INTERNAL CUSTOMER JOB SATISFACTION AND ROLE OF TQM PRACTICES

Far East Journal of Psychology and Business Vol. 6 No. 2 February 2012

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INTERNAL CUSTOMER JOB SATISFACTION AND ROLE OF TQM

PRACTICES

Dr. Aamir Ijaz

Institute of Quality and Technology Management

University of the Punjab, Lahore, Pakistan

Email: [email protected]

Dr. Kee, D.M.H

University of Sains Malaysia, Malaysia


S. M. Irfan

COMSATS Institute of Information Technology, Lahore, Pakistan


ABSTRACT

In Pakistan, industry both in manufacturing and industrial sector is facing a number of internal as

well as external challenges to sustain and maintain their survival. Quality is the only way that

enables them to face these challenges by utilizing the available talent to gain the competitive

edge. This study aims to investigate the relationship between total quality management (TQM)

practices and internal customer (employees) satisfaction at workplace. TQM focuses on

delivering quality and innovative product or services at the lowest cost first time and every time

to their external customers (directly affected by company’s products) but it cannot be achieved

without the satisfaction of internal customers’ means employees of the organization. Five most

common and basic TQM practices were selected from the available literature; Leadership role,

training and education, empowerment, reward and recognition, employees involvement and

cooperation and teamwork for this study. Only ISO implemented service and manufacturing

organizations were selected for this study. The questionnaire includes 23 items representing six

construct that includes five constructs representing TQM practices and one construct

representing internal customer satisfaction. The study sample of this study was comprised of 243

respondents working at officer, managerial and supervisor level positions. Data was analyzed

using the most advanced data analysis tools; structural equation modeling (AMOS 16.0) and

SPSS 16.0. Results of this study provide a strong relationship among TQM practices and internal

customer satisfaction.

Key words: TQM Practices, Internal Customer Satisfaction, Structure Equation Modeling, Job

Satisfaction

Paper Type: Research Paper

INTRODUCTION

During the last couple of decades, it has been explored in a number of studies that total quality

management (TQM) had benefited the organizations in improving quality of products and

services, increased market share, high sales volumes, reduced costs, increased efficiency and

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effectiveness, and improving business competitiveness (Rajagopal et al. 1995; Youssef et al.,

1996; Zhang et al., 2000; Chapman & Al-Khawaldeh, 2002). Today, TQM has been successfully

implemented in many organizations around the globe to gain sustainable advantages and since

1980’s it has become globally implemented management technique (Trappey, 1995). Quality

gurus like Deming, Juran, Crosby, Feigenbaum, Ishikawa, Tauguchi and Shingo had set the

foundation and develop guiding principles of quality management for the Japanese industry in

order to gain order to gain sustainable advantages through TQM philosophy in order to meet

customer expectations and perceptions. TQM is not limited to gain competitive advantage and

organizational effectiveness but it also helps to provide superior quality products to their

customers and increased organizational performance (Ahire et. al, 1996).

TQM is a combination of both technical “hard” side of TQM and the management system

especially focusing on employee’s management mean “soft” side of TQM (Wilkinson, 1992;

Evans and Lindsay, 1996). Technical aspect of TQM is comprised of quality tools and

techniques like QFD, FMEA, SPC etc. whereas the people factors like employee involvement,

commitment, teamwork, leadership, customer focused etc. It is evident from the literature that

several gurus in the field of TQM believed that the ‘soft’ aspects of TQM are critical for the

success of an organization (Juran, 1964; Ishikawa, 1985; Deming, 1986; Dale and Cooper, 1992;

Cruickshank, 2000) and major reasons of failure of TQM implementation in many of the

organizations is due to the reason that ‘soft’ side of TQM were not rightly addressed (Lowery et

al., 2000; Wilkinson et al., 1998; Cruickshank, 2000) .

