MOTIVATING EMPLOYEES

Why do we need to motivate employees?

• To avoid the behavior associated with dissatisfied employees such as
tardiness theft, loafing and employee turnover.
• To attract and keep best possible talents
• To enhance employees’ performance
• To inspire Organizational Citizenship behavior (behavior on behalf of
the organisation that goes beyond normal job expectations)
• Increase competitive advantage
MOTIVATION – NOT A PERSONAL TRAIT
• Would you ever have thought that a job title might be motivating?
• Have you ever thought about to how to motivate someone?
• It’s an important topic in management and researchers have long
been interested in it.
• Many people incorrectly view motivation as a personal trait; that is,
they think some people are motivated and others aren’t.
• Individuals differ in motivational drive and their overall motivation
varies from situation to situation.
MOTIVATION
• Motivation
• It represents the forces within a person that affect
his/her direction, intensity, and persistence of
voluntary behavior
• Direction – path along which people direct their efforts
• Intensity – amount of effort allocated to a goal
• Persistence – continuing the effort for a certain amount of
time
• The processes that account for an individual’s
willingness to exert high levels of effort to reach
organizational goals, conditioned by the effort’s ability
to satisfy some individual need
• Motivation works best when individual needs are
compatible with organizational goals
Maslow’s Hierarchy of Needs

Self-
Actualization
Esteem
Social
Safety
Physiological
• Physiological needs: A person’s needs for food, drink, shelter, sex, and
other physical requirements.
• Safety needs: A person’s needs for security and protection from physical
and emotional harm, as well as assurance that physical needs will continue
to be met.
• Social needs: A person’s needs for affection, belongingness, acceptance,
and friendship.
• Esteem needs: A person’s needs for internal esteem factors such as self-
respect, autonomy, and achievement and external esteem factors such as
status, recognition, and attention.
• Self-actualization needs: A person’s needs for growth, achieving one’s
potential, and self-fulfillment; the drive to become what one is capable of
becoming.
Maslow’s Hierarchy of Needs Theory

• Needs were categorized as five levels

• Individuals must satisfy lower-order needs before they can
satisfy higher order needs
• Satisfied needs will no longer motivate
• Motivating a person depends on knowing at what level that
person is on the hierarchy
• Hierarchy of needs
• Lower-order (external): physiological, safety
• Higher-order (internal): social, esteem, self-actualization
Maslow’s Hierarchy of Needs Theory
• This theory says that most people are motivated by several needs at
the same time but the strongest source is the lowest unsatisfied
need.
• Once a lower level need is satisfied the next higher need becomes the
primary motivator.
• The bottom four are “deficiency needs” while self actualisation is a
“growth need”
• Main drawback of this theory is that it assumes that everyone has the
same heirarchy of needs
Herzberg’s Motivation-Hygiene Theory (Two
Factor)
• Job satisfaction and job dissatisfaction are created by different
factors
• Hygiene factors: extrinsic (environmental) factors that
create job dissatisfaction
• Motivators: intrinsic (psychological) factors that create job
satisfaction
• Attempted to explain why job satisfaction does not result in
increased performance
• The opposite of satisfaction is not dissatisfaction, but
rather no satisfaction
Herzberg’s Motivation-Hygiene Theory

Motivators Hygiene Factors

• Achievement • Supervision
• Recognition • Company Policy
• Work Itself • Relationship with
• Responsibility Supervisor
• Advancement • Working Conditions
• Growth • Salary
• Relationship with Peers
• Personal Life
• Relationship with
Subordinates
• Status
• Security
Extremely Satisfied Neutral Extremely Dissatisfied
 Contrasting Views of Satisfaction–
Dissatisfaction

Traditional View
Satisfied Dissatisfied

Herzberg’s View
Motivators Hygiene Factors
Satisfaction No Satisfaction No Dissatisfaction Dissatisfaction
Aspects Of Employee Involvement

• Employee Participation
• EMPLOYEE MOTIVATION
• EMPLOYEE EMPOWEREMENT
• TEAMS AND TEAM WORK
• RECOGNITION AND REWARD
• PERFORMANCE APPRAISAL

Total Quality Management – IUG – Spring 2010 12

Employee Participation

 Employee participation can be defined as the degree to which

employees in a firm engage in various quality management
activities.
 By participating in quality management activities, employees
acquire new knowledge, see the benefits of the quality
disciplines, and obtain a sense of accomplishment by solving
quality problems.
 A remarkable characteristic of employee participation is
teamwork. Breakdown barriers between departments. People in
research, design, sales, and production must work as a team
(Deming’s 9th point).
 If several knowledgeable people are brought into the decision-
making process, a number of worthwhile possibilities may be
uncovered.

