BACHELOR OF BUSINESS ADMINISTRATION Quality and Customer Relations Management III

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1 BACHELOR OF BUSINESS ADMINISTRATION Quality and Customer Relations Management III Contact details: Regenesys Business School Tel: +27 (11) Fax: +27 (11)

2 Version Control: 5.2_f Date of Publication: July, 2014 Publisher: Regenesys Management Place of Publication: Sandton Document Change History Date Version Initials Description of Change 22 August _f FVS Formatting 18 December _f FVS Updating template and readings 14 July _f SK Updating articles to Emerald Final Formatting 29 July _f SK Updating guide as per SME recommendation This study guide highlights key focus areas for you as a student. Because the field of study in question is so vast, it is critical that you consult additional literature. Copyright Regenesys, 2014 All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording or otherwise) without written permission of the publisher. Any person who does any unauthorised act in relation to this publication may be liable for criminal prosecution and civil claims for damages.

3 CONTENTS 1 WELCOME TO REGENESYS INTRODUCTION ALIGNING ORGANISATIONAL, TEAM AND INDIVIDUAL OBJECTIVES TEACHING AND LEARNING METHODOLOGY ICONS USED IN THIS STUDY GUIDE STUDY MATERIAL FOR THE MODULE RECOMMENDED RESOURCES RECOMMENDED READING RECOMMENDED BOOK RECOMMENDED ARTICLES MULTIMEDIA ADDITIONAL SOURCES TO CONSULT LEARNING OUTCOMES CONTENT SCOPE AND LEARNING GUIDANCE AN INTRODUCTION TO QUALITY AND CUSTOMER RELATIONSHIP MANAGEMENT DEFINE QUALITY MANAGEMENT THE INTERNATIONAL STANDARDS OF QUALITY (ISO) DEFINE CUSTOMER RELATIONSHIP MANAGEMENT THE PRINCIPLES OF CUSTOMER RELATIONSHIP MANAGEMENT CONCLUSION QUALITY AND CUSTOMER RELATIONSHIP MANAGEMENT WITHIN ORGANISATIONS QUALITY MANAGEMENT SYSTEMS AND MODELS QUALITY MANAGEMENT SYSTEMS QUALITY MANAGEMENT THEORIES AND SYSTEMS SOLVE QUALITY PROBLEMS MOVING TOWARD A CLIENT-FOCUSED ORGANISATION CUSTOMER RELATIONSHIP MANAGEMENT THE CONCEPT: CUSTOMER RELATIONSHIP MANAGEMENT MAINTAINING PROFESSIONAL RELATIONSHIPS MANAGING CUSTOMERS IMPLEMENTING CRM PROGRAMMES IN ORGANISATIONS TECHNOLOGICAL IMPLICATIONS COMMUNICATE EFFECTIVELY WITH CUSTOMERS INTRODUCTION HOW TO DEAL WITH IRATE CUSTOMERS HANDLING EXTERNAL COMPLAINTS TALKING TO CUSTOMERS USING A TELEPHONE HOW TO ASSERT YOURSELF LESSONS ON CUSTOMER SERVICE REFERENCES GLOSSARY OF TERMS... 62

4 List of Tables TABLE 1: TABLE 2: TABLE 3: TABLE 4: TABLE 5: TABLE 6: PRINCIPLES OF QUALITY MANAGEMENT PRINCIPLES OF CRM THE ADVANTAGES OF IMPLEMENTING A QUALITY MANAGEMENT SYSTEM EIGHT PRINCIPLES OF TQM JURAN S QUALITY TRILOGY INTERNAL CUSTOMER RELATIONSHIP List of Figures FIGURE 1: FIGURE 2: FIGURE 3: FIGURE 4: FIGURE 5: FIGURE 6: SYSTEMS THINKING TQM PRINCIPLES GROUPING JURAN S QUALITY PLANNING ROAD MAP PROBLEM-SOLVING CYCLE CRM IMPLEMENTATION BUSINESS PROCESSES... 48

5 1 WELCOME TO REGENESYS Have a vision. Think big. Dream, persevere and your vision will become a reality. Awaken your potential knowing that everything you need is within you. Dr. Marko Saravanja At Regenesys, we assist individuals and organisations to achieve their personal and organisational goals, by enhancing their management and leadership potential. We approach education and development holistically, considering every interaction not only from an intellectual perspective but also in terms of emotion and spirituality. Our learning programmes are designed to transform and inspire your mind, heart and soul, and thus allow you to develop the positive values, attitudes and behaviours, which are required for success. Having educated over students based in highly reputable local and international corporations across over 160 countries since Regenesys' inception in 1998, we are now one of the fastest-growing and leading institutions of management and leadership development in the world. Regenesys ISO 9001:2008 accreditation bears testimony to our quality management systems meeting international standards. Regenesys is accredited with the Council on Higher Education. Our work is rooted in the realities of a rapidly changing world and we provide our clients with the knowledge, skills and values required for success in the 21st century. At Regenesys, you will be treated with respect, care and professionalism. You will be taught by business experts, entrepreneurs and academics who are inspired by their passion for human development. You will be at a place where business and government leaders meet, network, share their experiences and knowledge, learn from each other, and develop business relationships. You will have access to a campus, in the heart of Sandton, with the tranquillity of a Zen garden, gym and meditation room. We encourage you to embark on a journey of personal development with Regenesys. We will help you to awaken your potential and to realise that everything you need to succeed is within you. We will be with you every step of the way. We will work hard with you and, at the end celebrate your success with you. Areas of Expertise Regenesys Business School 1

