Draft Zenith

CENTRAL UNIVERSITY COLLEGE

FACULTY OF ARTS AND SOCIAL SCIENCES (FASS)

DEPARTMENT OF ECONOMICS

TOPIC:

Impact of Total Quality Management and Banks Performance in Ghana

A case of Zenith Bank (So so and So Branch)THIS DISSERTATION IS SUBMITTED TO THE DEPARTMENT OF .IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF MASTER OF SCIENCE DEGREE IN ..BYYour Name

DECLARATIONI hereby declare that this is my own work in partial fulfilment of the MSc. and that to the best of my knowledge, it contains no materials previously published by another person nor materials which have been accepted for the award of any other degree of the University, except where due acknowledgement has been given in the text.1. Your Name

. .Signature Date

I declare that I have supervised the students in undertaking the dissertation herein reported and confirm that they have my permission to submit for assessment.

Supervisors name

....

(SUPERVISOR)

Signature

DateDEDICATION

ACKNOWLEDGEMENT

I owe gratitude to the Almighty God, who through his infinite wisdom and abundant grace has provided me with strength and knowledge to come out with this project.

I again acknowledge the support and contribution of my lecturers towards my study at the University. I will also like to thank all the various contributors to this study especially for the time you put in addressing the various issues put before you that made the study a success.YOU CAN ADD MORETABLE OF CONTENTS

iDECLARATION

iiDEDICATION

iiiACKNOWLEDGEMENT

viLIST OF TABLES

viiLIST OF FIGURES

viiiABSTRACT

1CHAPTER ONE

1INTRODUCTION

11.0 Background of the Study

21.1 Statement of the Problem

41.2 Objectives of the Study

41.3 Research Questions

41.4 Research Hypothesis

51.5 Structure of the Study

6CHAPTER TWO

6LITERATURE REVIEW

62.0 Introduction

62.1 Historical Background of Total Quality Management

72.2 Definition and Total Quality Management Philosophy

92.2.1 Benefits of Total Quality Management.

102.3 Linking TQM and Performance

142.3.1 The Ghanaian Context

152.4 Problems in the implementation of TQM

182.5 Theoretical Framework for the Study

192.5.1 Top Management Involvement

202.5.2 Process

202.5.3 Customer Relationship

212.5.4 Education and Training

23CHAPTER THREE

23STUDY AREA AND METHODOLOGY

233.0 Introduction

233.1 Study Setting

233.1.1 Corporate Profile of Zenith Bank

243.1.2 Growth Areas and Product Lines

243.1.3 Customer Base

243.2 Methodology

253.2.1 Population

253.2.2 Sampling Technique

253.2.3 Sample Selection

263.3 Data Sources

273.4 Design and Administration of Questionnaires

273.5 Data Collection

283.6 Data Analysis

283.7 Limitation of the Study

29CHAPTER FOUR

29PRESENTATION AND DISCUSSION OF RESULTS

294.0 Introduction

294.1 Personal Details of respondents

304.2 Communication Approach

324.3 Total Quality Approach

334.4 Barriers to Introducing Total Quality Management

354.5 Relationship between Total Quality Management and Profitability

374.6 Relationship between Level Education, Management style, and Total Quality Management

394.7 Importance of Total Quality Management to the Bank

404.8 Effect of Implementing TQM

424.9 Measuring Customer Satisfaction

434.9.1 Measuring Total Quality Management Improvements

44CHAPTER FIVE

44SUMMARY, CONCLUSION AND POLICY RECOMMENDATIONS

445.0 Introduction

445.1 Effects of Total Quality Management on Performance


455.3 Policy Recommendation

475.4 Conclusion

48References

52APPENDIX I

LIST OF TABLES

27Table 1.0 Personal Details of Respondent

29Table 2. Has the company implemented TQM?

29Table 3 Achieved any recognized Quality Standard Certification?

31Table 4. Who has the responsibility for quality in your organisation?

32Table 5. Crosstabulation

33Table 6. Symmetric Measures

34Table 7 Chi-Square Tests

35Table 8. Model Summary

37Table 9. Effect of Total Quality Management

LIST OF FIGURES

15Figure 1 Theoretical Framework

30Figure 2. Barriers to Total Quality Management Implementation

36Figure 3 TQM support to Banks achievement

38Figure 4 Measuring Customer Satisfaction

39Figure 5 Measuring Total Quality Management Improvement

ABSTRACT

The competitive nature of the banking system in Ghana has increased the number of banks. Evidences emerging from already distressed banks revealed that bad management is indisputably a major factor for distress. The associated effect of the distress situation is the general erosion of banks confidence. This study therefore looks at the effect of this bad management on banks performance.The broad objective of this research work is to take a critical look at the principle of total quality management so as to find out how its implementation will affects organisations profitability and performance. For the purpose of this study, the researcher limited its data to those of the Zenith Bank. The researcher used survey method to investigate the effects of Total Quality Management on performance a case study of Zenith Bank (SO so and so branch).The major results of the article shows that total quality management has a positive effect on profitability, quality awareness, team work, number of customers and cost efficiency. The results from this study indicate that factors such as top management commitment, education and training, customer focus and employee participation contribute significantly to the successful implementation of TQM.It is therefore recommended that, actors involved in its implementation should not relax. However for sustenance of the concept, top management should continue to monitor the progress of TQM in all departments.CHAPTER ONEINTRODUCTION

