Quality: From Buzzword To Payoff

Rare today is the chief executive who does not profess to be an enthusiastic convert to the goal of improving quality. That's a legacy from the 1980s, when intense foreign competition and a rising perception of shoddy workmanship forced Corporate America to improve reliability, customer service, and overall product quality. Manufacturers were the first to join the "total quality management," or TQM, bandwagon, but they were soon followed by banks, telephone companies, and hospitals. Even local governments have embraced quality in an attempt to boost "customer" satisfaction with public services.

The problem is, so many private and public organizations are pursuing quality in a hidebound way--by following the dictates of their bureaucracies and management hierarchies rather than by listening to their customers. Yet the evidence is undeniable: TQM only works when a company finds out what customers really care about. Do they want on-time performance? Personal service and a little bit of hand-holding? Or just a cheaper price for a stripped-down product? The answer is not always obvious, unless companies ask customers the right questions and then painfully overhaul their operations to respond efficiently to customer demands.

Almost as distressing, in their pursuit of quality, some corporations have forgotten that quality improvements can only be justified if they eventually lead to the coin of the corporate realm--higher profits. To be sure, when TQM was first introduced, it was a welcome antidote to the bean-counter mentality that couldn't see past next quarter's earnings report. But now, the pendulum has swung back too far in the other direction. Some managements are too willing to sacrifice profits in an obsessive pursuit of the government's Baldrige Award. Enough already. Quality needs to be delivered in the most cost-effective fashion.

That's why companies such as AT&T, Nationsbank, Federal Express, and Promus, the hotel and gaming giant, are doing the right thing by taking a critical eye to their quality programs--not to eliminate them but to make quality pay. In the end, their efforts are helping to make the quality gospel an even more potent tool for improving America's global competitiveness.

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