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Total Quality Management and The European Quality Award

G. Waldner

Alcatel Austria AG

Scheydgasse 41

A-1210 Vienna

Self-Assessment is a comprehensive, systematic and regular review of an organisation's activities and results referenced against a model of business excellence for example the European Model for Total Quality Management. The Self-Assessment Process allows the organisation to discern clearly its strengths and areas in which improvements can be made and culminates in planned improvement actions which are then monitored for progress. Increasingly, companies in Europe accept that Total Quality Management is a way of managing a business to gain competitive advantage thereby ensuring longer term success - meeting the needs of their customers, employees, financial and other stake-holders and the community at large.

Alcatel Austria was the first and till now the only Austrian company to apply for The European Quality Award in 1993, 1994 and 1995. The purpose of this publication is to promote the value of Self-Assessment as a key process for driving business improvement and the benefits to be gained from carrying out internal Self-Assessments and from applying for the award.

The History

Alcatel Austria was founded in 1884 and thus is one of Austria's oldest industrial companies. In 1925 the company became a member of the ITT Corporation. Since the fusion of the telecom group of ITT with that of the French Companie Generale d'Electrique in the year 1987, the group is called Alcatel Alsthom. Our company is a subsidiary of Alcatel N.V. which is part of the Alcatel Alsthom Group.

Alcatel Austria's Total Quality Approach

Alcatel Austria's Total Quality initiative has a long history. It began in the 1970s with the introduction of the ITT Quality Program Quality Improvement through Defect Prevention which was conducted by its famous Group Quality Manager PHILIP CROSBY. Recognition, certificates and Quality awards of those previous days are still present in many departments of our company to remained staff of our long-standing experience in the field of Total Quality. In the early 1990s our board of directors stepped up the pace of Alcatel Austria's drive to Total Quality with the implementation of Time Based Management and ISO 9001. As first Austrian representative within the telecommunication sector we received external certification for the whole company in 1991 and have maintained our certificate through a reaudit in 1994.

Having achieved ISO 9001 a new challenge was sought to drive continuous improvement. A new process that could clearly discern strengths from opportunities for improvements was necessary. Therefore we set in motion a Total Quality process using the criteria of The

European Quality Award. Since 1992 self-assessments play a major part in our business review, because we view the model of the European Foundation for Quality Management (EFQM) as a business model. It is a quality model that links all the aspects of the business, enabling our employees to drive continuous business improvement through Total Quality Management.

Figure 1

The European Model for Total Quality Management

In order to undertake Self-Assessment, an underlying framework is necessary. An ideal framework is the European Model for Total Quality Management. Although each organisation is unique, this model provides a generic framework of criteria that can be applied widely to any organisation or component part of an organisation.

The European Model for Total Quality Management underlies The European Quality Award and is based on the following premise:

Customer Satisfaction, People Satisfaction and Impact on Society are achieved through Leadership driving, Policy and Strategy, People Management, Resources and Processes, leading ultimately to excellence in Business Results.

The Enablers criteria are concerned with how the organisation approaches each of the criterion parts and the Results criteria are concerned with what the organisation has achieved and is achieving.

Figure 2

Each of the nine elements shown in the model is a criterion that can be used to assess the organisation's progress towards Total Quality. The percentages shown are those for the purpose of The European Quality Award. By using the weightings, an organisation has the additional benefit of being able to compare its score profile with the Best in Europe. An application for The European Quality Award will be assessed and scored on a scale from 0 to 1000 points. The model and percentages were derived following a wide consultation exercise across Europe and are reviewed annually by the European Foundation for Quality Management.

To achieve a permanent Total Quality culture which conforms to Alcatel Austria's Visions and strategy, managers use the above mentioned method:

Alcatel Austria's Self-Assessment Process

Since 1992 the European Quality Award Model has been recognised by the board of directors as a guideline for the entire Alcatel Austria Total Quality Approach and as the driver for all continuous improvement activities. On basis of a written suggestion by the Commission of the EU, Alcatel Austria was the first and till now the only Austrian company to apply for TEQA. Because of this process managers are strongly involved in assessing awareness of Total Quality and reviewing its progress.