1.0 Background of the StudyTotal quality management (TQM) has become a world-wide topic in the twenty-first century. It has become an accepted technique to ensure survival in modern economies (Moballeghi and Moghaddam). Recent studies have claimed that the successful implementation of TQM could generate improved products and services, as well as reduced costs, more satisfied customers and employees, and improved financial performance (Garvin, 1991; Hendriks & Singhal, 1997; Quality improvement has become one of the most important organizational strategies for achieving competitive advantage. Hence improving the quality with which an organization can deliver its products and services is critical for competing in an expanding global market. Thus as society becomes higher in income, more knowledgeable, and matured culturally, the demand for high quality and innovative products and services become predominant. Quality is not just of concern in manufactured products or goods, it is also important in the banking industry as well. Thus for almost every product or service ever designed, there is more than one organization trying to make a sale (Hassan, 2014). This posits that there is more than one bank trying to gain more customers. This has led to a situation where banks now tend to compete in terms of financial prowess (e.g. asset base, amount of loans disbursed, cash flow, rates of borrowing, etc.) rather than just the quality of service. However these banks depend on customer satisfaction in order to continue their operations. In the current global competitive banking environment, banks have been applying TQM which is a management paradigm built on a philosophy of never ending quality improvement that includes methods and tools embracing management commitment, employee involvement, cross functional management and strategic planning (Pfau, 1989; Longo, 1997)Since banks customers are very sensitive to service delivery or service offered, they may easily turn to a competitor to access better services. Due to this, banks are required to create loyal customers through life long strategy that is based on delighting and continuously surprising customers by offering innovative and high quality products and services different from what their competitors may be offering.

Empirical studies conducted have proved that the performance of banks is significantly and positively related with the service quality, and to achieve service quality in the banking sector, TQM is highly recommended (Talib et al., 2012).1.1 Statement of the Problem

The issue of the relationship between successful TQM implementation and financial performance is important, when considering the incentives for the large organizational change. The main incitement for change is to improve, whether it is an improved management system or an improved customer satisfaction. Most organizations implement TQM in order to respond to changes in the competitive context that surrounds them,The Ghanaian banking sector has undergone intense competition and a change in customers expectations over the last few years due to large deregulation policy of government and the advent of many credit and finance companies turning into banks. Accordingly, the importance and increasing attention to service quality in financial institutions is in part justified by the socio-political changes that have arisen.Currently, there is more than one bank trying to woo customers for patronage. The rate of interest (price) may be a critical factor for patronage, but another factor is the quality of the service. Undoubtedly, quality is often the major issue and poor quality service can lead to erosion of goodwill, which could be very costly for any bank (Islam & Haque, 2012). Thus, having institutionalized TQM over the last years, the question that arises is: to what extent does the implementation of TQM affect the performance of banks?

It is to this end that the study seeks to assess total quality management on the performance of banks in the Ghanaian banking industry using Zenith Bank as a case study.

Despite the burgeoning studies on TQM, there is relatively little empirical research that focuses directly on assessing the impact of TQM on banks performance in Ghana. The study therefore seeks to fill this scholarship void and also provide empirical evidence to add to the existing literature. However whilst focusing on a single case, such as Zenith Bank may seem reductionist and does not allow for generalization, it has the potential to contribute to theoretical innovation when one explores it in-depth and compares it with other similar cases. Therefore as Gluckman argues one good case could illuminate the working of a social system in a way that a series of morphological statements cannot achieve (Gluckman in Mitchell, 2009: 23).1.2 Objectives of the Study

The main objective of the study is to assess the impact of total quality management on banks performance. Accordingly, other objectives include;

To analyze the strategic approach and the perceived effects of TQM in the Ghanaian banking sector.

To determine the effect of TQM information on the level of patronage To establish the extent to which top, middle and supervisory management involvement affect performance1.3 Research QuestionsThus the study seeks to answer the following key questions;

To what extent does total quality management affect banks performance To what extent does the involvement of senior level management in the implementation of total quality management affect performance To what extent do educational programmes, leadership styles and communication affect banks performance?

1.4 Research Hypothesis

This study seeks to empirically test the following hypotheses based on the research objectives stated, total quality management is an important element in determining the performance of banks in Ghana. Thus,Ho: Total quality management has no significant effect on banks performance

H1: Total quality management has significant impact on banks performance.

Ho: The effectiveness of TQM programmes implemented in the financial services sector is not

directly related to the strategic approach, organisational environment, education programme

H1: The effectiveness of TQM programmes implemented in the financial services sector is directly related to the strategic approach, organisational environment, education programme1.5 Structure of the StudyThe study is organized into five chapters. The first chapter looks at the general introduction to the study with emphasis on the background, objectives, hypothesis and the organisation of the study. Chapter two reviews both the theoretical and empirical literature on the study which is in line with the research questions and objectives. Chapter three discusses research methodology with a description of the study location, followed by the data collection and analysis. Chapter four presents the empirical research findings, a discussion of the results and limitation of the study. The last chapter concludes the study by summarising the main findings and their broad theoretical and policy ramifications for development and future research.CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter reviews some theoretical and empirical work done on Total Quality Management which has gain much attention and on the views required to connect the research objectives on Total quality Management and Bank performance. The literature is reviewed under the following major headlines; historical background of total quality management, the total quality management philosophy, link between quality and performance, problems associated with TQM implementation and a theoretical framework employed for the study.2.1 Historical Background of Total Quality Management

The concept of TQM was originally developed by Edwards W. Deming, after World War II for improving the production quality of goods and services. The idea was then adopted by Japan in 1950 that employed it to improve their postwar business and dominated world markets by the 1980s (Evans & Dean, 2003). Manufacturers in United States then realized that the existing nineteenth century assembly line factory model in use was obsolete and needed to be changed if Americans are to compete in modern global markets and be in the forefront among nations of economic consequence (Evans & Dean, 2003). This move motivated western companies to commence their own quality initiatives which led to a new phase of continuous quality improvement known as TQM between 1980s and 1990s. Originally, the idea of quality was based on plummeting flaws and errors in products and services through the use of measurements and the outcome was the achievement of superior performance and minimized costs of production. Organizations therefore realized that achievement of enduring improvement may be impossible without significant attention to the quality of the management practices excised on the day to day basis, caliber of staff in employment and relationship between service provider and the clients (Nwabueze, 2001). This made TQM all encompassing (Demirbag, et al 2006). Schonberger & Knod (1997) noted that the approaches they use to listen to customers and develop relationships, craft out strategy, measure performance, analyze data, train employees, deliver products and services and provide leadership in their organizations are the true enablers of quality, satisfaction, and business success.2.2 Definition and Total Quality Management Philosophy

TQM has been defined in many different ways. It is defined as both a philosophy and a set of guiding principles that represent the foundation of an excellent organization (Bester field et al., 1999). Thus TQM is an organization wide approach geared towards continuously improving the quality of all the organizations processes, products and services. Kartha (2004) also noted that TQM is a systems approach to management that aims to enhance value to customers by designing and continually improving organizational processes and systems

It can also be defined as a strategy for improving organizational performance through the commitment of all employees to the full satisfaction of the agreed customer requirements at the lowest overall cost through the continuous improvement of products and services, organizational processes and people involved (Hassan, 2014). Thus TQM is a set of management practices throughout the organization geared towards ensuring that the organization consistently meets or exceeds customer requirements.

