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A change process for adapting organizations

A change process for adapting organizations
to a total quality management strategy
Division of Quality Technology and Statistics, Luled University, S-95187 Luled, Sweden
Abstract The structure of the organization is often a major obstacle for organizations that want
to adopt a total quality managemeni (TQM) strategy. A process-oriented organization is more
suitable for a TQM strategy than a function-oriented organization. Modem methods for improvements, such as QFD, process management, policy deployment and benchmarking, can help organizations to adapt to a process orientation.
Organizational aspects of quality
As early as in the 1940s, Joseph Juran pointed out that the technical aspects of quality control
had been thoroughly discussed, but companies still did not know how to achieve and handle
quality. Juran had, according to Oakland (1989), identified a number of problems, such as:
• organization;
• communication;
• coordination between functions.
These three problems are all organizational aspects on work related to quality. Total quality
management (TQM) is a strategy that, if used in a correct manner, has proved to help
organizations solve these organizational problems.
A TQM strategy
Bergman and Klefsjo (1994) claim that, based on top management commitment, a successful
TQM strategy in an customer focused-organization must contain some basic elements. These
• base decisions on facts;
• improve continuously;
• focus on processes;
• let everybody be committed.
These main elements are briefly discussed below.
Top management commitment. It is not enough to have the involvement of top management in quality efforts. The management also has to show, in actions, that quality is
*To whom correspondence should be addressed.
0954-4 i 27/95/020187-11 ij 1995 Journals Oxford Ltd
important. The management is responsible for implementing and maintaining a quality
awareness in the organization, and ensuring that this awareness corresponds to the objectives
and goals of the organization, for instance in a quality policy. To be able to fulfil these
obligations, the structure ofthe organization has to support and facilitate the management in
its work.
Base decisions on fads. As customer demands and expectations constantly change, it is
imponant to base all decisions in an organization on facts, information from customers is as
imponant as information from managers. As today’s products, both goods and services, are
becoming more and more complex, the imponance of adapting to horizontal communication
in organizations will increase, to ensure that everyone in the organization can base decisions
on facts.
Improve continuously. The rapid development of business society emphaEises the importance
of continuous improvements to keep a competitive position. Furthermore, it is always
possible to achieve better quality at a reduced cost by continuously developing new methods
and tools and learning from earlier mistakes. Thus, devotion and a capacity to change in an
organization is necessary in the future.
Focus on processes. Almost all activities in an organization can be regarded as processes. The
objective for these processes is to produce goods and services that will satisfy the customers,
using the smallest possible amoimt of resources. To get more and increasingly satisfied
internal and external customers, it is imponant that the processes are maintained and
improved to satisfy and preferably to exceed the expectations ofthe customers.
Ensure that everyone is committed. It is important to allow all members of an organization to
be involved in a quality effort. Everyone is responsible for some process in an organization
and everyone is responsible for constantly improving this process. If every member is to be
involved and feel committed to quality improvements, it is necessary for the members to have
possibilities, responsibility and authority, and also suppon from the management for this.
In this example of a TQM strategy, the organizational aspects of quality can clearly be
seen. But is there still a problem with these aspects, as Juran’s statement implies? Powers
(1993) shows in a survey that companies identify problems with organizational structure as
an obstacle to world-class quality. Organizational aspects of quality are still a problem in
many organizations.
What is an organization?
The idea behind every organized activity is that the total activities of people will achieve
common goals using fewer resources, i.e. cooperation will lead to better effectiveness. The
strength and effectiveness of people working together in an organization is far greater than the
sum of the individual activities.
According to Shein (1988), some basic requirements have to be fulfilled to organize
activities. These basic requirements are:
• division of labour and specialization of the activities;
• coordination and control of the activities in the organization;
• all members of the organization have visible and common goals for their activities;
the organization has an integrative function ensuring that all elements are working
towards the common goal.
Organizational structure
Division of labour and specialization requires cooperation. An organization does not become
effective until labour has been divided in some sort of specialization. But this specialization
requires cooperation, coordination and control. Coordination and control are certainly
important tasks for management, but the most important task for modem management is to
support and facilitate the achievement of the common goals of the organization. To be able
to support and facilitate, it is important for management to understand bow work is affected
by the structure of the organization, and wbat kind of methods tbe organization uses to
achieve the common goals. According to Kennerfalk (1993), tbe division of labour, responsibility and authority and the coordination of activities describe the structure of an organization.
