Relationship between Organizational Commitment and EFQM Business Excellence Model: A Study on Turkish Quality Award Winners

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1 Total Quality Management Vol. 18, No. 10, , December 2007 Relationship between Organizational Commitment and EFQM Business Excellence Model: A Study on Turkish Quality Award Winners OZKAN TUTUNCU & DENIZ KUCUKUSTA Faculty of Business, Dokuz Eylul University, Center of Quality and Excellence, İzmir, Turkey; Center of Quality and Excellence, Dokuz Eylul University, İzmir, Turkey ABSTRACT Excellence models affect performance and help organizations achieve organizational excellence. Furthermore, organizational commitment is another concern of organizational excellence. The measurement of organizational commitment has become an important issue in TQM. In this respect, the extent to which employees are committed to what they are responsible for may directly influence the level of customer satisfaction with services and products. The main purpose of the study is to determine the relationship between an excellence model and organizational commitment. In order to achieve this goal, a survey that contains Meyer & Allen s Organizational Commitment scale and EFQM Criteria are applied to Turkish Quality Awards winners employees in Data obtained in the study have been analyzed at the level of multivariate data analysis and the results show that the relationship between organizational commitment and EFQM Excellence Model was significant. Findings suggest that leadership, partnerships and resources, policy and strategy, affective commitment, processes, results, people development and involvement and continuance commitment are the determinants of the organizational commitment and EFQM Excellence Model respectively. Theoretical and practical implications of the findings are also discussed in the paper. KEY WORDS: Total Quality Management, organizational commitment, business excellence model, EFQM Award, Turkey Introduction In Europe, this interest in self-assessment was heightened with the introduction of the European Quality Award (EQA), the quality award model most widely used in Europe developed by the European Foundation for Quality Management (EFQM), in 1991, Correspondence Address: Özkan Tütüncü, Dokuz Eylül Üniversitesi, İşletme Fakültesi, Kaynaklar Yerleşkesi, Buca, İzmir, Turkey. ozkan.tutuncu@deu.edu.tr Print/ Online/07/ # 2007 Taylor & Francis DOI: /

2 1084 O. Tutuncu and D. Kucukusta with the first winner in The EFQM was formed in 1988 by 14 leading European businesses, and it encourages European businesses to improve competitiveness through the use of TQM philosophy. Further details of the EQA are given by Conti (1993), Hakes (1995), and Nakhai & Neves (1994). The EFQM has provided a holistic model, termed business excellence or the excellence model (BEM), to facilitate such a purpose. The model and the associated self-assessment process have given new direction to the quality movement and have driven deep and lasting changes into participating organizations (Dale et al., 2000). Many researchers have attempted to determine the factors that would assist describing organizational commitment (OC), job satisfaction and, accordingly, a better organizational climate for organizational effectiveness and performance (e.g. Tutuncu & Demir, 2002). There are some consequences of the surveys on organizational commitment profits and/or social benefits. Excellence models affect performance and help organizations achieve organizational excellence. Furthermore, organizational commitment is another concern of organizational excellence. The measurement of organizational commitment has become an important issue in TQM. Literature Review EFQM Business Excellence Model In 1999, the EFQM revised the model and made a noticeable switch in language from TQM to organizational excellence. Nabitz et al. (1999) stated that the word quality does not appear in either the sub-criteria or the areas to address on the revised model. The EQA is now known as the EFQM excellence award. The EFQM model comprises five enabler criteria: leadership; policy and strategy; people; management, resources and partnerships; and processes. It also comprises four results criteria: customer satisfaction, people satisfaction, impact on society and key performance results (EFQM, 2005). These criteria represent critical success factors and are parallel to the TQM principles (Boynton & Zmud, 1984; cited in Kanji & Tambi, 1999). Criteria affect performance and help organizations achieve organizational excellence (Oakland, 1999; Kanji & Tambi, 1999). The EFQM excellence model involves nine criteria and the relative importance of these criteria is indicated by the criterion weight structure (Figure 1). Research on the weight structure has been limited and this is problematic regarding the use of the model because it raises the question of whether or not it makes any sense to compare companies according to an arbitrary weight structure, which has never been empirically tested (Eskildsen et al., 2002). The criterion weights of the award models are important for the EFQM Excellence Model as well as others (Lascelles & Peacock, 1996; Porter & Tanner, 1998; Conti, 1997). The logic behind this is that the award criterion has always been intended to be instruments for comparing an organization with other organizations or to rate an organization against a commonly-adopted scoreboard (Conti, 1997). Peters (2000) noted that quality was seen as old-fashioned and was superseded, to an extent, by the concept of excellence. Dale et al. (2000) also stated that people at the centre of initiatives including self-assessment against the EFQM Excellence Model often believe that their performance improvement initiatives are based on quality, although they know little about the subject.