TQM has become an accepted technique to ensure survival in todays industrial economy. Deming (1995) stated that the success of quality management efforts depends on the effective integration of various management subsystems. TQM integrates fundamental management techniques, resources and its implementation stands as both support and a challenge to top management. Several recent studies have attempted to predict customer perceptions of quality in service industries while others engaged in theory-building or principles related to TQM. In addition, some claimed that the successful implementation of TQM could generate improved products and services, as well as reduced costs, more satisfied customers and employees, and improved financial performance (Garvin, 1991; Hendriks & Singhal, 1997). Although there is growing awareness that a well-designed and well-executed TQM process is one of the most effective routes to increased product and service quality, productivity and profitability, many organisations are still caught up in "quality confusion. For example, many CEOs have incorrectly perceived the idea that gaining certification to ISO 9000 quality standards is the same as becoming a quality organization (Reimann and Hertz, 1994).

TQM remain hazy and ambiguous concepts. Indeed, the meaning of the term quality itself is still being debated. Due to this ambiguity, people's reactions to TQM vary as a function of their own beliefs and experiences. According to Ross (1995), TQM is based on a number of ideas. It means thinking about quality in terms of all functions of the enterprise, and it is a start-to-finish process that integrates interrelated functions at all levels. It is a systems approach that considers every interaction between elements of the organization. Thus, in the TQM approach, the overall effectiveness of the system is higher than the sum of the individual effectiveness of the subsystems. The subsystems include all of the organizational functions in the lifecycle of a product, such as design, planning, production, distribution, and field service.

Looking at the varying degree of definitions, this research adopts the definition by Hassan (2014). This is due to the fact that it tends to capture the objectives of the researcher.

2.2.1 Benefits of Total Quality Management.Juran (2001) wrote that the benefits and goals of total quality are lower costs, higher revenues, delighted customers, and empowered employees. Costs can be lowered by reducing errors, reducing rework, and reducing non-value added work. Higher quality can also equate to higher revenues through satisfied customers, increased market share, improved customer retention, more loyal customers, and premium prices. Customers continue to demand higher quality goods and services. Delighted customers purchase over and over again, advertise goods and services for the company, and check first when they are going to buy anything else to see what is offered by the company they are loyal to. Empowered employees have the means to measure the quality of their own work processes, to interpret the measurements, and compare these measurements to goals and take action when the process is not on target. These empowered employees also understand who their customers are; what the customers need, want, and expect; how to design new goods and services to meet these needs; how to develop the necessary work processes; how to develop and use the necessary quality measurements; and how to continuously improve these processes. Similarly Chin and Pun (2002) stated that the implementation of TQM can generate improved products and services, reduced costs, more satisfied customers and employees, and improved bottom line financial performance. Other benefits include improved company image, improved certainty in operations, improved morale, improved management, and committed customers (Davies, 2003). However, it is not easy for management to implement TQM, because TQM means a cultural overhaul (Rao, Youssef, & Stratton, 2004). Deming (1981) also attested that the benefits of better quality through improvement of the process are thus not just better quality and the long-range improvement of market-position, but also greater productivity and profit. Improvement of the process increases uniformity of output of product, reduces mistakes, and reduces waste of manpower, machine-time, and materials. Kaynak (2003) suggested that a positive relationship exists between the extent to which companies implement TQM and firm performance. The three TQM practices that have direct effects on operating performance (inventory management and quality performance) are supplier quality management, product/service design, and process management.

TQM deals with both individual and collective behaviors that can create customer satisfaction through continuous improvement (Claver, Gasco, Llopis, & Gonzalez, 2001). Each company should develop its own individual framework for TQM that fits its situation and available resources. TQM involves teamwork and commitment on the part of the employees and management. Well-conceived training, mentoring, and feedback systems have demonstrated that they serve important roles in mitigating employee resistance to change (Jun, Cai, & Peterson, 2004).

2.3 Linking TQM and Performance

During the past few years a number of studies that empirically demonstrated the positive impact of quality on performance have appeared in the literature (Hendricks & Singhal, 1997). Most of these studies utilized empirical data and clearly demonstrated a positive link between quality and performance. One of the earlier attempts to empirically demonstrate the impact of quality on financial performance was reported by Buzzell and Gale (1987), who explored the relation between the two by using cross-sectional data from the profit impact of market strategy (PIMS) dataset. Hendricks and Singhal (1997) further explored the relationship between quality and financial performance by comparing the financial performance of firms that have won quality awards, against a control group of non-winners. Their results showed that quality award winners outperformed the control firms on a series of operating-income based measures.

Finally, Hendricks and Singhal (1997) acknowledged the positive impact of quality on organization performance.

Adam (1994) studied the relationship between alternative quality improvement approaches and operating and financial performance, finding a strong relationship between the approach used and performance quality. Terziovski and Samson (1999) examined the relationship between TQM practices and operational performance, focused on the relationship between performance outcomes and award categories, and demonstrated that leadership, people management, and customer focus were particularly strong predictors of performance. Choi and Eboch (1998) found some paradoxical relations among TQM practices, plant performance, and customer satisfaction. Sinclair and Zairi (1995) analyzed results from 22 organizations, focusing on relationships among performance measures, strategic goals, and improvement areas in order to investigate their alignment. Their results suggested a gap between goals and the performance measurements that are implemented.