Different descriptions of the organizational structure
Wben an organizational structure is described, different types of structures are often mentioned.
Hierarchic versus flat structure. Wbetber tbe organizational structure is bierarcbic or flat is
dependent on tbe degree of decentralization and tbe levels of decision ofthe structure. In a
hierarchic structure tbere are more levels of decision than in a flat structure. Tbe number of
levels of decision will of course depend on the size of tbe organization. A large organization
might need more levels of decision than a small organization does, but not necessarily so.
Bureaucratic versus organic structure. Structures can also be described by referring to bow
tbey react to cbanges in tbe surrounding worid. According to Shein (1988) the reaction of tbe
organization in a bureaucratic structure will be predetermined and predictable, even standardized. In an organic structure, tbe actions of tbe organization lack standardization. An
organic structure is tbus more flexible in its reactions to cbanges in tbe surrounding world
tban a bureaucratic structure.
Formal versus informal structure. Tbe formal structure is often visualized in a organizational
chart. Tbese charts are often hierarchic matrices where eacb box represents a function in the
organization and tbe lines between the boxes represent bow responsibility and authority are
Tbe informal structure can only be found in tbe minds of tbe members of tbe organization. It is tbeir picture of bow labour, responsibility and autbority are divided and coordinated. Tbus, tbe informal structure will be a part of tbe organizational culture. Tbe
organizational culture can be defined as the total of tbe collective and shared thoughts,
attitudes and actions of tbe members of tbe organization (see Sbein, 1988). In an ideal
situation tbe formal and the infonna! structures coincide. If tbat is not tbe case, members of
the organization will probably act according to tbe informal structure ratber tban tbe formal.
Function oriented Process oriented
Short-term thinking
Narrow competence
Broad competence
Adopted to customer
Figure 1. Differences between function-oriented organizations and pracess-onented organizations.
Differences between function-oriented and process-oriented structures
Tbe differences between organizations witb process-oriented structures and organizations
with function-oriented structures can be summarized as in Fig. 1. The differences concern
extremes regarding tbe two types of organization. Tbese extremes probably do not exist.
Most organizations are somewbere between tbe extremes, and some organizations migbt be
closer to eitber of tbe extremes. Tbe differences between function- and process-oriented
organizations are further explored below.
Division of labour, responsibility and authority
The primary difference in bow division of labour, responsibility and authority is done in
function-oriented and process-oriented organizations is in tbe unit grouping.
Traditionally, labour bas been divided into units with responsibility for a common
function. As Melan (1993) explains, management has, for some time, divided labour on a
functional basis by skill, speciality or work activity. Grouping by function enables resources
to be pooled among different work activities in tbe organization, and allows and promotes
specialization as well as efficient management of similarly skilled personnel. Tbe responsibility of tbe unit is to manage tbe result of tbe unit in tbe best possible way. Tbis often leads
to sub-optimization for tbe total organization. Tbe goals for tbe results of one unit do not
correspond to tbe common goals for tbe organization. The autbority is often connected to
one or a few persons in tbe unit. Tbese persons are often the only ones in tbe unit witb a
complete view of the unit’s role witbin tbe organization.
Many of today’s successful companies divide labour into units formed along processes
instead of functions. According to Meian (1993), this type of organization avoids some
weaknesses that exist in the function-oriented organization. Tbose weaknesses include an
empbasis on nurturing and sustaining skill specialities, which often detracts attention from
tbe basic obiective of tbe function, namely work output. Management and workers witbin the
function tend to focus on tbeir own means ratber than the broader ends of tbe organization.
Tbe responsibility for tbe unit is to satisfy tbe customers of tbe process, using the least
possible amount of resources. This leads to a more comprehensive view on goals if tbe overall
goal of tbe organization is total customer satisfaction. Tbe authority is deployed witbin tbe
unit, to facilitate and support cbanges and improvements in tbe process.
Coordinating mechanisms
Coordination of tbe activities of people in an organization is vital to achieving the common
and overall obiectives of tbe organization. Coordinating mecbanisms tbat can be used depend
on bow responsibility and autbority are deployed witbin tbe organization. If responsibility and
autbority are centralized to a few people in the organization, as is often tbe case in a
function-oriented organization, tbe coordination is often carried out tbrougb direct supervision or standardization of the output. The supervisor tells tbe members of tbe unit wbat
sbould be done or wbat result is expected, and tbus coordinates tbe activities of the people.
