Transit Cooperative Research ProgramSponsored by the Federal Transit Administration

RESEARCH RESULTS DIGESTOctober 1994--Number 3

Subject Areas: VI Public Transit Responsible Staff Officer: Stephen J. Andrle

Total Quality Management in Public Transportation

A TCRP Digest on the progress of Project F-3, "Total Quality Management in Public Transportation," prepared by MacDorman& Associates in association with the American Quality Group and the Spire Group. This is a two-phase project, which presentsresearch on Total Quality Management (TQM) in the private and public sectors and in the U.S. public transportation industry.This Digest highlights the results of Phase I. The second phase involves the introduction of TQM at four transit systems and the

development of training and educational materials on TQM for use by transit systems nationwide.

INTRODUCTION

At the end of the 20th century, changes indemographic patterns and employee expectations,shifts in societal demands, increased competition andfiscal constraints, and the requirements of adoptingnew technologies have made many traditionalbusiness practices obsolete. To meet these broadchallenges, growing numbers of American businesseshave adopted the principles of Total QualityManagement (TQM) to improve the responsivenessof their products and services. These adoptedprinciples have influenced system changes that mayincrease customer and employee satisfaction, reducecosts, and improve productivity.

The transit industry faces many of these samechallenges. The principles of TQM appear to holdpromise as a way to improve transit service, increaseridership, and fulfill transit's broad social mission.However, to date, only a few agencies haveintroduced innovative TQM-based practices.

WHAT IS TQM?

TQM is a management philosophy concernedwith people and work processes that focuses oncustomer satisfaction and improves organizationalperformance. TQM requires an enterprise tosystematically energize, manage, coordinate, andimprove all business activities in the interest ofcustomers.

TQM requires improvements throughout anorganization to reduce waste and rework, to lowercosts, and to increase productivity. Quality is nolonger merely the province of service inspectors, the

director of quality assurance, or the work supervisor.It can be defined, measured, and achieved, but suchachievement requires that quality is built into allwork processes and is understood and applied by allemployees. Everyone is responsible for TQM,especially senior management; all employees areinvolved in solving problems and improvingperformance.

Like many so-called "new ideas," thecomponents of TQM are not all new. Rather, TQM isnew because it embraces and enjoins many existingmanagement and organizational philosophies. TQMhas its roots in many disciplines, includingeconomics, industrial engineering, social psychology,mathematical statistics, and management science.

STUDY OBJECTIVES AND SCOPE

The objectives of Project F-3 are to identify,evaluate, and recommend applications of potentiallysuccessful methods of implementing TQM in publictransportation to increase ridership through improvedcustomer satisfaction, to increase productivity, and toreduce costs.

The project is very timely and important becauseit provides the public transportation industry theopportunity to

• review the literature, principles, andpractices of TQM within and outside the publictransportation industry;

• conduct, evaluate, and document pilot TQMinitiatives at public transportation agencies;

• prepare informational materials on TQM forboard members, managers, and union officials;

____________________________TRANSPORTATION RESEARCH BOARD

NATIONAL RESEARCH COUNCIL

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• prepare user-friendlyeducational materials on TQM forpublic transportation agencies pursuingTQM; and

• identify future research needson TQM for public transportation.

The results of this project will bedocumented in a final report that willpresent the Phase I research results andthe Phase II pilot application results.Other products from this project willinclude materials that may be used inthe future by the pilot publictransportation agencies to continuetheir TQM initiatives, and by otherpublic transportation agenciesthroughout the United States that wishto pursue TQM.

HISTORICAL PERSPECTIVE ONMANAGEMENT

The history of management tracesback more than two centuries to theEnglish economist Adam Smith. Smith,and many other economists through theearly years of the 20th century, focusedon commodities and not on labor. Earlyeconomists did not considermanagement as a central issue inbusiness economics.

J. B. Say, a French economist andearly follower of Adam Smith, stressedthe importance of the managerial taskof making resources more productive.Another Frenchman, the Comte deSaint-Simon, foresaw the emergence oforganizations, the building of socialstructures within organizations and, inparticular, the management of tasks.

Organizations and the Managementof Work

It was not until large-scaleorganizations began to emerge in theearly 1870s that the structure,management, and behavior oforganizations became the subject ofdiscussion, debate, and writings. Henri

Fayol, a French mining engineer whoheaded a relatively large business (coalmine), developed the first rationalapproach to the functional organization.

Frederick W. Taylor's famousstudy of shoveling sand in a steel millfocused on increasing individual laborproductivity in order to provideemployees with a decent livelihood.Later, the husband-and-wife team ofFrank and Lillian Gilbreth conductedstudies of time and motion productivitythat were intended to perfect businessbehavior through testable workmethods.

In the early 1920s, Pierre S.duPont followed by Alfred P. Sloan,the CEO of General MotorsCorporation, confronted the issue of theappropriate degree of centralization ordecentralization of authority fordecisions in large organizations. Sloandeveloped and implemented theorganization principle ofdecentralization and systematicapproaches to business objectives andstrategic planning.

Behavior in Organizations

Elton Mayo was the director of thefamous Hawthorne studies (1927-1932)and the founding father of the HumanRelations movement--the first majorimpact of social science onmanagement thinking. He emphasizedthat employees must first be understoodas people if they are to be understoodas organization members. His workstressed the importance of an adequatecommunications system, particularlyfrom employees to management.

Douglas McGregor is best knownfor his discourse of Theory X andTheory Y approaches to management.Theory X was cast as the traditionalview of management direction andcontrol. Conversely, Theory Yaddresses the integration of individualand organizational

goals. McGregor's studies and writingshave been the vehicle of much work on"organizational development."

Quality Management

The concern for quality has a longand rich history, extending back toartisans and craftsmen, when mastertradesmen inspected the work ofapprentices to ensure qualitycraftsmanship. The introduction ofmass production at the beginning of the20th century was the dawn of a newage. The high numbers of poorly madeand noninterchangeable parts,breakdowns, and loss of sales becauseof unreliable products forcedcompanies to make improvements.

Initially, quality management wasa manufacturing concept intended toship nondefective products. It was theviewpoint of G.S. Radford thatinspectors should examine, weigh, andmeasure each item prior to its leavingthe factory. Inspection, measurement,and statistical analysis were the earlyfoundations of quality control.Mistakes were not necessarilyprevented, but they were not shipped.Inspection became an industrial safetynet.

Quality Pioneers

Quality management advanced,largely, through the writings andteachings of so-called Quality Pioneersor TQM gurus. The pioneers focusedon quantitative techniques and methodsto control the quality of manufacturedproducts. From its beginnings at BellLaboratories, TQM evolved anddeveloped while the most renownedpioneers created and promoted thephilosophy. Five of the more notableproponents and leaders of TQM arebriefly introduced below:

These Digests are issued in the interest of providing an early awareness of the research results emanating from projects in theTCRP. By making these results known as they are developed, it is hoped that the potential users of the research findings will beencouraged toward their early implementation Persons wanting to pursue the project subject matter in greater depth may do sothrough contact with the Cooperative Research Programs Staff, Transportation Research Board, 2101 Constitution Ave., N.W.,Washington, DC 20418

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• W. Edwards Deming is bestknown for his "Fourteen Points," abroad set of simple but profoundquality principles; the "Seven DeadlyDiseases," common obstacles to qualityimprovement; and the "Plan, Do Check,Act (PDCA) cycle," a systematicapproach to problem solving. Theseconcepts are well documented in hiswritings.

• Joseph Juran moved qualitycontrol forward to the idea of qualityassurance and introduced the conceptof quality as a means for cost control.Dr. Juran wrote the Quality ControlHandbook, which has served as thebible in this field. In this book, hearticulated that quality is not anexpense but an investment inprofitability. Like Deming, Juranhelped bring TQM to Japan and later tothe United States.

• Kaoru Ishikawa led themovement in Japan to adapt theteachings of the American qualityexperts and synthesized these conceptsinto his Company Wide Quality Control(CWQC), successfully championing theintegration of quality methods intoJapanese engineering and managementeducation curricula. These methodshave been used successfully for severaldecades, and are an integral part of theJapanese industrial culture.

• Armand Feigenbaum advocatedexpanding quality control beyondinspectors to every employee andvendor. He believed that quality wastoo central to be delegated to aninspection corps because this was toolimited an approach. Rather, a totalquality approach requires theparticipation of all employees in theorganization as well as vendors thatsupply the organization.

• Philip B. Crosby espoused "zerodefects" and the principle that quality isthe conformance to requirements.While initially real, the costs of qualitydisappear as the very real andmeasurable benefits of quality emerge.

The rising interest in TQM hasmade publishing and consulting inquality management a growth industry.Appendix A contains a bibliographyand reference guide, which includesmany of the more significant books andarticles on TQM. The bibliography isorganized into nine categories to assistpublic transportation managers andothers interested in learning aboutTQM: general, leadership andorganizational culture, measurementand benchmarking, processmanagement, training and tools,employee empowerment and teams,labor, customer service, and casestudies. A glossary of terms frequentlyused in the TQM literature and by itspractitioners is presented in AppendixB.

Principles Espoused by Experts

While the various experts differwith each other in specific areas, areview of TQM principles espoused byexperts identified the following areas ofgeneral agreement:

• TQM is a fundamental change in howmost enterprises manage their business.The change is difficult and takes time.

• Management must lead the totalquality initiative.

• All employees must be involved intotal quality management.

• Continuous quality improvement is abusiness imperative.

• Quality control and improvementapply throughout the organization.

• Ongoing education and training areessential for all employees.

• Quality requires an environment ofteamwork, respect for the individual, trust,and professional growth.

• Quality has a double benefit. Itincreases customer satisfaction andrevenue by improving the quality ofproducts and services; it reduces costs byimproving the quality of processes.

Regardless of the differences andsimilarities among the TQM gurus,organizations considering the pursuit ofTQM need not adopt the philosophy ofa single expert nor should they rethinkthe entire field and build their ownphilosophy from the ground up.Clearly, there is a middle ground,where each organization can draw onthe perspectives of different TQMproponents and tailor their initiative tobest serve the needs and priorities oftheir customers and their organization.

TQM in Japan

It is commonly believed that TQMis a Japanese management philosophy.It was, however, created by Americans,following World War I, and adopted bythe Japanese after World War II, asthey rebuilt their industries. TQM hasflourished in Japan since the early1950s, evolving and changingsomewhat over time.

Deming went to Japan in 1950, atthe request of the U.S. government,where the newly formed JapaneseUnion of Scientists and Engineers(JUSE) asked him to teach statisticalquality control to managers of allindustries. He declined royaltiesoffered by JUSE for the publication ofhis lecture notes and in gratitude, JUSEnamed a newly announced prize forquality after him. Although apparentlyslow to take hold, the Deming Prize isnow a distinguished and prestigiousaccomplishment. Among otherbenefits, it is credited with stimulatingthe race for quality in Japan, as well asthe transfer of quality methods andtechnology.

It was Japan's past reputation forpoor product quality and the need tocompete in the post-World War IIworld marketplace that drove theJapanese to implement total qualitymanagement concepts as the heart oftheir business planning. Since the1970s, Japan has been recognized asthe world leader for product and servicequality. Earlier than any other country,Japanese companies used theknowledge

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from Deming and Juran's teaching tobuild a quality revolution.

TQM in the United States

World War II created a demandfor products and heightened theconcern for product quality worldwide.Over time, new dimensions were addedto quality management, such as costreductions from less rework, improvedwork processes to avoid defects, andmeeting customer requirements to keepand increase market share.

The increased number ofinspectors and quality engineers in theUnited States resulted in the formationof an academic and professional societyto further spread quality techniques andtechnology. Formally established in1945, this group was originally calledthe Society for Quality Engineers;today it is called the American Societyof Quality Control (ASQC). Its effortshave helped legitimize qualitymanagement as an integral element ofbusiness and industry throughout theUnited States and worldwide. In thepast 20 years, other businessassociations and professional societiesthat support quality have been formed.

It has only been since the late1970s that TQM has come back to theUnited States as a means to redirectmanagement practices and improveperformance. With the increasingconcern for competition and globalmarkets, TQM has moved frommanufacturing, as its exclusive domain,to many sectors of U.S. business andindustry including services, researchand development, and health care.More recently, the public sector hasadopted TQM as the basis for improvedperformance.

TQM in the Private Sector

In the past several years, there hasbeen a burgeoning interest in TQMthroughout the private sector in theUnited States. New experts andrecognized consulting firms emergeeach

year to support clients in their pursuitof excellence and quality performance.Awards have been developed torecognize organizations that haveachieved or are pursuing qualityperformance.

• National Awards for Quality.The Malcolm Baldrige NationalQuality Award (Baldrige Award) isthe most renowned award for qualityin the United States. This award,established in 1987 by the Act ofCongress (the Malcolm BaldrigeNational Quality Improvement Actof 1987, Public Law 100-107), isdesigned to recognize companiesthat have successfully implementedtotal quality management systems.The award is managed by the U.S.Department of Commerce's NationalInstitute of Standards andTechnology (NIST) and isadministered by the ASQC.Following a rigorous examinationprocess, the award is presentedannually to a maximum of sixcompanies, representingmanufacturing, service, and smallbusiness.

• The United States SenateProductivity Award. This nationalaward also recognizes organizationsfor improvements in businessefficiency and productivity. It ispresented yearly to companies thatdemonstrate increases in annualproductivity or make a contributionto a community's employment. EachU.S. senator may present oneproductivity award per year. Thereare no set criteria that a companymust meet in order to win.