Main steps of the self-assessment process which is to conform to the EFQM Model:

1. Self-Assessment Document
2. Evaluation through Internal Assessors (score, areas for improvement)
3. Management Review
4. Corrective Actions

The self-assessment document is written every year by the TQM-Manager and subsequently handed over to internally trained assessors from every division (cross section).

The self assessment training is conducted by an external consultant. By means of a case study the internal assessors learn to identify strengths and areas for improvement and the use of TEQA scoring process. They also learn how to allocate their points for all enablers and results criteria. After the individual appraisal of the self-assessment document by each team member they meet for one day to agree on a consensus view of all strength, areas for improvement and the score. The TQM-Manager and the senior assessor present the results of the self assessment to the board of directors. This review meeting is entirely devoted to self-assessment issues.

The board of directors assigns priorities and agrees upon corrective actions by means of single tasks or improvement projects and their results are included in the next application document.

Key Elements of a Successful Self-Assessment Process

• The success of the process depends substantially on the preparation of the self assessment document. The originator of this document has the task of representing the overall performance of the company on not more than 75 pages. If the internal assessors don't recognise their own company in this document the whole self-assessment process will get a poor image. It is very hard for the originator to satisfy this requirement because all managers see the company from different points of view. Therefore the contents of the document should be defined in a way that allows verification during an audit or site visit. Thus the score of the assessment also will depend on the know how and performance of the originator. Note: A poor originator will make out of a 500 points company perhaps a 450 points description. On the other hand, a strong originator perhaps a 550 points document.

• For a better understanding of the requirements of the EFQM Model the originator should read as many case studies as possible to take all company-relevant enablers and results into consideration and to describe the contents exactly in conformance with the scoring charts. The case studies help the originator to identify existing or potential TQM activities in his company.

• Provide external self assessment training for at least one manager (e.g. EFQM Assessors Training for three days) to guarantee sufficient know how in your company. This well- trained manager should be also responsible for the preparation of the self-assessment document.

• Select carefully your internal assessors team. Nominate a cross-functional team (8 assessors) out of experienced middle managers who cover all relevant subjects of the 9 Elements. At least one member of the board of directors should join this team to provide sufficient information from the top level. An external expert should assist the team to help reduce conflicts or misunderstandings. The key manager in the assessors team is the senior assessor who is responsible for moderating the group and for time management. It depends essentially on him if the consensus meeting will be a success or not. Nominate a well-known moderator within your company who has the skill to lead a team and to overrule them if necessary without any lasting conflicts.

• Carry out a one day consensus meeting to discuss the scoring range of the assessors after their individual assessment and to define appropriate areas for improvement.

Example of our self assessment in 1995:

- Scoring range before consensus( 32 assessors): 240 Points

- Scoring range after consensus: 120 Points

- Difference of total score before and after consensus: 40 Points

- Difference of total score (max, min) between our 4 teams (after consensus): 10 %

• After your company has carried out one or two internal self assessments try an application for TEQA or a national quality award to learn and to verify your own performance and to get advanced ideas for corrective actions. Give your internal assessors and your management the feeling that your internal results will basically conform to that of external experts.

Because of the positive experience in terms of the self-assessment process within the company, the number of internal assessors involved in this process has increased since 1993 from 2 to 30.

Man days spent for this process (score, consensus) increased from 6 days in 1993 to 90 days in 1995.

All relevant divisions, levels and areas, i.e. marketing, development, operations, procurement, distribution, human resources and quality assurance, participate in this process. At least one member of the board of directors is actively involved in each assessment team.