6 2 INTRODUCTION Welcome to the module on Quality and Customer Relationship Management (QCM). In this module we will examine the concepts of quality management and customer relationship management. We will establish the importance of quality management in the transformation of the services provided to the customers of an organisation. In order to implement quality and customer relationship management, we will identify and describe some quality management models and systems. We will conclude the module with a brief description of specific communication strategies used within an organisation to deal with customers. 2.1 ALIGNING ORGANISATIONAL, TEAM AND INDIVIDUAL OBJECTIVES This course will draw on a model developed by Regenesys Management, which demonstrates how the external environment, the levels of an organisation, the team and the components of an individual are interrelated in a dynamic and systemic way. The success of an individual depends on his/her self-awareness, knowledge and ability to manage successfully these interdependent forces, stakeholders and processes. The degree of synergy and alignment between the goals and objectives of the organisation, the team and the individual determines the success or failure of an organisation. It is, therefore, imperative that each organisation ensures that team and individual goals and objectives are aligned with the organisation s strategies (vision, mission, goals and objectives, etc.); structure (organogram, decision-making structure, etc.); systems (HR, finance, communication, administration, information, etc.); culture (values, level of openness, democracy, caring, etc.). Hence, an effective work environment should be characterised by the alignment of organisational systems, strategies, structures and culture, and by people who operate synergistically. Please read through this Study Guide carefully, as it will influence your understanding of the subject matter and the successful planning and completion of your studies. Regenesys Business School 2

7 2.2 TEACHING AND LEARNING METHODOLOGY Regenesys uses an interactive teaching and learning methodology that encourages self-reflection and promotes independent and critical thinking. Key to the approach utilised is an understanding of adult learning principles, which recognise the maturity and experience of participants, and the way that adult students need to learn. At the core of this is the integration of new knowledge and skills into existing knowledge structures, as well as the importance of seeing the relevance of all learning via immediate application in the workplace. Practical exercises are used to create a simulated management experience to ensure that the conceptual knowledge and practical skills acquired can be directly applied within the work environment of the participants. The activities may include scenarios, case studies, self-reflection, problem solving and planning tasks. Training manuals are developed to cover all essential aspects of the training comprehensively, in a user-friendly and interactive format. Our facilitators have extensive experience in management education, training and development. REGENESYS INTEGRATED MANAGEMENT MODEL Regenesys Business School 3

8 3 ICONS USED IN THIS STUDY GUIDE Icons are included in the Study Guide to enhance its usability. Certain icons are used to indicate different important aspects in the Study Guide to help you to use it more effectively as a reference guide in future. The icons in this Study Guide should be interpreted as follows: Definition The definitions provide an academic perspective on given terminology. They are used to give students a frame of reference from which to define a term using their own words. Examples The example icon is used to indicate an extra/additional text that illustrates the content under discussion. These include templates, simple calculation, problem solution, etc. Video clip or presentation This icon indicates a URL link to a video clip or presentation on the subject matter for discussion. It is recommended that students follow the link and listen/read the required sources. Interesting source to consult The source icon is used to indicate text sources, from the Internet or resource centre, which add to the content of the topic being discussed In a nutshell This icon indicates a summary of the content of a section in the workbook and to emphasise an important issue. Calculations This icon indicates mathematical or linguistic formulae and calculations. Self-reflection Students complete the action of selfreflection in their own time. It requires students to think further about an issue raised in class or in the learning materials. In certain instances, students may be required to add their views to their assignments. Tasks The task icon indicates work activities that contact students must complete during class time. These tasks will be discussed in class and reflected upon by students and facilitators. E-learning students can use these tasks simply to reinforce their knowledge. Note This icon indicates important information of which to take note. Regenesys Business School 4