• State and Local Awards forQuality. The success of the BaldrigeAward has led to the creation ofsimilar awards for quality at thestate and local levels. While awardsfor quality are predominantly madeto companies in the private sector,half of the states currently offeringawards have added a category fornonprofit or governmentorganizations. Similar to theBaldrige Award, the intent of theseawards is to both recognize and

encourage outstanding performanceand excellence in business andgovernment.

TQM in the Public Sector

Total quality management is nowbeing widely adopted by federal, state,and local governments. The primarycatalyst for quality improvement in thepublic sector has been budget pressure,caused by rising costs and dwindlingtax revenues.

• The Federal Government. TQMin the federal government grew outof productivity programs that startedat the Department of Defense in theearly 1970s. As a result of DOD'searly commitment to this effort, itremains one of the strongestproponents and provides one of thebest examples of TQM in the federalgovernment.

In 1986, President Reagan signedan executive order to implement agovernment-wide productivityinitiative under the direction of theOffice of Management and Budget.After consultation with privatesector leaders, this productivityeffort evolved into total qualitymanagement initiatives.

The Federal Quality Institute(FQI) was created by the Office ofManagement and Budget, in 1988,to inform and consult withgovernment agencies involved inTQM programs. It was also chargedwith administration of thePresident's Award for Quality andProductivity and the QualityImprovement Prototype Award(QIP) established in 1988.

Early in his administration,President Clinton launched a 6-month National PerformanceReview of all federal agencies,headed by Vice President Gore. ThePresident announced: "Our goal is tomake the entire federal governmentboth less expensive and moreefficient, and to change the cultureof our national bureaucracy awayfrom complacency and entitlementtoward initiative and empowerment.We

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intend to redesign, to reinvent, toreinvigorate the entire nationalgovernment." The Clintonadministration's commitment toquality is further evidenced in VicePresident Gore's recently publishedThe Gore Report on ReinventingGovernment: Creating aGovernment that Works Better andCosts Less.

• State and LocalGovernment. Many states nowhave quality awards patterned afterthe private sector Baldrige Award.More recently, some states haveintroduced quality programs aimedat rewarding or improving theperformance of governmentagencies. As with the federalgovernment, budget pressure andconstituents' demands for improvedperformance in the public sectorhave provided an impetus for TQMin state and local government.

Several notable examples ofstates and local communities that arepursing and recognizing TQM in thepublic sector currently includeArkansas, Florida, Kansas,Minnesota, and Oregon and thecities of Madison, Wisconsin andPortland, Oregon.

Problems with TQM in the PublicSector

Despite many similarities, thepublic sector differs significantly fromthe private sector. Implementers ofTQM in government face a number ofadditional hurdles not found in theprivate companies. These include a lackof market incentives, a short-termperspective caused by frequent politicalchangeovers, a highly centralized andlayered structure, a separation ofpowers that requires negotiation andconsensus building, conflicting needsbetween various customer groups, andan emphasis on due process overefficiency.1

In short, the political process ismore complicated and contentious thansimilar processes in the private sector,and requires careful navigation. Publicsector organizations pursuing TQMmust

remain sensitive to each of thesedifferences to be effective.

TQM IN THE PUBLICTRANSPORTATION INDUSTRY

The public transportation industryhas become interested and involved inTQM only in the past several years. Ina confidential Survey for ChiefExecutive Officers: Total QualityManagement in Public Transportation--conducted in June 1993 as part of thisproject--about 85 percent of the 172respondents indicated they had heard ofor knew about TQM.

One hundred three ChiefExecutive Officers (CEOs) or 60percent of the respondents said thattheir organizations were involved inTQM or other quality initiatives. Of the103 transit organizations, only 17 (27percent) indicated they started theirefforts more than 3 years ago. Figures 1and 2 illustrate the focus of theseinitiatives. It is probable that the resultsof this survey overstate national publictransportation industry involvementwith TQM, since less than 30 percentof the CEOs (172 out of 590)responded to the survey. (The surveyinstrument and the results are presentedin the Interim and Final reports for thisproject.)

Concern for Performance andCustomers

Concern for performance andinterest in customers are not new to thepublic transportation industry. As theoperators of private businesses andlater public services, publictransportation managers have sought tomaximize ridership and revenues byproviding clean, safe, and reliableservice, while carefully managingcosts.

• Concern for Productivity. Sincethe mid 1970s, public transportationagencies, local officials, stategovernments, and the federalgovernment have displayedheightened interest in transitperformance. This interest is theproduct of several

economic, social, and politicalforces: escalating industry costs;greater competition for limitedpublic funds; fiscal conservatism atthe local, state, and national levels;continuing demand for clean, safe,on-time, affordable publictransportation services; andincreasing interest in accountabilityof public services.

Numerous factors influencepublic transportation performance.These factors may be divided intotwo categories--controllable andnoncontrollable. Controllable factorsare those influenced by the decisionsand actions of the publictransportation governing board, itsexecutives, managers, andemployees. Uncontrollable factorsinclude both the environmental andeconomic conditions in which publictransportation agencies operate.TQM focuses on the controllablefactors.

• Concern for People. Areport prepared by the AmericanPublic Transit Association, Transit2000 Task Force stated "...we arebound by a traditional preoccupationwith accommodating vehicles andinattention to accommodatingpeople....Public transportation isdominated by its human resourceand human service character. Theperformance and success of publictransit hinges on how human factorsare managed. There are twodimensions of concern--riders andwork force...."

• Industry Leadership:Perspectives and Attitudes. One ofthe most interesting findings of therecent Survey of Chief ExecutiveOfficers, conducted in this project,was the generally high opinion heldby CEOs of their organization'spublic image and their belief thatthings are going well. (See Figures 3and 4.) While this positive outlookis praiseworthy, opinion polls showthat transit has only an averagepublic image as judged by a nationalconsumer survey conducted by TheConference Board in 1990. From abusiness perspective, things are notgoing particularly well

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Figure 1. Responses to: Which organizational functions are involved in the quality initiatives?

Figure 2. Responses to: What types of performances are the quality initiatives to improve?

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Figure 3. Responses to: Our public image is very positive.

Figure 4. Responses to: Thins in our organization seem to be going well.

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in the U.S. transit industry.According to the 1990 NationwidePersonal Transportation Survey, theindustry, as a whole, continues tolose travel market share even in themore traditional transit arenas thatinclude female consumers and lowincome residents in urbanized areas.

Profile of Public TransportationQuality Initiatives

Transit systems in the UnitedStates have a well-established interestin improving performance--reducingcosts to increase efficiency, improvingvehicle maintenance to increase servicereliability, modifying bus schedules toincrease on-time performance,improving marketing andcommunications to increase customersatisfaction.

A number of U.S. publictransportation agencies made acommitment to TQM in the late 1980s.These systems include Madison Metroin Madison, Wisconsin; Port Authorityof Allegheny County in Pittsburgh,Pennsylvania; and Ride-On inMontgomery County, Maryland. Theefforts of these transit agencies toinitiate TQM are presented as casestudies in the Interim and Final Reportsfor this project.

In September 1993, theresearchers for this project sent aSurvey of Quality Initiatives and Effortsof Public Transportation Organizationsto 103 public transit organizations. Theorganizations surveyed were those thatresponded to the initial Survey for ChiefExecutive Officers and stated that theirtransit system had "embarked on TQMor other quality initiatives." Theprimary objective of the survey was toobtain a greater appreciation for thenature and extent of transit industryinvolvement in TQM and relatedformal quality initiatives. Theresponses provide insight regarding thecurrent status of the quality movementin the U.S. transit industry.

The overall conclusion of thissecond survey is that, while TQM isnew to the U.S. transit industry, manytransit systems are interested in TQMand have begun to implement qualityprograms. Transit systems areinterested in improved performance andin increased customer satisfaction,particularly for external customers.Information is being gathered by manypublic transportation organizationsthrough surveys to determine how theycan improve performance and increasequality.

The survey results, which arepresented in more detail in the InterimReport, indicate that, while transitsystem CEOs are involved in providingvision and oversight for qualityprograms, most other foundations forTQM are not yet in place. For example:

• Transit governing boards are notactively involved in quality; neitherare union leaders. Policy statementson quality have not been formulatedand communicated. (See Figures 5and 6.)

• Quality coordinators or facilitatorshave generally not been designatedor hired by transit systems tomanage and support quality.

• Transit employees are not yetsufficiently trained in tools andtechniques for problem solving andconflict resolution. Consequently,employee participation in qualityimprovement is largely unstructured,through individual ideas andsuggestions rather than throughwell-trained functional and cross-functional teams that meet regularly.(See Figures 7 and 8.)

• Transit employees are infrequentlyrewarded through formalrecognition and reward forcontributing to quality improvement.

• The quality programs of thesurvey respondents do not appear tobe very rigorous. Measurement ofresults is not integral to the pursuitof improvements, nor isbenchmarking

to emulate excellent performance byother organizations. (See Figures 9and 10.)

Formalizing TQM requirescommitment, time, effort, andresources. It appears it will be sometime yet before significant nationwideimprovements to performance andcustomer satisfaction will be realizedbased on the current status of TQM inthe U.S. transit industry.

TQM PRINCIPLES FOR THEPUBLIC TRANSPORTATIONINDUSTRY

This section defines sevenfundamental principles that provideguidance for TQM implementation andconcludes with lessons of TQM successand failure. TQM is a comprehensive,all-encompassing approach tomanagement and requires a systematicapproach to long-term growth. Theseprinciples should not be viewedindependently, but as vital componentsof a total quality plan.

Principle 1: Put Customers First

"Putting customers first" is thebasis for all quality management. TQMrequires organizations to adopt thebelief that service and product qualityshould meet--if not exceed--customers'expectations. All people and processesof an organization should be directed tomeet this goal.

The success of publictransportation depends on customersatisfaction--attracting and retainingcustomers to use or support its services.Indeed, if there are no customers, thereis no need for public transportationservices. Similar to many private sectorservices, public transportation has twotypes of customers: (1) consumers--thepeople who ride the service and (2)stockholders--the general public whoare tax-paying investors in the service.

By understanding and meetingcustomer expectations for service and

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Figure 5. Responses to: Is there an agreement between labor and management regarding quality initiatives?

Figure 6. Responses to: Has a written quality policy been prepared and communicated?

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Figure 7. Responses to: Identify the TQM tools and techniques employed in quality initiatives.

Figure 8. Responses to: How often do employee members of quality teams meet to work on quality issues?

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Figure 9. Responses to: Does the organization measure or monitor the results of initiatives?

Figure 10. Responses to: Does the organization utilize benchmarking in quality initiatives?

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product quality, an organizationimproves its performance. The effectsof successfully satisfying customers arerealized in at least three areas for transitsystems:

• Ridership Stability. By satisfyingand delighting customers, customerloyalty and ridership will increase. Itis less expensive to keep existingcustomers than to attract new ones.

• New Riders. Transit systems canalso attract new customers, resultingin increased market share.

• Cost Reduction. By directingprocesses and people towardmeeting customer expectations,operational costs can be lowered andwaste eliminated because certainextraneous activities, such asbureaucratic policies and paperwork,that are not essential to customerscan be stopped.

Organizations should strive tomeet customer expectations in all workfunctions. Every possible interactionbetween the customer and the transitsystem should be flawless and pleasant.Using the service should be easy. Itshould be accomplished in a timelymanner and pleasant environment, withfront-line employees who areknowledgeable and helpful. Thisrequires systems and processes behindthe scenes that enable employees tooffer courteous, efficient, and effectiveservice.

Knowing the Customer. Publictransportation agencies should usemarket research to determine customerexpectations and perceptions. Theymust first define their customers--whoare they, why do they use or not use theservice, and what competitivealternatives do they have. Next, transitagencies should determine what drivescustomer satisfaction--what arecustomers' priorities, and how satisfiedare they with the transit services.

There are numerous methods toobtain vital information on customerpriorities from sample groups.Researchers use focus groups,interviews,

mail surveys, and telephone surveys tosolicit information on customerexpectations, their current levels ofsatisfaction, and factors that mayinfluence people to use or not usetransit services. Market research shouldbe conducted so that transit directorsand managers base their decisionsregarding customer priorities on facts,rather than assumptions.

Front-line employees (i.e., vehicleoperators, telephone informationpersonnel, ticket agents) are alsoimportant resources for understandingcustomer expectations. Through regularcontact with customers, front-lineemployees are frequently better able tojudge customers' reactions to servicethan senior management or third-partymarket researchers. To use thisinformation, organizations must opentheir channels of communication sothat front-line employees are able tocommunicate effectively withmanagers who will organize follow-upaction.

Responding to CustomerExpectations. Translating marketresearch results and employee feedbackabout customers' expectations intoactionable procedures is a challenge forevery organization. There is no setmethod that an organization can follow.Every organization must adjust its ownculture, systems, and plans tosuccessfully "put customers first."

Organizations must learn to makemeeting and exceeding customerexpectations a priority in both theirday-to-day activities and in their longterm-planning. This requiresdeveloping customer-focusedoperational processes and, at a strategiclevel, committing the resources thatposition customers, and meeting theirexpectations, as an asset to theorganization's financial well-being.

The following are noteworthyexamples of work that is currentlybeing performed by U.S. transitsystems to research customer priorities:

• A large public transportationsystem in the western United Stateshas

conducted surveys of area residentsfor about 5 years to identify thedeterminants of customersatisfaction. About 2,500 annualriders and nonriders are asked to ratetheir degree of satisfaction with, andimportance of, 26 publictransportation service attributes.This process has identified the areasof performance most in need ofimprovement based on customerpriorities and satisfaction levelsassociated with the 26 attributes.

