement, factual approach to decision making and mutually beneficial supplier relationships. TQM practices involve; employee involvement, customer focus, teamwork, reduction of reworks, supplier relationships and continuous improvement in all aspects (Yang, 2005). However, number of definitions has been provided in the literature but no single definition can cover the whole aspects of TQM (Eriksson and Hansson, 2003). Another view point is about TQM comprised of two aspects; hard production/ operation oriented and soft employee s related elements (Wilkinson et al. 1997). Soft side of TQM that focuses on employees related issues become more important when it is considered in the context of HRM (Tari and Sabater 2006) and number of studies witnessed that TQM practices are positively related with the HRM (Wilkinson et al., 1998). Number of studies claimed that TQM practices have a significant impact on organizational performance but it is important that it first affect the soft performance (employee s satisfaction) before it affect the hard aspect of performance (Prajogo and Brian, 2010). Literature on TQM practices has proved empirically that effective implementation of TQM leads organizations towards increased performance (Flynn et al., 1994; Samson and Terziovski, 1999; Anderson and Sohal, 1999; Millen et al., 1999; Prajogo 3

4 Far East Research Centre and Sohal, 2004) and increased job satisfaction among employees (Harber et al., 1991; Guimaraes, 1996; Boon et al., 2007b). TQM practices are found to have a significant impact on employee s job satisfaction (Harber et al., 1991) and it also helps to create a healthy working environment in the organization (Poister and Harris, 1997). Major reason of selecting the five TQM practices namely; leadership role, training and education, reward and recognition, employees empowerment and cooperation and teamwork for this study is that these practices are also closely related to HRM practices and can be found in HRM and TQM literature. Leadership Role It has been recognized in number of studies that leadership plays a critical role in effective implementation of TQM in the organization (Flynn et al., 1994) and leadership plays a significant role by effectively implementation of TQM and how it drives towards organizational performance (Zakuan et al., 1997). Leadership role at all levels in the organizations is critical in creating a healthy working environment which motivates the employees for gaining the sustainable advantages. Employee s involvement is a key motivator among employees job satisfaction as it creates an environment in the organization where employees are involved and participate in decision making activities. More involvement of employees in their jobs helps to increase employee s commitment and performance (Lawler et al. 1998, O Driscoll and Randall 1999, Rodwell et al. 1998). Training and Education Training and development programs help to increase employee s knowledge and skills as well as provide opportunities for the individual growth. It has been observed that training and a development program increase job satisfaction and has a positive impact on employee s job satisfaction (Marie, 1995; Saks, 1996). Similarly, it helps to increase employee s ability to perform their duties and tasks assigned by the organization (Choo & Bowley, 2007). Reward and Recognition Reward and recognition plays a significant role in employee job satisfaction. Employees contributions in increasing organizational performance or any other contribution that distinguish from others in the organization are shared within the organization like employee of the month, cash rewards for higher sales, etc. impose positive impact on their attitude, behavior, and self satisfaction and it also helps to increase motivation among other worker by increased competition. Employees Empowerment Organizations are adopting such strategies and philosophy that enables the employees to perform their jobs more efficiently and effectively. Employee s empowerment is a strategy adopted by most of the organizations, which enables the employees to make their own decision at job in order to smooth functioning of their jobs and take responsibility of their results. Empowerment is defined by Conger and Kanungo (1988, p-747) as: a process of enhancing feelings of self efficacy among organizational members through the identification of conditions that foster 4