It is also evident from the literature that, organizations focusing on ‘soft’ elements of TQM can

outperform than their competitors (Powell, 1995). Employees are considered as an asset for the

organization that helps to deliver innovative and quality product or services for them and

contribute in organizational performance. It requires effective management of people by creating

an environment that provides motivation, increased commitment and satisfaction among the

employees. Number of studies explored that there is an association between TQM practices and

HRM functions (Sinclair and Zairi, 1995; Wilkinson et al., 1998) and also there is a significant

relationship among TQM practices and job satisfaction (Guimaraes, 1996, 1997; Noorliza and

Zainal, 2000; Boselie and Wiele, 2002; Boon et al., 2005, 2007b).

In Pakistan, survival of the industry is becoming more and more critical as the local industry in

Pakistan is facing dozen of issues that are considered as a barrier for their growth which include;

energy crisis, political instability, economy crisis, heavy taxes, cheap Chinese product and worst

natural disasters during the last one decade and had put adverse effects on the local industry.

Effective implementation of TQM principles in this worst situation is the only way that provides

the local industry a road map of success. Japanese, Korean and Chinese industries are evident

that TQM guiding principles provide them a road map of success. Hundreds of organizations in

Pakistan during the last one decade both in manufacturing and service sector have successfully

implemented the ISO 9000 series standards and now quality is considered as a part of strategic

planning.

This study aims to investigate the linkage between TQM practices and employees job

satisfaction in Pakistani organizations. Studied organizations have implemented TQM practices

to some extent but majority of these organizations have implemented ISO systems in order to


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make their systems effective and efficient and it is considered to be the first step towards their

success. In TQM implemented environment, everything is documented that enables everyone to

understand their roles and responsibility for organizational objectives. Uniqueness of this study

is that no such study is conducted on this topic before. This study will help to assess the

employee’s perceptions about the effective implementation of TQM practices as an input that

leads towards employees job satisfaction as an output.

LITERATURE REVIEW

TQM has a rich history that enables the Japanese companies to gain marvelous success within a

very short span of time between 1950’s and 1980’s; Japanese industry recognized themselves by

providing high quality products at lowest cost and considered as a global leader in electronics

and automobiles. Founder of this philosophy was the Dr. Edward Deming, who first visited

Japan in 1950’s to address the Japanese and since then the success of Japanese is still continue. A

number of other countries were benefited by implemented this philosophy to achieve a landmark

for their industry, Korean industry can be a one example. Abdullah Kaid Al-Swidi, Rosli

Mahmod (2011) pointed out that studies provides evidences that TQM is a universal approach

and it has been successfully implemented in almost all types of organizations like manufacturing,

services, SME’s, higher education and public service organizations.

According to Okland (1995), TQM is an approach that enables the organizations in order to

improve their competitiveness, increased effectiveness for the whole organization. TQM can be

defined as a systematic approach consisting of guiding principles that helps the organizations to

gain excellences in business through continuous improvement in all aspects (Short and Rahim,

1995; Boon et al., 2005). TQM is both a philosophy and set of guiding principles that helps the

organizations to effectively manage all its resources and benefit to all the stake holders (Dale,

1999). According to ISO 9000, quality management is set of eight guiding principles which

include: customer focus, leadership, involvement of people, process approach, system approach,

continual improvement, factual approach to decision making and mutually beneficial supplier

relationships.

TQM practices involve; employee involvement, customer focus, teamwork, reduction of

reworks, supplier relationships and continuous improvement in all aspects (Yang, 2005).

However, number of definitions has been provided in the literature but no single definition can

cover the whole aspects of TQM (Eriksson and Hansson, 2003).