In 1991, the survey revealed thatcustomers were most satisfied withthe safe operation of the buses, thedaytime safety of waiting for buses,the politeness of drivers, and theclarity of the timetables. Customersrated on-time performance, thenighttime safety of waiting for andriding buses, and the mechanicalreliability of the buses as the mostimportant service attributes. Thegreatest gaps between the ratings ofcustomer expectations andperceptions were night-time safety,on-time performance, headwaysbetween buses, and travel time towork. These performance gapsprovide opportunities to improveservice and satisfy customers.

• Another public transportationorganization reported that operatorbehavior makes a difference in thewillingness of current andprospective customers to use publictransportation services. The surveyfound, for example, that respondentswould be encouraged to use publictransportation when the driver ishelpful, pleasant, and courteous.Specifically, it noted that passengersappreciate drivers who wait forpassengers to be seated beforedriving off from a stop and who helpthose with difficulty boarding.

These and other similar efforts areon the cutting edge of performanceimprovement because they gatherrelevant and much needed customer-driven information to improve thequality of public transportationservices.

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Principle 2: Manage and ImproveProcesses

By improving operations--howwork activities are performed--organizations can raise the quality oftheir services, products, and delivery;increase productivity; improveoperational efficiency; and eliminatewaste.

Process Management CreatesCustomer Satisfaction. A widelyaccepted TQM approach tounderstanding and improvingoperations is process management.Process management requiresunderstanding how work is done, howoutput or results are achieved, and howvalue is provided to customers. Itprovides a comprehensive, integratedmethod of analyzing operations andfocusing all work activities onsatisfying customers.

All employees in a publictransportation system have customersand suppliers, either inside or outsidethe organization. Individuals andgroups (i.e., suppliers) perform workand pass on the results or informationto others (i.e., their customers) withinor outside the organization. Everyoneuses the output of their suppliers andprovides input to their customers.Throughout all work processes--to thedelivery of service, the goal of publictransportation employees is to satisfyall customers and to add value toprocesses. This requires buildingquality into work processes to avoiddefects and improve performance.

Cross-Functional Approach andContinuous Improvement. Publictransportation agencies are almostalways organized into specialty areassuch as scheduling, operations,maintenance, finance, human resources,and procurement. This arrangement,called functional organization,organizes employees into work groupsrequiring similar job knowledge andskills. Unfortunately, the results offunctional work efforts alone are rarelyresponsible for satisfying or exceedingcustomer expectations.

In the planning and developmentof processes, it is essential thatmembers of all stages and subprocessesbe involved. This is called a cross-functional approach. Through a cross-functional approach, publictransportation employees can view theirresponsibilities in the chain of eventsthat leads to service delivery whiledeveloping an understanding of theneeds and demands of their colleagues.Processes are then created orreorganized to meet customerexpectations, rather than havingemployees complete tasks in their ownareas, with little regard for the endresults.

Research shows that significantimprovements in organizationalperformance usually involve the effortsof more than one functional activity orgroup. In cross-functional groups,employees learn the following:

• the many functions within theorganization and how theycontribute to the end result;• the relationship among functionsand how each affects customersatisfaction;• the many responsibilities of otherswithin the organization, includingtime demands, pressures, andpotential failure points; and• important information that otherdepartments and employees mayknow regarding customersatisfaction and how it may best beachieved.

The development andimplementation of process managementwithin the context of cross-functionalgroups allows for and encouragesproblem prevention and continuousimprovement at every stage of transitservice delivery. A shift is made fromusing traditional quality inspection ofend results to recognizing andpreventing problems before the productor service is delivered.

Principle 3: Manage by Fact

TQM is a management philosophythat requires the use of facts and data,such as market research and process

documentation, to achieve customersatisfaction and improve operationalperformance. As many TQMproponents say, "If you can't measureit, you can't manage it. If you can'tmanage it, you can't improve it."Measures serve the dual role of(1) setting the direction foroperational and strategic planning and(2) providing feedback on whetherorganizational goals and objectives arebeing achieved.

TQM has simultaneous goals ofcustomer satisfaction and improvedoperations. Consequently, measurescritical for TQM are efficiency,effectiveness, and quality.

• Efficiency considers the resources(e.g., labor, capital, overhead,materials) necessary to produceoutput coupled with the quantity,cost, and rate of productivity.Efficiency measures are usuallydeveloped by dividing the quantityof output by the cost or quantity ofresource input. Increases in cost,because of inflationary factors, mustbe considered when assessingefficiency.

• Effectiveness is the quantity ofproducts or services consumed perunit cost or resource to producethem at a given price and quality.Effectiveness dimensions includethe consumption of services orproducts that are influenced byquality.

• Quality plays a major role in bothefficiency and effectiveness becauseof the multiplicity of dimensions itadds to improving and achievingcustomer satisfaction and byeliminating waste, rework, anddefects. Critical dimensions ofquality include accuracy, reliability,security, responsiveness, courtesy,competence, timeliness, appearance,information, communication, andaccessibility or ease of use.

Criteria for and Uses ofMeasures. The following criteriashould be used to successfullyimplement measures and ensure theiracceptance by employees.

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Otherwise, measurement will beviewed as "extra work" rather than asan enhancement to the TQM effort.Good measures are

• Valid. Data are sampled bymethods that are unquestionablycredible by all parties and areunaffected by artificialmanipulation.

• Complete. Measures adequatelygauge the activity rather than onlysome aspect of the activity.

• Manageable. Measures providesufficient information on which tobase management decisions.

• Timely. Data and informationshould be collected and reportedsoon after the processes' actualoccurrence.

• Visible. Measures should beopenly tracked by those whomanage them.

• Inexpensive. Measures make useof data easily obtained or alreadycollected for some other purpose.

• Interpretable. Measures shouldbe easy to understand and readilycomparable to other time periods ororganizations.

• Benchmarked. Comparablemeasures from other organizationsare available and current.

• Motivational. Measures shouldgenerate the desired balancebetween competitive spirit andcollaborative teamwork.

Benchmarking. Benchmarking isa measurement-based method used inTQM to make operationalimprovements. It is defined as aprocess of measuring products,services, and practices against those ofcompetitors and "best-in-class"organizations, for the purpose ofimprovement. Benchmarking is anapproach that goes outside of one'sorganization to observe howoutstanding organizations accomplishcertain activities.

There are two approaches tobenchmarking:

• Competitive benchmarkingmeasures organizationalperformance against competingorganizations. Competitivebenchmarking tends to concentrateon the relative performance ofcompetitors using a select set ofindustry measures.

• Process benchmarking identifiesand measures the best, i.e., world-class, practice for conducting aparticular business process. Oncethe best practice is identified,measured, and understood, it may beadapted and improved forapplication to another organization.For example, L.L. Bean is oftenbenchmarked by companies in otherindustries for its warehousingcapabilities.

There are a number of benefits tobenchmarking that can help improveoperations. For example, benchmarkingbuilds organizational awareness of thebest practices in a particular process;identifies the measure of excellence fora targeted process; enhances goal-setting and performance assessment;and challenges "business as usual" or"if it ain't broke, don't fix it" attitudes.

Information Technology. Theincreasing availability of sophisticatedinformation technology has a profoundeffect on business processes. Satellites,cellular telephones, modems,teleconferencing, and facsimiles areexamples of recent improvements ininformation technology. Availableinformation technology for publictransportation includes automaticpassenger counters, automatic vehiclelocation systems, and passengerinformation systems. Using informationtechnology to support the real-timeactivities of front-line employees andcustomers should be of primary interestto public transportation agencies.

An important challenge to publictransportation is to identify whereexisting and near-developedinformation technology can improveperformance.

Public transportation agencies mustlearn to process real-time informationto efficiently make decisions toimprove customer satisfaction.Becoming managers of "publicmobility" instead of managers of publictransportation will, to a large extent,rely on developments in informationtechnology.

Public transportation agenciesneed to (1) import informationefficiently; (2) move information to theright place in the organization where itcan be analyzed, digested, and actedupon; (3) make the necessary internaltransformations to take account of newinformation; and (4) get feedbackon the impacts of its new responses.

Principle 4: Cultivate OrganizationalLearning

Without learning, organizationsand their members repeat old behaviorand practices. Solving problems,changing procedures to meetcustomers' changing needs,understanding the importance ofsatisfying customers, and designing orreengineering processes all requirelearning that work can be performed indifferent, better ways.

Creating a learning environmentrequires commitment from seniormanagement. Senior managementshould set the example by continuing tolearn themselves, involving others inthe learning process, and creatingpolicies and recognition programs thatencourage employees to develop newideas. All employees should beencouraged to participate and shouldfeel their participation is valued.Because employees have operationalexperience, they often have the bestknowledge of where improvementsshould be made. Further, employeeinvolvement and participation isessential to translate new ideas intoaction.

There should be a plan thatincorporates learning into everydayactivities. The following are elementsof an organizational learning plan that

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help create a culture of knowledgegeneration, sharing, and development:

• Solve problems systematically.First, employees should understandthe value of basing decisions ondata rather than assumptions.Simple statistical tools should beused to organize and analyze data.The use of data and analytic tools iscritical to detecting and preventingproblems.• Experiment. Experimentation isessential for cultivating learning.Experiments involve searching forand testing new ideas.Experimentation should beperformed as part of a plan toachieve a desired end result, suchas testing methods to improvecustomer satisfaction.• Learn from the past.Organizations must learn to tracktheir attempts at implementing newideas and evaluate their successesor failures. From this information,organizations can make futuredecisions and create programsbased on success and not repeatfailures.• Learn from others. This is animportant element of TQM andshould be encouraged through thedevelopment of teams. Throughemployees working together inteams, knowledge is shared andbuilt upon throughout theorganization. Employees learn fromone another based on their hands-on, operational experience andperformance. Teamwork isessential in TQM for sharing ideasand also for incorporating all workfunctions' needs, requirements,knowledge, and views into decisionmaking and planning.• Transfer knowledge.Knowledge gained throughproblem solving, experimentation,and teamwork should be transferredquickly and efficiently throughoutthe organization to educate allworkers about the lessons learned.

Principle 5: Train, Empower, andRecognize Employees

Employees are a transit system'smost important asset. Their value mustbe protected and enhanced. This meanstraining employees to identify andsolve problems that cause customerdissatisfaction; empowering employeesto take actions to satisfy customers; andrecognizing employees for their effortsand contributions that improveperformance.

Training. TQM starts and endswith training. Employees must betrained to work together as a team,focused on meeting and exceedingcustomers' needs and expectations.There should be continual retraining tomeet ever-changing requirements forthe future, particularly with theincreasing availability of sophisticatedinformation technology.

Training is not only important forbasic job skills, but also important forproblem identification and problemsolving. Ongoing training creates aknowledgeable work force, which hasflexible skills and the ability to engagein multiple jobs. Management shouldconsider the potential for increasingcompensation as employees increasetheir skills in multiple job activities.

Empowerment. Empowermentmeans giving employees the authorityto do what it takes to satisfy customers.Often, this means moving decisionmaking closer to the front line of theorganization, rather than keeping itsolely in the hands of management.This requires a knowledgeable workforce and an environment of trust,accountability, and support.

Empowerment benefits customers.Often, empowerment reduces theamount of time required to solve aproblem or grant a special request. Intraditional vertical organizations, suchas public transportation, decisions aretypically made by management. Thisapproach to decision making requiresfront-line employees to consult their

managers to solve problems or grantrequests. Through empowerment, thereare increased opportunities foremployees to make decisions in realtime, without having to go through thechain of command.

There are many benefits toempowerment. Empowerment providesa sense of ownership and control overprocesses and job activities. Employeesfeel a personal responsibility formeeting the expectations of theircustomers. Employees are motivated byknowing they are entrusted to make theright decisions.

Recognition. Recognition is apowerful tool to reinforce and maintainquality improvement. Ongoingrecognition increases employeeinvolvement and helps employees feelcommitment to their workenvironment. Recognition alsoreinforces desired behaviors, buildsself-esteem, nurtures trust and respect,says "thank you," renews enthusiasm,affirms self-worth and value,empowers, confirms quality values, andcelebrates success.

Both individual employees andteams should be recognized forimproving performance and increasingcustomer satisfaction. Organizationswith formal recognition programs buildemployee support and ownership inquality improvement efforts.

Principle 6: Improve Labor-Management Teamwork

Polarized positions--us versusthem--have long characterized therelationships between organized laborand management in the U.S. publictransportation industry, as well as otherindustries. Labor agreements and workrules often overly define and limitemployee responsibilities andemphasize punishment for breakingrules. In many transit agencies, moreattention is paid to the arbitration ofgrievances than working together toimprove performance and satisfycustomers.

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A continuous and lasting TQMprogram is not possible without theinvolvement of employees. Inorganizations with representedemployees, this means involvement byunion officials in policy decisionmaking and participation byrepresented employees to improveperformance and satisfy customers.Employee teams with represented andnonrepresented members must beconcerned with the processes that focuson customer satisfaction.

Under the National LaborRelations Act (NLRA) law, labor-management committees cannotaddress grievances, labor disputes, ratesof pay, hours of employment, orconditions of work. These areas are thesole concern of formal labornegotiations. To avoid conflicts withthe National Labor Relations Board(NLRB), the following steps should betaken:

• Establish a written policy thatclearly states TQM goals in terms ofquality enhancement and customersatisfaction. The policy shouldexpressly forbid teams fromworking on initiatives related towages, rates of pay, hours ofemployment, or conditions of work.

• Alert team leaders and facilitatorsto avoid discussions related todesignated topics.

• Advise management personnelwho work with teams which topicsare appropriate and which areinappropriate.

• Periodically audit and reviewactual practices to make certain thatviolations are not occurring.