5 Far East Journal of Psychology and Business Vol. 6 No. 2 February 2012 powerlessness, and through their removal by both formal organizational practices and informal techniques of providing efficacy information. It has been recognized in number of studies that employee s empowerment has a positive impact on employee s attitude and behavior which ultimately, leads towards higher job satisfaction (Silver, & Randolph, 2004). Cooperation and Teamwork Quality circles and the quality improvement teams are critical for the success of TQM implementation and it also assure the employee participation from all departments in order to resolve the quality related issues which creates motivation and satisfaction among the employees. Teamwork in the organization provides employees cooperation among each other and among other departments which increases self-efficacy and ultimately leads towards job satisfaction among employees (Kirkman and Rosen 1999). Teamwork to achieve common goal in the interest of the organization causes to increase employee s job satisfaction and increased performance (Griffin et al., 2001). Job Satisfaction Job satisfaction has been defined and measured both as a global construct and as a concept with multiple dimensions or facets (Locke, 1969, 1976; Price, 2000). Locke (1976) defines job satisfaction as self-reported positive emotional state resulting from the appraisal of one s job or from job experiences Earlier studies found that employee job satisfaction and performance is a two folded concept either job satisfaction effects performance (Vroom, 1964; Schwab and Cummings, 1970) or performance effects job satisfaction (Vroom, 1964; Lawler and Porter, 1967). To deliver quality product or services and to make the external customer happy is strongly depending on internal customer satisfaction and hence the internal customer satisfaction has become an essential ingredient for the success and growth of a company (Harter et al. 2002, Harrison et al. 2006). External customer satisfaction cannot be achieved without the satisfaction of internal customers (Prajogo and Brian, 2010). From the above discussion the following Hypothesis were formed H1: Leadership has a positive impact on employee s performance H2: Training and education has a positive impact on employee s performance H3: Employees empowerment has a positive impact on employee s performance H4: Rewards and recognition has a positive impact on employee s performance H5: Cooperation and teamwork has a positive impact on employee s performance H6: Employee s performance has a positive impact on employee s job satisfaction STATISTICAL ANALYSIS The target population for this study was the employees working in the manufacturing and service organizations. However, service sector is one of the largest sectors of Pakistan economy and it contributes about 53% of the GPD in the national economy (economic survey of Pakistan 2009). A questionnaire was designed from the available literature based on the earlier studies conducted 5

6 Far East Research Centre on this topic by Boon et al. (2005, 2007b) and Prajogo and Brian, (2010). The questionnaire included 6 construct representing TQM practices and employee job satisfaction. The participants were the employees working at managerial, officers and supervisory level. Due to limited time, this study was conducted at local level in the 2 nd largest city of Pakistan. Personal efforts were used to collect the data from the respondents. A total 300 questionnaire were distributed, and a total 271 were received back from which 28 were incomplete or incorrect and were rejected. Thus a total 243 questionnaires were considered for the analysis of our study, yielding a response rate of 81% and considered it to acceptable level. The instrument in this study was used, a five point Likert Scale from strongly disagrees to the strongly agrees to measure the responses. The coding of the Likert scale was made as [1 = strongly disagree], [2 = disagree], [3 = neither agree nor disagree], [4 = agree], [5 = strongly agree]. Table.1 and 2 shows the demographic Statistics of sample comprised of gender and the job title of the respondents in this study. Out of a total 243 participants of this study, male population representing 65.8% participation, and female representing 34.2% participation of the total population. Table 1: Descriptive Statistics of Gender Frequency Percent Valid Percent Cumulative Percent Valid Female Male Total Table 2 indicates the position of the participant in the organization. There were 14 participants working at managerial position, 34 at deputy manager position and the remaining 193 are at officer or supervisor level position. The demographic of the data were given below and represented in table 1 and table 2. Data was entered in SPSS 16.0 for testing of our proposed SEM model using AMOS Table 2: Descriptive Statistics of Respondent Job Position Frequency Percent Valid Percent Cumulative Percent Valid Manager Deputy Manager Officers/Supervisors Total RESULTS & DISCUSSION The variables used in the study comprised of total 23 items out of which 22 items are representing five TQM practices as independent variables and 3 items represents employees job 6

