Effective Organisation and The Consultancy Process-Level 4

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Report on Issues in Financial Accounting

Introduction

Organisations that are effective stays in lengthy operations and are more profitable as compared to their rivals. There are certain traits of an effective organisation such as corporate social responsibility, clear directions, open communication, empowerment of employees and team building. One of the major element of effective organisation is that it should assure that its key operating principles, organisational structure and culture, job responsibilities are entirely integrated with its strategies and they delivers betterment in performance (Upadhaya Munir and Blount, 2014). Effectiveness in an organisation can be fostered through dimensions like optimistic leadership, strategic individual roles and organisational structures, talented workforce, effectual change management and allied and involved organisational culture. The present report is prepared on effective organisation and consultancy process considering the case study of Welsh Utilities Regular (WUR). This is a non-departmental public body made from a legislation passed in 2004 that is held accountable for regulating electricity, water, sewerage and gas industries in Wales for promoting short term as well as long term interests of patrons. It is not a policy-making government department, but it assures that water and energy utility industries are regulated and developed according to the ministerial policies that are made in its legal duties.

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The report is intended to make certain changes in performance management policy of WUR. Currently, the performance management policy provides employees an annual pay bonus about 35 percent of their present salary. This policy was expected to help in attracting and retaining top talented workers from private sector. The chosen organisation is required to attract and retain main workers who are having good knowledge and expertise for reputed gas and electricity firms. The board has asked to review the performance management approach of WUR so that when employees are given their bonus, it should develop a feeling in them that it is due to their job objectives and their performance which went above the set expectations and targets. For this purpose, Total Quality Management (TQM) has been taken into account for improving the performance management policies of WUR.

Main Body

Literature review

Concept of Total Quality Management

According to the views of Sallis, (2014) Total Quality Management is an approach of management which was propounded in 1950s and slowly it became a very famous approach since early 1980s. It describes the attitude, culture and organisation of a firm which strives for providing its consumers with those products and services which satisfies their wants and desires. This is a method through which management and staff gets engaged in the constant improvement of production of products and services. This approach is a combo of management tools and quality aiming at increase in business and decreasing losses because of inefficient policies and practices. It is a management philosophy which aims at integrating all functions of organisation such as finance, marketing, production, customers service, engineering etc. for focusing on fulfilling need of patrons and objectives of organisation as well. This approach views a firm as a combination of processes. This method tries to maintain that firms should try to constantly improve the processes by implementing skills and competencies of employees. However, Goetsch and Davis, (2014) argued that Total Quality Management can be summed-up as a management system for customer oriented organisation which engages its staff for continuous betterment. This system takes use of strategies, data and effectual communication for integrating quality discipline within culture and activities of an organisation. Several concepts are currently used in modern Quality Management Systems that is a modern form of TQM. This approach is an enhancement in the old methods of doing business. It is a proven tool which gives guarantee of survival in the cut-throat competition. Just by making changes in management actions, entire organisational culture and actions gets transformed. There are four important phases in Total Quality Management. The first stage is Planning phase in which is the most essential stage in TQM. At this step, staff is told to convey their problems and issues which should be resolved. They are told to come up with their challenges which they face during their routine jobs and examines the root cause of problem. At this stage, staff is needed to conduct some important research and gather relevant data and information that will be helpful to find out solutions for all problems. Then comes the second phase of doing. Here staff tries to bring out a solution for the problems and issues which were defined in the previous step. Strategies are designed and executed for overcoming the challenges and the effectiveness of strategies and solutions are checked. The third stage is of checking under which comparative assessment of before and after data is done for confirming the effectiveness of processes and to measure outcomes. The last phase is called as acting phase in which employees showcase their outcomes and get ready to solve other issues.

Basic elements of TQM

The successful implementation of Total Quality Management should include technical as well as people aspects which covers the whole organisation and broaden to relationship with patrons and suppliers. The basic constituents covers the gist of TQM philosophy in which first one is focus on customers. Wang Chen and Chen, (2012) stated that decision regarding organisation of resources for best serving the consumers begins with a clear-cut apprehension of wants and needs of patrons and measurement of consumer gratification. For instance, WUR is responsible in regulation of electricity, water, sewerage and gas industries for promotion of short term and long term interests of customers as well. Thus, by knowing needs and experiences of patrons regarding the services which they are getting for water supply, gas, electricity supply, sewerage system, WUR can identify the strengths and weaknesses of the services and makes changes if desired. The next important element of TQM is continuous improvement. If an organisation has a constant learning culture and problem solving culture then there are very less chances of defects and mistakes. The Toyota Production System is a universally accepted system for continuous improvement which is utilised by many distinct types of firms. There are some crucial components of this system which consists of study of process flow, collection of data and information, removing out the waste non-value-added tasks and activities and giving everybody the responsibility of quality improvement. Nevertheless, Oakland, (2014) asserted that employee involvement is an another constituent of Total Quality Management. Under a TQM environment, employees have distinct roles and responsibilities compared with a traditional organisation. They are provided accountability, training and authorization for measuring and controlling the quality of work they are producing, they work collectively for addressing the issues related to quality, they are given cross training to make them capable to do multiples tasks and develop understanding of total production process, and they are having a more intense apprehension of operating and maintaining the equipments. Employees are important for building constant betterment in an organisation. The next essential component of TQM is quality tools which is extended above the scope of this discussion, but there are seven quality tools which are taken in use by front-line managers and employees to monitor quality performance and collect data for making improvement in quality activities. These tools consists of flowcharts, checklists, scatter diagrams, Pareto analysis, histograms, fish-bone diagrams. Another essential element of TQM is product design which is a major activity for avoiding costly interior and exterior cost related to failures. Process management is one more crucial component of TQM which states that management and staff should emphasise on detailed activities in a process in which poor or good quality is made. The last but significant constituent of TQM is supplier quality. The attention on quality is on the part of supplier also, as the quality of end product is only good as quality of its detached parts and elements, irrespective of whether they come via intrinsic or extrinsic sources

