The effects of total quality management on productivity using the probit model

Project Abstract

<p> The broad objective of this research work is to take a critical look<br>at the principle of total quality management so as to find out how its<br>implementation will affect an organisation‟s productivity and<br>profitability. For the purpose of this study, the researcher limited its<br>data to those of the Skye Bank Plc and her customers. The researcher<br>used survey method to investigate the effects of Total Quality<br>Management on productivity using the probit model a case study of Skye<br>Bank Plc Edo State. <br></p>

Project Overview

<p> </p><p>INTRODUCTION</p><p>1.1 HISTORICAL BACKGROUND AND THE ORIGIN OF SKYE BANK PLC<br>Banking in Nigeria took a new dimension after the pronouncement of the<br>former governor of the Central Bank of Nigeria professor Charles Soludo<br>for the need to improve the banking industry in Nigeria thereby<br>competing with other foreign banks, hence capital base to 25 billion<br>naira.<br>According to the governor of central bank professor Charles Soludo, the<br>whole idea of the increment is to give room for other small financial<br>institutions to strive, thereby reducing the rate of competition amongst<br>banks in Nigeria.<br>For the purpose of this study, Skye Bank PLC came together as an entity<br>after due diligence was carried out amongst their five banks.<br>• Prudent Bank<br>• EIB Eko International Bank<br>• Reliance Bank<br>• Bond Bank<br>• Cooperative Bank Ltd<br>Currently, the bank has a significant network spread across the nation<br>over 200 branches and also planning to spread across West African<br>countries, turn up before the end of 2007, it major of business is<br>centered round services, hence service delivery is term of Skye Bank or<br>the hallmark as it term.<br>As a new generation bank, Skye Bank Plc is online real that is to say<br>every customer can access his/her account from any of location whether<br>it is savings or current account. It is worthy to know that the bank is<br>highly aggressive in expanding its numerous clientele world, that is to<br>say that the satisfaction derived by the customers is a key.<br>As a strategy to preposition the industry in order to offer high quality<br>products, CBN embarked upon a process of scrutinizing products offered<br>by banks.<br>Quality management of products in a post consolidation era been brought<br>to front banner. In order to contribute to this debate, TQM (total<br>quality management) as a policy for assessing and<br>regulating service delivery process became a very important instrument in this regard.<br>At the heart of the survival of any bank the satisfaction of the clients<br>is most important, the clients/customers are only satisfied when their<br>demands are being met at the right cost and to the right quality.<br>Ironically, it only when the customers are satisfied that the bank in<br>question can be seen as performing it as a new generation bank.<br>One particular approach to improve organizational performance and<br>effectiveness is the concept of the Japanese-inspired Total Quality<br>Management. This is a set of management practices throughout the<br>organization, geared to ensure the organization consistently meets or<br>exceeds customer requirements. TQM places strong focus on process<br>measurement.<br>The successful organization should as a matter of policy be constantly<br>seeking opportunities to improve the quality of its products or services<br>and processes; the bank must also couple quality with a required level<br>of productivity. TQM represents a total system and as such increasingly<br>enhances quality circles as a broader means of addressing the demand for<br>quality.<br>Total Quality Management is a method by which management and employees<br>can become involved in the continuous improvements of their products and<br>services. It is a combination of quality and management tools aimed at<br>increasing profit and reducing losses due to wasteful practice.<br>This research work stems from the need to evaluate the cost of quality<br>vis-à-vis its benefits in terms of increased productivity of any<br>organization, a lot of banks pay lip service to quality simply because<br>they do not realize the benefit such investment of time, effort and<br>money will bring to their banking system other are skeptical on whether<br>or not there is any real benefit at all.<br>It was the need to clear all these and show through a detail and<br>systematic study of how a popular quality philosophy such as TQM will<br>affect the performance of Skye Bank PLC that forms that background for<br>the study.<br>1.2 STATEMENT OF THE PROBLEM<br>The central focus of gravity organization is customer satisfaction and<br>improved performance. Quality focus seeks to institutionalize planned<br>and continuous improvement so as to ensure that quality is the outcome<br>of all activities that takes place within an organization; that all<br>functions and all employees have to participate in the improvement<br>process; that organization need both quality culture and management<br>effectiveness of this approach in making small but steady improvements.<br>But users and critics of Total Quality Management universally agree that<br>that approach takes too long to do, many abandon the approach with<br>frustration because it takes too long.