Principle 7: Lead the Change inOrganizational Culture

The success of TQM is largelydetermined by leadership andorganizational culture. Leaders must becommitted to TQM to sustain alongterm effort to improveperformance. They must change theorganizational

culture and provide increasedopportunity for everyone to satisfycustomers.

TQM requires cultural change andtransformation of organizational rulesand attitudes. For many employees,especially those who have worked in anorganization for many years, this newapproach may be difficult to adjust toor accept. Employees may be resistantto the change because they feel that theold way is better--it's worked in thepast, why won't it work in the future?"--"TQM is simply a fad," or "despite thecurrent enthusiasm, management willnot commit or follow-through."Leaders will meet with resistance tochange on many different frontsthroughout the organization.

How Cultures Develop andChange. Organizational culturesgenerally develop from three sources:(1) the beliefs, values, and philosophyof the founders or early leaders; (2)

the learning experiences of groupmembers as their organization evolves;and (3) new beliefs, values, andphilosophy brought in by new membersand leaders. The philosophies ofleaders are tested early and are oftenthe root of success or failure. Even inlarge, well-established organizations,culture can often be traced to thebeliefs and values of the founders andearly leaders.

Leaders create organizationalculture and then perpetuate the cultureby determining the criteria forleadership and thus, who will or willnot be future leaders. Understanding anorganization's culture, its strengths andweaknesses, is desirable for allemployees, but is essential fororganization leaders.

Importantly, leaders mustrecognize the need to change theirorganization culture, when warranted.Next, they must get the members oftheir organization to accept the need forchange and begin the often difficulttransition process. Ultimately, leadersmust provide a path and process forcultural change and assure members ofthe organization that constructivechange is necessary and possible.

Leadership and TQM.Implementing TQM requires clear,long-term leadership commitment.Leadership must believe that long-termrelationships with satisfied customersare critical assets to the success of theorganization. Leaders must incorporatethis value into strategic planning andset customers as the top priority of allemployees.

It is essential that customersatisfaction be incorporated in thevision, mission, and value statements.These statements define strategicdirection--what goals will be pursuedand how they will be accomplished.The statements incorporate strategyalong with operational techniques andactivities that are essential to success.They are written commitments thatestablish a basis for quality planning,priority setting, and follow-upfeedback.

Leadership is also responsible forcreating "customer-focused supportsystems" such as measurement, rewardsand recognition for satisfyingcustomers, and training on workingwith and achieving positiverelationships with customers. Theseand other programs will demonstrate toemployees that senior management iscommitted to TQM.

Leaders must demonstrate thatTQM is essential. By witnessingleaders acting as role-models,employees will be more apt to takeinitiative to meet or exceed customers'expectations. This requires leaders toparticipate in education sessions and towork with employees, demonstratingthat everyone is responsible for"putting customers first."

LESSONS OF SUCCESS ANDFAILURE IN TQM

Much has been said and writtenabout TQM--both its success andfailure. This section summarizesTQM's current track record, based onthe writings of management experts.

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Is TQM Overrated?

The track record of TQMprograms has been mixed, with manyhigh-profile successes and an almostequal number of failures. According toThomas Hout, Vice President at theBoston Consulting Group: "Themajority of quality efforts fizzle outearly, or give some improvements butnever fulfill their initial promise."2

The Harvard Business Reviewrecently reported that, of 300electronics companies surveyed, 73percent had TQM efforts underway, butonly 37 percent had achieved more thana 10 percent reduction in productdefects. McKinsey & Company, aconsulting firm, found that two-thirdsof the quality programs at majorcorporations are failing or stalled.Another consulting firm, Arthur D.Little, surveyed 500 executives andfound that only 36 percent believedTQM improved competitiveness.3

While experts believe that TQMprinciples are sound, many companieshave simply not implemented theconcepts properly. According toChristopher Hart, President of the SpireGroup and a former Harvard BusinessSchool professor:

Twenty years ago, the dataprocessing function was beingtaken to a new conceptual levelunder the label 'managementinformation systems.' Did anycompanies back then spendmillions of dollars developingsystems that didn't work? Yes;horror stories abound. Does thatmean that the MIS concept wasrelegated to the scrap heap? No!It means that MIS was acomplicated, rapidly emergingfield with tremendousopportunities for learning--inother words, many mistakes weremade--and learning over theyears has minimized problems.TQM is in the same situation asMIS was twenty years ago.Quality is here to stay! It makessense for the customer; it makessense for the company; it makessense for the employee, and it'sthe moral thing to do.4

When Does TQM Fail?

Companies have experienced avariety of specific problems with TQMimplementation. First, because TQM isa unifying philosophy that transformsbusinesses, it sometimes results ininternal debates over basic strategy.Furthermore, there are numerous TQMmethods and implementationapproaches, some of which may beincompatible. Finally, because seniormanagers may delegate qualityleadership, some organizations developinternal TQM bureaucracies that arejust as ineffective and insulated as otherfunctional departments.5

Other possible reasons for failureaccording to the American QualityFoundation include the following:"Americans react poorly to programsgeared to perfection," "70 percent ofAmerican workers are afraid to speakup with suggestions or to ask forclarification," and "Americans prefer tojump into a project without heavyplanning."6

When Does TQM Succeed?

In 1993, Ernst & Young and theAmerican Quality Foundationpublished the Best Practices Report,resulting from their ongoingInternational Quality Study. Theyfound that three types of initiatives hada significant impact on successfulperformance: (1) process improvement,(2) full deployment of strategic plans,and (3) supplier chain participation.Process improvement, as discussedelsewhere in this digest, meanschanging the way things are done.Deployment of strategy meanseveryone must understand and sharethe same vision. Supplier chainparticipation means encouragingsuppliers to adopt TQM methodsthemselves, to ensure that the 'input'received will not cause problems.7

Brad Stratton, editor of QualityProgress magazine, said that thefollowing conditions are necessary fora successful TQM program. First, thecorporate

culture must be prepared and ready forchange. Second, people must berewarded for new thinking andencouraged to report bad news. Third,TQM must have a strong championwho is willing and able to exertleadership. Fourth, implementationmust be from the top down, with activeand sustained participation by seniormanagement. Fifth, every employeeshould be trained and involved. Sixth,organizations must continuouslyimprove their training programs,adding new and more sophisticatedtools to employees' skills repertoires tosustain momentum. Seventh,organizations need to establish a proper"balance of statistical and social skills."Finally, people must be patient.Meaningful change takes time.8

PILOT TQM INITIATIVES

Important objectives of Project F-3 included identifying up to four transitsystems interested in initiating oradvancing TQM and providing supportfor their efforts. The four transitagencies should be diverse in size,services provided, geographic location,and labor environment. By initiatingand subsequently evaluating TQM inthese diverse transit settings,information and insights should begained that may benefit the U.S. transitindustry as a whole.

Conducting the four pilot TQMinitiatives serves a number of purposes:

• Provides an opportunity to applyand test TQM principles in publictransportation environments, whichto date have largely been applied inthe private sector or other parts ofthe public sector.

• Tailors TQM principles to betterserve the needs and uniquecharacter of public transportationthrough field testing.

• Ensures the preparation of moremeaningful informational andeducational materials on TQM,which

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will be useful to transit agencies thatpursue TQM in the future.

This digest briefly discusses theselection of the pilot participants,provides highlights of the four transitagencies, and reviews their interest inTQM at the outset of the pilotinitiatives.

Identification of Candidate PublicTransportation Agencies

The Survey of Chief ExecutiveOfficers, which included 590 publictransportation systems throughout theUnited States, served as the primarybasis for identifying four candidatetransit agencies for the TQM pilotinitiatives. In this confidential survey,the CEOs were asked a number ofquestions regarding their transitsystem's environment, their generalinterest in TQM, their efforts to pursueexcellence and quality, and theirinterest in being a candidate for a TQMinitiative under this project.

Of the 172 respondents to thesurvey, 30 public transportationagencies were identified as candidatesusing the following criteria:

• Labor-management relations."We have considerable trust andrespect between labor andmanagement." CEO responses tothis statement were required to rangefrom neutral to strongly agree.While TQM can render assistance inimproving the trust and respectbetween labor and management,overcoming poor relations betweenthe parties is not the principal focusof the quality effort.

• Interest in participation. "I amvery interested in having ourorganization participate in a TQMpilot program as described in yourcorrespondence." CEO responses tothis statement were required to rangefrom highly to strongly agree. SinceTQM begins at the top, it wasimportant that the CEO respondedenthusiastically.

• Labor agreement expirationdate. This project is not intended tocompete for the attention of laborand management leadership duringcollective bargaining. TQM initiallyrequires labor and managementleadership to focus on the plans andfuture events associated with qualityefforts. The pilot initiatives are, inthemselves, difficult to successfullylaunch. Therefore, collectivebargaining agreements of the pilotparticipants could not expirebetween February 1994 and June1995.

The Project Panel requested thattransit agencies with fewer than 50vehicles operating in peak periods notbe considered as pilot TQM candidates.This decision reduced the number ofcandidate transit systems from 30 to 12.A public transportation organizationwith less than 50 peak vehicles wasconsidered not sufficiently complex totest and evaluate TQM.

The Project Panel requested thatthe CEOs of the 12 final candidatetransit agencies be interviewed bytelephone to better determine theirinterest in the project and theirwillingness and ability to commit thetime and resources required fromparticipants. Questions were sent toeach CEO in advance of the telephoneinterviews. The responses from theinterviews were subsequently sent toeach Panel member for review andselection of the four finalists.

Four Pilot Participants

The Project Panel selected thefollowing participants: the ChicagoTransit Authority (CTA)--one of thelargest rail and bus transit systems inthe United States; the Pee Dee RegionalTransportation Authority (PDRTA)--amulticounty, mostly rural, southeasternU.S. system, which largely providesparatransit services; the SouthwestOhio Regional Transit Authority(Metro)--a mid-to-large-size busservice in the mid-west; and theSpokane Transit Authority (STA)--amid-size, west-coast bus system.

Table 1 briefly describes the agencies,highlighting these characteristics.

Once the pilot participants wereselected, the research team scheduled ameeting with each of the four selectedtransit agencies, and requested thateach meeting be attended by, at least,the CEO, the chair of the governingboard, and the president(s) of the locallabor union(s). The purpose of eachmeeting was to provide a more in-depthpresentation of the objectives andrequirements of the pilot initiatives,answer questions concerningparticipation, and permit withdrawalfrom participation by any party.Following these meetings, all fourtransit agencies made a year-longcommitment and agreed to the termsand requirements for participation inthe pilot TQM initiatives.

Initiation of the TQM Pilots

At the outset of the pilot activities,each of the four transit agencies was ata different stage in its thinking andconsideration of TQM. Seniormanagement at CTA had formulatedideas about changing its corporatephilosophy to a customer-focusedculture. Metro had been active, withgood results, for about 2 years with itsvisioning process and employeeparticipation program. STAmanagement was aware of TQM andwas learning about what it took toinitiate its effort. PDRTA had no priorinvolvement in quality programs.

To provide a common point ofdeparture for the pilot activities,Leadership Workshops were held tointroduce and discuss TQM, establish afoundation for the pilot activities,clarify roles and responsibilities, andprepare a draft TQM action plan foreach participating agency. Theworkshops, which each lasted from 1½to 2 days, included presentations, groupdiscussions, and video tapes aboutquality. Manuals were prepared anddistributed to each participant, as aworkshop guide.

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Table 1 Public transportation agency participants in the TQM pilot initiatives

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During the balance of this researchproject, assistance will be provided tothe participating transit systems tofurther develop and implement theirpilot TQM initiatives; provide trainingto a designated quality coordinator orfacilitator at each system, as well asmembers of quality improvementteams; support and guide each TQMpilot to achieve its objectives; troubleshoot, as needed; and evaluate anddocument the four pilot TQMinitiatives.

RESEARCH RESULTS,DOCUMENTATION, ANDPRODUCTS

A number of products resultingfrom this project will serve differentaudiences and meet differentobjectives. These products include thefollowing:

• Final report. This report will (1)present the research results

including the literature search,investigation of TQM in the publicand private sectors, and principlesfor TQM in public transportation;and (2) document the pilot TQMinitiatives, including the selection ofparticipants, plan development,training, facilitation, support, andevaluation of each effort.

• Informational materials. Thesematerials will be designed for transitexecutives, union leadership, andboard members to introduce TQM.A brochure and video tape arecurrently being considered as themedia for presenting material, whichshould help individuals responsiblefor public transportationmanagement and performancedecide to further investigate or makea commitment to TQM.

• Educational materials. A user-friendly TQM Guidebook for PublicTransportation will be prepared thatexpands on the informationalmaterials, including a TQM roadmap, sample meeting agenda,customer surveys, and additionalTQM resources.

All final products will be availablethrough the TCRP in the fall of 1995.An Interim Phase I Research Report isavailable at this time. To request acopy, contact:

Ms. Dianne SchwagerProject ManagerTransportation Research Board2101 Constitution Avenue, N.W.Washington, DC 20418202/334-2969

Note: The Transportation Research Board, the National Research Council, the Federal Transit Administration (sponsor of theTransit Cooperative Research Program), and the Transit Development Corporation do not endorse products or manufacturers.Trade or manufacturer names appear herein solely because they are considered essential to the object of this report.

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NOTES

1. Mizaur, Don.

2. Hammonds, Keith and DeGeorge, Gail, "Where Did They Go Wrong," Business Week: Quality 1991, p. 34.

3. Schaaf, Dick, "Is Quality Dead?" Quality, May 1993.

4. Hart, Christopher. The Marriage Between TQM and Customer Satisfaction. Presented at the J.D. Power CustomerSatisfaction Roundtable Conference, July 1993.