Tools of Total Quality Management

When an organisation wants to initiate a Total Quality Management Program or make improvements in it, it has to take use of some common tools for quality improvement procedures. In accordance with the view of Talib Rahman and Qureshi, M.N., (2013) the purpose of Total Quality Management is to decrease the happenings of mistakes within manufacturing or service procedures. With this, firms are able to streamline and kind of modifications by updating equipments and training to staff in an effective manner. This in turn will satisfy patrons. But firms are not able to apply Total Quality Management without taking use of correct tools. The first tools is Pareto Principle which states that most of mistakes occur due to certain causes. In terms of ratio, 80 percent of problems are related to 20 percent of causes. Thus, this tool points out that 20 percent causes the problem. This principle permits managers to deal with strictness with this 20 percent which is cause of the issue that usually consists of machine or operating errors. The next tool is control charts under which data is plotted in a historical manner to see the changes in processes with the time. These charts holds a central line for average, upper and lower line which shows the upper and lower control limitation. Flow charts are also supporting in TQM as they permit management to see the flow of processes is well or not. This is done with the help of words, pictures etc. along with pointers to next data flow point. The data flow points includes problems, solutions, objectives etc. Withal, Conti, (2012) quoted that an another tools is Scatter Plots and Diagrams. Generally, scatter plot resembles like a line graph without any line. The point of data points in this is to depict in what manner one data point correlated with other data point in positive or negative manner. If data is close to create a straight line, then there is great possibility that one point is correlated with the next point. Diagrams are also used for analysing process distribution which is done through cause and effect diagrams that showcases the key cause and less causes can impact a problems. The intended impact will be that problem will get solved. But the diagram will depict the either mode. For instance, WUR can takes use of this tools when managers want to coordinate data in a positive manner and make a straight line. Check sheets and Checklists are the ultimate key TQM tools. Check sheets are the forms which collect data and permit users to analyse and interpret data easily. They are only meant for collecting single kind of data and information at one time. Therefore, they are very good for that type of which is going to repeat many times. On the other hand, checklists ate for dealing with a particular problems which allows managers of WUR to check and see whether all essential steps have been taken or not. They are same as check-sheets, they are taken in use for assisting along with the operation processes and not collecting the data. One more tool of TQM is force field analysis which is utilised for identification of driving and restricting forces happening under a selected process for understanding why that specific process functions as it does. For identifying restricting forces which should be eliminated, or driving forces which are require to be improved, for functioning at a high efficiency level. An another significant tool of Total Quality Management is histograms which are graphical representation of distribution of numeric data. This is an estimation of probability distribution of a quantitative variable which is continuous. This is a type of bar graphs. For constructing a histogram, the initial step is “bin” the range of values which means to divide the whole range of values in a serial of intervals and after that count the values which comes under every interval. Bins are generally specified as non-overlapping and sequential intervals of variable. The bins should be adjacent and should be mostly of equivalent size. If they are having equal size, a rectangle erects over the bins with a high proportion to frequency i.e. number of cases under every bin. This tool provide a rough idea of density of inherent data distribution and most of the times for estimating density : estimation of probability density function of the inherent variable.