As tbe degree of deployment of responsibility and autbority increases as tbe organization
becomes more and more process-oriented, coordination tends to be carried out tbrougb
standardization of skills (inputs) or tbrougb standardization of the work process itself. In a
totally process-oriented organization, coordination is done tbrougb communication between
tbe members and different parts of tbe organization. Tbis is called coordination through
mutual adjustment.
Organizational focus
In a function-oriented organization tbe focus is on results. Tbe overall result is seen as being
maximized tbrougb maximization of tbe results of all tbe unit’s results. Hence, the focus of
eacb unit is on the result of tbat unit. This does not support cooperation and teamwork. This
migbt also lead to units bolding information back from otber units, to maximize tbeir own
result, and thus destroying all possibility of basing decisions on facts.
In a process-oriented organization tbe process, and the satisfaction of tbe process’s
customers, is tbe main focus. Tbis focus supports communication, botb cross-functional
communication and communication along processes, to fmd out about customer requirements and also to inform suppliers of tbe process’s own requirements. In fact, it makes
communication a vital part ofthe organization. The focus is also on continuous improvement
of eacb process to satisfy tbe customer even more tomorrow.
If the formal structure does not work in an organization, tbis does not necessarily mean tbat
the organization does not work. An informal structure develops in tbe organization and
makes it work, but less efficiently. Tbis working structure becomes a part of tbe culture of tbe
organization, no matter wbetber it is a formal or informal structure. Tbis is one reason wby
tbe organizational structure is difficult to cbange.
Tbe culture of a function-oriented organization is dominated by tbe belief tbat change
is a threat to tbe organization. All members or units of tbe organization want to keep status
quo. Information is not sbared between units in tbe organization. In a process-oriented
organization, bowever, tbe culture is dominated by tbe belief tbat cbange is something tbe
organization needs, and that cbange provides an opportunity to acbieve the common goals
more efficiently. All members of tbe organization constantly look for opportunities to improve
the performance of the processes. Information is sbared within tbe organization, and also
between organizations, to improve business. Tbis strengthens tbe support culture in a
process-oriented organization.
To cbange a traditionally function-oriented structure towards a process-oriented structure can be hard work. If tbe process-oriented structure is not seen as an improvement by tbe
members of tbe organization, the members will, because of tbe organizational culture, still
work as if the organization was liinction-oriented.
In a function-oriented organization, tbe information is communicated vertically within tbe
organization. Communication witb tbe customer is a business for tbe marketing and sales
departments. In tbis organization, securing power is more important tban sbaring information througb communication.
In process-oriented organizations, information is communicated mostly along processes,
borizontally witbin tbe organization. Communication witb customers permeates all communication witbin tbe organization. In this organization, communication is tbe primary goal
and securing power is a secondary goal.
Continuous improvement
In function-oriented organizations, continuous improvements are virtually impossible, because ofthe fear of cbange. Improvements by employees can be seen as an attempt to break
the power of managers.
Process-oriented organizations look for cbanges, and as tbe focus is on processes, tbe
cbanges are aimed at improving tbe processes. Tbis improvement work goes on continuously,
as the organizational culture supports tbis kind of activity. Tbe communication between
processes and between organizations facilitates exchange of information to improve business.
Organizing for a TQM strategy
Tbe above discussion implies tbat an organization fit for a TQM strategy sbould be
process-oriented. If management decides to adopt a TQM strategy in tbe organization,
appropriate cbanges bave to be made in tbe organization to benefit tbe most from this
Methods for improvements
Examples of metbods management can use for implementing a TQM strategy are quality
function deployment (QFD), process management, policy deployment and bencbmarking.
Wben a modem and proactive awareness of quality is to be implemented in an organization
it is important tbat management has an understanding of connections between different
metbods in a quality effort and bow tbese metbods are affected by the structure of the
Quality Junction deployment
QFD is, according to Akao {1990), defined as follows:
Quality function deployment provides specific methods for ensuring quality
throughout each stage of the product development process, starting with design. In
other words, this is a method for developing a design quality aimed at satisfying the
consumer and then translating the consumers’ demands into design targets and
major quality assurance points to be used throughout the production stage.
QFD is a tool used to manage and control the product development process. To be able to
work with QFD it is not necessary to work with process management, but it will be easier to
benefit from QFD if the organization has a process-oriented approach. QFD teams though,
are often formed for specific projects. This allows for only a small pan of continuous
improvement, as the people involved in the process change with each project.