5. Hammonds and DeGeorge.

6. Ibid.

7. Schaaf, Dick.

8. Stratton, Brad, "What Makes It Take, What Makes It Break," Quality Progress, April 1990.

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APPENDIX ABIBLIOGRAPHY

GENERAL

Crosby, P.B., Quality is Free: The Art of Making Quality Certain, New American Library, New York, NY (1979).The premise of Quality is Free is that doing things right the first time adds nothing to the cost of a product or service. Crosbytells how to manage quality so that it becomes a source of profit for your business. Case histories demonstrate how qualityconcepts have worked in actual business situations.

Deming, W.E., Out of the Crisis, MIT Center for Advanced Engineering Study, Cambridge, MA (1982).Dr. Deming shows the way "out of the crisis" with his famous 14 Points. This book teaches the transformation that is requiredfor survival--a transformation that can only be accomplished by man. Dr. Deming encourages long-term commitment to newlearning and new philosophy. He stresses new principles of training and leadership, the need for clear operational definitions,and common and special causes of improvement. "A company cannot buy its way into quality," he writes,--"it must be led intoquality by top management."

Imai, M., Kaizen: The Key to Japan's Competitive Success, Random House, Inc., New York NY (1986).Kaizen means gradual, unending improvement, doing "little things" better; setting--and achieving--ever-higher standards. Inthis classic book, Imai Masaki describes how a process-oriented, customer-driven strategy of involving everyone (bothmanagers and workers) in the continuous improvement of products and services will lead to improved quality andproductivity.

Juran, J.M., Juran on Leadership for Quality: An Executive Handbook, The Free Press, New York, NY (1989).Juran lays out his famed "Juran Trilogy" on how to apply the familiar business concepts of "planning, controlling, andimproving" to quality leadership. He gives criteria for selecting project-by-project improvements and for picking a team tocarry them out. He also describes a realistic timetable for implementation and directs the formulation of an ongoing qualitycouncil.

Walton, M., The Deming Management Method, The Putnam Publishing Group, New York, NY (1986).In this book, Mary Walton describes how the Deming Method is used by firms and organizations from all over the industrialspectrum, including service industries and manufacturing. The six organizations featured are Florida Power & Light; HospitalCorporation of America; Tri-Cities, Tennessee; The United States Navy; Bridgestone (USA) Incorporated; and GlobeMetallurgical Incorporated.

Additional Sources

Berry, T.H., Managing the Total Quality Transformation, McGraw-Hill Inc., New York, NY (1991).

Deming, W.E., The New Economics, MIT Center for Advanced Engineering Study, Cambridge, MA (1993).

Dobyns, L. and Crawford-Mason, C., Quality or Else: The Revolution in World Business, Houghton Mifflin Company, Boston, MA(1991).

Garvin, D.A., "Competing on the Eight Dimensions of Quality," Harvard Business Review, Cambridge, MA (Nov.-Dec. 1987), pp. 101-109.

Grant, R.M., Shani, R., and K.R., "TQM's Challenge to Management Theory and Practice," Sloan Management Review, Cambridge, MA(Winter 1994), pp. 25-35.

Hart, C.W.L. and Bogan, C.E., The Baldrige: What it is, How it's Won, How to Use it to Improve Quality in Your Company, McGraw-Hill, Inc., New York, NY (1992).

Ishikawa, K., What is Total Quality Control? The Japanese Way, Prentice-Hall Inc., Englewood Cliffs, NJ (1985).

Juran, J.M., Juran on Planning for Quality, The Free Press, New York, NY (1988).

Kearns, D.T. and Nadler, D.A., Prophets in the Dark, Harper Business, New York, NY (1992).

Peters, T.J., Thriving on Chaos: Handbook for a Management Revolution, Alfred A. Knopf, New York, NY (1987).

Rosander, A.C., Applications of Quality Control in the Service Industries, Marcel Dekker, Inc., New York, NY (1985).

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Teboul, J., Managing Quality Dynamics, Prentice Hall, Englewood Cliffs, NJ (1991).

Townsend, P.J., Commit to Quality, John Wiley & Sons Inc., New York, NY (1990).

LEADERSHIP AND ORGANIZATIONAL CULTURE

Block, P., Stewardship, Berrett-Koehler Publishers, San Francisco, CA (1993).Organizations that practice stewardship will succeed in their marketplace by choosing service over self-interest and by a far-reaching redistribution of power, purpose, and wealth. Without this, little real change will result. In place of the "managerialclass system" the author says, we need to reintegrate the managing of work with the doing of work. Everybody manages andeverybody does real work.

Belasco, J.A., Teaching the Elephant to Dance: The Manager's Guide to Empowering Change, Penguin Books, New York, NY (1991).This book gives every manager a step-by-step guide to making the impossible happen and is filled with illuminating casehistories of companies large and small that have maneuvered out of stagnation to get back into the competitive mainstream. Itshows how to devise new corporate vision and strategies, how to overcome inertia and inbred adherence to "how it has alwaysbeen done," and how to make both management and labor trail-blazers rather than road-blockers to new standards ofexcellence.

Covey, S.R., Principle-Centered Leadership, Summit Books, Fort Worth, TX (1990).How do you transform the paradigms of people and organizations from reactive, control-centered management to proactive,empowerment-oriented leadership? While Deming's theory of total quality explains the "what" to do and gives a partialexplanation of "why' it should be done, Covey supplies the missing "how-to-do-it." The Seven Habits are foundationprinciples that, when applied consistently in practice, become behaviors enabling fundamental transformations of individuals,relationships, and organizations.

Garvin, D.A., Managing Quality: The Strategic and Competitive Edge, The Free Press, New York, NY (1988).This critical yet enlightening analysis illustrates how America must improve quality to win back lost markets and gain long-term competitive advantage. Comparing quality management in Japanese and American plants producing the same products,Garvin provides the evidence relating to quality to such variables as process, productivity, and profitability. His focused studyof 9 Japanese and 11 American factories makes clear what the Japanese have done better than even the best U.S. companies.

Schein, E.H., Organizational Culture and Leadership, Jossey-Bass Publishers, San Francisco, CA (1992).This second edition transforms the abstract concept of culture into a tool that managers and students have continually used tobetter understand the dynamics of organizations and change. The author presents critical new learnings and practices in thefield. He defines culture--what it is, how it is created, how it evolves, and how it can be changed--and clearly demonstrates thecrucial role leaders play in successfully applying the principles of culture to increase organizational effectiveness.

Senge, P.M., The Fifth Discipline: The Art and Practice of the Learning Organization, Doubleday, New York, NY (1990).Author Peter Senge presents a system of thinking and acting that, if followed correctly, can be the basis for reducing the"learning disabilities" in any organization. Senge illustrates his ideas, based on both research and practical experience, withcompelling examples. With the help of stories, diagrams, and self-administered exercises, readers not only learn, they learnhow to learn.

Additional Sources

Albrecht, K., The Creative Corporation, Dow Jones-Irwin, Homewood, IL (1987).

Albrecht, K., Service Within: Solving the Middle Management Leadership Crisis, Business One Irwin, Homewood, IL (1990).

Belasco, J.A. and Stayer, R.C., Flight of the Buffalo: Soaring to Excellence, Learning to Let Employees Lead, Warner Books, New York,NY (1993).

Buzzell, R.D. and Gale, B.T., The PIMS Principles: Linking Strategy to Performance, The Free Press, New York, NY (1987).

Carlzon, J., Moments of Truth, Ballinger Publishing Co., Cambridge, MA (1987).

Covey, S.R., Seven Habits of Highly Effective People: Restoring the Character Ethic, Simon & Schuster, New York, NY (1989).

DePree, M., Leadership is an Art, Doubleday, New York, NY (1989).

Drucker, P., Managing for the Future: The 1990s and Beyond, Dutton, New York, NY (1992).

25

Ernst & Young Quality Improvement Consulting Group, Total Quality: An Executive's Guide for the 1990's, Dow Jones-Irwin,Homewood, IL (1990).

Hamel, G. and Prahalad, C.K., "Strategic Intent," Harvard Business Review, Cambridge, MA (May-June 1989).

Kotter, J.P., "What Leaders Really Do," Harvard Business Review, Cambridge, MA (May-June 1990).

Levering, R., A Great Place to Work, Random House, New York, NY (1988).

Peters, T.J. and Austin, N., A Passion for Excellence: The Leadership Difference, Random House, New York, NY (1985).

Prahalad, C.K. and Hamel, G., "The Core Competence of the Corporation," Harvard Business Review, Cambridge, MA (May-June 1990)pp. 79-91.

Saraph, J.V. and Sebastian, R.J., "Developing a Quality Culture," Quality Progress (Sept. 1993) pp. 73-78.

MEASUREMENT/BENCHMARKING

Camp, R.C., Benchmarking: The Search for Industry Best Practices that Lead to Superior Performance, American Society for QualityControl, Quality Press, Milwaukee, MI (1989).

Find answers to the questions: What is benchmarking? How do I perform benchmarking? What are the results of successfulapplications? Case histories provide examples of actual benchmarking investigations from beginning to end.

Harrington, H.J., Poor-Quality Cost, Marcel Dekker, Inc., New York, NY (1987).This book explains poor-quality cost concepts and gives simple, step-by-step guidelines for the implementation of a poor-quality cost identification and reporting system. This work includes analyzed data collected from a vast number ofcorporations and disciplines and provides many examples of how poor-quality cost concepts are put into practice.

Zeithaml, V.A., Parasuraman, A., and Berry, L.L., Delivering Quality Service: Balancing Customer Perceptions and Expectations, TheFree Press, New York, NY (1990).

The authors' grounding model, which tracks the five attributes of quality service--reliability, empathy, assurance,responsiveness, and tangibles--goes right to the heart of the tendency to overpromise. By comparing customer perceptionswith expectations, the model provides planning and marketing managers with a two-part measure of received quality that, forthe first time, enables them to segment a market into groups with different service expectations.

Additional Sources

AT&T Cost-of-Quality Guideline, AT&T Quality Steering Committee, Indianapolis, IN (1990).

Juran, J.M. and Gryna, F.M., Juran's Quality Control Handbook, McGraw-Hill Book Company, New York, NY (1988).

Kaplan, R.S. and Norton, D.P., "The Balanced Scorecard--Measures that Drive Performance," Harvard Business Review, Cambridge,MA (Jan.-Feb. 1992), pp. 71-79.

Kaplan, R.S. and Norton, D.P., "Putting the Balanced Scorecard to Work," Harvard Business Review, Cambridge, MA (Sept.-Oct. 1993),pp. 134-147.

Leibfried, K.H.J and McNair, C.J., Benchmarking: A Tool for Continuous Improvement, Harper Collins Publishers, New York, NY(1992).

Meyer, C., "How the Right Measures Help Teams Excel," Harvard Business Review, Cambridge, MA (May-June 1994), pp. 95-103.

Schaffer, R.H. and Thompson, H.A., "Successful Change Programs Begin with Results," Harvard Business Review, Cambridge, MA(Jan.-Feb. 1992), pp. 80-89.

Talley, D.J., Total Quality Management: Performance and Cost Measures, American Society for Quality Control, Quality Press,Milwaukee, WI (1991).

26

PROCESS MANAGEMENT

Davenport, T.H., Process Innovation: Re-engineering Work Through Information Technology, Harvard Business School Press,Cambridge, MA (1993).

This book is breakthrough thinking on how to exploit the real potential of Information Technology (IT). Davenport offers apathway for the serious general manager who must incorporate IT into his or her strategic management repertoire. Whereastraditional TQM techniques usually result in incremental improvement, re-engineering can bring about radical change to anorganization.

Hammer, M. and Champy, J., Re-engineering the Corporation: A Manifesto for Business Revolution, Harper Business, New York, NY(1993).This book describes the principles behind a new and systematic approach to structuring and managing work. Written in clear,readable prose, the book describes the what, the why, and the how of business re-engineering.

Harrington, H.J., Business Process Improvement: The Breakthrough Strategy for Total Quality, Productivity, Competitiveness,McGraw-Hill, New York, NY (1991).

Harrington offers a no-nonsense blueprint for restructuring our antiquated "business-as-usual" approach. The blueprint is notabout automating processes that already don't work nor is it about importing some exotic Japanese management technique thatonly serves to further confuse everyone. It is about effecting a major change in the way we manage our organizations byapplying new approaches to the business community as a whole, particularly service industries.

Process Quality Management & Improvement Guidelines, AT&T Quality Steering Committee, Indianapolis, IN (1988).This book describes a customer-focused, seven-step cycle for management, control and improvement of business processes. Itillustrates process management concepts with images from Alice's Adventures in Wonderland.

Rummler, G.A. and Brache, A.P., Improving Performance: How to Manage the White Space on the Organization Chart, Jossey-BassPublishers, San Francisco, CA (1990).

Rummler and Brache provide a practical framework for understanding how various departments and functions in anorganization interrelate and show how to manage this interaction to enhance the organization's effectiveness. Three avenues ofapproach for dealing with performance issues are explored: through organizational strategies, structures and managementpractices; through the processes used to get work done; and through individual jobs and employees.

Additional Sources

King, B., Hoshin Planning--The Developmental Approach, Goal/QPC (1989).

Sirkin, H. and Stalk, G., Jr., "Fix the Process, Not the Problem," Harvard Business Review, Cambridge, MA (July-Aug. 1990), pp. 1-8.

TRAINING AND TOOLS

American Quality Foundation and Ernst & Young, "The International Quality Study: Best Practices Report, An Analysis of ManagementPractices that Impact Performance," (1993). The IQS examined organizations in the automotive, banking, computer, and health careindustries within four leading industrialized nations--Canada, Germany, Japan and the United States. This report focuses on "bestpractices"--those management practices that lead to the best results and identifies three management practices that have significantimpact on performance.