Another view point is about TQM comprised of two aspects; ‘hard’ production/ operation

oriented and ‘soft’ employee’s related elements (Wilkinson et al. 1997). ‘Soft’ side of TQM that

focuses on employees related issues become more important when it is considered in the context

of HRM (Tari and Sabater 2006) and number of studies witnessed that TQM practices are

positively related with the HRM (Wilkinson et al., 1998). Number of studies claimed that TQM

practices have a significant impact on organizational performance but it is important that it first

affect the ‘soft’ performance (employee’s satisfaction) before it affect the ‘hard’ aspect of

performance (Prajogo and Brian, 2010). Literature on TQM practices has proved empirically that

effective implementation of TQM leads organizations towards increased performance (Flynn et

al., 1994; Samson and Terziovski, 1999; Anderson and Sohal, 1999; Millen et al., 1999; Prajogo


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and Sohal, 2004) and increased job satisfaction among employees (Harber et al., 1991;

Guimaraes, 1996; Boon et al., 2007b). TQM practices are found to have a significant impact on

employee’s job satisfaction (Harber et al., 1991) and it also helps to create a healthy working

environment in the organization (Poister and Harris, 1997). Major reason of selecting the five

TQM practices namely; leadership role, training and education, reward and recognition,

employees empowerment and cooperation and teamwork for this study is that these practices are

also closely related to HRM practices and can be found in HRM and TQM literature.

Leadership Role

It has been recognized in number of studies that leadership plays a critical role in effective

implementation of TQM in the organization (Flynn et al., 1994) and leadership plays a

significant role by effectively implementation of TQM and how it drives towards organizational

performance (Zakuan et al., 1997). Leadership role at all levels in the organizations is critical in

creating a healthy working environment which motivates the employees for gaining the

sustainable advantages. Employee’s involvement is a key motivator among employees job

satisfaction as it creates an environment in the organization where employees are involved and

participate in decision making activities. More involvement of employees in their jobs helps to

increase employee’s commitment and performance (Lawler et al. 1998, O’Driscoll and Randall

1999, Rodwell et al. 1998).

Training and Education

Training and development programs help to increase employee’s knowledge and skills as well as

provide opportunities for the individual growth. It has been observed that training and a

development program increase job satisfaction and has a positive impact on employee’s job

satisfaction (Marie, 1995; Saks, 1996). Similarly, it helps to increase employee’s ability to

perform their duties and tasks assigned by the organization (Choo & Bowley, 2007).

Reward and Recognition

Reward and recognition plays a significant role in employee job satisfaction. Employees’

contributions in increasing organizational performance or any other contribution that distinguish

from others in the organization are shared within the organization like employee of the month,

cash rewards for higher sales, etc. impose positive impact on their attitude, behavior, and self

satisfaction and it also helps to increase motivation among other worker by increased

competition.

Employees Empowerment

Organizations are adopting such strategies and philosophy that enables the employees to perform

their jobs more efficiently and effectively. Employee’s empowerment is a strategy adopted by

most of the organizations, which enables the employees to make their own decision at job in

order to smooth functioning of their jobs and take responsibility of their results. Empowerment is

defined by Conger and Kanungo (1988, p-747) as: ‘a process of enhancing feelings of self

efficacy among organizational members through the identification of conditions that foster


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powerlessness, and through their removal by both formal organizational practices and informal

techniques of providing efficacy information’. It has been recognized in number of studies that

employee’s empowerment has a positive impact on employee’s attitude and behavior which

ultimately, leads towards higher job satisfaction (Silver, & Randolph, 2004).

Cooperation and Teamwork

Quality circles and the quality improvement teams are critical for the success of TQM

implementation and it also assure the employee participation from all departments in order to

resolve the quality related issues which creates motivation and satisfaction among the

employees. Teamwork in the organization provides employees cooperation among each other

and among other departments which increases self-efficacy and ultimately leads towards job

satisfaction among employees (Kirkman and Rosen 1999). Teamwork to achieve common goal

in the interest of the organization causes to increase employee’s job satisfaction and increased

performance (Griffin et al., 2001).