9 4 STUDY MATERIAL FOR THE MODULE You have received material that includes the following: Study guide Recommended reading Assignment These resources provide you with a starting point from which to study the contents of this module. In addition to these, other resources to assist you in completing this module will be provided online via the link to this module. Guidance on how to access the material is provided in the Academic Handbook that you received when you registered for this qualification. 5 RECOMMENDED RESOURCES A number of recommended resources have been identified to assist you in successfully completing this module. 5.1 RECOMMENDED READING The following textbook and articles are recommended and must be used to complete the module. Please ensure you order, or download your textbook, before you start with the module. 5.2 RECOMMENDED BOOK The following book is highly recommended for this module: Davis, S. and Goetsch, D.L. 2013, 'Quality Management for Organisational Excellence: Introduction to Total Quality Management', International Edition, 7 th Edition, New Jersey. Pearson. Regenesys Business School 5

10 5.3 RECOMMENDED ARTICLES EFQM. 2012, 'An Overview of the Excellence Model', EFQM.org, Excellence Model 2013 EN extract.pdf (accessed online 04 March 2013). Fabac, R., and Mance, I. 2011, 'Customer relationship management system in occupational safety and health companies: Research on practice and preliminary design solution', Interdisciplinary description of complex systems, 9(2), nd_health_companies_research_on_practice_and_preliminary_design_solution (accessed 14 July 2014) Levine, D.I., and Toffel, M.W. 2010, 'Quality management and Job Quality: How the ISO 9001 standard for Quality Management Systems affects employees and employers', Harvard Business School: Working Paper Files/ pdf (accessed 14 July 2014) Po-An Hsieh, J.J., Rai, A., Petter, S., and Zhang, T. 2012, 'Impact of user satisfaction with mandated CRM use on employee service quality', MIS Quarterly, 36(4), andated+crm+use+on+employee+service+quality%26hl=en%26as_ (accessed 14 July 2014) Additional articles that may prompt discussions and further assist you in completing this course will be saved on Regenesys Online under the relevant course. Please visit the site regularly to access these additional sources. 5.4 MULTIMEDIA CQIWebManager. 2011, 'The handy Guide to Quality- CQI- Quality Management', Youtube.com., (assessed online 28 March 2013). Rational Tester. 2008, 'Quality Management in 3 Minutes', Youtube.com, (assessed online 28 March 2013). Sakol, T. 2012, 'PDCA', Youtube.com, (assessed online 28 March 2013). Spetz naz , 'Modern Chairs- A Total Quality Management Training Video' Youtube.com, (assessed online 28 March 2013). Torres. R. C. 2010, 'Total Quality Management', Youtube.com, (assessed online 28 March 2013). Regenesys Business School 6

11 5.5 ADDITIONAL SOURCES TO CONSULT As a higher education student, you are responsible for sourcing additional information that will assist you in completing this module successfully. Below is a list of sources that you can consult to obtain additional information on the topics to be discussed in this module: Emerald NetMBA: MindTools: Brunel Open Learning Archive: ProvenModels: 12manage.com: Alliance Online: The Free Management Library: The Charity Village: TEDx This is an online database containing journal articles that are relevant to your modules. Please refer to the attached Emerald manual to assist you to download required articles. Information on how to access Emerald is provided in your Academic Handbook. You will receive access to the database once you register as a student. This is one of several web sites that provide a selection of MBA constructs and discussion. It is one of the better of these addresses. MindTools.com is a very useful source of ideas, constructs, management models, etc with even more useful commentary and description. A Brunel University support-site that provides an easily accessible library of ideas, concepts, constructs techniques, tools, models, etc. ProvenModels' Digital Model Book presents digitalised management models categorised in a clear, consistent and standardised information structure to improve the usability and reusability of management literature. Management models are important generalisations of business situations when applied in context and are powerful tools for solving business issues. This is a website on which one can access numerous models as well as global comments on the models and principles. This could also serve as a place for you to voice your ideas and get feedback from all over the world. The Alliance for Non-profit Management's general introduction to strategic planning is built around 15 questions that cover just about all aspects in brief (click on Strategic Planning.) The Free Management Library can be used to improve your organisation, and for your own personal, professional and organisational development. This is by far the most comprehensive overview of all aspects of strategic planning covering all stages of the process. A series of 12 very short articles by Ron Robinson, an independent Canadian consultant, appeared on Charity Village between November 2001 and October These articles are refreshing in that they do not advocate a one best way for all types of nonprofit organisations. They discuss various ways of approaching the strategic planning process. The TEDx programme (Technology, Entertainment and Design) was created to help communities, organisations and individuals to spark conversation and connection through local TED-like experiences. It includes topics from science to business to global issues in more than 100 languages their mission is to spread ideas ("to make great ideas accessible and spark conversation"). There are many more sites and articles available that can help you to successfully complete this module. You are encouraged to post the website addresses or URLs of any additional interesting sites that you come across on the Regenesys Learning Platform. In this way, you can assist other students to access the same wonderful information that you have discovered. Regenesys Business School 7