Total Quality Management – IUG – Spring 2010 13

Employee Participation

 TQM implementation practice is formation of short-term problem-

solving teams (SEPG).
 Problem-solving teams work on a wide variety of tasks, ranging from
cross-functional involvement in tackling quality problems to solving
within-functional quality problems.
 TQM firms create employee suggestion systems. Production
workers should regularly participate in operational decisions such as
planning, goal setting, and monitoring of performance.
 They are encouraged to make suggestions and take a relatively high
degree of responsibility for overall performance.
 Employees should be encouraged to inform managers or
supervisors concerning conditions that need correction (e.g.,
process defects, incompetent staff and poor tools).

Total Quality Management – IUG – Spring 2010 14

EMPLOYEE MOTIVATION
At the heart of TQM is the concept of intrinsic
motivation-involvement in decision making.

Scott Defines “ Motivation is a process of

stimulating people to accomplish desired goals”.

Importance of Motivation
• Improves Employee Involvement.
• Promotes Job Satisfaction.
• Promotes Interpersonal Cooperation.

Total Quality Management – IUG – Spring 2010 15

Yoshio Kondo
Four points of action to support motivation:
1. when giving work instruction, clarify the true
aims of the work
2. see that people have a strong sense of
responsibility towards their work
3. give time for the creation of ideas
4. nurture ideas and bring them to fruition

Total Quality Management – IUG – Spring 2010 16

EMPLOYEE MOTIVATION
Maslow’s hierarchy of five needs.
1. physiological needs - Adequate Wage
2. Safety - Job security
3. Social needs - Recognition , Colleagues
4. Esteem needs - Promotion, Thank you
5. Self Actualization Needs - Using abilities to the
full.

Total Quality Management – IUG – Spring 2010 17

EMPLOYEE EMPOWEREMENT
Empower- ability/ authority
Operation definition of empowerment
Empowerment is an environment in which people
have the ability, the confidence & the
commitment to take the responsibility &
ownership to improve the process & initiate the
necessary steps to satisfy customer requirements
within well defined boundaries in order to
achieve organizational values and goals.

Total Quality Management – IUG – Spring 2010 18

Principles for Empowering Employees

1. Tell people what their responsibilities are?

2. Give them the authority.
3. Give them knowledge and information.
4. Provide them with feedback.
5. Trust them.
6. Treat them with dignity and respect.

Total Quality Management – IUG – Spring 2010 19

CHARACTERISTICS OF EMPOWERED EMPLOYEES

1.They feel responsible for their own

task.
2.They balance their own goals with the
organization.
3.They are challenged and encouraged.
4.They monitor and improve their work
continuously.
5.They find new goals and change
challenges.

Total Quality Management – IUG – Spring 2010 20

Organizing for Involvement & Participation

Properly organized and administered small groups and teams

are an effective motivational device for improving
productivity and quality. They can reduce the overlap and
lack of communication in a functionally based classical
structure characterized by chain of command, territorial
battles, and parochial outlooks.

Team membership, particularly in a cross-functional team,

reduces many of these barriers and encourages an
integrative systems approach to achievement of common
objectives — those that are common to both the company
and the team or group.

Total Quality Management – IUG – Spring 2010 21

Quality Director or Manager

TQM appointments
• Many organizations have realized the importance of the
contribution a senior, qualified director of quality can
make to the prevention strategy.
• Smaller organizations may well feel that the cost of
employing a full-time quality manager is not justified,
other than in certain very high risk areas.
• In these cases a member of the management team
should be appointed to operate on a part-time basis,
performing the quality management function in addition
to his/her other duties.

Total Quality Management – IUG – Spring 2010 22

Quality Director or Manager

Assign a TQM director, manager or coordinator

• This person will be responsible for the planning and
implementation of TQM.
• He will be chosen first for project management ability
rather than detailed knowledge of quality assurance
matters.
• Depending on the size and complexity of the
organization, and its previous activities in quality
management, the position may be either full or part-
time, but it must report directly to the Chief Executive.

Total Quality Management – IUG – Spring 2010 23

Quality Director or Manager

• To obtain the best results from a quality

director/manager, he should be given sufficient
authority to take necessary action to secure the
implementation of the organization’s quality policy, and
must have the personality to be able to communicate
the message to all employees, including staff,
management and directors.