Some empirical studies have addressed cause-and-effect linkages or correlations among organizational performance measures. These studies include Norreklit (2000), which examined the assumptions and cause and-effect chain in the balanced scorecard. Also in this category are several studies of the relationship between customer satisfaction, value and loyalty, and financial performance (Bernhardt, Donthu, & Kennett, 2000; Brandt, 2000) and several studies of the relationships between employee attitudes and customer satisfaction. Similar studies include those on relationships between work environment and customer service as related to financial performance and relationships between customer attitudes and market share/financial performance (Naumann & Hoisington, 2000). Easton and Jarrell (1998) examined the impact of TQM on the performance of 108 firms that began TQM implementation between 1981 and 1991. The impact of TQM was measured by comparing each firms performance to a control benchmark designed to capture what the performance would have been without TQM. Their results showed that improvement on stock price was consistently stronger for firms with more advanced TQM systems.

Garvin (1991) investigated the impact of TQM improvement strategies on the performance of 20 US companies that had performed well on the MBNQA in 1988/1989. He found a strong link between TQM practices and organizational performance measured in terms of productivity, profitability, customer satisfaction and employee relations. Madu et al. (1995) compared the quality practices and performance in manufacturing firms in the USA and Taiwan. Madu et al. (1995) found that the practice of quality as perceived by middle managers in Taiwan is different from that of the USA. Taiwan's managers view customer satisfaction as the major factor in achieving significant improvement in organizational performance, whereas US managers view employee satisfaction as the primary element in achieving significant improvement in organizational performance.

While some empirical studies strongly show that soft quality management practices contribute to organizational performance, other studies proved that only a handful of such practices were helpful in achieving organizational performance.

Several empirical studies have been conducted to establish the link between TQM practice and organizational performance in the contexts of Australia and New Zealand. The results of these studies indicate that TQM implementation has had a mixed success. For example, Terziovski and Samson (1999) and Dow et al. (1999) analyzed data collected by the Australian Manufacturing Council for 962 Australian and 379 New Zealand manufacturing companies and found a significant relationship between quality management practices and organizational performance. However, the results of these studies showed that only a handful of "soft" quality management practices have a positive relationship with organizational performance.

Powell (1995) studied 39 US manufacturing companies and found that only the "soft" aspects of quality practices, such as employee commitment, shared vision and customer focus contributed to organizational performance.

Studying whether quality initiatives are viable requires evaluations of outcomes, namely performance measures. It is important to measure the success of new initiatives like TQM with measures of financial performance for two reasons:

Most technologies and investments are justified on the basis of their impact on financial and accounting measures, not operational measures and,

Financial performance measures are the only internally generated measures that directly reflect whether the companys strategy, implementation, and execution are generating wealth by contributing to firm value.

For these reasons, even though impacts of initiatives are not easily quantified, financial performance measures are the most important measures of the efficacy of these initiatives. Financial performance measures indicate whether the companys strategy, implementation, and execution are contributing to bottom-line improvement. Typical financial goals have to do with profitability.

In exploring the literature, the following factors were detected as constituting TQM:

leadership, strategic quality planning, employee management and involvement, supplier management, customer focus, process management, continuous improvement, information and analysis, knowledge and education, and quality management tools and techniques (Ahmed 2002; Lagrosen and Lagrosen, 2005).

2.3.1 The Ghanaian Context

In a world with increasing globalization and completion, new techniques and strategies are being adopted to improve upon organizational performance. In the view of Mensah et.al, (2012), TQM has increasingly been accepted and implemented by many firms as the new paradigm of organizational management largely due to the benefits (either perceived or actual) associated with it. They noted that, an improvement in the performance of an organization cannot only be attributed to the application of the TQM programmes. Korankye (2013), did a comparative study of manufacturing and service firms in Ghana. The study employed a survey design by using questionnaire and interview guides as the data collection instruments. It was found out that when properly implemented, TQM will be a source of sustained competitive advantage. Fening et.al (2013), examines the linkages between Total Quality Management and Organizational Survival in Manufacturing Companies in Ghana. They study found out that there is a significant positive effect of the seven Total Quality Management (TQM) elements on organizational performance. Botsio (2012), examines the impact of total quality management on employee relations and how this affects job satisfaction. The results supported the predictive relationships of Total Quality Management, Teamwork, Employee Involvement and Job Satisfaction.

Not much study seems to have been carried out on the banking industry. This work therefore seeks to fill that research gap.

2.4 Problems in the implementation of TQM TQM has many different obstacles and barriers. As per managers five barriers to TQM are inadequate human resources development and management; lack of planning for quality; lack of leadership for quality; inadequate resources for TQM; and lack of customer focus. The most significant obstacle was found to be inadequate resources, followed by inadequate human resources development, and then lack of planning (Sebastianelli & Tamimi, 2003). A primary reason for TQM failure in organization is due to half-heartedly implemented TQM. Many organizations are not willing to undertake the total cultural transformation that TQM requires (Ugboro & Obeng, 2000). As per Nwabueze (2001), nobody knows exactly what culture change is and how best to approach cultural transformation, which is argued to be the most essential ingredient if TQM is to succeed. Other often-cited problems include getting everyone in the organization to move in the same direction, the lack of goals, insufficient knowledge, poor planning, lack of management commitment, lack of proper training, failure to use the right framework, lack of resources, lack of effective management, and incompatibility of attitudes of top management and workers. Some companies are already in poor health at the time during which TQM is implemented. TQM demands that resources be available to sustain the organization over the full period of implementation and beyond, and it could prove to be too demanding for the weak (Nwabueze, 2001). Beer (2003) stated that TQM fails due to failures in implementation, not in TQM theory and method. Top-down programs undermine the unit leaders' commitment and their capacity to lead a TQM transformation in their unit. It is management's lack of capacity to explore the gaps between the TQM program and the reality of actual practicethe very process of inquiry, analysis, and action embedded in TQMthat causes TQM implementation failure. The missing ingredient in unsuccessful TQM transformations is a total quality management process for assessing and developing a high quality of management at every level (Beer, 2003). A study by Ljungstrom and Klefsjo (2002) determined that the six areas for obstacles to TQM are management, continuous improvement, quality methods and tools, work development, process orientation, and unions. Unions have seldom been discussed in TQM literature, but they have a great deal of influence in many organizations. Efforts to achieve TQM that unions are often resistant to include reduced hierarchies, integration of work, increased responsibility and authority on the shop floor, membership in projects and design processes, and competence development. Lack of senior management commitment is seen as an important obstacle (Soltani, Lai, & Gharneh, 2005). Reasons for this include lack of knowledge about what TQM is, ineffective internal communication between management and employees, and low engagement of other levels of management within the organizations. So, top executives need training that will help them to understand the philosophy and benefits of TQM, along with how to implement it effectively. Juran (1993) suggested that many companies have failed at TQM initiatives because CEOs do not know which quality strategy is best for their company and their choices have been a gamble and there was a laissez-fair attitude, that is, managers were not trained in the process of managing for quality. Critics of TQM have suggested that TQM entails excessive retraining costs, consumes huge amounts of management time, increases paperwork and documentation, demands unrealistic employee commitments levels, emphasizes process over results, and fails to address the needs of small firms, service firms, or non-profits. Failures of TQM have been attributed to factors that conflict with the philosophy of TQM, which include lack of cooperation and excessive time and financial commitments (Chin & Pun, 2002). The review of literature showed that the most common obstacle to TQM is lack of management support and commitment. Other prevalent obstacles were lack of proper and adequate training and resistance to change from all involved.

