Effects of Total Quality Management on Productivity using the profit model

INTRODUCTION
1.1 HISTORICAL BACKGROUND AND THE ORIGIN OF SKYE
BANK PLC
Banking in Nigeria took a new dimension after the
pronouncement of the former governor of the Central Bank of Nigeria
professor Charles Soludo for the need to improve the banking industry
in Nigeria thereby competing with other foreign banks, hence capital
base to 25 billion naira.
According to the governor of central bank professor Charles
Soludo, the whole idea of the increment is to give room for other small
financial institutions to strive, thereby reducing the rate of competition
amongst banks in Nigeria.
For the purpose of this study, Skye Bank PLC came together as
an entity after due diligence was carried out amongst their five banks.
• Prudent Bank
• EIB Eko International Bank
• Reliance Bank
• Bond Bank
• Cooperative Bank Ltd
Currently, the bank has a significant network spread across the
nation over 200 branches and also planning to spread across West
African countries, turn up before the end of 2007, it major of business
is centered round services, hence service delivery is term of Skye Bank
or the hallmark as it term.
As a new generation bank, Skye Bank Plc is online real that is to
say every customer can access his/her account from any of location
whether it is savings or current account. It is worthy to know that the
bank is highly aggressive in expanding its numerous clientele world,
that is to say that the satisfaction derived by the customers is a key.
As a strategy to preposition the industry in order to offer high
quality products, CBN embarked upon a process of scrutinizing products
offered by banks.
Quality management of products in a post consolidation era
been brought to front banner. In order to contribute to this debate,
TQM (total quality management) as a policy for assessing and
regulating service delivery process became a very important instrument
in this regard.
At the heart of the survival of any bank the satisfaction of the
clients is most important, the clients/customers are only satisfied when
their demands are being met at the right cost and to the right quality.
Ironically, it only when the customers are satisfied that the bank in
question can be seen as performing it as a new generation bank.
One particular approach to improve organizational performance
and effectiveness is the concept of the Japanese-inspired Total Quality
Management. This is a set of management practices throughout the
organization, geared to ensure the organization consistently meets or
exceeds customer requirements. TQM places strong focus on process
measurement.
The successful organization should as a matter of policy be
constantly seeking opportunities to improve the quality of its products
or services and processes; the bank must also couple quality with a
required level of productivity. TQM represents a total system and as
such increasingly enhances quality circles as a broader means of
addressing the demand for quality.
Total Quality Management is a method by which management
and employees can become involved in the continuous improvements
of their products and services. It is a combination of quality and
management tools aimed at increasing profit and reducing losses due
to wasteful practice.
This research work stems from the need to evaluate the cost of
quality vis-à-vis its benefits in terms of increased productivity of any
organization, a lot of banks pay lip service to quality simply because
they do not realize the benefit such investment of time, effort and
money will bring to their banking system other are skeptical on whether
or not there is any real benefit at all.
It was the need to clear all these and show through a detail and
systematic study of how a popular quality philosophy such as TQM will
affect the performance of Skye Bank PLC that forms that background
for the study.

1.2 STATEMENT OF THE PROBLEM
The central focus of gravity organization is customer satisfaction
and improved performance. Quality focus seeks to institutionalize
planned and continuous improvement so as to ensure that quality is the
outcome of all activities that takes place within an organization; that all
functions and all employees have to participate in the improvement
process; that organization need both quality culture and management
effectiveness of this approach in making small but steady
improvements. But users and critics of Total Quality Management
universally agree that that approach takes too long to do, many
abandon the approach with frustration because it takes too long.
If we were to break a Total Quality Management efforts into its
components, it takes more time, very little go into problem solving.
Perhaps, we should spend more time on identifying the right
problem. After all, solving the wrong problem is a complete waste of
time, in this section we shall strictly discuss the basic problems
encountered in TQM implementation which was addressed by this
research work.
One nagging and ever present problem with Total Quality
Management is meetings and more meetings; lots of time goes into
meetings. Thus anything that will make meetings effective will reduce
the amount of time spent on the Total Quality Management and then
makes it worth the while.
Another problem with Total Quality Management
implementation is the fact that a great deal of time is spent on charting
a process. Steam members debate how the current process works. In
essence, by describing the process, teams set the stage for how the
process could be changed. Description of the process creates the mind
set and frame within which solutions would be sought.
Discovering ways to radically reduce the time it takes to do a
process charts will go a long way in helping to solve the problem.
Still another problem is that and effort is spent in data
collection, once an improvement is made we need to collect data to
verify that indeed real improvement have been made. This phase takes
considerable amount of time, as designed surveys distributed, retrieved
and analyzed, several months to a few years may be spent on data
collection. Again effort need to be put on strategies to reduce the
amount of time and effort spent on this area.

1.3 OBJECTIVES OF THE STUDY
The broad objectives of this research work are to take a critical
look at the principle of Total Quality Management so as to find out how
its implementation will affect an organization performance. The specific
is to investigate the following:
• The relationship between Total Quality Management variables and
the bank productivity.
• The relationship between Total Quality Management variables
and the bank profitability.

1.4 RESEARCH QUESTIONS
The questions related to this work are:
• Does the implementation of Total Quality Management (TQM)
have any effect on the performance of the bank?
• What kind of effect does Total Quality Management (TQM) has
on the performance of the bank and
• To what extent does Total Quality Management (TQM)
implementation affect performance?

1.5 HYPOTHESES OF THE STUDY
To identify the achievements of the desired objectives, the
following hypotheses are formulated:
H0: Represents Null Hypotheses
H1: Represents Alternate Hypotheses
HYPOTHESES I
H0: Total quality management variables will have negative influence on
banks productivity.
H1: Total quality management variables will have great influence on
banks productivity.
HYPOTHESES II
H0: Total quality management variables will have negative influence on
banks profitability.
H1: Total quality management variables will have a great influence on
banks profitability.

1.6 SIGNIFICANCE OF THE STUDY
Looking at the volume of investment required to execute a
formidable quality instrument such as TQM in bank, one would agree
that it is important to be able to convince ourselves that such
investment would yield some gains for the bank before embarking on
such a project.
Thus to say that this study is justified is merely repeating the
obvious as without a study like this it might be difficult to get the
support of quality advocators and sympathy of other members of the
organization.
Apart from this management, we will also not be able to
measure the benefit derivable from their huge investment in
implementing quality programmes such as TQM. A study like TQM will
therefore provide a guide towards evaluating the gains of implementing
a quality program both for organisations who has done that and those
that are still in the process.
In summary, the following listed points could be considered as
justification for a study just as this:
• It provides an opportunity to critically evaluate every quality
program in line of what benefit it will yield.
• It provides a good basis for the justification of proposed quality
program for the advocators of such program.
• It shows vividly what organization stand to gain or lose it
implementing quality programs such as TQM.
• Finally it exposes organization and other readers to the rudiments
of Total Quality Management philosophy.

1.7 THE SCOPE OF THE STUDY
This research work covers the performance of Skye Bank Plc.
in the years before and after the implementation of Total Quality
Management in the organization.
It is a study designed to compare the implementation of the
Total Quality Management principles in Skye Bank Plc. with the
performance of the banks using turn over and profitability as a
measurement yard-stick for the banks performance.

1.8 LIMITATION OF THE STUDY
• Network interconnectivity to enhance elaborate research
• High level of illiteracy
• Organization operational huddles
• Time and cost constraints due to cause of scarcity in gasoline to
go about the research.