• Occasionally the quality director/manager may require

some guidance and help on specific technical quality
matters, and one of the major attributes required is the
knowledge and wherewithal to acquire the necessary
information and assistance.
Total Quality Management – IUG – Spring 2010 24
Quality Director or Manager

 The first objectives for many ‘quality managers’ will be

to gradually disengage themselves from line activities,
which will then need to be dispersed throughout the
appropriate operating departments.
 This should allow quality to evolve into a ‘staff’
department at a senior level, and to be concerned with
the following throughout the organization:
 Encouraging and facilitating quality improvement.
 Monitoring and evaluating the progress of quality improvement.
 Promoting the ‘partnership’ in quality, in relations with
customers and suppliers.

Total Quality Management – IUG – Spring 2010 25

Quality Director or Manager

• Planning, managing, auditing, and reviewing quality

systems.
• Planning and providing quality training and counseling
or consultancy.
• Giving advice to management on:
A. Establishment of quality systems and process control.
B. Relevant statutory/legislation requirements with respect to
quality.
C. Quality improvement programs necessary.
D. Inclusion of quality elements in all job instructions and
procedures.

Total Quality Management – IUG – Spring 2010 26

Quality Director or Manager

• Quality directors and managers have an initial task,

however, to help those who control the means to
implement this concept – the leaders of industry and
commerce – to really believe that quality must become
an integral part of all the organization’s operations.
• The shift in ‘philosophy’ will require considerable staff
education in many organizations.
• Not only must people in other functions acquire quality
related skills, but quality personnel must change old
functions acquire new skills.

Total Quality Management – IUG – Spring 2010 27

Quality Director or Manager

• The challenge for many quality professionals is not so

much making changes in their organization as
recognizing the changes required in themselves.
• It is more than an overnight job to change the
attitudes of an inspection police force into those of a
consultative, team-oriented improvement force. This
emphasis on prevention and improvement-based
systems elevates the role of quality professionals from
a technical one to that of general management.

Total Quality Management – IUG – Spring 2010 28

 Quality Management Advisor

Appoint a quality management advisor

• A professional expert on quality management will be required to advise on the
‘technical’ aspects of planning and implementing TQM.
• This is a consultancy role, and may be provided from within or without the
organization, full or part-time.
• This person needs to be a persuader, philosopher, teacher, adviser, facilitator,
reporter and motivator.

Total Quality Management – IUG – Spring 2010 29

 Quality Management Advisor

• He must clearly understand the organization, its processes and interfaces, be

conversant with the key functional languages used in the business, and be
comfortable operating at many organizational levels.
• On a more general level this person must fully understand and be an effective
advocate and teacher of TQM, be flexible and become an efficient agent of
change.

Total Quality Management – IUG – Spring 2010 30

Councils, Committees and teams

• The creation of cost effective quality improvement is

difficult, because of the need for full integration with
the organization’s strategy, operating philosophy and
management systems.
• It may require an extensive review and substantial
revision of existing systems of management and ways
of operating.
• Authority must be given to those charged with
following TQM through with actions that they consider
necessary to achieve the goals.

Total Quality Management – IUG – Spring 2010 31

Quality Council

• The following steps are suggested in general terms.

Clearly, different types of organization will have need to
make adjustments to the detail, but the component
parts are the basic requirements.
• A disciplined and systematic approach to continuous
improvement may be established in a quality council.
• The council should meet at least monthly to review
strategy, implementation progress, and improvement.
• It should be chaired by the Chief Executive, who must
attend every meeting.

Total Quality Management – IUG – Spring 2010 32

Quality Council
• The council members should include the top
management team and the chairmen of any ‘site’ TQM
steering committees or process quality teams,
depending on the size of the organization.
• The objectives of the council are to:
Provide strategic direction on TQM for the organization.
Establish plans for TQM on each ‘site’.
Set up and review the process quality teams that will
own the key or critical business processes.
Review and revise quality plans for implementation.

Total Quality Management – IUG – Spring 2010 33

 TEAMS AND TEAMWORK

TEAM - Group of people working together to perform

common achievement / goal.
TEAMWORK - Cumulative actions of the team during the
achievement of goal.

BENEFITS OF TEAMWORK
• Improved solutions to quality
problems.
• improved communication.
• improved integration.
Total Quality Management – IUG – Spring 2010 34
 TEAMS AND TEAMWORK
Characteristics of successful Teams
• Sponsor- person from qty council.
• Team charter- document/ person
indicating mission
• Team composition- shouldn’t exceed 10
members.
• Training- members are well trained.
• Ground rules- basic rules.
• Clear Objectives- Stated clearly.
• Accountability- periodic status report.

