Total Quality Management: An Evaluation of GlaxoSmithKlines Strategies - Case Study Example

Total Quality Management: An Evaluation of GlaxoSmithKline’s Strategies Name: Course: Tutor: Date: Introduction The twenty-first century is characterised with intense global competition where the playing field and the rules of the game have changed. In the purview of this, there is need for businesses to change the way they operate. One of the means by which firms have achieved this is total quality management (TQM). TQM is a philosophy of management that strives to make the best use of all available resources and opportunities by steady improvement (Hakes, 1991; Gatchalian, 1997). It is inarguable that there is no single path to achieving total quality within an organization. Equally, there are no inflexible rules for a company to follow to become world class. The only things that are constant are basic guidelines, which when followed lead to success. This is because all firms have their own people, cultures, and technologies. A point worthy of mention is that what may work for one organisation will not necessarily work for another. The path to total quality is long, and organisations must adhere to a number of guidelines. These are highlighted by Pekar (1995) as leadership commitment, customer focus, measurement, empowerment and involvement, communication, and recognition and awards. This paper seeks to discuss these concepts with particular focus on GlaxoSmithKline, one of the leading UK organisations, with a presence all over the globe. It will analyse how in the diagnostic stage of TQM the consideration and assessment of costs of quality (quality costing and benchmarking) can help to set up a plan for implementing TQM by highlighting the critical path taken by GlaxoSmithKline. Principles of TQM Leadership commitment The first step to achieve quality is for the management to examine how they manage. The style of leadership must be tailored to encourage input from mangers and departments. A poorly structured organisation is one whose leadership style does not allow other departments or disciplines to influence the decisions of management. These two points can be referred to as the management depicting team management or acting as silos. Team management implies that top managers act as part of the management team, and they must be well versed with their peers’ responsibilities. For instance, the quality manager must have knowledge of how manufacturing engineering, design engineering, sales, purchasing, customer service, production control and all other departments function. This calls for the participation of everyone in the company in the development and achievement of shared vision, mission, plans and in the pursuit for improvement. This means that employees must become management’s partners in meeting the ultimate goal of delighting customers. Such collaboration will require concerted effort towards the acquisition of knowledge and skills in dealing with day-to day problems and coming up with fast but low-risk decisions (Gatchalian, 1997, p. 430). The opposite of such type of leadership is the silo style of leadership, whereby mangers stand alone within the organisational structure by excluding the input from departments or managers (Pekar, 1995). Customer focus TQM is about ensuring that the customer is satisfied. Management must develop an approach that puts the customer in each decision that is made. The customer is the reason firms are in business. Devoid of customers, there would be no business operations. Hence, the organisation must focus on the customer’s needs – its operations must be customer-led, market-oriented, aimed at taking care of customers and so forth. What remains unclear is how managers can assess and monitor their organisations’ performance with reference to achieving effective and productive customer focus. Achieving real customer focus usually demands more than management edict however dignified and prestigious the managers may be. Thus, an organisation needs to evaluate how it treats its customers, assess how customers perceive its services, think of how it feels like being one of the customers, and analyse how employees believe customers should be treated (Piercy, 1995, p. 4). Measurement To achieve TQM, management should establish measurements to track progress on consumer price indices. The unit of measurement set in place should represent the indicator being analysed and should be understood by those who contribute to the improvement process for that indicator. For example, the cost of quality CPI should be measured in comparison to many key values, such as cost of manufacturing or cost of sales. The CPI can be measured in several ways, which should all relate unswervingly to customer requirements. A key feature of measurement is performance measurement, which should be aimed at establishing whether business expectations have been fulfilled at each stage of the customer-supplier chain. The overall measure should reflect what has been delivered to the end user and whether customer satisfaction, which is the ultimate goal, has been achieved (Zairi, 1994, p. 4). Empowerment and involvement TQM cannot be accomplished without proper empowerment and involvement of all parties. One of the more conscientious acts that management can perform is recognizing that their employees can make significant contributions to the success of the organisation. Management has to provide the right goods and training in order to achieve great success as per the organisation’s mission and vision. Nevertheless, this requires full participation of all employees. The importance of empowerment and involvement of all employees cannot be gainsaid. According to Gatchalian (1997, p. 430), many surveys have shown that the proportion of successes in TQM implementation is only within the range of between 20 and 35 percent of those who initiated the practice. Many reasons for failure are, in most instances, associated with the problem of sustainability and leadership purpose, non-existence of strategic communications and teamwork for improving quality, and the lack of full commitment to the TQM philosophy and practice. In turn, these are attributed to poor comprehension of the TQM