12 A word of caution not all information available on the Internet is necessarily of a high academic standard. It is therefore recommended that you always compare information that you obtain with that contained in accredited sources such as articles that were published in accredited journals. 6 LEARNING OUTCOMES Upon completing this course, students should be able to: Explain the philosophy and principles of quality management and customer relations management; Understand the context and content of organisational transformation related to quality improvement; Identify the attitudes required to serve customers effectively; Communicate effectively with clients and relevant stakeholders; Conduct a stakeholder analysis to identify and manage stakeholders appropriately; Apply problem analysis tools, like the fishbone analysis, to separate the root causes from the symptoms; Understand quality management systems and models, such as ISO 9000; Identify and select tools to monitor quality of service; and Advance their understanding of the concept of Customer Relationship Management (CRM) o Identify potential applications of the concept for one s own organisation. Regenesys Business School 8

13 7 CONTENT SCOPE AND LEARNING GUIDANCE A number of topics will be covered to assist you in successfully achieving the learning outcomes of this module. It is important to study each of these sections to ensure that you expand your knowledge in the subject and are able to complete the required assessments. The sections that will be dealt with include: Section 1 Section 2 Section 3 Section 4 An introduction to Quality and Customer Relationship Management Quality management systems and models Customer relationship management Communicate effectively with customers A more detailed framework of what is required for each of these topics follows under each section heading. A number of questions to probe discussion and guide you towards comprehension and insight are also provided. The timetable under each section heading provides guidance on the time to be spent to study each section. It is recommended that you follow the given timetable to ensure that you spend the appropriate amount of time on each section. Following the timetable will ensure that you have covered the required sections relevant to each assignment and have appropriate time to prepare for the examination. Regenesys Business School 9

14 7.1 AN INTRODUCTION TO QUALITY AND CUSTOMER RELATIONSHIP MANAGEMENT Timeframe: Learning outcomes: Multimedia: Section overview: Minimum of 15 hours Explain the philosophy and principles of quality management and customer relations management; and Understand the context and content of organisational transformation related to quality improvement. Rational Tester. (2008) Quality Management in 3 Minutes, Youtube.com, (accessed 28 March 2013) Torres. R. C. (2010) Total Quality Management, Youtube.com, (accessed 28 March 2013) This section serves as an introduction to the concept of quality and customer relationship management (CRM). The relationship between these two concepts is explained and their importance emphasised. The principles and philosophies of quality and CRM are also discussed in order to provide students with a holistic view of the elements related to the concepts Define Quality Management According to ISO: The quality of something can be determined by comparing a set of inherent characteristics with a set of requirements. If those inherent characteristics meet all requirements, high or excellent quality is achieved. If those characteristics do not meet all requirements, a low or poor level of quality is achieved. Quality is, therefore, a question of degree. As a result, the central quality question is: How well does this set of inherent characteristics comply with this set of requirements? In short, the quality of something depends on a set of inherent characteristics and a set of requirements and how well the former complies with the latter. According to this definition, quality is a relative concept. By linking quality to requirements, ISO 9000 argues that the quality of something cannot be established in a vacuum. Quality is always relative to a set of requirements. (Praxiom Research Group, 2013) Regenesys Business School 10

15 Quality Management is defined as: All the activities that organisations use to direct, control, and coordinate quality. These activities include formulating a quality policy and setting quality objectives. They also include quality planning, quality control, quality assurance, and quality improvement. (Praxiom Research Group, 2013) It may be deduced from the definitions above that quality and quality management encompass all activities involved in delivering a certain product/service according to specific standards. For the purpose of this guide, this holistic view of quality and quality management should be implemented. Quality can be assessed based on the following concepts: Performance: This is about getting the job done. Performance embraces three aspects behaviours or processes, outputs or services, and outcomes or valueadded and impact. Economy: Efficiency: Effectiveness: Benchmarking: This is about the measurement and regulation of inputs or resources. How are they utilised? How are outputs produced related to inputs utilised? Effectiveness is difficult to assess. It is often intangible and relies on perceptions. This is the process of continuously measuring and comparing an organisation against leading organisations in order to improve performance. In any productive situation, an employee receives an input. That employee then adds value through his/her action to eventually pass that benefit on to a user. The string of those activities that enhance value is called a process. The user is called a customer. If the user is within the organisation, s/he is an internal customer. If the user is outside, then s/he is called an external customer. Ultimately, each process should contribute to the satisfaction of the customer. Observing a process over time shows that there are variations in how well a service or product is produced. If these variations are outside an acceptable standard, the production of a service can be considered faulty, disappointing a customer s expectations. Quality management therefore seeks to reduce these variations. Contrary to some managers beliefs, most problems do not occur due to employees errors. Generally, employees want to, and succeed in carrying out, a process correctly. A poor process design (poor organisation of work) is the most common source of quality defects. Regenesys Business School 11

