A STUDY OF TQM ORGANISATIONAL CULTURE IN A MICROFINANCE INSTITUTION OF WEST BENGAL

A STUDY OF TQM ORGANISATIONAL CULTURE IN A MICROFINANCE INSTITUTION OF WEST BENGAL Monalika Dey 18 ABSTRACT The changing environment calls for new approaches to meet the organization s mission. Total quality management is one of the tools, which organizations are embracing to meet the growing demand of a changing environment. The main objective of this research study is the development of a total quality management organizational culture in Microfinance Institution. To realize it the current organizational culture at Microfinance Institutions will be analyzed in order to determine what should be done. A literature review will also be conducted to determine the components of a TQM organizational culture. All this information will be used to formulate an approach for the development of a TQM organizational culture. This study will discuss the quest for service excellence and continuous improvement and the role of employees in total quality management and how managers can maximize this. It will also focus on cultural transformation principles that are useful in promoting quality processes and output and consequently service excellence in an organization. The empirical study involved a questionnaire, a sample and statistical analysis adapted to solve the main and sub-problems of the study. KEYWORDS Micro-Finance, Institution, TQM, Organizational Culture etc. BRIEF LITERATURE SURVEY Organizations around the world are under tremendous pressure to control their costs and improve their services. In response to chronic fiscal constraints, local governments are considering management tools used in the private sector such as activity based costing and management, total quality management (TQM), benchmarking, process re-engineering and the balanced scorecard (Naidoo, 27: 68). Total Quality Management has been applied outside the industrial sectors to service organization to increase both the performance and efficiency Microfinance is an important sector in India as well as in West Bengal. Reserve Bank of India Provides greater flexibility in this sector and has introduced several rules and regulations aimed to further develop this sector and improve its ability and at the same time encourage investment in the country. However, no significant work has been done to measure and control quality in this sector. Hence, my research will suggest that the application of TQM can improve service quality of Microfinance Institution and at the same time can increase the performance and efficiency of the organization. The need of the hour is to build up competitiveness through enhanced service quality thus making the microfinance sector more organized, market oriented and customer friendly. In the year, 1999 Otero defined Microfinance as the provision of financial services to low-income poor and very poor selfemployed people. Otero in the year 1999 illustrates the various ways in which microfinance, at its can combats poverty. She states that microfinance creates access to productive capital for the poor, which together with human capital, addressed through education and training, and social capital, achieved through local organization building, enables people to move out of poverty By providing material capital to a poor person, their sense of dignity is strengthened and this can help to empower the person to participate in the economy and society.the aim of microfinance according to her is not just about providing capital to the poor to combat poverty on an individual level, it also has a role at an institutional level. It seeks to create institutions that deliver financial services to the poor, who are continuously ignored by the formal banking sector. Schreiner and Colombet in 21define microfinance as the attempt to improve access to small deposits and small loans for poor households neglected by banks. Thus, we can conclude from the above literature the microfinance targeted the grass root sector of the society to provide doorstep finance, which is impossible by a formal banking system. However, the working process and the performance indicators to measure the same are not being clearly defined. Littlefield and Rosenberg in the year 24 state that the poor are generally excluded from the financial services sector of the economy so MFIs have emerged to address this market failure. By addressing this gap in the market in a financially sustainable manner, an MFI can become part of the formal financial system of a country and so can access capital markets to fund their lending portfolios, allowing them to dramatically increase the number of poor people they can reach. Thus, we can conclude that the microfinance institution helps in the formation of social capital. 18 Assistant Professor and Research Scholar, School of Management Sciences, Indian Institute of Engineering Science and Technology, West Bengal, India, monalika.dey@gmail.com 177 P a g e