Job Satisfaction

Job satisfaction has been defined and measured both as a global construct and as a concept with

multiple dimensions or facets (Locke, 1969, 1976; Price, 2000). Locke (1976) defines job

satisfaction as “self-reported positive emotional state resulting from the appraisal of one’s job or

from job experiences”

Earlier studies found that employee job satisfaction and performance is a two folded concept

either job satisfaction effects performance (Vroom, 1964; Schwab and Cummings, 1970) or

performance effects job satisfaction (Vroom, 1964; Lawler and Porter, 1967). To deliver quality

product or services and to make the external customer happy is strongly depending on internal

customer satisfaction and hence the internal customer satisfaction has become an essential

ingredient for the success and growth of a company (Harter et al. 2002, Harrison et al. 2006).

External customer satisfaction cannot be achieved without the satisfaction of internal customers

(Prajogo and Brian, 2010).

From the above discussion the following Hypothesis were formed

H1: Leadership has a positive impact on employee’s performance

H2: Training and education has a positive impact on employee’s performance

H3: Employees empowerment has a positive impact on employee’s performance

H4: Rewards and recognition has a positive impact on employee’s performance

H5: Cooperation and teamwork has a positive impact on employee’s performance

H6: Employee’s performance has a positive impact on employee’s job satisfaction

STATISTICAL ANALYSIS

The target population for this study was the employees working in the manufacturing and service

organizations. However, service sector is one of the largest sectors of Pakistan economy and it

contributes about 53% of the GPD in the national economy (economic survey of Pakistan 2009).

A questionnaire was designed from the available literature based on the earlier studies conducted


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on this topic by Boon et al. (2005, 2007b) and Prajogo and Brian, (2010). The questionnaire

included 6 construct representing TQM practices and employee job satisfaction. The participants

were the employees working at managerial, officers and supervisory level. Due to limited time,

this study was conducted at local level in the 2nd

largest city of Pakistan. Personal efforts were

used to collect the data from the respondents. A total 300 questionnaire were distributed, and a

total 271 were received back from which 28 were incomplete or incorrect and were rejected.

Thus a total 243 questionnaires were considered for the analysis of our study, yielding a response

rate of 81% and considered it to acceptable level. The instrument in this study was used, a five

point Likert Scale from strongly disagrees to the strongly agrees to measure the responses. The

coding of the Likert scale was made as [1 = strongly disagree], [2 = disagree], [3 = neither agree

nor disagree], [4 = agree], [5 = strongly agree]. Table.1 and 2 shows the demographic Statistics

of sample comprised of gender and the job title of the respondents in this study.

Out of a total 243 participants of this study, male population representing 65.8% participation,

and female representing 34.2% participation of the total population.

Table – 1: Descriptive Statistics of Gender

Frequency Percent

Valid

Percent Cumulative Percent

Valid Female 83 34.2 34.2 34.2

Male 160 65.8 65.8 100.0

Total 243 100.0 100.0

Table 2 indicates the position of the participant in the organization. There were 14 participants

working at managerial position, 34 at deputy manager position and the remaining 193 are at

officer or supervisor level position. The demographic of the data were given below and

represented in table 1 and table 2. Data was entered in SPSS 16.0 for testing of our proposed

SEM model using AMOS 16.0.

Table – 2: Descriptive Statistics of Respondent Job Position

Frequency Percent Valid Percent Cumulative Percent

Valid Manager 14 5.8 5.8 5.8

Deputy Manager 36 14.8 14.8 14.8

Officers/Supervisors 193 79.4 79.4 100

Total 243 100 100

RESULTS & DISCUSSION

The variables used in the study comprised of total 23 items out of which 22 items are

representing five TQM practices as independent variables and 3 items represents employees job


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satisfaction are dependent variables. The reliability of the questionnaire was checked using

reliability coefficient Cronbach Alpha and the overall value of Cronbach Alpha was 0.93

depicting the highest level of reliability of the data. Confirmatory factor analyses were used

using maximum likelihood. Leadership role was labeled as LDRSHP and was comprised of four

items having Cronbach Alpha value 0.84. Four items were representing the leadership role and

were labeled as LRDSHP providing Cronbach Alpha value 0.84. Second construct in this study

was Training and education comprised of four items and was labeled as TRNEDU providing

