Research and concepts Employee involvement and quality management

Hongyi Sun Ip Kee Hui Agnes Y.K. Tam and Jan Frick

Introduction
EI is a process designed to empower members of an organization to make decisions and to solve problems appropriate to their level in the organization (Pace, 1989). The logic of EI is that the people closest to a problem or opportunity are in the best position to make decisions for improvement if they have control of the improvement process. At the heart of TQM is the concept of intrinsic motivation-involvement in decision making. It is becoming an increasingly popular maxim of good management that human resources are the most important dimension in quality and productivity improvement (Ross, 1994). The chief executive officers of some of the most qualityconscious companies in the USA are quick to point out that the best way to achieve organizational success is by empowering and involving employees at all levels. The Chairman of General Electric has said: ``To get every worker to have a new idea every day is the route to winning in the 1990s''. A survey by HR Focus (1993) revealed that EI was rated as one of the top three concerns by 46 per cent of the 1,000 respondents. EI has also been widely studied in association with TQM and human resources management (Wood and Peccei, 1995; Cheng and Tummala, 1998; Wilkinson, 1998). In the past few years, a large amount of case evidence has shown that empowerment does produce more satisfied customers and employees. However, there has been little research done on the empirical relationship between employee involvement and quality management. This current study investigated the relationship between EI, TQM, ISO 9000 registration and the improvement of business performance.

The authors Hongyi Sun, Ip Kee Hui and Agnes Y.K. Tam are all in the Department of Manufacturing Engineering and Engineering Management, City University of Hong Kong, Hong Kong. Jan Frick is in the Department of Business Administration, Stavanger College, Norway. Keywords Employee involvement, TQM, ISO 9000, Performance Abstract This paper records the research on the investigation of the empirical relationship between employee involvement (EI) and quality management. It is based on data from a survey of 180 manufacturing companies. The main findings are: EI is positively correlated with total quality management (TQM) enablers; EI is positively correlated with improvements in business performance; EI positively influences the contribution of TQM to the improvement of business performance; EI is marginally related to ISO registration; and EI has no effect on the contribution of ISO 9000 registration. The conclusion is that EI should be incorporated into TQM and ISO 9000 registration. Implications for practice and future research are also discussed. Electronic access The research register for this journal is available at http://www.mcbup.com/research_registers/ quality.asp The current issue and full text archive of this journal is available at http://www.emerald-library.com
The TQM Magazine Volume 12 . Number 5 . 2000 . pp. 350354 # MCB University Press . ISSN 0954-478X

Literature review and research framework

Perhaps the most interesting results from the study are how EI and TQM work together to impact on organizational performance (Lawler et al., 1995). Some researchers believe that EI is associated with quality management activities such as quality circles
The authors acknowledge the financial support of Strategic Research Grant (SRG 7000948) from City University of Hong Kong.

350

Employee involvement and quality management

Hongyi Sun, Ip Kee Hui, Agnes Y.K. Tam and Jan Frick

The TQM Magazine Volume 12 . Number 5 . 2000 . 350354

and communication. According to Evans (1985) and Hogan (1992), employees participate in advisory groups to voice concerns and exchange views on quality issues. For example, two hotels use employee focus groups, called ``employee exchange communication meetings'', as a means of giving employees an opportunity to address their concerns or to provide input on upcoming issues. In the past few years, a large amount of case evidence has shown that empowerment does result in more satisfied customers and employees. For example, research has shown that job enrichment and task characteristics such as skill variety and autonomy are directly associated with higher work quality and employee satisfaction (Kopelman, 1986). Self-managing work teams typically produce positive results in terms of quality and costs (Beekun, 1990; Sundstrom et al., 1990). Similarly, gain-sharing plans result in substantial cost improvements as well as better services (Cooper et al., 1992). In addition, Partlow (1996) suggested that TQM should be supported by human resources practices such as EI. Inspired by the discussions in previous research on the relationship between EI, TQM and performance, we formulated the following three research questions: (1) Does EI have any relationship with the implementation of quality management practices such as TQM? (2) Does EI influence the improvement of business performance? (3) Does EI influence the contribution of TQM to the improvement of business performance? Very little research has been done on the relationship between ISO 9000 and EI. Velury (1996) believes that it seems logical for an organization to obtain ISO 9000 certification through EI, which has been shown to reduce the time to certification by shortening the initial learning curve. Ultimately, the initial benefits of ISO 9000 are directly proportional to the depth and breadth of EI. However, Curkovic and Handfield (1996) found that ISO 9000 registration criteria fail to measure key areas of quality management, including strategic planning, EI, quality results and customer satisfaction. These arguments lead to a further two questions: (4) Does EI have any relationship with ISO 9000 certificates?

