2 May 2005	Monday	22 Rabi-ul-Awwal 1426

QUALITY is being emphasized by all to be able to compete in a liberalizing international trade environment. Recently, the prime minister laid stress on it too on the basis of “quality engineering skills and competitive labour” available in the country. If skills are available in a certain sector, the challenge lies in turning them over into customer needs satisfaction that alone can lead to repeat and sustainable business. If skilled labour is not available in sufficient numbers in other sectors, the challenge is to identify potential and enable it to realize it. In either case, it is a test of managerial and organizational capabilities to produce quality on a sustainable basis.

This capability can, however, not be gauged by a simple acquisition of ISO certification just like a degree-holder’s skills cannot be measured always only by the degree he/she has acquired. What matters in the case of a degree-holder is the contribution that one can make by continuously building on the entry-level paper certificate.

Similarly, ISO certificate merely initiates a firm in the quality arena. The certificate in itself is not the end of struggle for continuous improvement of quality which remains a moving target. How this continuously changing target may be achieved in continuously changing times requires a management philosophy that keeps quality, amongst other factors, at the centre of its core values.

It is for this reason that Malcolm Baldrige Quality Award as well as the European Quality Award gauge, in addition to business results, quality of process, quality of design, quality of management functions, quality of strategic direction, quality of human resources, overall quality of organizational climate, and quality of leadership. The European Quality Award goes on further to also gauge the impact on the society and the impact on other stakeholders of the firm.

For, the quality of a firm’s output would be as good as the quality of the inputs provided by the society. And the quality of inputs would be as good as the quality of inputs, the input-providers receive from the firm in the form of firm’s outputs. Based on open-systems theory, quality-in is quality-out as quality inputs can influence not just the quality of the products but also the quality of design and process capability. Quality-out, in turn, influences quality-in and the virtuous circle is thus triggered based on mutually beneficial win-win relationships.

That is, a totally new management philosophy is required to sustainably roll out quality that would ensure sustainable business for customers’ needs and wants satisfaction. In turn, benefits will be generated for the stakeholders including profits for the shareholders for a long time to come.

So, ability to provide quality boils down to being a function of breadth and depth of horizon and vision respectively instead of short-term profit maximization that average businesses and economists, ala Peter Drucker, may remain obsessed with at the expense of competitiveness and long-term business prospects.

So, as discussed above, quality is not mere quality of the product but it encompasses the concept of the quality of the firm defined by the quality of variables mentioned earlier.

Quality of a firm is further gauged by its ability to produce products that are affordable and safe and by the firm’s ability to make a timely response to the changing market needs without which too the firm might lose competitiveness. This important dimension of quality requires enhanced productivity, efficiency, and firm’s swift response capability—-all of which are formidable targets if the work force lacks enthusiasm and desire to excel at the individual and collective levels.

While some of these attitudes may be sifted out during the screening process necessitating careful and professional recruitment and selection procedures, even the spirited workers are likely to lose enthusiasm if the environment within the firm disables them more instead of enabling them to perform and excel.

The disabling internal environmental factors may, inter alia, revolve around compensation and position that should not only be adequate and suitable in proportion to the workers’ marginal output and capabilities but should also reflect comparative justice, that is, comparable compensation/position for comparable capability within the organization.

Nepotism, cronyism, premium on sycophancy and personal loyalty, and formation of inner circles and power groups on the basis of these criteria eat into organizational capability like termites. For, all of these practices tend to discount merit and capability and are, therefore, sure-fire depressants of organizational performance.

Quality is unthinkable if quality human resource is discounted blatantly in a manner stated earlier. These human resource (HR) practices do not feed quality HR into the processes which means a lack-of-quality-in leading to a lack-of-quality-out.

Transparency in the HR management function is the first level of instilling confidence in the workforce. Losing trust at this level is a sure recipe for an adversarial relationship between the management and the workforce.

While a firm can get by with such a conflictual relationship, it cannot sprint competitively. A workforce that experiences injustice will not be able to do justice to the firm. Producing quality would then be even more daunting a task than would otherwise be the case.

A quality-seeking firm first needs to assess the quality of its HR processes with a view to determining if the same are driven by justice and fair play that can be defended before an independent audience of integrity. If the answer is in the negative, this is where they need to focus upon first, that is, introspection and remedial action. If a firm scores a positive score on this crucial variable, it is ready to move on.

The next step towards getting the best out is to install a generator inside each worker by building on the sound HR practices already in place. That is, with the lower order needs satisfied, the workforce is poised to have its higher order needs of esteem and self-actualization satisfied too if an enabling environment for the same is provided. This is an environment which can successfully tap the creative and innovative potential in each as each worker accumulates knowledge about the job he/she undertakes on the basis of which one brims with ideas that can be translated into action only if so encouraged by the management.

The organizational challenge here is to get the workers to share their ideas about quality improvement, cost reduction, productivity and efficiency enhancement, and timely response to the changing needs of the market place.

Once such enthusiastic knowledge workers are shown the bigger picture, they will be able to liaise and integrate with other functional areas also. This would lead to a cross-functionally integrated horizontal organization that will successfully close the design-production-marketing gap and will be equipped organization-wide to effectively satisfy customer needs. Such an organization will also be able to integrate easily with the forward and backward ends of the value chain. Total quality will thus be provided and customer value enhanced even further. The upshot will be a self-propelled workplace geared to identify and satisfy the needs in the marketplace that will, in turn, be rewarding for all the stakeholders including the owner managers and shareholders.

To manage for total quality through quality circles and the above mode, firms must get into the “continuous improvement” mindset to be able to compete and excel. The underlying assumption is that competitiveness and excellence is an ever changing target towards which a firm must always be striving to avoid being overtaken and left behind. For this purpose, a firm may need to reinvent its competitive advantage and may even need to re-engineer its processes if the limits of improvement have been reached with an older process. All of this would, however, be possible only if the workforce is knowledgeable enough not only about the process at hand but also about the external environmental factors that impact the process and the firm. It will be only then that workers will be able to seek “global optimum” and not just “local maximum” as used to be the case traditionally.

For, sustainable competitive advantage comes not just from local maxima but from globally optimal performance emanating from the combined good performance of an interlocked set of activities that is difficult to replicate as opposed to local maxima that can be replicated with ease (Alex Miller) thereby resulting in the loss of competitive advantage. So, at the end of the day, competitive advantage lies in the rare resources a firm may possess that are not only not easy to recreate but which the firm knows how to utilize best. These are the knowledge workers whose intellectual capital, ala Mohan Thite, provides the single most important source of competitive advantage.

Enthusiasts of capital-intensity ought to then track the developments in management thought. That is, the emphasis on capital has graduated from physical capital to human capital to intellectual capital in what is now known as the knowledge economy in which it is knowledge that provides the single-most important source of differentiation.

With premium on workers’ intellect, personnel management graduated to HR management to Strategic HR management, and now to “knowledge management”, ala Mohan Thite. And, knowledge management is not just the domain of one functional area but is an activity that should pervade the entire organization to produce the inimitable global optimum. It is this company-wide way of thought and way of life that alone can continue to deliver the much desired quality we need for competitiveness in domestic and international markets alike.