Brassard, M. and Ritter, D., The Memory Jogger II, GOAL/QPC (1994).Memory Jogger II is the successor book to The Memory Jogger first written and produced in 1985. It is an outstandingreference and guide to basic tools and techniques used by individuals and teams in identifying and solving problems. The bookcontains the basic Seven Quality Control Tools and the Seven Management and Planning Tools with excellent graphics andexamples. The book also contains a complete case study that details Stop'N Go Pizza's using the Improvement Storyboardmodel.

Quality Manager's Handbook, AT&T Quality Steering Committee, Indianapolis, IN (1990).This manual is a road map for the quality manager. It examines the evolution of quality in the organization and recommendstools, references, and resources to help the quality professional support and sustain the organization in implementing a world-class quality system.

Additional Sources

American Quality Foundation and Ernst & Young, "The International Quality Study: The Definitive Study of the Best InternationalQuality Management Practices," (1991).

27

Amsden, R.T., Butler, H.E., and Amsden, D.A., SPC Simplified: Practical Steps to Quality, Quality Resources (1989).

Scholtes, P.R. and other contributors, The Team Handbook, Joiner Associates (1988).

Wyckoff, D.D., "New Tools for Achieving Service Quality," The Cornell Hotel and Restaurant Administration Quarterly (Nov. 1984),pp. 7891.

EMPLOYEE EMPOWERMENT AND TEAMS

Block, P., The Empowered Manager: Positive Political Skills at Work, Jossey-Bass Publishers, San Francisco, CA (1987).Empowerment is not a set of techniques--it is a choice. Is this a business strategy you believe in? The promise ofempowerment is that it will dramatically increase the sense of responsibility and ownership at every level of the organization,especially at the bottom where products and services are delivered and customers are served. "As you give employees moreand more freedom," Block says, "expect a very mixed response. There is a part of us that does not want more autonomy,choice, or responsibility. We want to be taken care of." The goal of his book is to present a way of being political that balancesthe hope for transforming organizations with the risk in attempting change, in a realistic and helpful way.

Blanchard, K., Carew, D., and Parisi-Carew, E., The One-Minute Manager: Builds High Performance Teams, William Morrow andCompany, Inc., New York, NY (1990).

Benefit from learning how to develop through the four stages of team development. This book is essential for anyone whoworks with groups and wants to improve group effectiveness.

Lawler, E.E., III, High-Involvement Management: Participative Strategies for Improving Organizational Performance, Jossey-BassPublishers, San Francisco, CA (1986).

Lawler answers the important questions about participative management--quality circles, self-managing teams, jobenrichment, gainsharing--including how each approach works, how much they raise quality and performance, which approachworks best, the advantages and disadvantages of each, and how they are successfully implemented.

Zenger, J.H., Musselwhite, E., Hurson, K., and Perrin, C., Leading Teams: Mastering the New Role, Business One Irwin, Homewood, IL(1994).

Implementing successful teams presents the challenge of training team members to take more responsibility for their work.But the greater challenge for managers and supervisors is preparing for their new role. The book is a comprehensive guide tothe art of shared leadership--helping the team to perform activities that managers once performed alone.

Additional Sources

Belcher, J.G., Jr., "Employee Involvement Techniques," APQC Briefs, American Productivity & Quality Center, Brief 62 (Sept. 1987),12 pp.

Byham, W.C. with Cox, J., Zapp! The Lightning of Empowerment: How to Improve Quality, Productivity, and Employee Satisfaction,Fawcett Columbia, New York, NY (1988).

Clark, S.A., Warren, K.D., and Greisinger, G., "Assessment of Quality of Work Life Programs for The Transit Industry," NationalCooperative Transit Research & Development Program Report 5, Transportation Research Board, Washington, DC (1983).

Wellins, R.S., Byham, W.C., and Wilson, J.M., Empowered Teams: Creating Self-Directed Work Groups that Improve Quality,Productivity, and Participation, Jossey-Bass Publishers, San Francisco, CA (1991).

LABOR

Bluestone, B. and Bluestone, I., Negotiating the Future: A Labor Perspective on American Business, Basic Books, New York, NY(1992).

This book describes labor-management experiments to show that Enterprise Compacts are not impractical utopias, butpromising means for making firms more efficient and profitable, improving employment security and the quality of workinglife, and restoring America's competitive edge. The authors argue that America will continue to lag behind its competitors aslong as corporate decision making is blocked by an outworn, adversarial system of labor-management relations that no longerserves the interests of workers, stockholders, and the nation.

Cohen-Rosenthal, E. and Burton, C.E., Mutual Gains: A Guide to Union-Management Cooperation, ILR Press, 2nd ed, rev., Ithaca, NY(1993).

While quality efforts can be an excellent way to showcase how union-management cooperation, both parties should be vigilantto the real hazards, risks, and potential losses associated with them. The key to success is to position quality efforts solidlywithin the collective bargaining relationship on a foundation of union-management cooperation. A management and union cando almost

28

anything that they set out to do, when they summon their imaginations and are dedicated to having the highest-qualitycooperation in order to provide the highest quality service.

Applebaum, E. and Batt, R., The New American Workplace: Transforming Work Systems in the United States, ILR Press, Ithaca, NY(1994).

There are two basic routes that get you to a high-performance workplace. These authors review several decades of U.S. andinternational cases to identify two distinct and coherent models of high-performance work systems--what is referred to in thebook as an American version of lean production and an American version of team production. The two systems producesimilar results and improvements in performance. While the outcomes for companies may be similar, the outcomes foremployees are apt to be quite different. The lean model is the one used predominately by U.S. employers: a centralized, top-down approach to employee relations which is reinforced by the criteria of the Baldrige Award. Only 15 percent of the Awardformula deals in improvement in human resource development and management, just 2 percent with employee involvement,and 2.5 percent with morale.

Additional Sources

Cohen-Rosenthal, E. and Burton, C., "Improving Organizational Quality by Forging the Best Union-Management Relationship,"National Productivity Review, Spring 1994.

Collective Bargaining Form, "Labor-Management Commitment: A Compact for Change," Bureau of Labor-Management Relations andCooperative Program, U.S. Department of Labor, BLMR 141 (1991).

Rubenstein, S.P., "Democracy and Quality as an Integrated System," Quality Progress (Sept. 1993) pp. 51-55.

CUSTOMER SERVICE

Davidow, W.H. and Uttal, B., Total Customer Service: The Ultimate Weapon: A Six-Point Plan for Giving Your Business theCompetitive Edge in the 1990s, Harper & Row Publishers, New York, NY (1989).

Drawing on in-depth case histories of service leaders who have triumphed and of laggards who have lost, Davidow and Uttalhave devised a six-point plan that any company--regardless of what business it is in--can utilize to secure a decisivecompetitive edge: devise a service strategy; get managers to behave like customer service fanatics; concentrate on motivatingand training employees; design products and services that make good customer service possible; invest in serviceinfrastructure; and constantly monitor achievement of customer service goals.

Hart, C.W.L., Extraordinary Guarantees: A New Way to Build Quality Throughout Your Company and Ensure Satisfaction for YourCustomers, American Management Association, New York, NY (1993).

In this innovative book, Hart describes the power of the extraordinary guarantee--one that does not merely limit a customer'srisk but promises exceptional, uncompromising quality and customer satisfaction, and backs that promise with a payoutintended to recapture the customer's good will and continued business. The book examines different types of guarantees anddiscusses their benefits from a marketing and an operational standpoint.

Heskett, J.L., Sasser, W.E., and Hart, C.W.L., Service Breakthroughs: Changing the Rules of the Game, The Free Press, New York, NY(1990).

Based on five years of research in 14 service industries, Heskett, Sasser, and Hart show exactly what enables one or twocompanies in each industry to constantly set new standards for quality and value that force competitors to adapt or fail. At theheart of breakthrough performance, the authors contend, is a sometimes intuitive but thorough understanding of the "self-reinforcing service cycle" that replaces traditional management of "trade-offs." The "cycle" is a paradigm derived from theresearch results suggesting direct links between heightened customer satisfaction, increased customer retention, augmentedsales and profit, improved quality and productivity, greater service value per unit cost, improved satisfaction of serviceproviders, increased employee retention, and further heightened customer satisfaction.

Reichheld, F.E. and Sasser, W.E., Jr., "Zero Defections: Quality Comes to Services," Harvard Business Review, Cambridge, MA (Sept.-Oct. 1990), pp. 105-111.

This article provides a compelling rationale for both guarantees and service recovery, by spelling out the hard costs of losingdissatisfied customers.

Additional Sources

Albrecht, K., At America's Service: How Corporations Can Revolutionize the Way They Treat Their Customers, Dow Jones-Irwin,Homewood, IL (1988).

29

Albrecht, K. and Zemke, R., Service America! Doing Business in the New Economy, Dow Jones-Irwin, Homewood, IL (1985).

Hart, C.W.L., "The Power of Unconditional Guarantees," Harvard Business Review, Cambridge, MA (July- Aug. 1988), pp. 54-62.

Hart, C.W.L., Heskett, J.L. and Sasser, W.E., Jr., "The Profitable Art of Service Recovery," Harvard Business Review, Cambridge, MA(July-Aug. 1990), pp. 148-156.

Heskett, J.L., Managing in the Service Economy, Harvard Business School Press, Cambridge, MA (1986).

Parasuraman, A., Berry, L.L., and Zeithaml, V.A., "Understanding Customer Expectations of Service," Sloan Management Review,Cambridge, MA (Spring 1991) pp.39-48.

CASE STUDIES IN QUALITY

European Conference of Ministers of Transport, Round Table 92: Marketing and Service Quality in Public Transport, Organisation forEconomic Co-operation, Paris, France (1993).

Faced with mounting deficits, public transport is in search of a new image. Above all, service quality must be adapted tocustomer needs. A whole range of possibilities exist to make public transport more appealing: more frequent and punctualservice, better equipment, improved customer relations, electronic payment facilities and more convenient connections are justa few of these.

Papers and presentations that are provided in the book include case studies from Barcelona, Spain; Gothenburg, Sweden;Lyons, France; and Munich, Germany.

Peters, T.J. and Waterman, R.H., Jr., In Search of Excellence: Lessons from America's Best-Run Companies, Warner Books, New York,NY (1982).

The authors studied 43 successful American companies and discovered that these companies shared eight basic principles ofmanagement that are readily transferable. The book illustrates with anecdotes and examples the experiences of these best-runcompanies to make them accessible and practical for readers to use.

Sasser, W.E., Hart, C.W.L., and Heskett, J.L., The Service Management Course: Cases and Readings, The Free Press, New York, NY(1991)

This book can supplement Service Breakthroughs or be used on its own. The 37 case studies and 10 readings offer a multitudeof breakthrough management thinking. Sasser, Hart, and Heskett explore how companies such as Club Med, Nordstrom,Florida Power & Light, UPS and many more rise above their competitors and become industry leaders. The authors carefullydescribe how breakthrough managers develop "counterintuitive" visions and how they define service.

Additional Sources

Hiam, A., Closing the Quality Gap: Lessons from America's Leading Companies, Prentice Hall, Englewood Cliffs, NJ (1992).

Harrington, H.J., The Improvement Process--How America's Leading Companies Improve Quality, McGraw-Hill, New York, NY(1987).

Kearns, D.T. and Nadler, D., Prophets in the Dark: How Xerox Reinvented Itself and Beat Back the Japanese, Harper Collins Publishers,New York, NY (1992).

Sasser, W.E., The Service Management Course, Free Press, New York, NY (1991).

Tiche, N., Control Your Destiny or Someone Else Will, Doubleday, New York, NY (1993).

United States General Accounting Office, Management Practices--U.S. Companies Improve Performance through Quality Efforts(GAO/NSIAD-91-190), Washington, DC (May 1991).

Walton, M., Deming Management at Work: Six Successful Companies that use the Quality Principles on the World-Famous W. EdwardDeming. G.P. Putnam's Sons, New York, NY (1990).

Zemke, R. and Schaff, D., The Service Edge: 101 Companies that Profit from Customer Care, New American Library, New York, NY(1989).

30

JOURNALS, PERIODICALS, AND NEWSLETTERS

Commitment PlusNewsletter, monthlyQuality and Productivity Management Association (QPMA)300 Martingale Road, Suite230 Schaumburg, IL 60173(708) 619-2909

Journal for Quality and ParticipationJournal, six times/yearAssociation for Quality and Participation (AQP)801-B West 8th Street, Suite 501Cincinnati, OH 45203-1601(513) 381-1959

QualityMagazine, monthlyHitchcock Publishing Co.191 S. Gary AvenueCarol Stream, IL 60188(312) 655-1000

Quality DigestMagazine, monthlyQCI International1425 Vista WayRed Bluff, CA 96080(916) 527-8875

Quality ProgressMagazine, monthlyAmerican Society for Quality Control (ASQC)310 West Wisconsin AvenueMilwaukee, WI 53203(404) 272-8575

Additional

Continuous JourneyMagazine, six times/yearAmerican Productivity & Quality Center123 North Post Oak Lane, Suite 300Houston, TX 77024-7797(713) 681-4020

Government Productivity NewsNewsletter, 10 times/yearP.O. Box 27435Austin, TX 78755-0435

National Productivity ReviewMagazine, quarterlyExecutive Enterprises Co., Inc.22 West 21st StreetNew York, New York 10010-6904(800)332-8804; (212) 645-7880, ext. 208

31

Productivity Inc.Newsletter, monthlyP.O. Box 3007Cambridge, MA 02140(617) 497-5146

Quality Assurance BulletinNewsletter, semi-monthlyNational Forman's Institute24 Rope Ferry RoadWaterford, CT 06386(203) 442-4365

The LetterNewsletter, monthlyAmerican Productivity & Quality Center123 North Post Oak Lane, Suite 300Houston, TX 77024-7797(713) 681-4020

The Service EdgeNewsletter, monthlyLakewood Publications50 South Ninth StreetMinneapolis, MN 55402(800) 328-4329; (612) 333-0471

SOURCES FOR REFERENCE BOOKS

George Washington University Continuing Engineering Education ProgramSchool of Engineering and Applied ScienceAttn: Books and Videos.Washington, D.C. 20052(800) 424-9773

Productivity PressProductivity, Inc.P.O. Box 3007Cambridge, MA 02140(800) 274-9911

Quality PressAmerican Society for Quality Control (ASQC)310 West Wisconsin AvenueMilwaukee, WI 53203(800) 952-6587

PROFESSIONAL SOCIETIES

American Society for Quality Control (ASQC)310 West Wisconsin AvenueMilwaukee, WI 53203(414) 272-8575

Conferences, educational courses, seminars, The Quality Review magazine, and Quality Progress journal, book service,professional certification, technical divisions, and committees, and local chapters.