(5) Does EI influence the contribution of ISO 9000 certificates to the improvement of business performance? The variables and their relationships in the above research questions are illustrated in a framework in Figure 1. Previous research was mainly based on case studies and in service organizations. This research will investigate the empirical relationship between EI, TQM and ISO 9000 in manufacturing companies.

Research method and empirical data

This study is based on a survey. The first version of the questionnaire was designed by Rao and Raghu-Nathan (Solis et al., 1998) at Toledo University. It covers the following criteria: quality leadership; human resources development; quality strategy; information resources; process and product; people satisfaction; customer satisfaction; social and environmental impact; and the results. EI questions were added to the survey conducted in Norway, in order to find out whether employees were given appropriate power in decision making, etc. (Sun, 1999). Twelve questions on employee involvement were asked. Other information on ISO 9000 certification was also requested. This survey was conducted in Norway with the support of the Norwegian Quality Association (NFK)

Figure 1 A framework illustrating the variables and research questions

351

Employee involvement and quality management

Hongyi Sun, Ip Kee Hui, Agnes Y.K. Tam and Jan Frick

The TQM Magazine Volume 12 . Number 5 . 2000 . 350354

and the Rogaland Research Institute in early 1997. Questionnaires were sent to all 900 NFK member companies. All the informants are quality managers in these companies. A total of 363 replies were received, a return rate of about 40 per cent. The sampled companies include manufacturing companies (180, 50 per cent), service companies (85, 23 per cent), public companies (47, 13 per cent), and other types of organizations such as research institutes and foundations (51, 14 per cent). In this research, the 180 manufacturing companies are used. Their sizes range from less than 150 employees (51 per cent), to 150500 employees (31 per cent), to more than 500 employees (18 per cent). Reliability and validity tests (Nunnally, 1978) were conducted. Based on the tests, 14 valid TQM factors (F1-F8), two performance factors (F7 and F72) and one employee involvement factor (EI) are identified as shown in Table I. Data analysis described below are based on these factors, which have a mean of zero.

Results
Data analyses produce the following results as shown in Table I. EI and TQM (Q1) EI is positively correlated with improvement in business performance. Correlation coefficients between EI and the 12 TQM factors range from 0.2 to 0.5, all at the significant level of 0.05 and 0.01, as shown in Table I. This indicates that EI is highly related to the implementation of TQM. There are two explanations for this. One, EI will enhance the implementation of TQM programmes; and two, TQM programmes provide opportunities for employees to be involved. EI and business performance (Q2) The correlation between EI and business performance is significant. However, significant correlation was found only in the high-EI group (0.39 and 0.35). This indicates there is a learning-curve effect in EI. In other

Table I Means and correlation coefficients between participation, TQM and results Correlation coefficients High EI Low EI (47 per cent) (53 per cent) F71 F72 F71 F72 0.39** 0.35** 0.35* 0.32* 0.32* 0.30* 0.47** 0.49** 0.32*

Factors Employee involvement Leadership system Citizenship Availability and use of quality information Benchmarking Strategic management Human resources development Training Quality assurance Design control Process control Supplier co-operation Supplier selection Customer satisfaction Customer feedback External performance Internal performance ISO-EI

Code EI F11 F12 F21 F22 F3 F41 F42 F51 F52 F53 F61 F62 F81 F82 F71 F72

Means 2.74 3.51 4.17 3.32 3.07 3.28 3.02 2.57 3.97 4.02 3.62 3.39 2.96 3.86 3.62

EI 1.00 0.50** 0.27** 0.41** 0.35** 0.61** 0.65** 0.46** 0.20* 0.22* 0.40** 0.37** 0.37** 0.29** 0.29**

0.45*

0.43*

0.36* 0.32* 0.31* 0.50**

ISO Non-ISO T-value Significant

0.15 0.22 4.48 0.04

0.11 0.26 0.24 0.63

0.02 0.30 0.83 0.37

0.37 0.13 0.60 0.44

0.36 0.09 2.11 0.15

Notes: * Correlation is significant at the 0.05 level (2-tailed) ** Correlation is significant at the 0.01 level (2-tailed)