Deviation Between Internal and External Self Assessment Results

To avoid too much deviation between the internal and the EFQM results the following aspects are important:

• Carry out training for all internal assessors for one day.
• Use one Enabler and one Result criterion for this training and have a consensus meeting. It is an advantage if your assessors evaluate, for example, criteria 3 (people management) and 7 (people satisfaction) of your own self assessment document. They will find out strengths, areas for improvement and the score in conformance with the EFQM scoring charts. It is not necessary to confront the assessors with a complete case study. Middle and top managers don't need more days of training because they are able to understand this simple process in one day.
• Commission an external trainer (if possible an EFQM assessor).
• Explain the Blue Card very carefully. You will have the greatest deviation if assessors do not exactly take this scoring grid into consideration for their individual evaluation. Tell them that they should always take a look at this card during their individual assessment of the 33 criteria parts of the EFQM Model.
• The Lead Assessor should steadily handle the Blue Card during the consensus meeting, particularly after completion of a whole element, if the scoring range of the assessors is as much as 40 percent, or if the discussion allows no consensus.
• Be sure that the writing team of the document and the assessing team consist of different managers. Otherwise the writer will defend the contents of the document during the consensus meeting.
• Say to the assessors that a good company will achieve a total score of 500 points and quality prize winners achieve not more than 600 - 650 points. So you can avoid too unrealistic individual scores.
• A good approach shows a deviation of not more than 10 percent between the internal and external results.

The figure below shows the deviation of our assessors' score from those of the EFQM assessors for each TEQA criterion in 1993 and 1994:

1993 1994

1. Leadership +20% -10%

2. Policy & Strategy +30% 0

3. People Management +10% 0

4. Resources +10% -10%

5. Processes 0 -10%

6. Customer Satisfaction 0 +10%

7. People Satisfaction 0 0

8. Impact on Society 0 0

9. Business Results +30% +20%

Average deviation +11% + 7%

Developing a Strategy for Effective Use of Internal and External Assessments

• The real start of the process is the handing over of the company self assessment document to the internal assessors. Therefore it is better to start the assessors training when your description is completed. The assessors will be aware of the logic and non-bureaucratic manner of this business model through this training. Afterwards they like to know the performance of their company in comparison with the requirements of the EFQM Model. You will not have any problems to nominate internal assessors, to train them, to motivate them for a two-day individual study of the company's performance, to bring them together in a consensus meeting for discussion of scores and areas for improvement, and to present finally the results of the overall process to the board of directors during a management review. But you will perhaps have great problems in starting the process itself. It is not necessary to inform the whole staff about the start of this process or to nominate a team for the descriptions if there are manpower problems within the company or there is a saturation because of a lot of different management projects and initiatives in recent years. You can start this process easily with the informal nomination of a project leader and the informal commitment of the top management. The only assumption is that the orignator of the document knows the company very well to define all relevant contents.

• Change your internal assessors each year. In this way, you have the chance to use this process also as a kind of quality training and to spread the TQM philosophy within your whole organisation. Note that the learning experience during this process is perhaps more valuable for your company than the rigid definition of improvement projects. Because of the individual feedback of many assessors the originator can further improve his document for the next assessment and also for a potential application for TEQA. But don't change your senior assessors because they have an important function to improve and stabilise the consensus process. Their professional use of the Blue Card is key success factor.

• Note that the name TEQA may be an unfortunate term. Parts of your organisation will believe that the winning of the Award is the only intention of the management. There would be no problems if the EFQM would replace the word award with the word benchmark.This would perfectly meet the intention of the company's management and avoid a lot of senseless discussions within or outside the company. Avoid the word award whenever possible.

• The intention to win TEQA can be a dangerous strategy for top management. If they announce that the organisation will, for example, prepare itself three years and then apply to win TEQA the chance is very high that the top management will be a loser in the eyes of the employees. Remain realistic - to win TEQA could be a useful vision but not a specific strategic target. Avoid any pressure in this direction. Don't forget that the strategic target is to benchmark your performance, to verify your internal self-assessment results, to get feedback from at least 7 international TQM experts, to get a comprehensive and non-bureaucratic overview about your company in terms of strengths and areas for improvement, to provide excellent business training for your managers, and finally to reduce your distance from the best TQM companies in Europe through continuous improvement activities.

