ACG - Agency Consulting Group

The PIPELINE

A national monthly newsletter for agency principals dedicated to agency management topic

Total Quality Management - A Primer

So what's it all about - this TQM business?

For many years even us small businessmen have been hearing the buzz words of the Total Quality Management movement but, frankly, we have been too busy trying to make a living to study the concepts. The objective of this article is to give you a simple straightforward explanation of TQM and why it will be impossible for you to disregard it unless you for your company to disappear when you retire.

First of all, there is no "high quality" or "low quality". You either have quality or you don't. The definition of quality is doing the right things in the right way, consistently. The process of TQM is to change your environment to permit you to maintain a quality business.

But why should you learn and implement a new system of management if you feel that your employees are not making that many mistakes now?

Because the chances are that your organization is making considerably more mistakes in process than you have ever been made aware of. Poor quality and mistakes cost you dearly in three ways:

1. You are doing something wrong for your customers.

2. Then you are forced to do it again to correct your problem (And sometimes again and again...),

3. Finally, while you are correcting mistakes you can't be doing something more productive. This is the most costly for your paybacks for low quality. Opportunity costs can easily add 30 or 40% to your expense line.

Total Quality Management is a process not a theory. The process is to continually analyze and improve your methods of satisfying your customers and "walking the talk". "Walking the talk" is the current translation of "Practice what your preach". If we read, learn and commit to TQM we have failed as owners the first time that we discard the TQM process for any reason. Just as a leap of faith cannot be made in two short hops, you can't pick "most" of the guiding principals of TQM and discard the others in the hopes of becoming a quality organization.

Shown below are the differences between conventional management philosophy and TQM concepts. Test yourself to see how you feel about each:

Conventional TQM

1. Quality Costs Quality saves both time and money

2. Customers are your target Customers are a part of your organizational efforts

3. Quantity of work is as Quantity is meaningless important as if not more without quality important than quality

4. If you hit your goals you are Quality is defined as a quality organization continuous improvement

5. A 5% error rate is acceptable Only 100% quality is acceptable

6. Higher quality results from Quality is built into the quality control and work process supervision

7. Work is a system of Work is totally integrated procedures, jobs and efforts the failure of any one link can break the chain

8. Higher quality results from Quality can be achieved by having more and better your current staff by people training and different leadership

Edward Deming is the accepted guru of TQM. He reiterates 14 major points of TQM in all of his work. We highly recommend Out of the Crisis one of his key publications.

1.Create a constant sea of purpose for the improvement of product and service.

2.Adopt a new philosophy.

3.Cease dependence on inspection to achieve quality

4.End the practice of awarding business on the basis of price tag alone.

5. Improve constantly and forever, ever process planning, production and service

6.Institute training at work

7. Adopt and institute leadership

8.Drive fear out of the workplace

9.Break down barriers between staff areas

10.Eliminate slogans exhortations and targets for the workforce

11. Eliminate numerical quotas for workforce and numerical goals for management

12. Remove barriers that rob people of pride of workmanship

13. Eliminate annual raises or merit systems

14. Institute a vigorous program of education and self improvement for all employees

Put everyone in the company to work to accomplish the transformation to TQM. Call us if you would like to institute a TQM program in your firm. The Agency Consulting Group can assist you in the planning and implementation of TQM programs in the insurance businesses who are our primary clients.