16 Special structures such as quality teams are set up to investigate how to bring about change. These teams are made up of staff from across all levels of an organisation and comprise of people who possess different types of skill sets. The quality team s first step involves a careful, information-driven analysis of what could cause a failure of a process, with what frequency problems occur, and to what extent problems vary over time. Such analysis is termed a quality audit. However, simply understanding the current state of operation is not enough. An organisation should also check how it compares against others. Comparing one s operating targets with those of the best in the industry is called benchmarking. This process not only points to areas that need improvement, but benchmarking an organisation s performance also highlights differences in the way things are done amongst leading companies. Such innovative management procedures and systems are called best practices. These practices can be copied, adapted and integrated from one organisation to another. Understanding one s own performance in comparison to the best performing companies, allows an organisation to set new and higher standards. Once these standards are reliably met, the organisation can raise its standards even further. This is called continuous improvement. The concept of quality management is based on eight principles defined by ISO They are illustrated in Table 1 below: TABLE 1: PRINCIPLES OF QUALITY MANAGEMENT Principle Key Benefits Application of the principle leads to: Customer Focus Organisations depend on their customers and therefore should understand current and future customer needs, should meet customer requirements and strive to exceed customer expectations. Increased revenue and market share obtained through flexible and fast responses to market opportunities; Increased effectiveness in the use of the organisation s resources to enhance customer satisfaction; and Improved customer loyalty leading to repeat business Researching and understanding customer needs and expectations; Ensuring that the objectives of the organisation are linked to customer needs and expectations; Communicating customer needs and expectations throughout the organisation; Measuring customer satisfaction and acting on the results; Systematically managing customer relationships; and Ensuring a balanced approach between satisfying customers and other interested parties (such as owners, employees, suppliers, financiers, local communities and society as a whole). Regenesys Business School 12

17 Principle Key Benefits Application of the principle leads to: Leadership Leaders establish unity of purpose and direction of the organisation. They should create and maintain the internal environment in which people can become fully involved in achieving the organisation s objectives. Involvement of People People at all levels are the essence of an organisation and their full involvement allows their abilities to be used for the organisation s benefit. Process Approach A desired result is achieved more efficiently when activities and related resources are managed as a process. People will understand and be motivated towards the organisation s goals and objectives; Activities are evaluated, aligned and implemented in a unified way; and Miscommunication between levels of an organisation will be minimized. Motivated, committed and involved people within the organisation; Innovation and creativity in furthering the organisation s objectives; People being accountable for their own performance; and People eager to participate in and contribute to continual improvement. Lower costs and shorter cycle times through effective use of resources; Improved, consistent and predictable results; and Focused and prioritized improvement opportunities. Considering the needs of all interested parties including customers, owners, employees, suppliers, financiers, local communities and society as a whole; Establishing a clear vision of the organisation s future; Setting challenging goals and targets; Creating and sustaining shared values, fairness and ethical role models at all levels of the organisation; Establishing trust and eliminating fear; Providing people with the required resources, training and freedom to act with responsibility and accountability; and Inspiring, encouraging and recognising people s contributions. People understanding the importance of their contribution and role in the organisation; People identifying constraints to their performance; People accepting ownership of problems and their responsibility for solving them; People evaluating their performance against their personal goals and objectives; People actively seeking opportunities to enhance their competence, knowledge and experience; People freely sharing knowledge and experience; and People openly discussing problems and issues. Systematically defining the activities necessary to obtain a desired result; Establishing clear responsibility and accountability for managing key activities; Analysing and measuring of the capability of key activities; Identifying the interfaces of key activities within and between the functions of the organisation; Focusing on the factors such as resources, methods, and materials that will improve key activities of the organisation; and Evaluating risks, consequences and impact of activities on customers, suppliers and other interested parties. Regenesys Business School 13