Cronbach Alpha value 0.87. Third construct in this study was empowerment comprised of four

items and was labeled as EMPMNT providing Cronbach Alpha value 0.80. Fourth construct was

reward and recognition comprised of four items and was labeled as RWDRNG providing

Cronbach Alpha value 0.83. Fifth construct of this study is co-operation and teamwork and was

labeled as COPTMW providing Cronbach Alpha value 0.91 and finally, job satisfaction is coded

as JOBSAT providing Cronbach alpha value 0.89. Hence all the constructs used in this study

providing Cronbach Alpha value more than 0.70 as provided by Nunnally (1970). Table 3

provides information regarding all the variables and construct with factor loading and Cronbach

Alpha values.

Table - 3: Description of Variables used in the Study

Construct Standardized

Regression

weights

Cronbach

Alpha

Leadership Role (LDRSHP) 0.84

L1: Management commitment to customers 0.81

L2: Employee cooperation is encouraged throughout the

organization

0.74

L3: continuous improvement at all levels 0.79

L4: Create learning environment in the organization 0.73

Training and education (TRNEDU) 0.87

T1: Encourage and provide resources for training programs 0.87

T2: Quality enhancement training programs 0.84

T3: Comprehensive training programs at all levels throughout the

year

0.89

T4: Training on statistical quality tools to measure the variations 0.71

Empowerment (EMPMNT) 0.80

E1: Suggestion for improvement are discussed and implement 0.71

E2: Risky initiative for improvements are taken 0.79

E3: employees at all levels participate in brainstorming sessions 0.74

E4: Crisis handling and improvements 0.64

Rewards and recognition (RWDRGN) 0.83

R1: Performance is recognized and rewarded 0.74

R2: Team based reward system 0.62

R3: Reward system is fair and clear 0.81

R4: Employee achievements are shared and promoted 0.89

Co-operation and Team work (COPTMW) 0.91

C1: Teams to solve quality issues and other problems 0.84

C2: Share knowledge and expertise with the other employees 0.84


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C3: Quality circles are actively working in the organization 0.89

C4: promote teamwork and cooperation among each other 0.93

Employee Job satisfaction (JOBSAT) 0.89

JS1: Above efforts helps to reduce absenteeism and complaints 0.84

JS2:Motivated and create ease to perform my duties 0.89

JS3: Happy to work and continue to work in this organization 0.91

Structural equation modeling has been substantively used in most of the today’s management

research articles as a statistical tool in order to analyze the results (Zakuan et. al, 2010). They

further emphasizes that major reason of rapid adoption and use of SEM in management studies

and social science studies is that confirmatory factor analyses help the scholars to asses and

modify the theoretical models and its functions are better than multivariate techniques, factor

analysis and regression analysis. It provides a relationship between both the independent and

dependent variables (Rohani et al., 2006).

Figure - 1: Path Diagram for the proposed model

LDRSHP

L4

0.73L30.79

L2 0.74

L10.81

TRNEDU

T4

T3

T2

T1

0.710.89

0.840.87

EMPMNT

E4

E3

E2

E1

0.640.74

0.790.71

RWDRGN

R4

R3

R2

R1

0.890.81

0.620.74

COPTMW

C4

C3

C2

C1

0.730.81

0.840.84

JOBSAT

JS3

0.91

JS2

0.89

JS1

0.86

EMPPER0.79

0.86

0.9

0.81

0.89

0.92

Chi-square= 513.324, df=319, normed chi-square=1.023 p=0.000 RMSEA=0.079 CFI= 0.72 GFI= 0.79


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Estimated path diagram for the proposed TQM practices and employees satisfaction is

represented in the figure below. Rectangles represent the endogenous or exogenous observed

variables and the oval represents the related latent variables. Arrows between the rectangles and

ovals represents the relation between the observed variables and the arrow between the ovals

indicates the structural relationships among the corresponding variables. Path diagram of the

structural model is represented in the figure below and the results of this analysis provide a very

good fit by using the results from goodness-of fit indices. Values of the chi-square, degree of

freedom, p-value, Root mean squared error of approximation RMSEA, goodness of fit index for

this model (GFI), Value of the comparative fit (CFI), adjusted goodness of fit index (AGFI),

normed Fit index (NFI) provides goodness of fit of the measured model (Chau & Hu, 2001; Jun

et al., 2006; Lin & Lee, 2004).