352

Employee involvement and quality management

Hongyi Sun, Ip Kee Hui, Agnes Y.K. Tam and Jan Frick

The TQM Magazine Volume 12 . Number 5 . 2000 . 350354

words, it takes time for the benefits to be obvious. EI and the contribution of TQM (Q3) For this question, the sample was divided into two groups by the mean of the degree of employee involvement, i.e. high-EI and lowEI. In the high-EI group, the correlation (0.31 and 0.50) between EI and performance improvement is at the significant level of 0.01. However, in the low-EI group, only two significant correlation coefficients are noted. It is concluded, therefore, that EI positively influences the contribution of TQM. In other words, TQM programmes accompanied by EI tend to be more successful. EI and ISO certificates (Q4) The degree of EI is slightly different between those companies with and without ISO 9000 certificates. The test of the difference is at the level of 0.04, which indicates that there is some positive relationship between ISO 9000 certification and EI. However, based on the data in this research, it is still impossible to determine which influences which. Juran and Gryna (1988) believe that without EI, the future of quality management and ISO 9000 certificates will be gloomy. However, the current version of ISO 9000 does not cover several key issues, such as quality goals in the business plan, quality improvement at a revolutionary rate, training in managing for quality, and participation by the work force. It is to be hoped that these issues will be addressed in a future version of ISO 9000 standards. EI and the contribution of ISO certificates (Q5) In either high- and low-EI there is no significant difference in performance improvement between companies with and without ISO 9000 certificates. This indicates that EI has no effect on the contribution of ISO 9000 certificates to performance improvement. However, this may be because EI and ISO 9000 have not been wellincorporated (cf. ``EI and ISO certificates'').

Discussions and implications

This research revealed that EI is positively related to various aspects of quality management and should be emphasized in

quality management programmes. The results suggest that instead of implementing TQM and EI as separate programmes, they should be implemented in combination. However, the ``means'' column in Table I indicates that the average implementation of EI is very low compared with other quality management practices. Companies are therefore recommended to pay more attention to EI and to incorporate it with TQM. In order to participate in the business, employees at all levels must have power, information, knowledge and rewards (Lawler et al., 1995), all of which should be incorporated in quality management programmes. EI must, however, be implemented within certain strategic contexts. It is meaningful only after a strategic concept has been established and communicated to all employees. Employees need to share strategic information to direct their efforts at the operational level. It is the responsibility of top management to evaluate customer value and determine the company's goals and the task of middle management to turn the goals into operations tasks. EI is a process for empowering members of an organization to make decisions and to solve problems appropriate to their levels in the organization (Pace, 1989). To participate effectively, employees must be given more responsibility. This requires the delegation of certain decision making and administrative powers to employees at various levels. Without the necessary power, EI cannot be utilized for making continuous improvements and will be limited to just making suggestions. Increased involvement means more responsibility, which in turn requires a higher level of skills. Training should be provided to allow employees to attain higher skills and should include training in both techniques, such as statistical methods, and managerial skills in decision making, leadership, team building, etc. Training is the essential part of all quality programmes and it is relatively easy to incorporate knowledge development with TQM programmes. Companies which implemented quality management programmes must recognize and reward quality improvement and better customer service. The reward system should provide incentives to motivate employees to participate further. Performance-based, individual and group-based payment systems, business interests sharing, and gain-sharing

353

Employee involvement and quality management

Hongyi Sun, Ip Kee Hui, Agnes Y.K. Tam and Jan Frick

The TQM Magazine Volume 12 . Number 5 . 2000 . 350354

Figure 2 A managerial framework for employee involvement

programmes, etc., are commonly used incentive-based reward systems in successful companies. EI takes various forms, such as work teams, job enrichment/rotation, quality circles, task forces and labour-management action (Bounds et al., 1994). However, quality circles are the most common, with many successful instances being reported. It is suggested that companies use quality circles as the first step in implementing EI. Finally, management must hold a new management philosophy and new attitude towards employees. To implement EI, management should hold the assumption that employees are willing to contribute and be able to contribute. The above implications are summarised in a framework as shown in Figure 2.