18 Principle Key Benefits Application of the principle leads to: System Approach to Management Identifying, understanding and managing interrelated processes as a system contributes to the organisation s effectiveness and efficiency in achieving its objectives. Continual Improvement Continual improvement of the organisation s overall performance should be a permanent objective of the organisation. Factual Approach to Decision Making Effective decisions are based on the analysis of data and information Mutually Beneficial Supplier Relationships An organisation and its suppliers are interdependent and a mutually beneficial relationship enhances the ability of both to create value. Integration and alignment of the processes that will best achieve the desired results; Ability to focus effort on the key processes; and Providing confidence to interested parties as to the consistency, effectiveness and efficiency of the organisation. Performance advantage through improved organisational capabilities; Alignment of improvement activities at all levels to an organisation s strategic intent; and Flexibility to react quickly to opportunities. Informed decisions; An increased ability to demonstrate the effectiveness of past decisions through reference to factual records; and Increased ability to review, challenge and change opinions and decisions. Increased ability to create value for both parties; Flexibility and speed of joint responses to changing market or customer needs and expectations; and Optimization of costs and resources. Structuring a system to achieve the organisation s objectives in the most effective and efficient way; Understanding the interdependencies between the processes of the system; Structured approaches that harmonize and integrate processes; Providing a better understanding of the roles and responsibilities necessary for achieving common objectives and thereby reducing cross-functional barriers; Understanding organisational capabilities and establishing resource constraints prior to action; Targeting and defining how specific activities within a system should operate; and Continually improving the system through measurement and evaluation. Employing a consistent organisation-wide approach to continual improvement of the organisation s performance; Providing people with training in the methods and tools of continual improvement; Making continual improvement of products, processes and systems an objective for every individual in the organisation; Establishing goals to guide, and measures to track, continual improvement; and Recognizing and acknowledging improvements. Ensuring that data and information are sufficiently accurate and reliable; Making data accessible to those who need it; Analysing data and information using valid methods; and Making decisions and taking action based on factual analysis, balanced with experience and intuition. Establishing relationships that balance short-term gains with long-term considerations; Pooling of expertise and resources with partners; Identifying and selecting key suppliers; Clear and open communication; Sharing information and future plans; Establishing joint development and improvement activities; and Inspiring, encouraging and recognising. (ISO.org, 2012) Regenesys Business School 14

19 Watch the clip below, it provides a brief overview of quality management: Rational Tester. (2008) Quality Management in 3 Minutes, Youtube.com, (accessed 28 March 2013) Total quality management Recent investigation into the topic of quality management has led theorists to a new field: Total Quality Management. Previously, quality management systems focused on quality standards and achieving those quality standards was their objective. Total Quality Management focuses more on the philosophy of continuous improvements throughout all functional areas of the organisation (Hashmi, 2010). Total Quality Management (TQM) is defined by The American Society for Quality (2013) as: A management approach to long term success through customer satisfaction. In a TQM effort, all members of an organisation participate in improving processes, products, services, and the culture in which they work. In defining quality, quality management and Total Quality Management, the connection they have to customer relations and satisfaction becomes more clear. Customers are satisfied when they receive products and services of a high quality. The clip below describes Total Quality Management in more detail. Please click on the hyperlink below and follow the argument of Torres (2010). Torres. R. C. (2010) Total Quality Management, Youtube.com, (accessed 28 March 2013) The International Standards of Quality (ISO) The ISO 9000 collection addresses various aspects of quality management and contains some of ISO s best-known standards (ISO.org, 2012). The standards provide assistance and tools for organisations that want to ensure that their products and services consistently meet customers requirements, and that quality consistently progresses. Regenesys Business School 15

20 There are many standards in the ISO 9000 family: ISO 9001: sets out the requirements of a quality management system; ISO 9000: covers the basic concepts and language; ISO 9004: focuses on how to make a quality management system more efficient and effective; and ISO 19011: sets out guidance on internal and external audits of quality management systems. (ISO.org, 2012) The content of the ISO documents will be discussed in the next section of this study guide. Before we continue any further with the topic of total quality management, you need to understand the concept of Customer Relationship Management Define Customer Relationship Management This section serves as an introduction to the concept of Customer Relations Management. The concepts will be further unpacked in the last two sections of this Study Guide. We will therefore only discuss the key terminology attached to customer relationship management and the principles related to the concepts. A customer is defined as: Anyone who receives products or services from a supplier organisation. Customers can be people or organisations and can be either external or internal to the supplier organisation. For example, a factory may supply products or services to another factory (customer) within the same organisation. According to ISO 9000, examples of customers include clients, consumers, end-users, purchasers, retailers, and beneficiaries. (Praxiom Research Group, 2013) CRMforecast.com (n.d) defines Customer Relationship Management (CRM) as: A business strategy directed to understand, anticipate and respond to the needs of an enterprise's current and potential customers in order to grow the relationship value. It is apparent from this definition that customer relationship management is a field that ensures that organisations focus on customer satisfaction. Regenesys Business School 16

