Total quality management, or TQM, is a comprehensive effort to improve quality at all levels of a business. It is based on two notions: Quality is what the customer wants, and the whole organization should pursue perfect quality. TQM can improve customer satisfaction and lead to better sales. However, it is not a panacea for all problems, and some characteristics of small businesses pose a challenge in TQM implementation.

Learning Mechanism

The strategy involves constant innovation, improvement and change. Companies that practice TQM initiate a cycle of continuous improvement. This reflects a way of management in which every employee has a role to play, everything is subject to change and customer needs are the driving force. Managers have to trust employees and delegate decisions. This gives employees the responsibility to deliver quality in their own sphere.

Reducing Cost of Quality

Quality costs can be divided into two categories: good quality costs and poor quality costs. Achieving high quality involves prevention and appraisal costs. Prevention costs are the costs incurred in the process of preventing poor quality. For example, process design and employee training are prevention costs. Appraisal costs are incurred in the process of finding defects. The cost of quality inspections and product testing are appraisal costs. On the other hand, poor quality creates internal and external failure costs. Internal failure costs, such as rework and scrap, are those incurred before the product reaches the customer. External failure costs are associated with quality problems that surface after the product sale. Customer complaints and warranty claims are among these costs. External failure is particularly costly because it is related to customer satisfaction and loyalty. Companies invest in prevention and appraisal costs to avoid expensive internal and external quality failures. TQM strives to build quality into processes and systems to avoid quality problems.

Challenges for Small Businesses

Certain characteristics of small businesses hold challenges for TQM implementation. Training is vital in implementing TQM, but affording the time and resources for training can pose a challenge for small companies. The small number of employees makes it difficult to substitute employees for the duration of training. Moreover, if the dominant quality culture is detection rather than prevention, overcoming resistance to change is a priority. Finally, because of limited financial resources, small companies may focus on survival and short-term objectives. However, some important benefits of TQM, such as long-term sustainability of the business, may require adopting a long-term approach.

TQM as a Fad

Management advice, such as TQM, can exist as an appealing package that might catch on quickly and then subside if not stringently executed. While certain strategies might contain complex management advice, they can be simplified and embellished by catchy buzzwords that mask their long-term implications for business improvement. To benefit from new management concepts, managers need to grasp the essence of the concept and have a long-term orientation. Fads are usually marketed as a quick fix; hence, they are adopted quickly without preparation and when they fail to deliver, are set aside.