A study conducted by Kanji and Asher (1996) showed that in Western European countries, for instance France, Italy, England, and Norway the way firms implement their TQM practices is very complicated and has a long process. The analysis carried out shows that the level of TQM implementation in telecommunication institutions is even worse. According to Kanji and Asher (1996), the following were the problems noted in the implementation of TQM.

The industries do not have even a single conception of quality.

There is no clear vision, mission and concrete quality policy for the institutions.

The leaders of the institutions do not understand the modern concept of quality and obligation to it.

Firms have poor observation, care and control of quality of industrial practice.

There is lack of time and resources and most enterprises prefer short-term goals to the long-term ones.

The process of achieving total quality management is complicated when involving all members of the organization. Organisations require enough time to change employees traditional standpoint to the concept of quality.Another research found that there are some problems pertaining to the application of TQM programmes in some Saudi public sector agencies. The most apparent problem is the limited nature of how TQM practices are implemented. The other main problem results from the change in leadership in all organizations which reflects on their commitment to TQM programmes implementation. These problems appear to be related to weak understanding of TQM and its implementation goal in most of the organizations (Korankye 2013). Moreover, the training on TQM does not seem to be efficient, it is conducted mostly in-house where there is no experience to offer, not to mention the fact that the complexity of TQM training programmes and the lack of post training consultations were factors that hindered the efforts of these organizations in their implementations of TQM. A survey of branch managers in the UK banks considered lack of resources, short-term goals, internal environment and communication as major barriers to TQM implementation (Mansour, 2007). Finally, the narrow perspective organisations have concerning TQM is a critical factor. TQM distinguishes itself in this regard; unlike much of the training in quality, it emphasizes thinking and deciding over learning the technical aspects. Practitioners will come away from it with a mental framework and a versatile toolkit, rather than a few narrow methods. For example, if a carpenter has only a hammer, his perspective is limited to finding nails to hit. Likewise, some quality management programmes arm their participants mainly with statistical methods and quality techniques, preparing them to look only for quantifiable things; nothing against nuts and bolts, but without a guiding philosophy, they are little else but scrap Embse (1990).2.5 Theoretical Framework for the Study

The figure 2.1 below illustrates the theoretical framework of the study, identifying the dependent and independent variables which will form the basis of the study. The study employed the framework by Mwaniki and Okibo (2014), however adjustments have been made to the figure to include education and training. This inclusion has been necessitated by the significant role played by education and training in achieving banks financial performance.

Figure 1 Theoretical Framework

Source: Authors design from Mwaniki and Okibo (2014) framework

2.5.1 Top Management Involvement

Top management commitment is vital in the implementation of TQM. Chrusciel and Field (2003) defined top management commitment as an active and visible support or commitment from the management of the organization, often in the form of a champion for the application. Top management commitment is seen as a critical factor for performance excellence-an organizational change strategy (Ciptono, 2008).

A predominant issue in quality management literature is that strong commitment from top management is vital. This therefore means that, leadership is very critical in implementing TQM system. The concept of leadership is the ability for top management to establish, practice and lead a long-term vision of an organization. Certain roles of top management can be identified as establishing quality policies, establishing and deploying quality goals, providing resources, providing problem-oriented training, and stimulating improvement. Recognition of the critical role of leadership and its responsibility in pursuit of continuous quality improvement echoes the arguments put forward by quality gurus such as Edward W. Deming, Joseph M. Juran and Philip B. Crosby. The European Foundation for Quality Award (EFQA) and the Malcolm Baldrige National Quality Award (MBNQA) further recognize the crucial role of leadership in creating the goals, values and systems that guide the pursuit of continuous performance improvement. Demonstrating such commitment is therefore a primary leadership principle for achieving TQM because lack of top management commitment is one of the many reasons for the failure of TQM2.5.2 Process

A process consists of one or more actions that transform inputs into outputs (Russell and Taylor, 2011). These include the combination and engagement of machines, tools, methods, materials, and people in production. A key part of any total quality strategy is the management of processes and their further improvement. Process control and continuous improvement allow individuals involved in the day-to-day operations to change and improve processes and work flows as they see fit. Traditional systems operated on the assumption that once a company achieved a certain level of quality, it was successful and needed no further improvements (Zhang et. al, 1999 cited in Edu 2013). However, the more experience the organization gains in applying this technique, the more gradual the improvement will be (Balbastre and Moreno Luzon, 2003 cited in Edu 2013). Process management focuses on managing the service process so that it operates as expected, without breakdowns.