Conclusions
The research reported in this paper revealed that EI contribute to various aspects of quality management. The result supports the proposition that EI is a prerequisite for TQM and other quality management programmes. To implement EI, management needs to hold a new management philosophy and new attitude towards employees and employees should be provided with the necessary authority, information, skills, and reward.

References
Beekun, R.I. (1990), ``Assessing the effectiveness of sociotechnical interventions: anitdore or fad?'', Human Relations, Vol. 42, pp. 887-97. Bounds, G., Yorks, L., Adams, M. and Ranney, G. (1994), Beyond Total Quality Management: Towards the Emerging Paradigm, McGraw-Hill, New York, NY.

Cheng, S.P. and Tummala, V.M.R. (1998), ``An employee involvement strategy for ISO 9000 registration and maintenance: a case study for Hong Kong and China companies'', International Journal of Quality & Reliability Management, Vol. 15 No. 8, pp. 860-91. Cooper, C., Dyck, B. and Frohlich, N. (1992), ``Improving the effectiveness of gainsharing: the role of fairness and participation'', Administrative Science Quarterly, Vol. 376, pp. 471-90. Curkovic, S. and Handfield, R. (1996), ``Use of ISO 9000 and Baldrige Award criteria in supplier quality evaluation'', International Journal of Purchasing and Materials Management, Vol. 32 No. 2, pp. 2-12. Evans, M.R. (1985), ``Opyland Hotel: managing Nashville's complete destination'', Cornell Hotel and Restaurant Administration Quarterly, Vol. 25 No. 4, pp. 44-55. Hogan, J.J. (1992), ``Turnover and what to do about it'', Cornell Hotel and Restaurant Administration Quarterly, Vol. 33 No. 1, pp. 40-45. HR Focus (1993), January, pp. 1-4. Juran, J.M. and Gryna, F.M. (1988), Juran's Quality Control Handbook, McGraw-Hill Book Company, New York, NY. Kopelman, R.E. (1986), Managing Productivity in Organizations, McGraw-Hill, New York, NY. Lawler, E.E., Mohrman, S.A. and Ledford, E. (Ed.) (1995), Creating High Performance Organizations: Practices and Results of Employee Involvement and Total Quality Management in Fortune 1000 Companies, Jossey-Bass, San Francisco, CA. Nunnally, J.C. (1978), Psychometric Theory, McGraw-Hill, New York, NY. Pace, L.A. (1989), ``Motivation towards system integration'', Survey of Business, Vol. 25 No. 1, pp. 57-41. Partlow, C.C. (1996), ``Human-resources practices of TQM hotels'', Cornell Hotel and Restaurant Administration Quarterly, Vol. 37 No. 5, pp. 67-79. Ross, J.E. (1994), Total Quality Management, Text, Cases and Readings, Kogan Page, London. Solis, L.E.S., Rao, S., Raghu-Nathan, T.S., Chen, C. and Pan, S. (1998), ``Quality management practices and quality results: a comparison of manufacturing and service sectors in Taiwan'', Managing Service Quality, Vol. 8 No. 1, pp. 46-54. Sun, H. (1999), ``An empirical study of TQM in Norway'', Total Quality Management, Vol. 10 No. 6, pp. 901-14. Sundstrom, E., DeMeuse, K.P. and Futell, D. (1990), ``Work teams'', American Psychologist, Vol. 45, pp. 120-33. Velury, J. (1996), ``ISO 900: focusing on quality systems'', Industrial Management, Vol. 38 No. 6, pp. 11-15. Wilkinson, A. (1998), ``Empowerment: theory and practice'', Personnel Review, Vol. 27 No. 1, pp. 40-56. Wood, S. and Peccei, R. (1995), ``Does total quality management make a difference to employee attitudes'', Employee Relations, Vol. 17 No. 3, pp. 52-62.

Commentary
Extensive research results on the essential area of employee involvement. 354