Patten et al. in 21 provide a more recent example of the of MFIs and their clientele. They compare the performance of the Indonesian MFI Bank Rakyat Indonesia (BRI) to formal Indonesian banks during the East Asian financial crisis. They find that BRI performed superior to the formal banking sector when comparing both loan repayment rates and savings rates of members. Here we see the performance of the microfinance institution is a major issue but how sustainability and efficiency of performance is maintained has not been discussed. In 22 Edgcomb, in 21 Cook et al and Dumas used case methodology to analyze MFIs offering integrated business development training. They concluded that business development training significantly improves microenterprise performance and micro entrepreneur empowerment. Effective performance of the micro entrepreneur and microenterprise will ultimately enhance the loan repayment cycle of the MFI and will indirectly help to be more efficient. This shows that some MFI took initiative for better performance. Microfinance has a very important role to play in development. According to proponents of microfinance, as stated by UNCDF in 24 that studies have shown that microfinance plays three key roles in development. It: _ helps very poor households meet basic needs and protects against risks, _ is associated with improvements in household economic welfare, _ helps to empower women by supporting women s economic participation and so promotes gender equity Microfinance plays a vital role in the overall development of the economy. It empowers women by providing them financial support for income generation activities and in turn making them more involved in the decision making process of their family. Thus we can say that the success story of microfinance institution truly depends on the members/customers portfolio. Hence steps should be taken to measure and control its quality in order to improve its performance. Epstein, M.J. & Crane, C.A. in (2) in the paper Alleviating global poverty through microfinance: factors and measures of financial, economic, and social performance illustrates on two major issues as what are the primary determinants of success for MFI and what are the appropriate measures. Thus, we can conclude that success of microfinance is important and at the same time measures to control this success is important. In all the above mentioned literature it has been said that Microfinance Institutions plays a very important role in the overall development of the society by providing financial support to establish microenterprises by those individuals who are normally ignored by the formal banking system. Microfinance institution plays an important role in developing the economy of our country and at the same time, RBI is providing several regulatory frameworks to manage this unorganized sector. As the principle of TQM has been applied in most of the service organization, hence this can also be used to control quality of service in the microfinance sector. Applying TQM in this sector will not only enhance quality but at the same time it will help the microfinance sector to gain competitive advantage by improving performance. PURPOSE OF RESEARCH STUDY To identify the nature of the current organizational culture in a Microfinance Institution and identify the various components / variables of a TQM organizational culture. RESEARCH DESIGN AND METHODOLOGY The sample group included officials who are employed in the organization. The sample size is 4.A convenience sampling method is used. A structured questionnaire was used to collect primary data consisting of the following sections: Obstacles to the implementation of a TQM organizational culture; Assessment of the current status of quality management Assessment of the status of the current organizational culture Secondary data was obtained from a number of literature sources, including published articles. 178 P a g e

ANALYSIS AND INTERPRETATION OF TOTAL QUALITY MANAGEMENT Figure-1 4 3 3 2 2 1 4 31 34 34 9 6 6 Vsiosn Statement Core Values Manual Present Job Definition Figure-2 Yes No 4 3 3 2 2 1 3 Effective Implementation Training On TQM 33 33 7 7 TQM Entrenched In Vision Mission 37 Quality Customer Service 3 Yes No Yes No Figure-3: Mechanism for Quality Improvement 4 1 TQM 12 23 Service Quality Customer Care Corporate Culture Change Progrmme 179 P a g e

Table 1 below presents responses to the TQM tools questions. The table indicates the following: Only 12 respondents (3 per cent) are of the opinion that employees are encouraged to make suggestions for quality and safety improvements in the workplace and that there is a system in place for employees to put their suggestions in suggestion boxes; Two respondents ( per cent) indicated that there are visible charts in the working environment which are used to record the standard of performance in TQM so that everybody knows when the standard is achieved or not; Only one respondent (2 per cent) indicated that they received rewards and recognition for best performance in their jobs. It is quite clear that the TQM tools that are available are not optimally utilized. Twenty-eight respondents (7 per cent) indicated that there are no suggestion boxes or visible charts in the workplace. Table-1: TQM Tools Description of Closed Questions Number of Yes Number of No Total % of Yes Workers are encouraged to make suggestions. Suggestion boxes are in place for improvements in 12 28 4 3% quality and safety. Visible charts to record the standard of performance in TQM 2 38 4 % Rewards and recognition for best performance. 1 39 4 2% Average 3 4 12% The employees of the organization were asked regarding the aim of the quality improvement Programme: 36 respondents out of 4 said that the Quality Improvement Programme was done to improve quality services 18 respondents out of 4 said that it was done to improve customer satisfaction 11 respondents out of 4 said that it was done to streamline work practices respondents out of 4 said that it was done to support organizational culture change respondents out of 4 said that it was done to reduce cost 4 respondents out of 4 said that it was done to improve competitive advantage Figure-4 TQM - Wastefulness Of Time 18 3 1 8 Strongly Agree Agree Neutral Disagree Strongly Disagree Table-2: Vital Aspects in the Organizational Change Process Vital Aspects Order of Importance Adequate planning 37/4 Provision of support 32/4 Involvement of staff 39/4 Demonstration of commitment 3/4 Communication 36/4 Average 36/4 17 P a g e

Table-2 identifies the aspects that are vital in the organizational change process. The responses were added and the aspects that received the most responses indicate that the respondents view them as vital. The involvement of staff received 39 responses (97 per cent), followed by adequate planning with 37 responses (92 per cent), then communication 36 responses (9 per cent), demonstrate commitment 3 responses (87 per cent) and provision of support 32 responses (8 per cent). Figure- Success Rate of Quality Initiative 8 1 2 Very successful Reasonably Successful Too soon to say 24 Don't know No answer Figure-, above depicts that Implementation of TQM has reasonably successful in the organization because 24 respondent that is 6 percent agrees the fact. While 8 respondent that is 2 percent agrees that it is too early for them to comment on it success but on the other hand respondent that is 13 percent of the respondent agrees that TQM implementation has been successful in the organization. Figure-6 3 2 2 1 Communication Of Organizational Values Sense Of Change Trust and Empowerment Culture Of Improvement Of Staff Highly Not Very Table-3: Techniques for Quality Initiatives Name of the Technique Number of Respondent Total No. of Respondents Quality Circle 23 4 Customer Care Training 4 4 Customer Satisfaction Surveys 8 4 Management Workshops 3 4 Team Building 4 Awareness Training 6 4 Quality Improvement Projects 6 4 Table-3 tabulates the respondent s view of how important competencies and responsibilities of TQM leaders are. The table indicates that of the combined responses 98 per cent indicated that the five competencies and responsibilities are either highly important or important. Four respondents (2 per cent) are of the opinion that the commonalities are not very important. 1711 P a g e