policy by senior management and an overall lack of employee opportunities to relate training activities with the company vision or direction. Concisely, people empowerment is not given full attention it requires to facilitate TQM success. With the view that most organisations have not been successful in implementing TQM, it may be worthwhile to consider reviewing the processes used especially in the diagnostic stage. Communication Communication management strategies that are not fully in place could lead to failure of TQM. Quality management undoubtedly requires premeditated management of communication. The top-down communication strategy sets forth the orientation of the company in the form of a quality policy. This needs to be clearly discussed and understood by the entire company staff. In addition, bottom-up communication strategies encompass understanding customer-supplier prerequisites within the organisation. With TQM, communication becomes more than the mere information-passing process. TQM business people need timely and accurate information in order to make decisions which impact the quality of their work. They also require the support of a communication network which will allow them to communicate those decisions to others. Effective TQM communication requires people to understand what TQM is about, how it affects them, what the vision is, and what it will imply for them (Evans, Jeffries & Reynolds, 1996, p. 126). Recognition and awards According to Subburaj (2005), an organization implementing TQM should have a reward programme that should help it enable happiness amongst all the employees. It should not lead to resentment amongst employees and should not demotivate them. Thus, before venturing into the recognition programme, the management should critically appraise the final strategy for recognition awards. Subburaj (2005) argues further that it has been proved beyond doubt that recognition of the worthiest employees certainly leads not only to higher productivity and the quality of team or individual awarded, but also the entire organization. Recognition and awards is definitely part TQM, and without it, the organization will become stale. Although employees are expected to work without expectations for awards, the management should be looking forward to the achievements made and give awards appropriately. For TQM to be successful, recognition and award scheme should be one of the major inputs into an organisation’s strategies. Implementation of TQM at GlaxoSmithKline Change is never easy, and this was also the case when two firms, Glaxo Wellcome and SmithKline Beecham International merged in 2000 to form GlaxoSmithKline Pharmaceuticals. This is because of the complex nature of operations that comes with expansion of organisations. GlaxoSmithKline is a large and complex organisation. From the onset of improving its style of management, the organisation was keen to transform its operational model to reduce complexities, improve efficiency and reduce costs. The company’s restructuring programme has also been a vital catalyst for its strategy. The diagnostic stage of GlaxoSmithKline’s TQM was and is intended change the organisation’s business model, giving it the capacity to support a more diverse, growing business in the long-term. Key plans of the management process include evolving the company’s commercial model, re-shaping manufacturing, streamlining the various processes involved, and reducing working capital by cutting on research and development budgets (Young, 2009, p. 26). The aim of simplifying the company’s operating model was simplify employees’ decision-making (GlaxoSmithKline, 2010). Diagnostic stage of TQM Like all organisations striving to achieve total quality, GlaxoSmithKline took an approach with which it aimed at evaluating its current status at various instances. The organisation thus followed the six diagnostic steps as mentioned by Huxtable (1995), which are evaluating the opinion of customers, assessing employees’ standpoint about their job, assessing the business processes currently in use, assessing the cost of quality, reviewing the details about suppliers, and benchmarking of performance. These processes are phenomenal in TQM as they comprise the main elements of quality diagnosis, leading an organisation’s continuous improvement. These details are highlighted next. Customer review, cost of quality and benchmarking As previously noted, the essence of TQM is satisfying the customer. The obvious way of achieving this objective is to inquire from them. According to Huxtable (1995), most organisations usually fail to ask their customers basic questions such as whether they are meeting what the customers want, the nature of problems customers are experiencing, how such problems can be resolved, and how the organisation in question compares with others (competitors). In its review though, GlaxoSmithKline did not ignore these questions and that is why it decided to review its operational model. Many organisations assume that they know what their customers need through misplaced haughtiness or from haphazard information gained from informal contacts. Many organisations also have the attitude that they are satisfying customer requirements if they do not receive any formal complaints from consumers. But this misses the point on cost of quality. Cost of quality implies the costs that are connected with both attaining and missing the desired quality level of quality in a product or service (Wood, 2007, p. 3). It is also the cost incurred in producing a product or service according to the quality standards of the set plan. In essence, it means the costs incurred in preventing quality problems, measuring quality levels, controlling and inspecting quality levels, or failing to accomplish the desired quality levels. This last point is commonly associated with organisations that fail to determine what customers actually want. If the organisation fails to meet the quality standards, it will be a cost to the organisation because the entire project will be unsuccessful. Thus, large organisations such as GlaxoSmithKline should employ cost-benefit analysis techniques to determine whether the cost of quality is worth the benefits received. Benchmarking is