32

American Productivity & Quality Center (APQC)123 North Post Oak Lane, Suite 300Houston, TX 77024-7797(713) 681-4020

Educational and advisory services to organizations in the private and public sectors, courses, case studies, researchpublications, The Letter newsletter, Continuous Journey magazine, resource guide, library, and consulting.

Quality and Productivity Management Association (QPMA)300 Martingale Road, Suite 230Schaumburg, IL 60173(708) 619-2909

Network of North American quality and productivity coordinators, operating managers and staff managers,conferences, workshops, Commitment Plus newsletter, resources guide, and local chapters.

Association for Quality and Participation (AQP)801-B West 8th Street, Suite 501Cincinnati, OH 45203-1601(513) 381-1959

Focus on quality circles, self-managing teams, union-management committees, and other aspects of employeeinvolvement. Conferences, library and selected research service, Quality and Participation newsletter, resource guide,and local chapters.

33

APPENDIX BGlossary

appraisal costsThe costs associated with inspecting theproduct to ensure that it meets thecustomer's (either internal or external)needs and requirements.

approachOne of the three evaluative dimensionsused in Baldrige scoring, "approach"refers to the methods a company uses toachieve the purpose stated in the criteria.Some specific components of theapproach concept are the degree to whichit is systematic, integrated, consistentlyapplied, and prevention-based.

acceptable quality level (AQL)A concept used with samplingprocedures applied to arms-and-ammunition suppliers during World WarII, AQL is the poorest quality that asupplier can provide and still beconsidered "acceptable" or satisfactory.The concept--that some errors or defectsare normal--is the antithesis of "zerodefects," which holds that the onlyallowable standard for quality is error-free work.

auditAn assessment to determine the extent towhich certain standards or requirementshave been met, usually conductedindependently of personnel responsiblefor implementing the standards orrequirements.

Baldrige AwardSee Malcolm Baldrige National QualityAward.

benchmarkingThe practice of setting operating targetsfor a particular function by selecting thetop performance levels, either within oroutside a company's own industry. In abroader sense, benchmarking involvessearching around the world for new ideasand best practices for the improvementof processes, products, and services.

best of class (or best in class)When overall performance, in terms ofeffectiveness, efficiency, andadaptability, is superior to allcomparables.

brainstormingA technique used by a group of peoplefor thought generation. The aim is toelicit as

many ideas as possible within a giventime frame.

catchballIn policy deployment, extensivecommunication across managementlevels when setting annual objectivesThe analogy to tossing a ball back andforth emphasizes the nature of theinteraction

causeAn established reason for the existenceof a defect.

common causeA source of variation in the processoutput that is inherent to the process andwill affect all the individual results orvalues of process output.

companywide quality control (CWQC)An expression used widely in Japan,CWQC means the application of qualityprincipals to all processes in a companyand the involvement of all employees atall levels in the quality-improvementprocess. The concepts of continuousimprovement and customer satisfactionare also embedded in the approach.CWQC in the equivalent of "total qualitymanagement (TQM)" in the UnitedStates, where the term "management" hasroughly the same meaning as the word"control" in Japan.

conjoint analysisAlso called "tradeoff analysis," conjointanalysis is a method for providing aquantitative measure of the relativeimportance of one product or serviceover another. In performing this type ofanalysis, customers are asked to maketradeoff judgments: Is one featuredesirable enough to sacrifice another?Conjoint analysis is particularly useful insituations where customer preferencesare in conflict and where the problem isto develop a compromise set of attributes

controlA term applied to the management ofprocesses indicating that qualityrequirements, standards, or goals arebeing met and that the output of theprocess is predictable.

correctionThe totality of actions to minimize orremove variations and their causes.

corrective actionThe implementation of effectivesolutions that result in the elimination ofidentified product, service, and processproblems.

cost of poor qualityThe overall financial loss to the businessdue to quality problems; the cost of poorquality includes all costs of rework, lostvalue and other forms of waste thatmight be prevented through qualitymethods

cost of qualityThe sum of the cost of prevention,appraisal, and failure The key financialmeasurement tool that ties processcontrol and process optimization into atotal process-management effort. It canbe used both as an indicator and a signalfor variation (more often, for patterns ofvariation), as well as a measure ofproductivity and efficiency.

cross-functional processA process spanning organizationalboundaries and involving work groupsand people who do not normally interact.

cross-functional teamsTeams similar to quality teams butwhose members are from several workunits that interface with one another.These teams are particularly useful whenwork units are dependent upon oneanother for materials, information, etc.

cultureA prevailing pattern of activities,interactions, norms, sentiments, beliefs,attitudes, values, and products in anorganization.

customerThe recipient or beneficiary of theoutputs of your work efforts or thepurchaser of your products and services.May be either internal or external to theorganization, and must be satisfied withthe outputs of your work efforts.

customer expectationsCustomer perceptions of the value theywill receive from the purchase of aproduct or service. Customers formexpectations by analyzing availableinformation, which may includeexperience, word-of-mouth, andadvertising and sales promises.

34

customer, externalThe purchaser of a product or service.

customer, internalA downstream internal operation thatdepends on outputs or results of a givenprocess, or an employee of the businesswho depends on these outputs or results.

customer satisfactionThe degree to which a customer'sexperience with a product or servicemeets customer expectations for thatproduct or service.

customer service processA business process related to selling,delivering, or otherwise supportingprimary products and services.

customer/supplier modelA representation of tasks and work flowsin terms of a process, its customers, andits suppliers, linked through informationflows in the form of requirements andfeedback.

cycle timeThe amount of time it takes to completea particular task. Shortening the cycletimes of critical functions within acompany is usually a source ofcompetitive advantage and a key quality-improvement objective

dataInformation or a set of facts presented indescriptive form There are two basickinds of data: measured (also known asvariable data) and counted (also knownas attribute data).

defectAny state of nonconformance torequirements.

Deming PrizeIn 1950, W. Edwards Deming wasinvited to Japan by the Union ofJapanese Scientists and Engineers(JUSE) to lecture on the applicability ofusing quality control in manufacturingcompanies. The impact of Deming'steaching was widespread and swift totake root. In 1951, JUSE instituted theDeming Prize to honor Deming for hisfriendship and achievements in industrialquality control. Today, Japanesecompanies wishing to improve the levelof quality within their organizationcompete for the Deming Prize, not onlyto achieve the honor and prestige ofwinning, but also the improvements thatcome from implementing his qualityprinciples.

deploymentOne of the evaluative dimensions used inBaldrige scoring, "deployment" refers tothe extent to which a company'sapproaches are applied in all relevantareas and activities For example, rewardand-recognition programs need to beapplied to all categories of employees,from hourly workers to top managers

descriptorsDescriptors are relatively specificmethods, organizational features, orsystem/process characteristics thatillustrate or help interpret each area toaddress in the application.

differentiationThe unique value of a product or servicethat distinguishes it from competingproducts or services.

effectivenessHow closely an organization's outputmeets its goal and/or meets thecustomer's requirements.

efficiencyProduction of required output atperceived minimum cost. It is measuredby the ratio of the quantity of resourcesexpected or planned to be consumed inmeeting customer requirements to theresources actually consumed.

Employee Involvement/Quality of WorkLife

Program for employee participationaimed at improving customersatisfaction, productivity, and employeesatisfaction. Union and managementwork together to foster this program.

empowermentInvestment in employees of authority andresponsibility for making decisions andtaking actions, particularly to satisfycustomers and improve processes.Empowerment requires that employeesbe enabled through training, information,resources, and advice.

external failure costsThe costs incurred when an externalcustomer receives a defective product.

failure mode and effect analysis (FMEA)A technique for systematically reviewingthe ways in which a process, product, orservice can fail and the impact suchfailures could have on customers,employees, or other processes. Using thisanalysis, quality engineers can predictfield-failure rates, design recoverysystems,

and estimate the need for additional partsor personnel

feedbackinformation from a customer about howprocess output meets the needs ofprocess customers.

feedback loopA system for communicating informationabout the performance of processes,products, or services Feedback loops areessential for continuous improvement

firefightingRemedial approach to process problems,focusing on "fixing" rather thanprevention

fishbone diagramsA diagram that depicts the characteristicsof a problem or process and the factorsor root causes that contribute to them

force field analysisA technique involving the identificationof forces "for" and "against" a certaincourse of action. The nominal grouptechnique could be used in conjunctionwith force field analysis. The groupmight prioritize the forces for and againstby assessing their magnitude andprobability of occurrence. The groupmight then develop an action plan tominimize the forces against andmaximize the forces for.

frequency distributionOf a discrete variable is the count of thenumber of occurrences of individualvalues over a given range. Of acontinuous variable is the count of casesthat lie between certain predeterminedlimits over the range of values thevariable may assume

functional administrative controltechnique

A tool designed to improve performancethrough a process combining timemanagement and value engineering Theprocess involves breaking activitiesdown into functions and establishingaction teams to target and solve problemsin each function.

functional organizationAn organization responsible for one ofthe major organizational functions suchas marketing, sales, design,manufacturing, and distribution.

35

gainsharingA reward system that shares productivitygains between owners and employeesGainsharing is generally used to provideincentive for group efforts towardimprovement.

goalA statement of attainment/achievementthat one proposes to accomplish or attainwith an implication of sustained effortand energy directed to it over the longterm.

guidelineA suggested practice that is notmandatory in programs intended tocomply with a standard.

hoshin planningSee policy deployment.

hypothesisAn assertion made about the value ofsome parameter of a population.

indicatorsMeasurable characteristics of products,services, and processes that bestrepresent quality and customersatisfaction.

inputMaterials, energy, or informationrequired to complete the activitiesnecessary to produce a specified output(work product).

internal failure costsThe costs generated by defects foundwithin the enterprise prior to the productreaching the external customer.

just-in-time inventory management (JIT)Approach to achieving and maintainingminimal in-process inventory. Theapproach includes application of TotalQuality Control to eliminate qualityproblems as in-process inventory is beingreduced.

kaizenA Japanese expression referring tocontinuous improvement in all phases ofbusiness.

key business processProcess designated by management ascritical to customer satisfaction,competitive effectiveness, or theachievement of strategic goals. Keybusiness processes are generally cross-functional, spanning major functionalorganizations such as marketing, design,manufacturing, and distribution.

leadershipCommunicating a clear purpose andvision and enabling and inspiring peopleto develop commitment to help inachieving that purpose. Leaders providea strategy, clear expectations of others,support, personal involvement andresolve, and reinforcement of valuesneeded to achieve the purpose.

lessons learnedA phrase coined by Joseph Juran todescribe a structured approach toanalyzing past experience in an endeavorand applying the results of that analysisto improving the quality of future efforts.

linkagesinteractions among the tasks in a processthat determine how effectively the taskscoordinate, share information, andprovide mutual support toward meetingcommon process objectives.

Malcolm Baldrige National QualityAward

United States national quality awardrecognizing companies for leadership inquality. The award is managed by theNational Institute of Standards andTechnology, U.S. Department ofCommerce. Award criteria also serve asthe standard for the AT&T Chairman'sQuality Award and as a basis for self-evaluation of quality systems.

Management by Objective (MBO)A business planning approach in whicheach employee works with his or hermanager to set annual objectivesEmployee performance is evaluatedbased on the extent to which objectivesare met.

mean time between failures (MTBF)The average time between successivefailures of a given product.

measurementThe act or process of measuring tocompare results to requirements. Aquantitative estimate of performance.

natural work teamA group of people who work together ona regular basis, such as a manager andthe people who report to him or her

needA lack of something requisite, desired, oruseful; a condition requiring provision orrelief. Usually expressed by users orcustomers.

nominal group techniqueA tool for idea generation, problemsolving, mission, and key result areadefinition, performance measuredefinition, goals/objectives definition.

normative performance measurementtechnique

Incorporates structured group processesso that work groups can designmeasurement systems suited for theirown needs. This approach considersbehavioral consequences of measurementto foster acceptance of measurementeffort

objectiveA statement of the desired result to beachieved within a specified time Bydefinition, an objective always has anassociated schedule.

objectivesVerifiable improvement targets forprocesses, suppliers, organizations, andpeople.

outputThe specified end result. Required by therecipient.

outputsMaterials or information provided toothers (internal or external customers).

perceived qualityA firm's market reputation for continuingexcellence of products and services andfor customer satisfaction; the firm's goodwill among customers

pareto analysisA system of analysis based on theprinciple that, in any phenomenon,relatively few factors account for themajority of effects. Juran uses the phrase"vital few" to suggest that it is moreefficient and less costly to concentrate onthe most important sources or types offailures, customers, and so on.

performanceA term used both as an attribute of thework product itself and as a generalprocess characteristic. The broadperformance characteristics that are ofinterest to management are quality(effectiveness), cost (efficiency), andschedule. Performance is the highlyeffective common measurement thatlinks the quality of the work product toefficiency and productivity.