2.5.3 Customer Relationship

To a larger extent, all the practices surrounding TQM are due to the final customers or consumers out there whose needs and expectations are to be met in order to satisfy them. An organizations success in the long-run is largely determined by the degree to which it is able to satisfy its customers. Deming (1986) cited in Edu (2013) argues that the most important parameter for measuring the outcome of TQM practices is customer satisfaction. His point is corroborated by most researchers such as Bergman and Klefjo (2007) and Sandholm (2000) cited in Edu 2013. As a result of the above, numerous researchers have resorted to identifying the relationship between the implementation of TQM and the impact on customer satisfaction (Kaynak, 2003 cited in Edu, 2013). Through on-time product delivery and reliability of services, the customer becomes loyal to the offerings of the organization. According to Sila (2007) cited in Edu (2013), improving the level of quality performance has a resulting impact on the performance of the workforce. This in turn improves the quality of products and services given to customers. For instance, in the service industry, committed employees tend to be responsive to customers, exhibit high sense of empathy which increases the satisfaction level of customers (Mensah et. al, 2012).

2.5.4 Education and Training

Education and training forms a vital part of TQM. Education and training are some of the key elements of total quality in which many people are involved (Russell and Taylor, 2011 cited in Edu, 2013). Therefore, the success of the implementation depends directly on how well they have been done. In his 14 points contribution to TQM, Deming emphasize that, organizations must institute vigorous education and training programs in methods of quality improvement throughout the organization, from top management to lower management, so that continuous improvement can occur (Russell and Taylor, 2011 cited in Edu, 2013). Many research results reveal that education and training are one of the most important elements in a successful implementation of total quality management (Zhang et. at, 1999 cited in Edu, 2013). The research confirms what most organizations already realize, namely, that education and training are an integral and essential part of the TQM initiative (Zhang, 2000b cited in Edu, 2013). Investment in education and training is vitally important for TQM success. In an organization, all of the management, supervisors, and employees should accept quality education and training. Quality education and training include quality awareness education and basic quality management methods, such as statistical process control, problem solving methods, basic tools and techniques.CHAPTER THREE

STUDY AREA AND METHODOLOGY

3.0 Introduction

This chapter presents the study area and deals with the theoretical and analytical framework. The methods used for data collection are explained. It also describes the methodological steps used to analyze the data and other information obtained from the field survey.

3.1 Study Setting

3.1.1 Corporate Profile of Zenith Bank

Zenith Bank (Ghana) Limited is a privately owned African bank incorporated in April 2005 under the Ghana Banking ACT 2004 (ACT 673) and a Subsidiary of Zenith Bank PLC.

The Zenith Brand has been synonymous with its cutting edge ICT platform which sets it apart from its competitors, passionately innovative staff and devotion to the systems and products to meet customers requirement.

The banks main service delivery channels include twenty eight business offices as well as numerous ATMs and point of sales countrywide. Zenith Bank also offers internet and mobile banking which enables customers to access banking services on the go. The bank aims at providing prompt, flawless and innovative banking service.

3.1.2 Growth Areas and Product Lines

The target of Zenith bank is to dominate the market by continuously introducing innovative e-banking products for specific industries and service. Some of the products introduced by Zenith bank are; corporate customers, online, mobile and in shop payment solutions, third party collaborations, online interbank transfer using internet banking and retail customers.

3.1.3 Customer Base

Through the immense investment made by the bank, it has been able to stay in the fore-front of a fast growing technology such as internet banking, mobile banking and visa payment systems as well as other services that provide customers with greater speed and accuracy. The banks service offerings cover most aspect of banking which is tailored to the banking needs of customers with emphasis on the following market segment and lines of business; corporate banking, energy sector, commercial and consumer banking, platinum banking, telecoms and aviation sector, financial institutions, public sector, mining and construction sector, custodian service among others.

Given the robustness of the banks IT infrastructure, huge balance sheet size, sound financial ratios and the resourcefulness of its workforce, the bank is in a good condition to sustain and consolidate its growth trajectory and market share. The bank is also well placed to take advantage of emerging opportunities in the economy.

3.2 Methodology

This section gives an outline on how this research is conducted. The section sought to describe the tools that were used in gathering data. Accordingly, the section was on identifying appropriate measurement techniques that helped in gathering data to achieve the desired objective of the study.

3.2.1 Population

The population of the study consisted of all departments of the Zenith Bank Headquarters. The study area was chosen because of the availability of data and the branch been the headquarters where all activities including other branches activities take place. The study population comprised of all employees of the branch be it senior level management to lower management level. The reason for the above population is to have a diverse views on employees view on TQM and its impact on banks performance. Thus this will help prevent selection bias and also ensure accuracy and reliability about information taking from the field.

A total of 600 was considered as the population. Thus this number comprised of all employees of the branch (Headquarters). A breakdown of the above shows about 170 senior management employees and the rest been lower level management.

3.2.2 Sampling Technique

In order to give each member of the population an equal chance of being selected and to ensure accuracy, the simple random sampling techniques was employed in the selection of lower level management respondents to be interviewed. However, the purposive technique was used to select senior level management due to time and their availability in the office.3.2.3 Sample Selection

In selecting the sample for the study and on the part of senior level management, the purposive sample was used in selecting seventeen (17) respondents to be interviewed. Accordingly, the simple random sampling was used in selecting forty-three 43 respondents from the lower level management. Thus these number constituted the sample frame and according to Morris (2010), in sampling from a small population less than 5,000, between 10% and 45% of sample size is appropriate. This is because such proportion of the study population is accurate enough to represent the views of the entire people in the study population. Based on this sampling principle, a total of 60 respondents were interviewed. Thus 17 and 43 from senior level and lower level management respectively.

However there were twelve missing questionnaires from the lower level management therefore the analysis was made on 48 respondents.