7 Far East Journal of Psychology and Business Vol. 6 No. 2 February 2012 satisfaction are dependent variables. The reliability of the questionnaire was checked using reliability coefficient Cronbach Alpha and the overall value of Cronbach Alpha was 0.93 depicting the highest level of reliability of the data. Confirmatory factor analyses were used using maximum likelihood. Leadership role was labeled as LDRSHP and was comprised of four items having Cronbach Alpha value Four items were representing the leadership role and were labeled as LRDSHP providing Cronbach Alpha value Second construct in this study was Training and education comprised of four items and was labeled as TRNEDU providing Cronbach Alpha value Third construct in this study was empowerment comprised of four items and was labeled as EMPMNT providing Cronbach Alpha value Fourth construct was reward and recognition comprised of four items and was labeled as RWDRNG providing Cronbach Alpha value Fifth construct of this study is co-operation and teamwork and was labeled as COPTMW providing Cronbach Alpha value 0.91 and finally, job satisfaction is coded as JOBSAT providing Cronbach alpha value Hence all the constructs used in this study providing Cronbach Alpha value more than 0.70 as provided by Nunnally (1970). Table 3 provides information regarding all the variables and construct with factor loading and Cronbach Alpha values. Table - 3: Description of Variables used in the Study Construct 7 Standardized Regression weights Cronbach Alpha Leadership Role (LDRSHP) 0.84 L1: Management commitment to customers 0.81 L2: Employee cooperation is encouraged throughout the 0.74 organization L3: continuous improvement at all levels 0.79 L4: Create learning environment in the organization 0.73 Training and education (TRNEDU) 0.87 T1: Encourage and provide resources for training programs 0.87 T2: Quality enhancement training programs 0.84 T3: Comprehensive training programs at all levels throughout the 0.89 year T4: Training on statistical quality tools to measure the variations 0.71 Empowerment (EMPMNT) 0.80 E1: Suggestion for improvement are discussed and implement 0.71 E2: Risky initiative for improvements are taken 0.79 E3: employees at all levels participate in brainstorming sessions 0.74 E4: Crisis handling and improvements 0.64 Rewards and recognition (RWDRGN) 0.83 R1: Performance is recognized and rewarded 0.74 R2: Team based reward system 0.62 R3: Reward system is fair and clear 0.81 R4: Employee achievements are shared and promoted 0.89 Co-operation and Team work (COPTMW) 0.91 C1: Teams to solve quality issues and other problems 0.84 C2: Share knowledge and expertise with the other employees 0.84

8 Far East Research Centre C3: Quality circles are actively working in the organization 0.89 C4: promote teamwork and cooperation among each other 0.93 Employee Job satisfaction (JOBSAT) 0.89 JS1: Above efforts helps to reduce absenteeism and complaints 0.84 JS2:Motivated and create ease to perform my duties 0.89 JS3: Happy to work and continue to work in this organization 0.91 Structural equation modeling has been substantively used in most of the today s management research articles as a statistical tool in order to analyze the results (Zakuan et. al, 2010). They further emphasizes that major reason of rapid adoption and use of SEM in management studies and social science studies is that confirmatory factor analyses help the scholars to asses and modify the theoretical models and its functions are better than multivariate techniques, factor analysis and regression analysis. It provides a relationship between both the independent and dependent variables (Rohani et al., 2006). Figure - 1: Path Diagram for the proposed model L L L3 L4 LDRSHP T1 T2 T3 T4 E1 E2 E3 E TRNEDU EMPMNT EMPPER R1 R2 R3 R RWDRGN C1 C2 C3 C COPTMW 0.86 JS1 JOBSAT JS JS3 Chi-square= , df=319, normed chi-square=1.023 p=0.000 RMSEA=0.079 CFI= 0.72 GFI=