3 Relationship between Organizational Commitment and EFQM 1085 Figure 1. The EFQM criterion weight The excellence model has evolved to be a framework that can incorporate several other initiatives. Jeanes (2000) noted that every type of organization will be able to include any one of the dozens of quality initiatives under the Model and he then went on to identify the relevance of the Model to several initiatives and practices. This view was also supported by Shephard (2000). Thus, while the Excellence Model provides an overall framework, it presupposes that an organization has a number of established systems and initiatives to deal with process and other operational issues. Morgan (2000) asserted that there are a lot of parallels between Six Sigma and the Excellence Model and that both are complementary approaches. Organizational Commitment Organizational commitment is a long-studied topic by researchers (Angle & Perry, 1981; Becker, 1960; Meyer & Allen, 1997; Reichers, 1985). Research has found commitment positively related to job satisfaction (Mowday et al., 1982), motivation (Blau, 1988; Gunz & Gunz, 1994; Mowday et al., 1979), and negatively related to absenteeism and turnover (Aquino et al., 1997; Clegg, 1983; Cotton & Tuttle, 1986). Other issues include the foci of commitment (Becker, 1992; Becker et al., 1996; Gordon et al., 1984; Gouldner, 1958; Hunt & Morgan, 1994; Reichers, 1985); whether it is an attitude or a behavior (Jaros et al., 1993); how to measure commitment (Meyer et al., 1989); and, most relevant to this study, the multidimensional nature of commitment (Meyer & Allen, 1997). Organizational Commitment and Job Satisfaction are two of the most important work attitudes examined in the work and organizational literature. Porter et al. (1974) defined organizational commitment as the strength of an individual s identification and involvement with a particular organization, characterized by three factors: (a) a strong belief in, and acceptance of, the organization s goals and values; (b) a willingness to exert considerable effort on behalf of the organization; (c) a definite desire to maintain organizational membership.

4 1086 O. Tutuncu and D. Kucukusta This definition combines both psychological and an attitudinal dimension (Maxwell & Steele, 2003). Mowday et al. (1982) have suggested that gaining a greater understanding of the processes related to organizational commitment has implications for employees, organizations, and society as a whole. Employees level of commitment to an organization may make them more eligible to receive both extrinsic (e.g. wages and benefits) and psychological (e.g. intrinsic job satisfaction and relationships with co-workers) rewards associated with membership. Organizations value commitment among their employees, which is typically assumed to reduce withdrawal behaviors such as lateness and turnover. Meyer & Allen (1997) state that organizational commitment is a psychological state that characterizes the employee s relationships with the organization and it has implications for the decision to continue membership in the organization. According to organizational behavior theorists, organizational commitment consists of three different types. It is believed that one type of commitment involves the employee s affective evaluation of the organization and this has been labeled as: affective commitment (Meyer & Allen, 1997); psychological attachment through identification (O Reilly & Chatman, 1986); or involvement (Mowday et al., 1982). Another type of commitment is reflected by an individual s feelings of obligation to the organization and has been termed: normative commitment (Meyer et al., 1989); moral commitment (Penley & Gould, 1988); or internalization. A third type of commitment is reflected in the employee s evaluation of the costs and rewards associated with continued employment and has been labeled: continuance commitment (Meyer et al., 1989); calculative commitment (Penley & Gould, 1988); or compliance commitment (O Reilly & Chatman,1986). In the study, organizational commitment is measured by the Meyer Allen Scale with the three above-mentioned dimensions like affective, normative and continuance commitment. Organizational Commitment in Business Excellence and TQM Deming (1986) views employee commitment to quality work as central to a successful TQM program. Commitment to remaining a member of the organization is crucial to quality. TQM theory suggests that long-term employment contributes to quality in at least two ways: it generates the kind of implied knowledge of operations that helps improve effectiveness, and it helps the organization gain advantage from investments in training (Brooks & Zeitz, 1999). Some researchers mention the importance of longterm employment commitment from employees (Berry, 1991), although for others employment longevity is only implicit. Treatments of Japanese TQM programs generally are explicit in their emphasis on long-term commitment (McMillan, 1989). TQM may have been misunderstood narrowly as a tool for quality improvement only. There has been a movement from a reactive to a proactive quality management approach (Slack et al., 1998; Dale, 1999). Many studies have investigated the effects of various quality management practices on operational performance (Zhao et al., 2004; Choi & Eboch, 1998; Samson & Terziovski, 1999), and quality performance (Anderson et al., 1995; Dow et al., 1999), and business performance (Adam et al., 1997; Hendricks & Singhal, 1997). It has been empirically verified that the application of holistic management models such as The EFQM Excellence Model has a positive effect on corporate performance (Kristensen et al., 2000). While it can be argued that the wide acceptance of business excellence model slowed down the growth of the use of classical quality management tools and techniques, it is more debatable that quality died or was totally eliminated