Model fit summary of the variable studied provides that chi-square value is 514.315, degree of

freedom is 319 and the p-value is 0.000 and normed-chi square is 1.023, value of the goodness of

fit index (GFI) for this model provides an acceptable value of 0.79, comparative fit (CFI) for this

model is 0.72, root mean square error (RMSEA) for this model is calculated as 0.079. Therefore,

the above result indicates that the studied model provides a very good fit and it is represented in

the table below. From the above results it is clear that all the variables representing the construct

leadership has a direct positive impact on employee’s performance and thus validating our

hypothesis H1. Similarly, other construct representing TQM practices has a direct positive

impact on employee’s performance and thus validating the hypothesis H2, H3, H4 and

H5.Employee’s performance has a direct positive impact on employee’s job satisfaction and thus

validating the hypothesis H6.

Correlation among the variables is also stated in the table below.

Corelation Among The Latent Variables

Constructs LDRSHP TRNEDU EMPMNT RWDRNG COPTMW

LDRSHP 1 .741**

.563**

.541**

.756**

TRNEDU .741**

1 .523**

.534**

.668**

EMPMNT .563**

.523**

1 .629**

.673**

RWDRNG .541**

.534**

.629**

1 .682**

COPTMW .756**

.668**

.673**

.682**

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**. Correlation is significant at the 0.01 level (2-tailed).

Correlation among the constructs reported in above table provides the information about the

correlation among the studies variables which includes leadership role, reward and recognition,

training and education, employee’s empowerment, cooperation and teamwork. Results indicate

that there exists highest correlation among leadership role and cooperation and teamwork which

indicates 75.6% which indicates that there is strong and positive correlation among these

variables. It means that positive and effective leadership plays a significant role on developing a

cooperation and teamwork and it leads towards individual performance as well as organizational

performance. A p-value which is 0.000 at 1% level of significant among these two variables also

indicates that there is a strong correlation among these variables. However, the weakest

correlation is among training and education and empowerment which is 52.3% which is positive


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and p-values is 0.000 indicating a significant correlation among these two variables at 1%

significance level.

CONCLUSION

It is clear from our findings from the above statistical results that ‘soft’ aspects of TQM practices

have a significant and positive impact on employee’s performance and ultimately, it leads

towards employee’s job satisfaction. It means that employees satisfied with their jobs are

performing their task with more commitment and motivation that helps to reduce absenteeism

which ultimately, helps to reduce the reworks. Secondly, a satisfied employee is more committed

with their jobs as compare to other employees and it also creates loyalty with the organization

that provides basis for organizational performance. Thirdly, job satisfaction also provides

employees pleasure at their jobs and there are mentally relax and find pleasure to perform their

duties which helps to create a healthy working environment in the organization for gaining

sustainable advantages.

TQM practices are not only limited to increase employee’s job satisfaction but TQM practices

and employee’s job satisfaction linkage is considered as input to achieve organizational

performance. It is not necessary, that TQM practices are the only management approach that

helps to increase employee’s performance. However, people related TQM practices must

incorporated with HR system in the organization to gain the competitive advantage (Prajogo and

Brian, 2010). Due to limited time, this study has some limitations. This study was conducted at

local level and results of this study cannot be generalized. However, a comprehensive study can

be conducted by adding more people related TQM practices on a particular sector, which wills

helps to provide a real understanding about the TQM practices and employees job satisfaction.

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INTERNAL CUSTOMER JOB SATISFACTION AND ROLE OF TQM PRACTICES

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