another technique used to establish the cost of quality. The procedure compares previous similar activities to the current project activities in order to provide a yardstick against which to measure performance (Heldman, 2003, p. 190). For instance, GlaxoSmithKline was able to research about the effectiveness of a given drug in three years, then it can be assumed that similar research on another drug will be completed in three years or thereabout. Benchmarking also involves tracking where a company’s performance is vis-à-vis where it wants to be and where the competition is (Schneider, Wilson & Rosenback, 2010). GlaxoSmithKline’s website clearly shows where the company wants to be. Its scientists are working meticulously to find out new ways of preventing and treating illnesses. Its success relies on a vibrant research and development phenomenon that promotes inventiveness and augments the accelerated invention and advancement of new drugs. The company has had a refocus on the best science that has led to creation of an entrepreneurial environment in discovery that builds on the success of its Centre of Excellence for Drug Discovery (CEDD). In its development pipeline, GlaxoSmithKline has built a large drug portfolio. The assortment is expected to undergo changes over time as new compounds progress from delivery to development and from development to the market. Nevertheless, owing the nature of the medicine development process, many of the new compounds, especially those in initial stages of development may be terminated as they progress through development. Due to the nature of competition in the medical field, new projects in pre-clinical development and have not been disclosed and some types of projects may not have been identified. As part increasing the quality of products produced at GlaxoSmithKline, the management constantly engages in external collaborations and links with other research groups, academic institutions and biotechnology companies to help develop innovative science concepts. Given the cost constraints in the health care environment, organisations such as GlaxoSmithKline must calculate the cost of quality. Real-time evaluation of the cost of quality of services can offer information to help guide quality improvement efforts while minimising overheads. Calculating the cost of quality encompasses quantifying and comparing the prevention costs (which include the composite prevention and appraisal cost) to the failure costs (Jcaho, 2009, p. 9). Benchmarking is an important tool for achieving total quality. Using this technique, GlaxoSmithKline has been able to determine the level of its investment in community development activities (which are part of customer satisfaction strategies). In 2009, the company’s global community investment was £163 million compared with £124 million in 2008. The company maintained and increased its corporate giving levels in spite of the global economic crisis, understanding that its contributions are an important part of achieving total quality and can be critical for the success of the various initiatives in which it is involved. The company has also increased its innovativeness in that in 2009 it valued its donations using cost (that is average cost of goods) as opposed to the wholesale acquisition cost (WAC). According to the company’s website, this new way of determining the value of donations is a more accurate reflection of the true cost to the company; hence, the method has been identified as the best tool for benchmarking purposes. GlaxoSmithKline’s customer focus At GlaxoSmithKline, the move towards becoming more customer focused is being assisted by team coaches. The role of the team coach has been specially created so as to support and encourage team members to achieve their personal and team development goals. The coaches have been given thorough training in facilitation, coaching and counselling skills. GlaxoSmithKline believes that telling people they are empowered will make them empowered. This is reflected in its mission, which is to grow a diversified global business, deliver more products of value, and simplify the operating model (Cook, 2008, p. 151). From the onset, GlaxoSmithKline was cognisant of the fact that successful organisations need to introduce an empowering environment using a structured approach. Another point is that empowerment will not just simply happen overnight. Simply telling people that they have been empowered and can take additional responsibility does not imply that they will automatically do so. Empowerment thus works best where it is part of a customer service strategy where guidelines are laid down for the degree of responsibility that employees can take. This for instance touches on how far decision-making can go and the scope of the decisions made. Recognition and awards at GlaxoSmithKline GlaxoSmithKline has a reward scheme known as “TotalReward” that consists of three elements. First is total cash that includes a base salary and gratuity, and long-term incentives for managers and executives. Second is “lifestyle benefits” that includes health care, employee assistance, dental care and family support. The third component of the reward scheme is “savings choices” that includes ShareSave, pension plan and ShareReward (Armstrong, 2007, p. 442). The complete package, whose concept is based on employees having an understanding of the total value of rewards they receive and not just the individual elements, is designed to attract, retain, inspire and develop the best talent. The point of view of employees is that the TotalReward scheme gives them the opportunity to share in the organisation’s success, makes it easier to balance working life and life at home, and enables them to take care of themselves as well as their families (Armstrong, 2007, p. 442). GlaxoSmithKline’s communication strategy GlaxoSmithKline uses regular two-way communication with employees. This is based on the realisation that two way communication enhances morale and productivity and reflects the company’s values of transparency and respect for its people. According to Labovitz, Chang and Rosansky, (1993), the quality of communication often determines the ultimate success or failure of quality programmes. In