Eight Leadership Principles for a Winning Organization. Principle 1 Customer Focus

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1 Eight Leadership Principles for a Winning Organization Leading and operating an organization successfully requires managing it in a systematic and visible manner. Success should result from implementing and maintaining a system that is designed to continually improve the effectiveness and efficiency of the organization s performance by considering the needs of interested parties. Top leadership should establish a customer-oriented organization a. By defining systems and processes that can be clearly understood, managed and improved in effectiveness as well as efficiency and b. By ensuring effective and efficient operation and control of processes and the measures and data used to determine satisfactory performance of the organization. Principle 1 Customer Focus Organizations depend on their customers and therefore should understand current and future customer needs, should meet customer requirements and strive to exceed customer expectations. The quality management systems approach encourages organizations to analyze customer requirements, define the processes that contribute to the achievement of a product or service that is acceptable to the customer and keep those processes under control. A quality management system can provide the framework for continual improvement to increase the probability of enhancing customer satisfaction. It provides confidence to the organization and its customers that is able to provide products and services that consistently fulfill requirements. Increased revenue and market share obtained through flexible and fast responses to market opportunities. Increased effectiveness in the use of the organization's resources to enhance customer satisfaction. Improved customer loyalty leading to repeat business. Applying the principle of customer focus typically leads to: Researching and understanding customer needs and expectations. Ensuring that the objectives of the organization are linked to customer needs and expectations. Communicating customer needs and expectations throughout the organization. Measuring customer satisfaction and acting on the results. Systematically managing customer relationships. Ensuring a balanced approach between satisfying customers and other interested parties (such as owners, employees, suppliers, financiers, local communities and society as a whole). 1

2 Questions to ask How are customer needs identified, communicated and promoted throughout the organization? How are future customer needs identified? What is done to meet customer requirements? How measured? Are they exceeded? How is customer satisfaction measured? Are corrective actions taken when there are problems? How is this information used by management to improve the quality management system? Are customers satisfaction surveys used? Are there active or passive measures o f customer satisfaction? Does the organization only measure customer complaints (dissatisfaction)? Principle 2 Leadership Leaders establish unity of purpose and direction of the organization. They should create and maintain the internal environment in which people can become fully involved in achieving the organization's objectives. Leadership, commitment and active involvement of the top leadership are essential for developing and maintaining an effective and efficient quality management system to achieve benefits for interested parties. To achieve these benefits it is necessary to establish, sustain and increase customer satisfaction. Top leadership should consider actions such as: To establish and maintain vision, policies and strategic objectives consistent with the purpose of the organization. To promote the purpose, vision, quality policy and quality objectives throughout the organization to increase awareness, motivation and involvement. To decide on actions regarding the quality policy and quality objectives. Leading the organization by example, in order to develop trust within its people. Communicating organizational direction and values regarding quality and the quality management system. Identifying the product realization processes that provide added value to the organization. Participating in improvement projects, searching for new methods, solutions and products. Obtaining feedback directly on the effectiveness and efficiency of the quality management system. Identifying the support processes that influence the effectiveness and efficiency of the realization processes. Creating an environment that encourages the involvement and development of people. Provision of the structure and resources that are necessary to support the organization s strategic plans. People will understand and be motivated towards the organization's purpose, vision, goals and objectives. Activities are evaluated, aligned and implemented in a unified way. Miscommunication between levels of an organization will be minimized. Top Leadership should also define methods for measurement of the organization s performance in order to determine whether planned objectives have been achieved. 2

3 Financial measurement Measurement of process performance throughout the organization External measurement, such as benchmarking and third party evaluation Assessment of the satisfaction of customers, people in the organization and other interested parties. Assessment of the perceptions of customers and other interested parties of performance of products provided Top Leadership should demonstrate leadership in and commitment to the following activities Understanding current future customer needs and expectations in addition to requirements. Promoting policies and objectives to increase awareness, motivation and involvement of people in the organization. Establishing continual improvement as an objective for processes of the organization. Planning for the future of the organization and managing change. Applying the principle of leadership typically leads to: 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 organization's future. Setting challenging goals and targets. Creating and sustaining shared values, fairness and ethical role models at all levels of the organization. Establishing trust and eliminating fear. Providing people with the required resources, training and freedom to act with responsibility and accountability. Inspiring, encouraging and recognizing people's contributions. Questions to ask How are the vision, quality policy and quality objectives established, maintained and promoted throughout the organization? Where is the evidence? How are goals and objectives flowed to appropriate levels of the organization? How measured? How is this information used by top leadership to monitor performance of the quality management system? How does top leadership promote awareness of customer requirements throughout the organization? How does top leadership assure that appropriate processes are established and documented? How does top leadership assure an effective and efficient quality management system is established and maintained? What evidence is available to support this claim? When does top leadership review the quality management system? What actions are taken to correct problems and ensure continual improvement? How are resources needs identified and provided? How is customer focus promoted and maintained in the organization? Is there evidence available that top leadership is actively involved in creating a sense of purpose and unity within the organization? How do they help assure employees are involved in the achievement of quality objectives? Are the human needs of the workplace being met? 3