<br>If we were to break a Total Quality Management efforts into its<br>components, it takes more time, very little go into problem solving.<br>Perhaps, we should spend more time on identifying the right problem.<br>After all, solving the wrong problem is a complete waste of time, in<br>this section we shall strictly discuss the basic problems encountered in<br>TQM implementation which was addressed by this research work.<br>One nagging and ever present problem with Total Quality Management is<br>meetings and more meetings; lots of time goes into meetings. Thus<br>anything that will make meetings effective will reduce the amount of<br>time spent on the Total Quality Management and then makes it worth the<br>while.<br>Another problem with Total Quality Management implementation is the fact that a great deal of time is spent on charting<br>a process. Steam members debate how the current process works. In<br>essence, by describing the process, teams set the stage for how the<br>process could be changed. Description of the process creates the mind<br>set and frame within which solutions would be sought.<br>Discovering ways to radically reduce the time it takes to do a process<br>charts will go a long way in helping to solve the problem.<br>Still another problem is that and effort is spent in data collection,<br>once an improvement is made we need to collect data to verify that<br>indeed real improvement have been made. This phase takes considerable<br>amount of time, as designed surveys distributed, retrieved and analyzed,<br>several months to a few years may be spent on data collection. Again<br>effort need to be put on strategies to reduce the amount of time and<br>effort spent on this area.<br>1.3 OBJECTIVES OF THE STUDY<br>The broad objectives of this research work are to take a critical look<br>at the principle of Total Quality Management so as to find out how its<br>implementation will affect an organization performance. The specific is<br>to investigate the following:<br>• The relationship between Total Quality Management variables and the bank productivity.<br>• The relationship between Total Quality Management variables and the bank profitability.<br>1.4 RESEARCH QUESTIONS<br>The questions related to this work are:<br>• Does the implementation of Total Quality Management (TQM) have any effect on the performance of the bank?<br>• What kind of effect does Total Quality Management (TQM) has on the performance of the bank and<br>• To what extent does Total Quality Management (TQM) implementation affect performance?<br>1.5 HYPOTHESES OF THE STUDY<br>To identify the achievements of the desired objectives, the following hypotheses are formulated:<br>H0: Represents Null Hypotheses<br>H1: Represents Alternate Hypotheses<br>HYPOTHESES I<br>H0: Total quality management variables will have negative influence on banks productivity.<br>H1: Total quality management variables will have great influence on banks productivity.<br>HYPOTHESES II<br>H0: Total quality management variables will have negative influence on banks profitability.<br>H1: Total quality management variables will have a great influence on banks profitability.<br>1.6 SIGNIFICANCE OF THE STUDY<br>Looking at the volume of investment required to execute a formidable<br>quality instrument such as TQM in bank, one would agree that it is<br>important to be able to convince ourselves that such investment would<br>yield some gains for the bank before embarking on such a project.<br>Thus to say that this study is justified is merely repeating the obvious<br>as without a study like this it might be difficult to get the<br>support of quality advocators and sympathy of other members of the organization.<br>Apart from this management, we will also not be able to measure the<br>benefit derivable from their huge investment in implementing quality<br>programmes such as TQM. A study like TQM will therefore provide a guide<br>towards evaluating the gains of implementing a quality program both for<br>organisations who has done that and those that are still in the process.<br>In summary, the following listed points could be considered as justification for a study just as this:<br>• It provides an opportunity to critically evaluate every quality program in line of what benefit it will yield.<br>• It provides a good basis for the justification of proposed quality program for the advocators of such program.<br>• It shows vividly what organization stand to gain or lose it implementing quality programs such as TQM.<br>• Finally it exposes organization and other readers to the rudiments of Total Quality Management philosophy.<br>1.7 THE SCOPE OF THE STUDY<br>This research work covers the performance of Skye Bank Plc. in the years<br>before and after the implementation of Total Quality Management in the<br>organization.<br>It is a study designed to compare the implementation of the Total<br>Quality Management principles in Skye Bank Plc. with the performance of<br>the banks using turn over and profitability as a measurement yard-stick<br>for the banks performance.<br>1.8 LIMITATION OF THE STUDY<br>• Network interconnectivity to enhance elaborate research<br>• High level of illiteracy<br>• Organization operational huddles<br>• Time and cost constraints due to cause of scarcity in gasoline to go about the research.</p><br> <br><p></p>