21 CRM therefore, enables organisations to: Understand their customers; Retain their customers through a better customer experience (higher levels of satisfaction); Attract new customers; Win new clients and contracts (increasing profitably); and Decrease costs related to customer management. (CRMforecast.com, nd) Please refer to Appendix A for a glossary of terms related to quality and customer relationship management The Principles of Customer Relationship Management Customer relationship management embraces the philosophy that, An organisation s goals can be best achieved through identification and satisfaction of their customers known and unknown needs and wants, retaining continued patronage, and obtaining new customers in all aspects of business operations (Businessdictionary.com, 2013). This philosophy is built on the notion of an organisation being customer-focused. This means that all strategies, systems, policies and procedures of the organisation have customer satisfaction as their primary objective. Table 2 below highlights the principles of a CRM system. TABLE 2: PRINCIPLES OF CRM Involve top management from day one Restructure employee compensation to reinforce CRM priorities Manage cultural change and people Issues Concentrate on customer lifecycle value Push the project if you are serious. And keep pushing! Top management needs to be involved in every stage of a CRM programme. Two critical components are required for it: a vision embedded within the organisation and the motivation to make it work. When a change in organisational priorities occurs, such as a shift to a more customer-centric focus, the compensation structure also needs to be adjusted. Organisations serious about CRM attach incentives to customer indicators, such as customer retention and satisfaction. This serves as a motivation tactic to promote CRM. When organisations implement changes, employees are exposed to a range of emotions such as fear, insecurity, confusion, etc., and management needs to ensure that they keep the communication lines with employees open. Employees should be asked for feedback and management should listen and take note of their comments. An important point is to remind employees of what they stand to gain from the changes. For a CRM strategy to be successful, all employees need to support it. The entire organisation needs to understand the importance of positive customer relationships. A useful tip is to analyse which customers the organisation wishes to keep for a lifetime and maintain the relationships with these customers efficiently. Try not to be too diplomatic as your organisation s existence is at stake. Make it clear that the CRM strategy is not optional and ALL employees need to comply with it. Try to implement the CRM strategy as a condition of employment. Try not to get discouraged by unpredictable obstacles, rather focus on the solution and move forward. Discipline non-performers. Regenesys Business School 17

22 Provide training and support. Prepare for continuous improvement. CRM is an on-going process. Once a strategy has been selected and approved, management needs to shift their focus to training. All new employees will need training for CRM so that they will realise the importance of CRM in the organisation. Management needs to constantly support staff encountering any challenges. Due to the rapid pace of technological change, the chances of a CRM programme being updated in a short period is very high. These enhancements and updates must be communicated to staff and the necessary training catered for. Organisations need to include enhancements in their CRM programme into their budget. (Thompson, n.d) Conclusion A manager is not just concerned about working within time and financial constraints. S/he wants to ensure that the task at hand is of a particular quality in that it meets desired customer expectations. These desired expectations should be described in plans where the output is qualified. This is crucial because many people have different ideas of quality standards or expectations. Furthermore, management has a responsibility to ensure the behaviours that will deliver quality customer/client service, and this involves ensuring that customer and client requirements are determined and are met with the aim of enhancing customer/client excellence. In the next section we will look at different models/systems of quality management Quality and Customer Relationship Management within organisations As you know by now, this module draws on a model developed by Regenesys Business School, which demonstrates how the delivery of quality services is the result of successfully aligning the client s needs with an institution s internal organisation, the way its people work together as a team and, finally, the individual s ability to serve clients (see the Regenesys Integrated Management model in Section 1). FIGURE 1: SYSTEMS THINKING Regenesys Business School 18

23 Figure 1 illustrates the connections between the different elements in an organisation. How does this link with quality management and the Regenesys Integrated Management model? Recap Questions 1. Explain the link between quality and CRM. 2. Explain the significance of TQM. 3. Critically analyse the principles of quality management. 4. Discuss the benefits of applying the quality management principles in organisations. 5. Discuss the philosophy of CRM. 6. Explain the benefit of adapting the principles of CRM in your organisation or an organisation with which you are familiar. Regenesys Business School 19

24 7.2 QUALITY MANAGEMENT SYSTEMS AND MODELS Timeframe: Learning outcomes: Recommended reading: Multimedia: Section overview Minimum 15 hours Understand quality management systems and models, such as ISO 9000; and Apply problem analysis tools, like the fishbone analysis, to separate the root causes from the symptoms. EFQM. (2012) An Overview of the Excellence Model. EFQM.org. Excellence Model 2013 EN extract.pdf (accessed 14 July 2014) Levine, D.I., & Toffel, M.W. (2010) Quality management and Job Quality: How the ISO 9001 standard for Quality Management Systems affects employees and employers. Harvard Business School: Working Paper Files/ pdf (accessed 14 July 2014) CQIWebManager. (2011) The Handy Guide to Quality- CQI- Quality Management, Youtube.com, (accessed 28 March 2013) Spetz naz1. (2009) Modern Chairs- A Total Quality Management Training Video, Youtube.com, (accessed 28 March 2013) Sakol, T. (2012) PDCA. [Accessed online] Youtube.com. Viewed 28 March This section analyses various quality systems and models related to organisational success. The implementation of these models and the characteristics thereof are also highlighted. The advantages of implementing these systems are discussed to highlight the benefits associated with focusing on quality products/services Quality Management Systems A Quality Management System (QMS) is defined by the Businessdirectory.com (2013b) as: A system by which an organisation aims to reduce and eventually eliminate non-conformance to specifications, standards, and customer expectations in the most cost effective and efficient manner. An effective quality management system should be: Systems based; People-based; Process-based; and, The emphasis should be on prevention in all spheres. (Fasset, 2004) Regenesys Business School 20