Total Quality Management – IUG – Spring 2010 35

TEAMS AND TEAMWORK

• Well defined decision procedures.

• Resources- tools.
• Trust – management trust on team.
• Effective problem solving- efficient
methods.
• Open communication- everyone should
talk.
• Appropriate leadership- leader who leads.
• Balanced participation
• Cohesiveness- single unit not in subgroups.
Total Quality Management – IUG – Spring 2010 36
TEAMS AND TEAMWORK
Barriers To Team Process
• Insufficient training
• Lack of management support
• Lack of planning
• Project scope too large
• No clear measures of success

Total Quality Management – IUG – Spring 2010 37

 Process Quality Teams

• The process quality teams (PQTs) and any site TQM

steering committees should also meet monthly, shortly
before the council meetings.
• Every senior manager should be a member of at least
one PQT.
• This system provides the “top-down” support for
employee participation in process management and
development, through either a quality improvement
team or a quality circle program.
• It also ensures that the commitment to TQM at the top
is communicated effectively through the organization.

Total Quality Management – IUG – Spring 2010 38

 Process Quality Teams
 The three-tier approach of quality council, process
quality teams (PQTs) and quality improvements teams
(QITs) allows the first to concentrate on quality
strategy, rather than become a senior problem solving
group.
 Progress is assured if the PQT chairmen are required to
present a status report at each meeting.
 The PQTs or steering committees all control the QITs
and have responsibility for:
 The selection of projects for the QITs.
 Providing an outline and scope for each project to give
to the QITs.

Total Quality Management – IUG – Spring 2010 39

 Process Quality Teams
The appointment of team members and leaders.
Monitoring and reviewing the progress and results from
each QIT project.
• The PQT members must be given the responsibility and
authority to represent their part of the organization in
the process.
• The members must also feel that they represent the
team to the rest of the organization.
• In this way the PQT will gain knowledge and respect
and be seen to have the authority to act in the best
interests of the organization, with respect to their
process.

Total Quality Management – IUG – Spring 2010 40

Quality Improvement teams

• A quality improvement team (QIT) is a group of people

with the appropriate knowledge, skills, and experience
who are brought together specifically by management
to tackle and solve a particular problem, usually on a
project basis.
Team selection and leadership
• People with knowledge and experience relevant to
solving the problem are clearly required.
• There should be a limit of five to ten members to keep
the team small enough to be manageable but allow a
good exchange of ideas

Total Quality Management – IUG – Spring 2010 41

Quality Improvement teams
 The team leader need not be the highest ranking
person in the team, but must be concerned about
accomplishing the team objectives and the needs of
the members.
Team objectives
 At the beginning of any QIT project and at the start of
every meeting the objectives should be stated as
clearly as possible by the leader.
 Project and/or meeting objectives enable the team
members to focus thoughts and efforts on the aims,
which may need to be restated if the team become
distracted by other issues.

Total Quality Management – IUG – Spring 2010 42

What is a quality circle?
• Quality circles are perhaps the most widespread form of employee
involvement teams. They are defined as a small group of employees
doing similar or related work who meet regularly to identify, analyze,
and solve product quality and production problems and to improve
general operations.
• Method for
 Analysing context, problem, situation and action
 Define the problem is and relationship between parts. Verify the causes and
knock-on effects.
 soft systems methodology - CATWOE
 plurality of quality objectives
 quantitative measurement & consensus (qualitative judgement.)
 critical evaluation of the problem
 MUSTs and DESIRABLES
 creativity and innovation
 Solutions must address the real problem.

Total Quality Management – IUG – Spring 2010 43

Task teams & Self-managing work teams

 Task teams are a modification of the quality circle concept.

The major differences are that the task teams can exist at any
level and the goal is given to the team, whereas quality circles
are generally free to choose the problems they will address.

 Self-managing work teams are also an extension of the quality

circle concept but differ in one major respect: Members are
empowered to exercise control over their jobs and optimize
the effectiveness of the total process rather than the individual
steps within it. Team members perform all the tasks necessary
to complete an entire job, such as setting up work schedules
and making assignments to team members.

 Cross -functional teams represent an attempt to modify the

classic hierarchical form of an organization based on a vertical
chain of command. They include horizontal coordination in
order to plan and control processes that flow laterally.