3.3 Data Sources

In order to answer the research questions and achieve the objectives of the study, primary survey data were used. According to Salkind (2010), primary data involves collecting first-hand information about the variables of attention for the exact use of the study by the researcher and this can be collected by administering questionnaires, observing or interviewing. Primary data were collected from a sample of senior level and lower level management from all departments of the study setting. The collection of data from different sample populations was to ensure a coherent data representation (Bryman, 2012). The primary data was consistent with literature. The first section focused on the personal details of the respondents such as age, gender, level of education, years of service and management level. Thus, it sought to find the effect of these characteristics on TQM implementation and the effects on banks performance. The second section is in relation to the approach to communication. Thus it sought to find out the flow of information in the organization and its effect of TQM implementation and bank performance. The third section also sought to find answers to Total Quality Approach. Thus whether the organization has implemented TQM and if yes, what has been the impact on performance.

3.4 Design and Administration of Questionnaires

Survey questionnaires were used as the study tool for the collection of data. Three different sets of structured questionnaires were used (Appendices I). Closed-ended questions was used and this helped to elicit information for the quantitative analyses (Balbi and Triunfo, 2013). The questionnaire was made of twenty-two questions and consisted of three sections. Section one sought to solicit information about the personal characteristics of the respondent, section two focused on the communication approach, section three sought to find how the effects of TQM on the banks performance. Whether they have employed TQM and for how long and the effect it has had on their performance.

There was a piloting of questionnaires and it was realized that it was difficult getting respondents in the afternoon because they were busy working. This factor was considered and therefore most of the questionnaires were administered by the enumerator in the evening (around 4pm) when they were less busy. Pre-testing also revealed that there was the need to re-define some aspect of the questionnaires. The administration of the questionnaires by enumerators lasted for four days.3.5 Data Collection

Data was obtained from forty three sampled lower level and senior level management. The respondent recorded their answers directly on the questionnaire which were collected by the enumerator on the same day. However in some cases, respondents requested that questionnaires be collected the next day.

3.6 Data Analysis

Before data were analyzed, data validation was undertaken by the researcher to help in the identification of unusual and invalid variables, cases and data values in the active dataset (Kitchenham and Pfleeger, 2003). A validation rule was used by the researcher to check for the validity and consistency of the data. The Single Variables and Cross Variables Rules in Statistical Product and Service Solutions (SPSS) Statistics 20.0 were used to validate the data by checking for out-of-range, invalid and missing values.

The data obtained from the field was coded and shown in the pictorial form. Again, this was achieved with the aid of the Statistical Product and Service Solutions (SPSS) Statistics 20.0 and excel. Descriptive statistics was the main means of analysing the data. Since the study mainly seeks to identify the effect of TQM on banks performance, case study research design was used and it helped the researcher to engage almost all the key stakeholders.

3.7 Limitation of the Study

It is important to acknowledge that the study had some limitations and that the findings of the study were confined to the Headquarters of Zenith Bank so as to prevent a generalisation of the findings.

The researcher was also faced with some respondents who failed to complete questionnaire given them and this limited the number of respondents who were involved in the study despite the enumerators effort to explain the potential benefits of the study to them.CHAPTER FOUR

PRESENTATION AND DISCUSSION OF RESULTS

4.0 Introduction

This chapter sought to analyse the data collected from the field. It covers data of respondents from the Zenith Bank. Thus it covers information from both senior and lower level management.

4.1 Personal Details of Respondents

A total of sixty (60) questionnaires were issued, however only forty-eight 48 were received from the field as such analyses are made from the 48 responses received. The forty-eight response encompasses both senior and junior level management across each department of Zenith Bank (So so and So branch).

4.1 Personal Details of respondents

Out of the 48 respondents, 64.7 per cent were males and 29.4 per cent represented females. Accordingly majority of the respondents were within the 26-35 years age bracket. Majority of the respondents have worked for about 4-10 years. This indicates the level of experience they possess when it comes to banking. However most of the respondents were within lower level management. Thus 68.6 per cent of the respondents were classified as lower level management. By dummying the middle level management as senior level management, 25.4 per cent were therefore classified as senior level management.

On the level of Education, 32 of the respondents indicated they had Bachelors degree and 16 indicated they have masters degree. Of the 32 respondents who had bachelors degree, 7 of them also indicated they had professional qualifications like ACCA, ICA among others.

The table 1.0 depicts the personal details of the respondents.

Table 1.0 Personal Details of RespondentPersonal DetailsFrequencyPercentage

Age16-25 years12.1

26-35 years4593.8

36-45 years24.2

Total48100.0

Years of Service 0-3 years815.7

4-10 years4078.4

Total4894.1

Lower Level

Management Senior Level

Level Total 35

13

48

68.6

25.8

94.1

Bachelors Degree3266.7

Level of Masters Degree Education Total16

4833.3

100.0

Source: Field Data February, 2015

The degrees of personnel employed by the banks will go a long way to determining the extent of TQM application. If the quality is high, there is the probability that they will quickly grasp the training in TQM and vice versa. The level of education of the bank customers as well as the bank staff determines to a large extent the success of TQM implementation. The study also revealed that the year of service of bank staff determines the level of their commitment to achieving the organisational goals.

4.2 Communication Approach

In order to ascertain the efficiency and smoothness of the flow of communication within the organization, thus how employees interact, respondents were asked to indicate whether the downward or upward flow of communication was smooth and efficient, all the respondent indicated that both upward and downward flow of information within the organization is smooth and efficient. This indicates the level of good relationship between both senior and lower level management. Thus this could in part indicate that senior level management are not the bossy type. The relationship between employees also go a long way to influencing the TQM implementation. If the attitudes of the workers are negative, it is not likely that the TQM will be successfully implemented.

Accordingly, respondents were asked whether the organisation which they worked in have a clearly defined mission statement and if they do know this mission statement. It was not surprising to see that all the respondent indicated that they do have and know the mission statement of the organization. Thus the key features of the mission statement includes but not limited to investing in the best quality staff, investing in the best technology thus an ICT platform which sets it apart from its competitors. Moreover ICT hasten the processing of data and transactions such that customers spent less time on questions as opposed to the ledger cards that were used hitherto. Computerization engenders fast service time. Investment in the environment in which they operate, thus it is keener on its social responsibilities by giving back to society. And lastly it is keen on attaining the highest customer enthusiasm.