4 Principle 3 Involvement of people People at all levels are the essence of an organization and their full involvement enables their abilities to be used for the organization's benefit. To involve people top leadership should create an environment where authority is delegated so that people are empowered and accept responsibility to identify opportunities where the organization can improve its performance. This can be achieved by activities such as: Setting of objectives for people, projects and the organization. Benchmarking competitor performance and best practice. Recognition and reward for achievement of improvement Suggestion schemes including reaction by leadership Motivated, committed and involved people within the organization. Innovation and creativity in furthering the organization's objectives. People being accountable for their own performance. People eager to participate in and contribute to continual improvement. Applying the principle of involvement of people typically leads to: People understanding the importance of their contribution and role in the organization. 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. People openly discussing problems and issues. Principle 4 Process approach A desired result is achieved more efficiently when activities and related resources are managed as a process. For an organization to function effectively it has to identify and manage numerous linked activities. Any activity using resources and managed to enable the transformation of input into output, can be considered a process. The integration and alignment of its processes to enable the achievement of its planned results. An ability to focus effort on process effectiveness and efficiency. An increase in the confidence of customers and other interested parties as to the consistent performance of the organization. Transparency of operations within the organization. Improved, consistent and predictable results. Lower costs and shorter cycle times through effective and efficient use of resources. 4

5 The encouragement and involvement of people and the clarification of their responsibilities. The elimination of barriers between different functional units and the unification of their focus to the objectives of the organization. Improved management of process interfaces Applying the principle of process approach typically leads to: Systematically defining the activities necessary to obtain a desired result. Establishing clear responsibility and accountability for managing key activities. Analyzing and measuring of the capability of key activities. Identifying the interfaces of key activities within and between the functions of the organization. Focusing on the factors such as resources, methods, and materials that will improve key activities of the organization. Evaluating risks, consequences and impacts of activities on customers, suppliers and other interested parties. Continual improvement of processes based on objective measurement. Plan-Do-Check-Act (PDCA) Plan establish the objectives and processes necessary to deliver results in accordance with customer requirements and organization s policies. (what to do and how to do it) Do implement the processes (do what was planned) Check monitor and measure processes and product against policies, objectives and requirements and report the results. (did things happened according to plan) Act take actions to continually improve performance. (how to improve next time) The Process Approach Model See Figure Model of a process based quality management system Questions to ask How is the interaction between the processes of the quality management system documented? Where is the information kept? How is it made available to the employees? How is training provided for this process? Tell me how you perform this activity? Show me? What is the input into this process? What is the output? How does the output from this process link to another process? What are the objectives of this process? Where are they defined? How do you know when it s being performed correctly? What measurements of the process are taken? 5

6 Principle 5 System approach to leadership Identifying, understanding and managing interrelated processes as a system contributes to the organization's effectiveness and efficiency in achieving its objectives. Integration and alignment of the processes that will best achieve the desired results. Ability to focus effort on the key processes. Providing confidence to interested parties as to the consistency, effectiveness and efficiency of the organization. Applying the principle of system approach to management typically leads to: Structuring a system to achieve the organization'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 organizational capabilities and establishing resource constraints prior to action. Targeting and defining how specific activities within a system should operate. Continually improving the system through measurement and evaluation. Principle 6 Continual Improvement Leadership should continually seek to improve the effectiveness and efficiency of the processes of the organization (proactive), rather than wait for a problem to reveal opportunities for improvement (reactive). Improvements can range from small-step ongoing continual improvement to strategic breakthrough improvement projects. The organization should have a process in place to identify and manage improvement activities. These improvements may result in change to the product or processes, or even to the quality management system or the organization. The aim of continual improvement of a quality management system is to increase the probability of enhancing the satisfaction of customers and other interested parties. An action plan for improvement can include the following: Analyzing and evaluation the existing situation to identify areas for improvement. Establishing objectives for improvement. Searching for possible solutions to achieve the objectives. Evaluating these solutions and making a selection. Implementing the selected solution. Measuring, verifying, analyzing and evaluating results of the implementation to determine that the objective have been met Formalizing change 6

7 Performance advantage through improved organizational capabilities. Alignment of improvement activities at all levels to an organization's strategic intent. Flexibility to react quickly to opportunities. Applying the principle of continual improvement typically leads to: Employing a consistent organization-wide approach to continual improvement of the organization'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 organization. Establishing goals to guide, and measures to track, continual improvement. Recognizing and acknowledging improvements. Questions to ask Is there evidence of continual improvement in the organization? Is it anecdotal or the result of planning and involvement of top leadership? Are there processes in place supporting continual improvement? How is this information used to improve products and/or services? Is the results of continual improvement communicated to the organization? Are there rewards for employees when quality objectives are met or exceeded? Principle 7 Factual approach to decision making Effective decisions are based on the analysis of data and information Informed decisions. An increased ability to demonstrate the effectiveness of past decisions through reference to factual records. Increased ability to review, challenge and change opinions and decisions. Applying the principle of factual approach to decision making typically leads to: Ensuring that data and information are sufficiently accurate and reliable. Making data accessible to those who need it. Analyzing data and information using valid methods. Making decisions and taking action based on factual analysis, balanced with experience and intuition. 7

8 Principle 8 Mutually beneficial supplier relationships An organization and its suppliers are interdependent and a mutually beneficial relationship enhances the ability of both to create value Increased ability to create value for both parties. Flexibility and speed of joint responses to changing market or customer needs and expectations. Optimization of costs and resources. Applying the principles of mutually beneficial supplier relationships typically leads to: 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. Inspiring, encouraging and recognizing improvements and achievements by suppliers. 8