5 Relationship between Organizational Commitment and EFQM 1087 (Adebanjo, 2001). The move from the EFQM model to the European Business Excellence Model seems justified but more explanation is needed (Sun et al., 2004). The topic of business excellence has received considerable attention from academic researchers and is well defined in the literature (Chin et al., 2003; Bemowski & Stratton, 1995; Conti, 1997; Coulambidou & Dale, 1995; Hakes, 1998; Lascelles & Peacock, 1996). The search for excellence and dissemination of best practice is the main philosophy and a major function of the Business Excellence Model but many writers like Galloway (1996) have difficulty in defining quality this way. It was also seen as addressing the needs of both internal customers and stakeholders allowing the business to meet set goals and objectives (Ritchie & Dale, 2000). Some new models are developed for business excellence. One of them is Kanji s (1998) Business Excellence Model. Later, Kanji & Sa (2002) proposed the Business Excellence Measurement System. The system is based on two core factors: leadership and organizational values. Business excellence is related to both quality performance and customer satisfaction. Some empirical studies have addressed cause-and-effect linkages or correlations among organizational performance measures (Evans & Jack, 2003). These include Norreklit (2000), who examined the assumptions and cause-and-effect chain in the balanced scorecard; studies of the relationship between customer satisfaction, value and loyalty, organizational commitment and financial performance (Brandt, 2000; Anderson, Fornell & Lehmann 1994; Bernhardt et al., 2000; Edvardsson et al., 2000); relationships between employee attitudes and customer satisfaction (Tornow & Wiley, 1991; Hallowell et al., 1996); and relationships between work environment and customer service as related to financial performance (Wiley, 1991; Borucki & Burke, 1999); and relationships between customer attitudes and market share/financial performance (Naumann & Hoisington, 2000). Human resource management is also important to customer satisfaction as is strategic planning to quality performance (Flynn & Saladin, 2001). Excellence models affect performance and help organizations achieve organizational excellence (Kanji, 2002). Furthermore, employee satisfaction is another concern of organizational excellence. Organizations should focus on internal customers as much as external customers. The link between employee satisfaction and customer satisfaction has been verified empirically (Dahlgaard et al., 1998). Eskildsen & Dahlgaard (2000) have developed a causal model for employee satisfaction. Attention to the relationship between TQM implementation and employee commitment is also under investigation by researchers. Brooks & Zeitz (1999) carried out a study on the relationship between organizational commitments and TQM among healthcare staff. The main purpose of the study is to determine the relationship between excellence model and organizational commitment. The paper will focus on identifying the relationships that create committed employees in the business excellence process. Therefore, the first hypothesis of this study can be stated as follows: H 1 : There is a correlation between OC and BEM. Since the Business Excellence Model has been previously proved to improve performance and human factors is one of the main dimensions of it, enablers of BEM may influence the employees of an organization more than the components of OC. Through canonical correlation analysis, the following hypothesis is tested: H 2 : BEM components are perceived as more important than OC components.