Total Quality Management – IUG – Spring 2010 44

Quality circle characteristics
• Voluntary groups of 6-8 members
• Quality circle teams are semi-permanent
• Teams are from single functional department
• Members have equal status and select their
own project
• Minimum pressure to solve problems with a set
time frame

Total Quality Management – IUG – Spring 2010 45

Implementing quality circles
• Quality circles require top management support
• Personal characteristics of facilitators are critical
• Scope of project needs to be small enough to be
capably addressed by the team
• Success of other teams has positive peer pressure
effect

Total Quality Management – IUG – Spring 2010 46

Quality Circles
Organization
8-10 members
Same area
Supervisor/moderator

Training
Presentation Group processes
Implementation Data collection
Monitoring Problem analysis

Problem
Solution Identification
Problem results List alternatives
Consensus
Brainstorming
Problem Analysis
Cause and effect
Data collection and
analysis

Total Quality Management – IUG – Spring 2010 47

Results of Teamwork
 People understanding the importance of their
contribution to the organization
 People identifying constraints to their performance
 People accepting ownership of problems and their
responsibility in solving them
 People evaluating their performance against their
personal objectives
 People actively seeking opportunities to enhance
their current knowledge and experience
 People freely sharing knowledge and experience
 People openly discussing problems and issues

Total Quality Management – IUG – Spring 2010 48

Results of Teamwork
 A desired result is achieved more efficiently
when activities of resources are managed as a
process

 Key benefits:
◦ Lower costs and shorter cycle times through effective
use of resources
◦ Improved, consistent and predictable results
◦ Focused and prioritized improvement opportunities

Total Quality Management – IUG – Spring 2010 49

 Recognition & Reward
 Recognition is defined as the public acknowledgment of superior
performance of specific activities.
 Reward is defined as benefits, such as increased salary, bonuses
and promotion, which are conferred for generally superior
performance with respect to goals (Juran and Gryna, 1993).
 Public recognition is an important source of human motivation.
 Important feature of any quality improvement program is the
showing of due recognition for improved performance by any
individual, section, department or division within the firm.
 A large majority of firms implementing TQM modify their
performance measurement and reward systems so that
achievement of specific quality goals can be assessed and
rewarded.

Total Quality Management – IUG – Spring 2010 50

Recognition
• Recognition is a process whereby management shows
acknowledgement.
• Recognition is a form of employee positive motivation.
• The acknowledgement may be financial, psychological in
nature.
• Reward is a tangible one, such as increased salaries, gain
sharing etc.
• NEED FOR RECOGNITION
• Improve employees moral.
• Create satisfied workplace.
• Stimulate creative efforts.

Total Quality Management – IUG – Spring 2010 51

Performance Appraisal
Performance appraisal is a systematic and
objective assessment or evaluation of
performance and contribution of an individual.
Need for performance appraisal
• To identify employees for salary revision,
promotion etc.
• To determine training and development needs.
• To motivate employees.
• To validate the selection procedures.
• To make the supervisors more observant of
their subordinates.
Total Quality Management – IUG – Spring 2010 52
PROCESS OF PERFORMANCE APPRAISAL
1.Establish performance standards.
2.Communicate performance.
3.Measure actual performance.
4.Compare with standards.
5.Discuss the appraisal with
employees.
6. If necessary , take correction
actions.

Total Quality Management – IUG – Spring 2010 53

Education & Training
 Training programs attempt to teach employees how to
perform particular activities or a specific job.
 Institute a vigorous program of education and self-
improvement (Deming’s 13th point).
 According to Deming, Japanese firms obviously regard
their employees as their most significant competitive
assets and provide good general orientation as well as
training in specific skills.
 According to Feigenbaum, a brief and general course
for first-line supervision is modern methods of
planning and controlling quality, concentrating
essentially upon the physical elements affecting
product quality.
Total Quality Management – IUG – Spring 2010 54
Education & Training
 Increased involvement means more responsibility, which in
turn requires a greater level of skill.
 Additional benefits include
 (1) improved communications,
 (2) change in corporate culture, and
 (3) demonstration of management’s commitment to
quality.
 Although the type of training depends on the needs of the
particular company and may or may not extend to technical
areas, the one area that should be common to all
organization training programs is problem solving. Problem
solving should be institutionalized and internalized in many,
if not most, companies. This would be a prerequisite to
widespread empowerment.

Total Quality Management – IUG – Spring 2010 55

Education & Training
Training usually falls into one of three categories:
(1)reinforcement of the quality message3 and basic skill
remediation,
(2)job skill requirements, and
(3) knowledge about principles of TQM. The latter
typically covers problem-solving techniques, problem
analysis, statistical process control, and quality
measurement — areas that go beyond typical job
skills.