9 Far East Journal of Psychology and Business Vol. 6 No. 2 February 2012 Estimated path diagram for the proposed TQM practices and employees satisfaction is represented in the figure below. Rectangles represent the endogenous or exogenous observed variables and the oval represents the related latent variables. Arrows between the rectangles and ovals represents the relation between the observed variables and the arrow between the ovals indicates the structural relationships among the corresponding variables. Path diagram of the structural model is represented in the figure below and the results of this analysis provide a very good fit by using the results from goodness-of fit indices. Values of the chi-square, degree of freedom, p-value, Root mean squared error of approximation RMSEA, goodness of fit index for this model (GFI), Value of the comparative fit (CFI), adjusted goodness of fit index (AGFI), normed Fit index (NFI) provides goodness of fit of the measured model (Chau & Hu, 2001; Jun et al., 2006; Lin & Lee, 2004). Model fit summary of the variable studied provides that chi-square value is , degree of freedom is 319 and the p-value is and normed-chi square is 1.023, value of the goodness of fit index (GFI) for this model provides an acceptable value of 0.79, comparative fit (CFI) for this model is 0.72, root mean square error (RMSEA) for this model is calculated as Therefore, the above result indicates that the studied model provides a very good fit and it is represented in the table below. From the above results it is clear that all the variables representing the construct leadership has a direct positive impact on employee s performance and thus validating our hypothesis H1. Similarly, other construct representing TQM practices has a direct positive impact on employee s performance and thus validating the hypothesis H2, H3, H4 and H5.Employee s performance has a direct positive impact on employee s job satisfaction and thus validating the hypothesis H6. Correlation among the variables is also stated in the table below. Corelation Among The Latent Variables Constructs LDRSHP TRNEDU EMPMNT RWDRNG COPTMW LDRSHP **.563 **.541 **.756 ** TRNEDU.741 ** **.534 **.668 ** EMPMNT.563 **.523 ** **.673 ** RWDRNG.541 **.534 **.629 ** ** COPTMW.756 **.668 **.673 **.682 ** 1 **. Correlation is significant at the 0.01 level (2-tailed). Correlation among the constructs reported in above table provides the information about the correlation among the studies variables which includes leadership role, reward and recognition, training and education, employee s empowerment, cooperation and teamwork. Results indicate that there exists highest correlation among leadership role and cooperation and teamwork which indicates 75.6% which indicates that there is strong and positive correlation among these variables. It means that positive and effective leadership plays a significant role on developing a cooperation and teamwork and it leads towards individual performance as well as organizational performance. A p-value which is at 1% level of significant among these two variables also indicates that there is a strong correlation among these variables. However, the weakest correlation is among training and education and empowerment which is 52.3% which is positive 9

10 Far East Research Centre and p-values is indicating a significant correlation among these two variables at 1% significance level. CONCLUSION It is clear from our findings from the above statistical results that soft aspects of TQM practices have a significant and positive impact on employee s performance and ultimately, it leads towards employee s job satisfaction. It means that employees satisfied with their jobs are performing their task with more commitment and motivation that helps to reduce absenteeism which ultimately, helps to reduce the reworks. Secondly, a satisfied employee is more committed with their jobs as compare to other employees and it also creates loyalty with the organization that provides basis for organizational performance. Thirdly, job satisfaction also provides employees pleasure at their jobs and there are mentally relax and find pleasure to perform their duties which helps to create a healthy working environment in the organization for gaining sustainable advantages. TQM practices are not only limited to increase employee s job satisfaction but TQM practices and employee s job satisfaction linkage is considered as input to achieve organizational performance. It is not necessary, that TQM practices are the only management approach that helps to increase employee s performance. However, people related TQM practices must incorporated with HR system in the organization to gain the competitive advantage (Prajogo and Brian, 2010). Due to limited time, this study has some limitations. This study was conducted at local level and results of this study cannot be generalized. However, a comprehensive study can be conducted by adding more people related TQM practices on a particular sector, which wills helps to provide a real understanding about the TQM practices and employees job satisfaction. REFERENCES Abdullah Kaid Al-Swidi, Rosli Mahmod (2011), Fostering the Performance of Banks Through Total Quality Management (TQM) Practices: A Bank Branches Perspective, European Journal of Social Sciences, 19(2,) Ahire, S.L. and Golhar, D.Y. (1996), Quality management in large vs small firms, Journal of Small Business Management, 34(2), Boon, O.K, Bakar, N.A., Arumugam, V., Vellapan, L. and Loke, K.Y. (2007b), Does TQM influence employees job satisfaction? An empirical case analysis, International Journal of Quality & Reliability Management, 24(1), Boon, O.K., Arumugam, V. and Hwa, T.S. (2005), Does soft TQM predict employees attributes?, The TQM Magazine, 17(3), Boselie, P. and Wiele, T.V.D. (2002), Employee perceptions of HRM and TQM and the effects on satisfaction and intention to leave, Managing Service Quality, 12(3), Chapman, R. and Al-Khawaldeh, K. (2002), Quality management worldwide: TQM and labour productivity in Jordanian industrial companies, The TQM Magazine, 14(4),

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