6 1088 O. Tutuncu and D. Kucukusta The search for excellence and dissemination of best practice is the main philosophy and a major function of the Business Excellence Model, but many writers, such as Galloway (1996), have difficulty in defining quality this way. It was also seen as addressing the needs of both internal customers and stakeholders, allowing the business to meet set goals and objectives (Ritchie & Dale, 2000). As one of the modern organization theories, the contingency approach suggests that organizational structure is related to environment and technology (Duncan, 1972, 1973). On the other hand, as one of the post-modern approaches, the population ecology approach argues that the unit of analysis may be determined as organizations, populations or communities in any given area, as well as any single organization. According to Hannan & Freeman (1977), any sub-level unit of analysis cannot perform an accurate research without conceiving a high level unit of analysis. According to the cultural differences, the perceptions of respondents may vary towards dimensions of the dependent variables. The third hypothesis concerning different value judgments is stated as: H 3 : Affective commitment is perceived more important among other OC dimensions. According to Hofstede (2005) Uncertainty Avoidance (UAI) is highly correlated with the country s emotional values. The study conducted among 56 countries showed evidence that UAI is higher than other dimensions in Turkey. Therefore, his study stated that Turkish people are emotional. H 3 is constructed with this information in mind. Another result of this state of being emotional, is that normative commitment scores are expected to be lower. When we analyze the statements that constitute the normative commitment dimension the items seem more concrete than the ones that constitutes the affective commitment dimension. Quality award studies were started in Turkey in 1998 by the Turkish Foundation for Quality (KALDER). The criterion for quality award in Turkey is the same as the Business Excellence Model. The model has some limitations for Turkey. These limitations are determined in previous researches (e.g. Tutuncu & Dogan, 2004). It is identified that the nine EFQM Business Excellence Model criterion groups were perceived as six groups by the respondents. In other words, the results of criterion groups were perceived as a single item instead of independent groups. This can be explained by the pragmatic approach of the Turkish society. Research Methodology The data were obtained by administrating a structured-questionnaire survey. The questionnaire instrument consisted of three parts. The first part of the survey inquired about 18 statements covering organizational commitment under three dimensions. The second part of the instrument included 36 questions designed to measure the level of the employees perception levels on EFQM Excellence model criteria and presented statements such as Leaders motivate, support and recognize the organization s people. The reliabilities and validities of both instruments (OC & EFQM) have been previously proved by other researchers. Since the scales were to be used in Turkey, it has to be retested against validity and reliability. The reliability and validity have been proved in recent studies (e.g. Tutuncu & Dogan, 2005; Tutuncu et al., 2005). Their reliabilities and construct validities have been confirmed.

7 Relationship between Organizational Commitment and EFQM 1089 A five-point Likert scale was used in this part, ranging from definitely agree (1) to definitely disagree (5). The final part involved six questions regarding basic demographic characteristics of the respondents, such as How old are you?. The survey instrument was pilot tested among 25 employees. The pilot results were used to improve the clarity and readability of questions. The study was carried out in three stages: population, data collection and data analysis. According to the KALDER, five companies and institutions won EFQM Business Excellence Award in All of them accepted to take part in the research. Approximately 9000 employees work in these organizations. As a result, multi-stage sampling was used for the survey due to its efficiency. In total, 600 questionnaires distributed by the researchers and 407 questionnaires were returned, with a response rate of 69%, which is statistically acceptable for data analysis. Of these, two were eliminated due to missing data. The data obtained were analyzed by using SPSS 13.0 and SAS 9.0 software. Data analysis consisted of frequency distribution, descriptive statistics and canonical correlation analysis within the multivariate data analysis. Research Findings Demographic dispersion and the profile of employees under the base of definitive statistics are stated in Table 1. A total of 405 people have participated in the research. The reliability tests have been implemented on the data. To increase the reliability coefficient of the test, two data items have been taken out of study. As a result of the test, the general Cronbach alpha of the data is found to be This is within acceptable limits for reliability analysis (Nunnaly, 1978). Table 2 shows the descriptive statistics of the survey results by the means of factor averages of the independent variables and dependent variables. The mean values come out between 1 5 numerical values (in reading Likert scale results, 5: strongly agree, 4: agree, 3: neither agree nor disagree, 2: disagree, 1: strongly disagree). In order to determine the relationship between two sets of variables, canonical correlation analysis is used. Canonical correlation analysis is a multivariate statistical model that facilitates the study of interrelationships among sets of multiple dependent variables and multiple independent variables. In this study, organizational commitment (OC) and business excellence models (BEM) are specified as the set of dependent variables. One of the dependent variables, OC, is measured by the Meyer Allen Scale with the three above-mentioned dimensions, affective, normative and continuance commitment. There are six more dependent variables associated with the other dependent variable, the business excellence model. The level of significance of a canonical correlation generally considered to be the minimum acceptable level for interpretation is the 0.05 level, which (along with the 0.01 level) has become the generally accepted level for considering a correlation coefficient as statistically significant (Hair et al., 1984: 450). In this study, both canonical correlations are statistically significant ( p, 0.05). In addition, multivariate tests such as Wilk s lambda, Pillai s trace, Hotelling s trace and Roy s ger are also performed (Table 3). The results of these tests also prove that both correlations are significant at the level. Redundancy analysis for the first and the second function is observed. From the redundancy analysis, it is seen that the canonical R 2 of the first function is and the redundancy analysis for the second function produces a lower value, a