This result is in contrast to the results by Kanji and Asher (1996) which indicated that most of the problems associated with the implementation of TQM is as a result of the lack of clear vision, mission and concrete quality policy for the institutions.

If employees are aware of organizations objectives they will work towards achieving the objectives. But a situation where the objectives are not communicated to the employees, the employees will only believe that whatever they are doing is the right thing.

4.3 Total Quality Approach

It came to light that almost all the employees knew the company had implemented total quality management. TQM implementation serves as a guiding principle to performing a task. Thus there is no room for mistakes and any little mistake could be deadly for both the employees and clients. Table 2 shows the responses as to whether TQM has been implemented or not.

Table 2. Has the company implemented TQM?

TQM ImplementationFrequencyPercent

ValidYes3879.2

No24.2

Don't know816.7

Total48100.0

Source: Field Data February, 2015Of the 48 respondent 79.2 per cent indicated they knew TQM has been implemented in the organisation. Only 4.2 per cent of the respondent indicated TQM had not been implemented and 8 of the respondent indicated they do not know of TQM implementation in the organisation. However as to whether they knew the number of years the bank has implemented TQM, 77.1 per cent of the respondents indicated TQM has been implemented in the organisation for more than six years. Six persons indicated TQM has been implemented in the organisation between four to six years. Further to the above, respondents were asked if the bank has achieved any recognized quality certification and the responses is depicted in table 3.Table 3 Achieved any recognized Quality Standard Certification?

Quality Standard Certification FrequencyPercent

ValidYes1020.8

No510.4

Aiming for one612.5

Don't know2756.3

Total48100.0


20.8 per cent of the respondent indicated they that the company has achieved a quality standard certification, however none of them was able to emphatically state the kind of certification they have achieved.


The study also sought to find the barriers associated with the implementation of total quality management. The study revealed that lack of resources, cost constraint, communication, lack of training and skills of employees are some of the barriers associated with total quality management implementation and the results are depicted in the figure below.

Figure 2. Barriers to Total Quality Management Implementation


The figure 2 shows that of the 48 respondent, 20 of them indicated that the skill of employees is a major barrier to total quality implementation while 12 0f them indicated that it is of minor importance. Accordingly, 38 of the respondent indicated that the lack of training is a major problem in to total quality management implementation and only 10 indicated it is of minor importance. This confirms the study by Korankye (2013), who noted that the training on TQM does not seem to be efficient, it is conducted mostly in-house where there is no experience to offer, not to mention the fact that the complexity of TQM training programmes and the lack of post training consultations are factors that hindered the efforts of these organizations in their implementations of TQM.

The study also found out that lack of resources to undertake TQM implementation and communication and cost constraint are also constraint barriers to TQM implementation. This also confirms a study by Mansour (2007), where a survey of branch managers in the UK banks considered lack of resources, short-term goals, internal environment and communication as major barriers to TQM implementation.

Accordingly 77.1 per cent employees indicated all the employees are responsible for quality management and only six indicated it was the sole responsibility of a quality control specialist.Table 4. Who has the responsibility for quality in your organisation?

ResponsesFrequencyPercent

ValidQuality Control Specialist612.5

Line Managers510.4

All Employees3777.1

Total48100.0


According to Kanji and Asher (1996), the process of achieving total quality management is complicated involving all members of the organization. This therefore confirms this study. Thus the involvement of all members tend to complicate the total quality management implementation.4.5 Relationship between Total Quality Management and Profitability

Asset structure and achievement of target and the cost of operation are factors that are very important for rating the performance of the banks. The study sought to find the relationship between total quality management and profitability. Thus testing for the first hypothesis of the study,

Ho: Total quality management has no significant effect on banks performance

H1: Total quality management has significant impact on banks performance.

The study revealed that there is a positive relationship between total quality management and banks profitability and this is depicted in the tables below. The categories under increase in profitability were dummied. Thus major and minor importance were coded as Yes whiles, mostly and definitely false were coded as No. The resulting outcome is shown below.

Table 5. Crosstabulation Increase in Profitability1 * Has the company implemented TQM?

Has the company implemented TQM?Total

NoYes

Increase in Profitability1Yes23840

No011

Total23941


The table shows that of the 41 respondent who answered this question, 38 indicated that the implementation of total quality management within the organisation has caused an increased in profit. However one person indicated that the implementation of TQM has had no impact of the banks profitability. Accordingly two people indicated that the company has not implemented total quality management.

Table 6. Symmetric Measures

ValueAsymp. Std. ErroraApprox. TbApprox. Sig.

Ordinal by OrdinalKendall's tau-b.056.022.122.004

Gamma1.000.000.122.003

Spearman Correlation.056.022.224.004c

Interval by IntervalPearson's R.066.022.224.004c

N of Valid Cases41

a. Not assuming the null hypothesis.

b. Using the asymptotic standard error assuming the null hypothesis.

c. Based on normal approximation.


Table 6 shows the measure of association between total quality management and whether it has increased or decreased banks profit. Gamma showed a 1.000 which indicates a strong positive correlation between respondents total quality management and banks profitability. Kendalls tau-b also shows a moderate positive relationship of 0.56. Both spearman correlation and Pearsons rank of correlation also showed a moderate relationship.

A deduction made from the above premise is that, total quality management implementation has a strong impact on banks profitability. This study confirms the study by Buzzell and Gale (1987), Hendricks and Singhal (1997), Easton and Jarrell (1998), Adam (1994), Terziovski and Samson (1999).In order to find out whether the relationship that exists between total quality management and banks performance is significant, the chi square was used to test this and the table 7 depicts the results. Table 7 Chi-Square Tests

ValuedfAsymp. Sig. (2-sided)

Pearson Chi-Square10.53a1.04

Continuity Correctionb.00011.000

Linear-by-Linear Association.0511.821

N of Valid Cases41


a. 3 cells (75.0%) have expected count less than 5. The minimum expected count is .05.

b. Computed only for a 2x2 table

Table 7 shows that, Chi-Square= 10.53, degree of freedom (df) = 1, p-value=0.04 (2-sided). From the analysis, since p

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