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planA specified course of action designed toattain a stated objective.

policyA statement of principles and beliefs, ora settled course, adopted to guide theoverall management of affairs in supportof a stated aim or goal. It is mostlyrelated to fundamental conduct andusually defines a general frameworkwithin which other business andmanagement actions are carried out.

policy deploymentA discipline approach to business-wideplanning and implementation; involvessetting long-term goals and annualpriorities, deploying priorities throughthe management structure for refinementinto detailed objectives, developingimplementation plans, and trackingregular progress and annual results.

populationA large collection of items (productobservations, data) about certaincharacteristics of which conclusions anddecisions are to be made for purposes ofprocess assessment and qualityimprovement.

preventionActivities and practices aimed atanticipating and removing sources ofpotential problems; for example, trainingor supplier qualification.

problemA question or situation proposed forsolution. The result of not conforming torequirements, which can create apotential task resulting from theexistence of defects.

processThe system of tasks, work flows,information flows, and otherinterdependencies that produce somespecific outputs or results. How work isdone, how outputs or results areachieved, and how value is provided tothe business or customer.

process capabilityThe ability of a process to meet operatinggoals or internal- or external-customerrequirements. "Capability" may differfrom actual performance due to "specialcauses"--conditions or events due purelyto chance and not the production systemitself.

process controlActivities undertaken to acquire and useinformation during process execution toensure--with a reasonable degree ofconfidence--that the process will meet itsrequirements and that these requirementswill continue to reflect the needs ofprocess customers.

process flow analysisA technique for identification andanalysis of key processes, and for areasand methods of possible improvement. Itis particularly useful for roadblockremoval.

process flow diagrammingA visual, systematic way of examining aprocess by diagramming all its inputs,outputs, and activities

process improvementThe set of activities employed to detectand remove common causes of variationin order to improve process capability.Process improvement leads to qualityimprovement.

process managementActivities aimed at process planning,process control, identifying improvementopportunities, and initiatingimprovement. Planning involves settingprocess requirements, characterizing theprocess, establishing in-process andsupplier requirements, and planning forcontrol.

process optimizationThe major aspect of process managementthat concerns itself with the efficiencyand productivity of the process; that is,with economic factors.

process ownerA designated person within the process,who has the authority to manage theprocess and responsibility for its overallperformance.

process performanceA measure of how effectively andefficiently a process satisfies customerrequirements

Process Quality Management andImprovement (PQMI)

Seven-step methodology for processmanagement and continuous processimprovement.

process reviewAn objective assessment of how well themethodology has been applied to yourprocess. Emphasizes the potential for

long-term process results rather than theactual results achieved.

productivityRefers both to the efficiency of tasks oroperations and to their effectiveness inmeeting the needs of other internaloperations; some productivity-relatedmeasures include cost of poor qualityand unit output costs.

projectA process executed over time, rather thanrepeatedly.

qualityThe extent to which products andservices produced conform to customerrequirements. Customers can be internalas well as external to the organizationalsystem (e.g., products or services mayflow to the person at the next desk orwork area rather than to people outsideof the immediate organization). TheFederal Quality Institute defines qualityas meeting the customer requirements thefirst time every time. The Department ofDefense (DOD) defines quality asconformance to a set of customerrequirements that , if met, result in aproduct that is fit for its intended use.

Quality ApproachOverall strategy for managing quality inan organization; "blueprint" for theorganization's quality system.

quality assurance (QA)A phase in the evolution of the qualitydiscipline, QA differed from statisticalquality control, its predecessor, in that allfunctional groups, not just engineers andworkers on the shop floor, were involvedin the quality effort. However, QA ismore narrowly focused than itssuccessor, total quality management(TQM), which emphasizes senior-executive involvement, the managementof quality for competitive advantage, anda strong customer orientation.

quality circlesA group of workers and their supervisorswho voluntarily meet to identify andsolve job-related problems. Structuredprocesses are used by the group toaccomplish their task.

quality consultantA person with expertise in quality-relatedmethods and tools who advises bothbusiness managers and quality teams.

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Quality CouncilThe senior management team in abusiness unit or division acting in theirrole of managing for quality.

quality function deployment (QFD)A disciplined approach to solving qualityproblems before the design phase of aproduct. The foundation of QFD is thebelief that products should be designedto reflect customer desires; therefore,marketers, design engineers, andmanufacturing personnel must workclosely together from the beginning toensure a successful product. Theapproach involves finding out whatfeatures are important to customers,ranking them in importance, identifyingconflicts, and translating them intoengineering specifications.

Quality Improvement Cycle (QIC)Eight-step methodology forimplementing process improvements.

Quality ManagerManager appointed to assist the QualityCouncil in managing for quality and alsoto coordinate overall quality support forthe business.

quality of working lifeThe extent to which the organizationalculture provides employees withinformation, knowledge, authority, andrewards to enable them to perform safelyand effectively, be compensatedequitably, and maintain a sense of humandignity.

quality professionalsPart- or full-time quality experts onquality methods and tools, who providequality consulting and training for anorganization. Quality professionals workwith both managers and teams.

quality systemEverything associated withimplementation of the Quality Approach,including responsibilities, plans,activities, behaviors, and incentives.

quality system auditSystematic assessment of the qualitysystem against a standard such as theBaldrige Award criteria or ISO 9000series of standards.

quality teamsAlso referred to as Performance ActionTeams or Quality Improvement Teams.They might be composed of volunteerswho meet regularly to review progresstoward goal attainment, plan for changes,

decide upon corrective actions, etc.Members are usually from the samework unit.

rangeThe difference between the maximumand the minimum value of data in asample.

recognitionPublic or private acknowledgement--other than compensation or promotion--of significant achievement or effort

recoveryThe actions taken by an organization,particularly its front-line employees, inresponse to unexpected customerproblems such as an unusual request orthe inconvenience caused by a canceledairplane flight Less severe than a crises,recovery situations can result from anerror committed by the company or thecustomer or from an uncontrollable eventlike the weather.

reengineeringA method for systematically overhaulingor revamping an entire process,organization, or function.

reliabilityThe probability that a product entity willperform its specified function underspecified conditions, without failure, fora specified period of time

reliability engineeringA broad-based discipline for ensuringbetter product performance by predictingmore accurately when and under whatconditions a product can fail. Based onthe results of such an analysis, engineerscan improve designs, set operating limitsfor equipment, and create backups incase of system failure. Reliabilityprograms also incorporate feedbackloops for analyzing product performancein the field and, in particular, productfailures

requirementA formal statement of need, and theexpected manner in which it is met.

requirementsWhat process should achieve in terms ofoutput characteristics, costs, timeliness;determined based on customer needs,competitor performance, and overallbusiness direction or strategy.

rewardSalary increases, bonuses, andpromotions given on the basis ofperformance.

roadblock identification analysisA tool that focuses on identifyingroadblocks to performance improvementand/or problems that are causing thegroup to be less productive than it couldbe. This tool uses the nominal grouptechnique to identify and prioritizeperformance roadblocks. Action teamsare formed to analyze barriers anddevelop proposals to remove roadblocksThe proposals are implemented, tracked,and evaluated.

root cause (cause-and-effect) analysisA deductive approach to analyzingproblems by working backwards fromthe "effect" to the cause or causes. Oneof so-called "Seven Quality Tools," root-cause analysis is often facilitated using a"fishbone diagram" in which all theinputs to the process are arrayed in visualformat like the bones of a fish.

sampleA finite number of items taken from apopulation

Scanlon committeesCommittees comprised of managers,supervisors, and employees who worktogether to implement a philosophy ofmanagement/labor cooperation that isbelieved to enhance productivity. Thereare a number of principles andtechniques involved, with employeeparticipation being a major component.

service(Service offering) a process or operationdirected at fulfilling a need or demand,rather than delivering a physical product.Examples of service processes includemaintenance, purchasing, marketresearch, and training.

simulationThe technique of observing andmanipulating an artificial mechanism(model) that represents a real worldprocess that, for technical or economicalreasons, is not suitable or available fordirect experimentation.

simultaneous engineering (SE)Also known as concurrent engineering,SE is a general approach to production inwhich concept development, design,manufacturing, and marketing are carriedout in unison. In contrast to a linear,sequential approach in whichcommunication between functions ispoor and the production process ismarred by rework, scrap, poor quality,and frustration, simultaneous engineering

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maximizes communication, reduceserrors, and shortens cycle times.

six-sigmaA statistical way of measuring quality,six-sigma is equivalent to 3.4 defects permillion units of output--a virtuallydefect-free level of performance. Theambitious, companywide goal of "six-sigma quality" has been adopted, mostnotably, by Motorola, a 1988 BaldrigeAward winner.

special causeAn "abnormal" source of variation thatdoes not arise from the productionprocess itself, but which is extraneousand unpredictable.

specificationA document containing a detaileddescription or enumeration of particularsFormal description of a work productand the intended manner of providing it(the provider's view of the workproduct).

standard deviationA parameter describing the spread of theprocess output, denoted by the Greekletter sigma. The positive square root ofthe variance.

statisticAny parameter that can be determined onthe basis of the quantitativecharacteristics of a sample. A descriptivestatistic is a computed measure of someproperty of a set of values, makingpossible a definitive statement about themeaning of the collected data. Aninferential statistic indicates theconfidence that can be placed in anystatement regarding its expectedaccuracy, the range of its applicability,and the probability of its being true.Consequently, decisions can be based oninferential statistics.

statistical process control (SPC)Based on the principle that no two unitsof output of a process are likely to havethe exact same specifications, SPCinvolves the mathematical determinationof acceptable limits of variation. Graphsare used by workers to plot outputvariables and visually determine when aprocess is "in" or "out of" control.

statistical controlThe status of a process from which allspecial causes of variation have beenremoved and only common causesremain. Such a process is also said to bestable.

statistical estimationThe analysis of a sample parameter inorder to predict the values of thecorresponding population parameter

statistical methodsThe application of the theory ofprobability to problems of variation.There are two groups of statisticalmethods. Basic statistical methods arerelatively simple problem-solving toolsand techniques, such as control charts,capability analysis, data summarizationand analysis, and statistical inference.Advanced statistical methods are moresophisticated specialized techniques ofstatistical analysis, such as the design ofexperiments, regression and correlationanalysis, and the analyses of variance.

statistical quality control (SQC)A relatively early development in theevolution of the quality discipline, SQCrelies on statistical concepts and tools(e.g., sampling techniques) to controlproduction quality. SQC techniques areused in total quality management,although the emphasis in TQM is on"building quality in," rather than errordetection.

statisticsThe branch of applied mathematics thatdescribes and analyzes empiricalobservations for the purpose ofpredicting certain events in order tomake decisions in the face of uncertaintyStatistics, in turn, are based on the theoryof probability. The two together providethe abstraction for the mathematicalmodel underlying the study of problemsinvolving uncertainty.

strategyA broad course of action, chosen from anumber of alternatives, to accomplish astated goal of uncertainty

stretch goalAn ambitious, usually long-term qualitygoal that requires extraordinary effort,innovation, and planning to achieve.

subprocessesThe internal processes that make up aprocess.

supplierSource of material and/or informationinput to a process, which may be internalor external to the company, organization,or group.

team buildingA process of developing and maintaininga group of people who are workingtoward a common goal. Team buildingusually focuses on one or more of thefollowing objectives: (1) clarifying roleexpectations and obligations of teammembers, (2) improving superior-subordinate or peer relationships, (3)improving problem solving, decisionmaking, resource utilization, or planningactivities, (4) reducing conflict, and (5)improving organizational climate

timelinessThe promptness with which qualityproducts and services are delivered,relative to customer expectations.

total quality control (TQC)An expression coined by ArmandFeigenbaum, TQC involves theapplication of quality principles in allprocesses and at all levels of a company.

total quality management (TQM)TQM, as embodied in the Baldrigecriteria, represents the latest phase in theevolution of the quality discipline.Distinctive features are a strong andpervasive customer orientation and aview toward managing quality forcompetitive advantage. The term "TQM"is roughly equivalent to TQC andCWQC in Japan, where the word"control" has the same connotations as"management" in this country.

transactional analysisA process that helps people change to bemore effective on the job and can alsohelp organizations to change. Theprocess involves several exercises thathelp identify organizational scripts andgames that people may be playing. Theresults help point the way toward change.

transfer to operationsAn activity or series of activities inwhich operating personnel are trained inthe performance of a new manufacturingor service-delivery process.

valueThe extent to which a product or servicemeets a customer's needs or wants, whichcan be measured (though not easily) inwillingness to pay. Also, the benefit, orutility, a customer receives from aproduct or service.

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variableA data item that takes on values withinsome range with a certain frequency orpattern. Variables may be discrete, thatis, limited in value to integer quantities(e.g., the number of bolts produced in amanufacturing process).Discretevariables relate to attribute data.Variables may also be continuous, thatis, measured to any desired degree ofaccuracy (e.g., the diameter of a shaft).Continuous variables relate to variablesdata.

varianceIn quality management terminology, anynonconformance to specifications. Instatistics, it is the square of the standarddeviation.

visionThe desired future state of business.

world-classRanking among the best across allcomparable products, services, orprocesses (not just direct competitors) interms of critical performance or features

zero defectsAn approach to quality improvement,based primarily on increasing workermotivation and attentiveness, in whichthe only acceptable quality standard isdefect-free output or service execution.