addition, good communication is vital to the success of the total quality process, especially with reference to the communication directed to audiences inside the organisation (Oakland, 2003, p. 319). With apt execution, the right messages will contribute colossally to the success of the total quality process. Well-communicated information will gain widespread commitment, bind the organisation and encourage action. On the contrary, poor managed communication might lead to adverse effects. In its total quality strategy, GlaxoSmithKline aims to keep everyone well informed and involved in company activities. It supports this by providing opportunities for everyone to get feedback. The internal communications within GlaxoSmithKline include (1) face-to-face communications, for instance through town hall style meetings, lunches with the Corporate Executive Team, team meetings and conferences, (2) the GlaxoSmithKline Experience two-day induction programme for new starters in the United Kingdom and the United States, (3) use of Spirit, GlaxoSmithKline’s internal magazine that is available in print and the company’s intranet, and (4) use of the company’s global intranet, myGSK, through which it provides updates on industry and company news, as well as a wide range of information and resources for employees (GlaxoSmithKline, 2010). GlaxoSmithKline also has an email cascade system, where business leaders share information with employees, and carries out surveys that enable it to monitor employee engagement and track the impact of internal communication on general product delivery that is reflected in customer satisfaction surveys. This is an example of a case of combining the knowledge and competency of total quality managers with that of communication professionals as noted by (Labovitz, Chang & Rosansky, 1993, p. 188). GlaxoSmithKline’s empowerment and involvement strategy GlaxoSmithKline employs over 90,000 people in 114 countries across the world. Its empowerment practices include good employment policies through an inclusive and diverse workplace, robust programmes for employee development, employee communication, change management, reward recognition and safety and health. The company also pays particular attention to individual empowerment for all employees, which it defines as trusting people to perform their tasks using good judgement within a clearly defined and understood framework for responsibility. Leadership at GlaxoSmithKline As noted earlier, effective leadership is fundamental in achieving total quality. An effective leadership system creates clear values that respect the abilities and requirements of employees and other company stakeholders and sets high prospects for performance and performance improvement (Ross & Perry, p. 43). GlaxoSmithKline has recognised this and in 2009 it developed a robust strategy to identify and develop the highly skilled leadership cadre needed in place. The strategy looks at how the company can manage and invest in talented people to ensure effective succession planning and leadership. Conclusion GlaxoSmithKline’s profile shows how devotion to the principles of TQM, that is leadership commitment, customer focus, measurement, empowerment and involvement, communication, and recognition and awards can lead to effective attainment of total quality. Right from the diagnostic stage of TQM, the company has been able to avoid the many reasons of failure that are in most instances related to poor leadership, non-existence of strategic communications lack of full commitment to the TQM philosophy and practice. The case show that successful TQM demands more than just policies but an assurance that the policies put in place are thoroughly followed in implementation. Right from the start an organisation must ensure that leadership commitment, customer focus, measurement, empowerment and involvement, communication, and recognition and awards are adhered to if TQM is to be anything of a success. References Armstrong, M. (2007) A Handbook of Employee Reward Management and Practice (2nd edition), Kogan Page Publishers, London. Cook, S. (2008) Customer Care Excellence: How to Create an Effective Customer Focus (5th edition), Kogan Page Publishers, London. Evans, B., Jeffries, D. & Reynolds, P. (1996) Training for Total Quality Management (2nd edition), Kogan Page Publishers, London. Gatchalian, M. M (1997) “People empowerment: The key to TQM success,” The TQM Magazine, Vol 9 · No 6. pp. 429–433. Hakes, C. (1991) Total Quality Management: The Key To Business Improvement: A Pera International Executive Briefing, Springer, New York. Heldman, K. (2003) Project Management Jumpstart, John Wiley and Sons, New York. Huxtable, N. (1995) Small Business Total Quality, Springer, New York. Jamshed H. Khan, (2003) "Impact of total quality management on productivity", The TQM Magazine, Vol. 15 No: 6, pp.374 – 380. Jcaho (2001) Cost-Effective Performance Improvement in Behavioral Health Car, Joint Commission Resources, London. Labovitz, G., Chang, Y. S. & Rosansky, V. (1993) Making Quality Work: A Leadership Guide for the Results-Driven, John Wiley and Sons, New York. Oakland, J. S. (2003) Total Quality Management: Text with Cases (3rd edition), Butterworth-Heinemann, London. Pekar, J.P. (1995) Total Quality Management: Guiding Principles for Application, ASTM International, London. Piercy, N.F. (1995) “What do you do to get customer focus in an organization?” Marketing Intelligence & Planning, Vol. 13 No. 6, 1995, pp. 4-11. Ross, J. E. & Perry, S. (1999) Total Quality Management: Text, Cases, and Readings (3rd edition), CRC Press, New York. Schneider, J. L., Wilson, A. & Rosenbeck, J. M. (2010) “Pharmaceutical companies and sustainability: an analysis of corporate reporting” Benchmarking: An International Journal, Vol. 17 No. 3, pp. 421-434. Subburaj (2005) Total Quality Management, Tata McGraw-Hill, Delhi. Wood, D. C. (2007) The Executive Guide to Understanding and Implementing Quality Cost Programs: Reduce Operating Expenses and Increase Revenue, American Society for Quality, New York. Young, R. (2010) “Interview with Rowan Gibson,” Strategic Direction, Vol.25 No. 3, pp. 26-28. Zairi, M. (1994) Measuring Performance for Business Results, Springer, New York. Read More