Total Quality Management – IUG – Spring 2010 56

Education & Training
Quality Training Curricula:
1. Quality awareness
2. Quality measurement (performance
measures/quality cost bench- marking, data
analysis)
3. Process management and defect prevention
4. Team building and quality circle training
5. Focus on customers and markets
6. Statistics and statistical methods
7. Taguchi methods

Total Quality Management – IUG – Spring 2010 57

Selection
Selection is choosing from a group of potential
employees (or placement from existing employees)
the specific person to perform a given job.

In theory, the process is simple: Decide what the job

involves and what abilities are necessary, and then
use established selection techniques (ability tests,
personality tests, interviews, assessment centers) as
indicators of how the candidate will perform.

The job requirements for a typist, a machinist, or

even a manager can be determined by job analysis,
and the qualifications of a candidate can be
compared to these requirements.

Total Quality Management – IUG – Spring 2010 58

Selection
The process is not so simple, however, when TQM enters
the picture.

People well suited for operating in a quality climate may

require additional characteristics, such as attitude, values,
personality type, and analytical & sharp problem-solving
ability ability.

Because of the emphasis on teams and group process,

personnel must function well in group settings.

What is perhaps different in the selection process in a

TQM environment is the emphasis on a quality-oriented
organization culture as the desired outcome of the
selection process.

Total Quality Management – IUG – Spring 2010 59

Performance Evaluation
• The purpose of performance appraisal is to serve as a diagnostic tool
and review process for development of the individual, team, and
organization.
• Appraisals are used to determine reward levels, validate tests, aid career
development, improve communication, and facilitate understanding of
job duties.
 Evaluation can identify the difference between actual and the
expected performance.
 Evaluation information should be communicated to employees in
order to encourage employees to make things better.
 Uncontrolled variance in processes or outcomes is the primary cause
of quality problems and must be evaluated and controlled by those
who perform the firm’s front-line work.

It is important to note that the major aim of evaluation is

improvement, NOT criticism.

Total Quality Management – IUG – Spring 2010 60

Performance Evaluation
• Deming cites traditional employee evaluation systems as
one of seven deadly diseases.
• He states that individual performance evaluations
encourage short-term goals rather than long-term planning.
• They undermine teamwork and encourage competition
among people for the same rewards.

• Moreover, the overwhelming cause of non- quality is not the

employee but the system; by focusing on individuals,
attention is diverted from the root cause of poor quality: the
system.
• Many TQM proponents, like Deming, argue that traditional
performance appraisal methods are attempts by
management to pin the blame for poor organization
performance on lower level employees, rather than focusing
attention on the system, for which upper management is
primarily responsible.
Total Quality Management – IUG – Spring 2010 61
Performance Evaluation
The integration of total quality and performance appraisal is
necessary. One should reinforce the other.

One approach might be to modify existing systems in accordance

with the following principles:
1. Customer expectations, not the job description, generate the
individual’s job expectation.
2. Results expectations meet different criteria than
management-byobjectives statements.
3. Performance expectations include behavioral skills that make
the real difference in achieving quality performance and total
customer satisfaction.
4. The rating scale reflects actual performance, not a “grading
curve.”
5. Employees are active participants in the process, not merely
“drawn in.”

Total Quality Management – IUG – Spring 2010 62

Compensation Systems
Historically, compensation systems have been based on:
(1) pay for performance or
(2) pay for responsibility (a job description).

Each of these is based on individual performance, which creates a

competitive atmosphere among employees.

In contrast, the TQM philosophy emphasizes flexibility, lateral

communication, group effectiveness, and responsibility for an
entire process that has the ultimate outcome of customer
satisfaction.

There are several compensation plans, including gain sharing,

profit sharing, and stock ownership. These are among the systems
designed to create a financial incentive for employees to be
involved in performance improvements.

Total Quality Management – IUG – Spring 2010 63

Compensation Systems
• Gain sharing is one of the most rapidly growing
compensation and involvement systems.
• It is a system of management in which an
organization seeks higher levels of
performance through the involvement and
participation of its people.
• Employees share financially in the gain when
performance improves.
• The approach is a team effort in which
employees are eligible for bonuses at regular
intervals on an operational basis.
• Gain sharing reinforces TQM, partially because
it contains common components, such as
involvement and commitment
Total Quality Management – IUG – Spring 2010 64