8 1090 O. Tutuncu and D. Kucukusta Table 1. Demographic dispersion Number % Number % Sex Education Female High school Man University Missing Post graduate Total Missing Age Total At 15 or younger than Total working years and above More than 10 years Missing Missing Total Total Tenure (Present job) Less than and more Missing Total canonical R 2 of From the redundancy analysis, and the significance tests, the first canonical function should be accepted. Table 4 represents canonical results of the dependent and independent sets for both functions (variates). Table 4 shows the canonical coefficients of the dependent variables (OC and BEM) belong to the criterion set and three commitment measures and six components of the business excellence model belong to the predictor set. Canonical function 1 has been found to be significant from the significance tests and redundancy values. Function 2 Table 2. Descriptive statistics N Mean Std. deviation Continuance commitment Normative commitment Affective commitment Leadership Policy People Partners Processes Results OC BEM Valid N (listwise) 398

9 Relationship between Organizational Commitment and EFQM 1091 Table 3. Canonical correlation analysis relating levels of dependent and independent set Measures of overall model Fit for canonical correlation Canonical function Canonical correlation Canonical R 2 F Statistics Probability Multivariate tests of significance Value Approx. F Probability statistics Wilks lambda Pillai s trace Hotelling s trace Roy s ger has not been taken into consideration since it is significant but has poor redundancy percent with lower loadings. In Function 1, both dependent variables (criterion set) have loadings exceeding This indicates a high correlation between OC and BEM and supports Hypothesis 1. The examination of the loading values in the criterion set shows that OC (0.9162) has a higher value than BEM (0.8275). When BEM factors and OC factors are taken together, these factors have a stronger effect on OC. All the canonical loading of the independent variables in the predictor set have positive values. Leadership (0.8166), Partners (0.8089), Policy (0.7880) have the highest loadings. These loadings show that Hypothesis 2 should be accepted where BEM variables are perceived more important than the OC variables Affective Commitment (0.7691), Processes Table 4. Canonical results Canonical function 1 Canonical function 2 loadings loadings Criterion Set BEM-Business Excellence Models OC-Organizational Commitment Explained variance 76.2% 23.8% Predictor Set Leadership Policy People Partners Processes Results Continuance Commitment Normative Commitment Affective Commitment Explained variance 49.7% 8.4% Canonical Coefficient Redundancy R % 7.4%

10 1092 O. Tutuncu and D. Kucukusta (0.7629), Results (0.6958), People (0.6755), and Continuance Commitment (0.6101) have the next highest loadings. Normative Commitment (0.2162) has the lowest loading, which may mean that normative commitment has the weakest effect on dependent variables. The BEM components have mostly had positive and strong impacts on BEM and OC. This also supports Hypothesis 2. From Table 3 it can be seen that affective commitment, among other OC components, is perceived to be more important since it has the highest loading value (0.7691). According to Hofstede (2005) emotional values are respected more than other factors. This study also supports his findings. In other words, of the three factors affective, normative and continuance which constitute the Organizational Commitment (OC), affective commitment is perceived to be more meaningful on the road to business excellence. This also supports Hypothesis 3. As far as OC components are concerned, normative commitment has the weakest impact on the criterion set. When the items of the normative commitment are examined it can be seen that they have rigid expressions. Business excellence, however, is based upon voluntariness. Forceful structure in the organization, on the way to excellence, conflicts with the voluntary spirit of the BEM. In order to validate the canonical correlation analysis, a sensitivity analysis of the independent set also has been made. Independent variables like leadership, partnership and normative commitment have been deleted but there have not been significant changes at the factor loadings. This analysis ensures the validity of the data. Conclusion The relationship between the enablers and the results criteria of the EFQM can also be interpreted. The enablers of the study have more canonical loadings compared to the results. One reason is the formulation of the results in the survey as a whole through a questionnaire whose validity was previously proved, while the results in the EFQM Model consist of four parts. Consequently, the strength of the relationship between them is relatively low. On the other hand, process management is perceived to be more important than results. As a result, there is a strong relationship between organizational commitment and business excellence. Normative commitment has a negligible role in this relationship. Employees do not evaluate their level of commitment in relation to coercive structure (normative) in the process towards business excellence. It would be possible for the organizations to establish more effective quality systems by taking these evaluations into consideration. Although there is a strong relationship between canonical criterion variables, it is seen that business excellence criteria are more affected by the predictors, especially by the independent variables of its BEM s original measure. It can be seen from the study that affective commitment is highly correlated with BEM factors, as it is perceived to be more important than processes, results and people factors. Management that wants to implement the business excellence model should also take affective and also continuance variables into consideration, as well as the BEM s factor. From the analysis of criterion set interrelations, it can be said that organizational commitment receives more input than BEM factors. In other words, any contribution into Business Excellence will help the level of organizational commitment to increase. The strong relationship between OC and BEM shows that organizations that implement

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