Critically evaluating the extent to which TQM can improve organisational effectiveness

There may be a debate on the extent to which TQM tools within WUR can improve its effectiveness. This is being assumed that TMQ is helpful in highlighting the market needs. The application of TQM is universally acceptable and is supportive for organisation such as WUR in identifying and fulfilling market needs in a better manner. Bon and Mustafa, (2013) argued that it is helpful to energising innovation process. Innovations and inventions emphasise on quality of services. The innovative aspects of key or peripheral services appeals to the services users. Also the professionals find it easy to market the innovative services in a profitable manner. TQM leads to cost effectiveness which is very important for endurance of any type of organisation. Organisations should be aiming at spending their resources in a productive way. During development of services, due attention should be paid to cost-benefit analysis. Training sessions and incentive plans should be brought for making the employees more productive. However it can also be argued that implementation of total quality management system in chosen firm needs extensive training to workers and it needs them to give some time from their routine work responsibilities and roles. While the betterment does decreases lead time, removes wastage and improves productivity, the initial stages of execution of total quality management within an organisation can decrease employee output. On the other side, implementation of TQM is favoured by Madu, (2012) saying that it ensures better quality performance in each domain of activities. Adverse and non-involvement attitude and behaviour of staff are the most significant hurdle in success, growth and advancement of organisation. TQM focuses on introducing attitudinal changes and betterment in employee performance by encouraging appropriate work culture and efficacious team work. It offers fabulous chances for self development and increasing interests of workers towards their jobs. The techniques and tools of TQM are significantly assistive in knowing and understanding the competition and also in development of an effectual combating strategies. Because of the intense competition, survival of several firms is a vital issue. Total Quality Management is helpful in understanding the patrons and market as well. It gives a chance to organisation to face the competition by applying the TQM techniques. Nevertheless, the counter argument of Al-Swidi and Mahmood, (2012) is a weak point of TQM which says that total quality management needs change is thinking, attitude and ways of performing jobs by staff. If the management does not communicate the team approach of TQM is an effective manner, employees may develop fear in their minds which results in employee resistance.

If employees resists towards TQM programme, it can lessen staff morale and productivity for the organisation. Also it is an expensive approach for implementation. Execution of this technique mostly brings additional training cost, team development costs, consultancy fees, improvement cost in infrastructure and many more. This system emphasises on standardisation of tasks for ensuring consistency which discourages creativity and innovation in organisation. This also discourages new and out-of-box ideas which are likely to make improvement in productivity. This is further supported by fact stated by Herzallah Gutiérrez-Gutiérrez and Munoz Rosas, (2014) total quality management programmes remove defects and wastage that results in reduction of production cost of businesses. When teams meets for identifying and eliminating weaknesses in the business, firm enjoys decreased costs and high profitability. Team of quality management are able to eliminate mistakes and errors, decrease lead time and determine redundancy in the process of production which can importantly add in the profits that are earned by organisations. TQM showcases a fair image of services. This system facilitates service organisation in delivering consistent quality of products. Furthermore, to maintain consistency in profit producing inspires all the parties which are concerned about this. They make a favourable viewpoint regarding services firm. Patrons receives quality services, staff gets fabulous incentives and investors attains profitable returns on their investments which they made. Thus, Total Quality Management depicts a fair image of service firms amid general public that is helpful for organisation to progress slowly in the long run. TQM is also helpful in development of a sufficient system of communication. Defective and insufficient communication and inappropriate processes are an obstacle in the path of appropriate development and growth of a firm. This leads to confusions, misunderstandings, lower productivity, bad quality, copying of of efforts given by staff and lower morale. Techniques of TQM brings together the individuals of several linked sections, departments and management levels for efficacious communication and interaction.

Conclusion

The current report is prepared on effective organisation and consultancy process for which case study of Welsh Utilities Regular (WUR) is taken into account. From the above report it is concluded that to improve performance management approaches in chosen organisation, Total Quality Management will be the most suitable tool. The concept of total quality management has been discussed in the report from which it is observed that it is a way from which managers and employees gets involved in continual betterment of production of goods and services. Certain tools of TQM such as Pareto, Principle, control charts, flow charts, scatter plots and diagrams, check sheets and Checklists, force field analysis and histograms are being determined in the report which are significantly supporting the cited organisation. It is to be summed up that these tools have proved effective for making improvement in performance and effectiveness of quoted organisation. Then a critical assessment of degree to which TQM can improve organisational effectiveness is being conducted in the report from which it is concluded that TQM system should be applied by making a balance betwixt its strengths and drawbacks by the stated firm.

References

  • Sallis, E., 2014. Total quality management in education. Routledge.
  • Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
  • Wang, C.H., Chen, K.Y. and Chen, S.C., 2012. Total quality management, market orientation and hotel performance: The moderating effects of external environmental factors. International Journal of Hospitality Management, 31(1), pp.119-129.
  • Oakland, J.S., 2014. Total quality management and operational excellence: text with cases. Routledge.
  • Talib, F., Rahman, Z. and Qureshi, M.N., 2013. An empirical investigation of relationship between total quality management practices and quality performance in Indian service companies. International Journal of Quality & Reliability Management, 30(3), pp.280-318.
  • Conti, T., 2012. Building total quality: a guide for management. Springer Science & Business Media.
  • Bon, A.T. and Mustafa, E.M., 2013. Impact of total quality management on innovation in service organizations: Literature review and new conceptual framework. Procedia Engineering, 53, pp.516-529.
  • Madu, C. ed., 2012. Handbook of total quality management. Springer Science & Business Media.