Process management
According to Harrington (1991), the objectives of process management are to make processes
more effective, more efficient and more adaptable. The main processes that have to be
managed are the business processes. The business processes are those processes that cut
horizontally through the organization and whose fmal result provides the organization with its
profit. According to Melan (1993), the basic elements of process management are:
organize for improvement;
identify the process;
control the process;
improve the process.
Policy deployment
Policy deployment, according to Akao (1991), provides management with an opportunity for
consensus dialogue about significant system change. Akao (1991) explains policy deployment
as the means by which both the overall control system and TQM are deployed. The ultimate
purpose of implementing policy deployment is to create company-wide quality assurance,
which is based on the philosophy that quality is supreme and which takes a market-in
(customer-oriented) approach.
Benchmarking is, according to Bergman and Klefsjo (1994), a way of finding opportunities
for process improvements. The basic idea is to make a careful comparison of a process ofthe
company with the same or a similar process at another company or another division of one’s
own company and benefit from the comparison. To be able to benefit from benchmarking,
the organization has to be process-oriented. Responsibility for process improvements and
authority to make these improvements have to be divided within the organization. The
structure in an organization must support processes and improvements in processes rather
than functions and the result of the functions.
Changes in two dimensions
Changes are rapid in today’s world. Markets are opened and closed, new technologies for
both products and production are developed and more and more organizations want to
compete on the market. Thus, organizations that want to be competitive have to react quicker
and be more flexible. They have continuously to listen to and anticipate the customer’s needs
and expectations and be able quickly to adapt to these new needs and expectations in terms
of new products and processes.
The change from a function-oriented organization to a process-oriented has to start with
a change in the culture of the organization. Because the informal structure is a pan of the
organizational culture, it will be difficult to change the formal structure without changing the
Changes in culture
The greatest change in culture will be the change in management style. This has to be a
change in the behaviour ofthe managers and a change in their attitudes to other members of
the organization, suppliers and customers. The manager has to change from a ‘hero’ to a
‘coach’. The hero is a manager who knows everything and does everything. The hero plans,
solves problems and forms objectives. This behaviour leads to the alienation of the leader
from the team. The coach, however, knows what everyone in the team can do and wants to
do. The coach supports the members ofthe team, who themselves plan, solve problems and
form objectives. The coach becomes a part of the team. The view of an employee has to
change from that of a resource, where only one desired quality is used to achieve the
objectives ofthe organization, towards a comprehensive view ofthe employee, where all skills
and knowledge are used.
Saraph and Sebastian (t993) give an example of a quality culture with four dimensions:
management values, employee values, supplier-related values and customer-related values.
This culture is consistent with the philosophy of Deming (1986).
Changes in structure
The change in culture helps the organization change its structure. The cultural change will
work as a lever. As the culture is changed from individualistic to team-thinking, the
function-oriented structure will change towards a more process-oriented structure. The
number of decision levels will decrease and the structure will be flatter. Focus will be more
on work flows and processes than on departments and functions, and the importance of
horizontal communication will increase.
Facilitating change
To speed up the change process, organizations can use modem methods of management.
Examples of such methods are QFD, process management, policy deployment and benchmarking. To benefit the most from these methods, organizations have to be more or less
process-oriented. QFD could be used in a function-oriented organization, where the commitment to and interest in changing the structure towards a more process-oriented one exist.
Benchmarking, however, will probably not benefit much in an organization with little or no
process orientation. These methods could also be used to support and facilitate a change
process in the organization, from a function-oriented structure to a process-oriented one. In
2. Process
1. Quality
4. Benchmarking
3. Policy Deployment
Work Flow
Figure 2. The change process from afiinciion-oriented towards a process-oriented structure (after an idea by Lars-Christer
an organization with a function-oriented structure and an individualistic culture, an emphasis
on QFD can help the organization to change the culture towards a one more focused on
teamwork. The interest and commitment to make work more process-oriented increase,
because more people will be involved in the product development process.
The next step in the change might be to start working with process management in
greater parts ofthe organization. The process view is emphazised in the entire organization,
and labour, responsibility and authority is divided along processes in the organization. The
focus ofthe organization shifts from results towards improvements in processes. The internal
customer-supplier relations are also strengthened,
A focus on the common goals ofthe organization is vital to achieve efficiency. To get an
organization focused on the common goals, these goals have to be communicated and
deployed in the organization. Policy deployment is an effective tool to achieve this focus. The
coordination of activities will also tend to be accomplished more by mutual adjustment as
communication becomes a natural process within the organization.