• Involve at least one member of the board of directors in your self assessment team. They know best the strategic direction of the company and thus help to optimise the contents of the document and the self assessment process itself. Note that the output of internal or external consensus meetings normally show areas for improvement which concerns primarily the activity of these managers. So it is up to them to define corrective actions or not. Don't forget that the EFQM Model is only a guideline for Total Quality Management. The strategic thinking of the top managers and the culture of the company determine which areas for improvement are relevant and which not. It is not efficient to follow this model 100 % if the demands in terms of customers, change and competition require other actions for the company. For example, Alcatel Austria is dramatically expanding operations in Eastern Europe. In this type of pioneering situation it is difficult to follow the EFQM Model. Take those areas for improvement into consideration which support best your firm's strategic direction and do not be overly concerned if you do not satisfy all other model's requirements.

• One major outcome of this process is that a company needs comprehensive benchmarking activities. You will never get more than 500 points if you cannot show the value of your results and trends in comparison with other companies, business sector averages or best in class practices. It is also difficult to get these benchmarks easily or immediately. Therefore start as soon as possible with this activity which is quite important for every company. Note that it is easier to increase the score for the enablers criteria than for the results criteria. To avoid a major inequality between these two criteria parts you need primarily benchmarks.

Business Benefits for the Organisation

The following aspects are relevant for each organisation:

• Self assessments which conform to the EFQM Model allow a comparison with the best TQM companies in Europe. We know exactly how many applicants (in percent) for TEQA have a better performance per each criterion than Alcatel Austria. These benchmarks give us more certainty for the formulation of corrective actions.

• We use self assessments as a business training activity. Therefore we increased the number of internal assessors from 8 to 32 (4 teams) to give more employees the chance to get a good overview of our company. Because of self assessments, managers understand better the loops between enablers and results, for example, the relationship between policy & strategy, critical processes and business results. The learning experience for all managers who are involved in this process is more valuable than the rigid definition of corrective actions.

• Because of the EFQM Model managers understand that Total Quality does not mean any additional activities under the term TQM. Total Quality means the satisfying of all stakeholders: customers, suppliers, employees, shareholders, society. This is our daily business itself.

• Managers recognise the importance of benchmarking and they are more interested in the comparison of their own process performance with that of competitors or with the business sector's average.

• The self assessment results are a good basis for the definition of improvement projects. Without the use of a TQM model you have a high risk of losing the orientation for your improvement program.

• By using of the EFQM Model you can easily increase the motivation for Total Quality. It should be the intention of any manager to reduce the distance to the best TQM companies in Europe, to be the best national TQM company or to be the best subsidiary within a corporation in this subject.

• The EFQM Feedback Report is very helpful. Don't forget that each of the 7 international assessors work at least 3 days with your company, in sum 21 days, but you pay only a minimal fee for this TQM consulting activity.
• The self-assessment approach is very powerful, non-bureaucratic and easy for everyone to understand.

References

• The European Quality Award Application Brochure and the Self-Assessment Guidlines 1995;

European Foundation for Quality Management

1200 Brussels, Avenue des Pleiades 19

Telefax +32 2 779 12 37

• The Self-Assessment Handbook (1994), Chris Hakes, Chapman & Hall
• The Rank Xerox European Quality Award Submission Document 1992
• The D2D European Quality Award Submission Document 1994
• The Use of Quality Award Criteria and Models for Self-Assessment Purposes (Proceeding of the First European Forum on Quality Self-Assessment, Milano, 1994)
• Benchmarking for Competitive Advantage (1993), Tony Bendell, Financial Times Pitman Publishing

Biographical Details

Dipl. Ing. Günther Waldner

Born 1961 in Austria, degree in petroleum engineering; from 1989-1991 implementation of ISO 9001 at a Philips company; since 1991 Total Quality Manager for Alcatel Austria; Auditor for ÖQS; Assessor for TEQA 1995; Trainer on ISO 9000 and Self Assessments in several Austrian Management Institutes.

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