Table-4: Competencies and Responsibilities of TQM Leaders Competencies and Responsibilities Highly important Not Very Of No Importance Communicate the Organization s values 3 Create a sense of change urgency 17 21 2 Trust subordinates and empower staff 29 1 Develop a culture of continuous improvement 33 6 1 Total responses 9 47 4 % 68% 3% 2% % Combined responses 98% 2% Figure-7 Responsibilty of Quality Control 2 4 Everybody Managers 34 Designated Person Analysis and Interpretation of TQM Components Table-: TQM Components Description of Components Strongly Agree Agree Neutral Disagree Strongly Disagree Leaders must create a culture of quality 3 9 1 Employee participation 24 1 1 Formation of quality circles 14 21 4 1 Following a systems approach 21 17 2 Benchmarking and best practices 18 21 1 Training and development 3 9 1 Total responses 137 92 1 % 8% 38% 4% % Combined responses 96% 4% % The organizational Culture Part: People s behaviour is determined largely by the roles they occupy. If one creates new responsibilities, team roles and a process driven environment for them, a new situation will develop, one that will draw their attention and work on the processes. This will change the culture. The roles and responsibilities of employees should be aligned with the organization and its processes. The focus should not be on abstract issues such as culture and participation, but on activities and tasks that employees must perform. Training and developments should form the basis by ensuring that employees are empowered to execute their roles and responsibilities. Teamwork is an especially important part of the TQM model in terms of bringing about change. Close coordination among the Finance, Technical and Human resources are essential. Multifunctional teams working on the process and understanding their interrelationships can bring this about effectively. 1712 P a g e

The change process must ensure adequate initial planning, provide support, involve staff, demonstrate commitment, consider the impact on team members, recognize and deal with resistance, communicate, use management tools and evaluate change. CONCLUSION An evaluation of the literature highlighted the importance of TQM in microfinance Institution, why it is a complex process of organizational change and explains why government is slow in its commitment to quality improvements. TQM is everyone s responsibility in the workplace, but it is mainly the responsibility of management, because strong leadership and commitment is needed from their side to lead a TQM organization. A framework inclusive of the vision, mission and strategy should then be developed. Establishes a quality department with a quality manager who will be responsible for the planning and implementation of TQM. A further extension of the quality department should be the formation of quality circles where groups of workers doing similar work meet on a regular basis. The implementation of TQM should be approached by way of the continuous improvement cycle. REFERENCES 1. Sales, C. (26). Organizational culture in multinational organizations. Journal of Contemporary Management, 3, 6-76. 2. Salkind, N. J. (2). Exploring Research. (4 th Edition). New Jersey: Prentice Hall. 3. Saunders, M., Lewis, P., & Thornhill, A. (2). Research methods for business students (2 nd Edition). Great Britain: Pearson Education Limited. 4. Smith, A. (26, May). Total quality management from the top. The Quality Edge, 29-31.. Belbissi, B. (2). Total Quality Management and Performance An Applied Study on the Commercial Sector in Jordan (M. Sc. Thesis). Amman. Jordan: Jordan University. 6. Poverty assessment and targeting. Consultative Group to Assist the Poorest (CGAP). Retrieved from www.cgap.org 7. Zeller, M., & Meyer, R. L. (eds). (22, December). The triangle of microfinance: Financial sustainability, outreach, and impact. Baltimore and London: Johns Hopkins University Press. 8. Zeller, M., Lapenu, C., & Greeley, M. (23). Measuring Social Performance of Micro-Finance Institutions: A Proposal. Tech. rept. Argidius Foundation and Consultative Group to Assist the Poorest (CGAP). 9. (211). ICRA s Credit Rating Methodology for Non-Banking Finance Companies report.. Kadra, O. M. (1998). Total Quality Management in Banks. Banks in Jordan, No. 4. 11. Sa, P. M., & Kanji, G. K. (23). Finding the path to organizational excellence in Portuguese local government: a performance measurement approach. Total Quality Management, 14(4), 491-. 12. McDonnell, J. (1994). The route to total quality management. Managing Service Quality, 4(4), 4-. 13. Laszlo, G. P. (1999). Implementing a quality management program the three C s of success: commitment, culture, cost. The TQM Magazine, 11(4), 231-237. 14. Lahiry, S. (1994, April). Building commitment through organizational culture. Training and Development, -2. 1. Retrieved from http://economicswebinstitute.org/essays/microfinanceghana.htm 16. Retrieved from http://www.fundsforngos.org/featured-articles/introduction-microfinance/ ***** 1713 P a g e