Finally, to start the vital work on continuous improvements in business, it is possible to
use benchmarking. Focus on the improvements will be on external comparisons to improve
internal processes.
These four methods can help an organization to change from function orientation and
an individualistic culture towards process orientation and a culture of teamwork. The change
starts with a change in the culture of the organization, and goes on, with the help of the
cultural change, to change the structure of the organization. The change process could be
described as in Fig. 2.
Table I. Modem managemem tools and methods supporting change from a fimctian-orienred to a process-oriented structure
Division of
and authority
Customersupplier relation
Step 1:
of the work
Step 2:
of the work
Step 3;
Step 4:
Organizational structures have a fundamental impact on the efficiency of an organization. If
the members do not know what to do, and what other members are supposed to do, chaos
will arise and coordination ofthe activities will fail. The consequences of this will be that the
organization cannot achieve the common and overall objectives. The organization will lose its
ability to achieve what it was created to achieve.
Management methods can help organizations adopt process-oriented structures. Process-oriented organizations support the TQM strategy of Bergman and Klefsjo (1994),
explained above.
The change process
To facilitate the change process from a function-oriented to a process-oriented structure,
organizations can use modern methods and tools for management. The tools and methods
discussed previously are QFD, process management, policy deployment and benchmarking.
One possible change process could start with QFD. Division of labour, responsibility and
authority are still in function, but coordination is made through standardization of the work
process, in this case in the product development process. It also increases the importance of
horizontal communication. A second step could be to involve more people in processes by
using process management. This method utilizes maximum advantage ofthe functions ofthe
old organization, but puts the focus more on processes and improvements of these processes.
Horizontal communication and internal customer-supplier relationships are created. A third
step could be to start coordinating the organizational activities through mutual adjustment.
To be able to do this, policy deployment could be used to deploy and get organizational
support for the objectives. As a last step, focus on external information for continuous
improvement could lead to the use of benchmarking. Possible steps in the change process
could be described as in Table 1.
This is a theoretical model for a change process. Tlie advantages described in these
methods make it possible to say that this is a suitable model for the use of these methods to
help organizations to change their structure towards a more process-oriented one.
The order ofthe steps might be discussed. In an article by Conti (1989) the relationship
between QFD and process management is discussed. It is therefore possible to assume that
step 1 and step 2 might occur at the same time in some organizations. In Bergman and
KJefsjb (1994) the relation between process management and policy deployment is discussed.
All these discussions further emphasize that the order in which the steps in the change
process are to be taken can and must be further investigated and discussed.
The financial support from the Swedish Institute for Quality, SIQ is gratefully acknowledged.
AKAO, Y. (ed.) (1990) Quality Function Depbyment. Integrating Customer Requirements into Product Design
(Massachusetts, Productivity Press).
AKAO, Y. (ed.) (1991) Hoshin Kanri, Policy Deployment for Successful TQM (Massachusetts, Productivity Press).
BRRGMAN, B. & KI.I-:RSJO, B. (1994) Quality from Customer Needs to Customer Satisfaction (New York,
CONTI, T . (1989) Process management and quality function deployment, Quality Progress, December, pp.
DEMING, W . E. (1986) Out of the Crisis (Boston, Massachusetts Institute of Technology).
HARRINGTON, H.J. (1991) Business Process Improvement. The Breakthrough Strategy for Total Quality, Productivity, and Competitiveness (New York, McGraw-Hill).
KENNERFALK, L. (1993) Relations between organizational structure and continuous improvements. Research
Report 1993:10, Division of Quality Technology and Statistics, University of LuleS.
MELAN, E.H . (1993) Process Management. Methods for Improving Products and Service (New York, McGrawHill)
OAKLAND, J. S. (1989) Total Quality Management (Oxford, Butterworth-Heinemann).
POWERS, V. J. (1993) Quality hurdles; barriers that keep organizations from world-class, mature quality.
Continuous Journey, August/September, pp. 16-19.
SARAI’H, J.V. & SHBASTLfkN R.J. (1993) Developing a quality culture. Quality Progress, September, pp. 73-78.
SHKIN, E. H . (1988) Organizational Psychology (Englewood Cliffs, NJ, Prentice-Hall Intemational).

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