25 In order for an organisation to guarantee quality products/services, a quality management system must be developed and implemented in each functional area at critical control points. The system should define what people, actions and documents are going to be employed in order to carry out the work in a consistent manner, providing evidence of what has happened (Handy and RQA Outreach Working, Party, 2013). There are several reasons why organisations implement quality management systems. A few of them are that quality management systems: Define and convey the provider with quality objectives, policies and practices; Facilitate uniformity in practice; Reduce, eliminate and prevent quality deficiencies; Facilitate training of new employees; Expedite the interchange of employees between various jobs; Eliminate important system changes being made without due consideration; Assist in maintaining good organisational practices; Eliminate unnecessary informal instruction; Provide a basis for audits to be conducted; and Provide assurance to the client. (Fasset, 2004) ExpertResource.net (2013) goes further and highlights the following advantages in terms of ISO 9000, as illustrated in Table 3: TABLE 3: THE ADVANTAGES OF IMPLEMENTING A QUALITY MANAGEMENT SYSTEM Customer/Marketing Benefits Internal Benefits Greater focus on customer requirements and customer service; Conveys commitment to quality and partnering; Promotional credibility to an international standard; Provides access to markets and bids; and Employees become more responsive to customer needs and requirements. Continuous Improvement Cycle of a management system results in savings; Guarantees that new and existing products and services satisfy customers; Provides a universal approach to quality and business; Assists in establishing operational baselines and enterprise alignment; Operationalises and procedralises quality; Encourages self-assessment and maintains internal consistency; Controls process and systems and establishes operational controls; Makes internal operations more efficient and effective; Corporate walls come down and people communicate better; Ensures product development and design changes are controlled; Reduced customer quality audits reduce your business disruptions; Creates awareness of the need for training and encourages operational problem solving; and Provides insights on organisational interrelationships, encourages internal focus, facilitates internal operational control, and assists employees in understanding and improving operations. Regenesys Business School 21

26 Customer-Supplier Partnering Benefits Internal Benefits External Benefits Forms the basis for a common language of quality; Ensures a minimum level of quality; Facilitates development of seamless operations; Reduces supplier base and assists in selecting suppliers; Facilitates just-in-time delivery; and Assists in monitoring suppliers. Improves: Management efficiency; Planning; Problem-solving; Supplier control; Communications; Ability to change; Discipline; Staff morale; and Employee training. Reduces: Duplicate effort; Re-work; Waste; Costs; and Staff Turnover Improves: Product and service quality; Customer satisfaction; Repeat sales; Company image; and Marketability Reduces: Complaints; and Warranty claims. The importance of quality management systems Organisations need to develop their own quality management systems because they provide a feedback loop in which: Policies define purposes and set the standards an organisation wants to meet. Procedures are implemented to put these policies into practise. Policies and procedures are reviewed to make sure that organisations actively improve their effectiveness and efficiency. (Fasset, 2004) Abahe.co.uk (n.d) argues that quality management systems are needed in all areas of activity, whether large or small businesses, in the manufacturing industry, or in the service or public sector. Regenesys Business School 22

27 Abahe.co.uk (n.d) state that a good QMS will: Set direction and meet customers expectations; Improve process control; Reduce wastage; Lower costs; Increase market share; Facilitate training; Involve staff; and Raise morale. Therefore, it becomes clear that implementing a quality management system enables an organisation to achieve the goals and objectives set out in its policy and strategy. The quality management system provides consistency and satisfaction in terms of methods, materials, equipment, etc., and facilitates interaction with all activities of the organisation; beginning with the identification of customer requirements and ending with their satisfaction, at every point. The clip below provides guidance on quality management: CQIWebManager. (2011) The handy Guide to Quality- CQI- Quality Management, Youtube.com, (accessed 28 March 2013) Quality management Theories and Systems Organisations employ different quality management theories in order to select a quality management system. In this section, we will discuss different quality management systems and theories. The International Organisation for Standardisation (ISO) ISO is a worldwide federation of national standards bodies (ISO member bodies). The work of preparing International Standards is carried out through ISO technical committees, in liaison with international organisations, governmental and non-governmental bodies (ISO.org, 2013). The ISO Series (as discussed in the previous section) can form the means by which a holistic management system can be implemented, into which quality, health and safety, and environmental responsibility can be integrated, with audits carried out either separately or in combination with one another (Abahe.co.uk, n.d). An organisation that would like to have ISO certification needs to meet all the criteria stated in the ISO standards and pass a detailed audit performed by an ISO auditor. In some industries, ISO certification has become necessary; for example, some large manufacturers require all suppliers to be ISO certified. While ISO certification is highly respected, if it is not a trend in your specific industry, the additional cost of certification can be a deterrent to most managers. Regenesys Business School 23