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COMPANIES CONTINUE TO EMBRACE QUALITY PROGRAMS, BUT TQM HAS GENERATED MORE ENTHUSIASM THAN RESULTS

 COMPANIES CONTINUE TO EMBRACE QUALITY PROGRAMS,
 BUT TQM HAS GENERATED MORE ENTHUSIASM THAN RESULTS
 CAMBRIDGE, Mass., March 24 /PRNewswire/ -- A recent survey of 500 executives from manufacturing and service companies-(a) confirms that most U.S. companies (93 percent) have some form of quality improvement program, but many are finding they simply aren't improving fast enough in relation to the competition.
 "Therein lies the rub," says Dr. P. Ranganath Nayak, a senior vice president of Arthur D. Little Inc., the consulting firm that commissioned the survey. "For example," says Nayak, "we've seen companies like Cadillac and Wallace win Baldrige awards and then report substantial losses in their earnings statements."
 Nayak maintains that training employees in problem-solving and empowering them to find localized, incremental solutions -- the essence of today's Total Quality Management (TQM) movement -- in and of itself won't result in the significant improvement needed to become what he and his colleagues refer to as a high performance business.
 "A high performance business," he explains," is a world-class organization that is able to improve faster than the competition and sustain that higher rate indefinitely. It takes into account actions that involve its primary stakeholders (i.e., its customers, employees, owners), as well as its work processes, resources, and organizational character -- and it requires the total commitment of senior management to succeed."
 According to Nayak, the ideal high performance business would be a company whose growth rate is consistently higher than the industry average and whose return on equity consistently places it in at least the 95th percentile within the industry. Ninety-five percent of the company's customers would say they are highly satisfied with its products or services, and 95 percent of its employees would say that it is one of the best places to work.
 In the Arthur D. Little survey, only about one-third of those executives polled (36 percent) believe their company's TQM efforts have had significant impact on their competitive position in the marketplace. However, two-thirds held out hope that their quality program could have a significant impact on their firm's competitive position over the next three years.
 "Executives had best be careful not to get caught up in the euphoria of the total quality movement," Nayak warns. "They can ill afford to 'bet the ranch' merely on the potential for incremental improvement. What they may need instead is to consider a redesign or a complete 'rethink' of the critical work processes that drive their firms."
 In another survey of executives at leading medical devices companies-(b), Arthur D. Little found that while the firms reported benefits from their quality improvement efforts in such areas as operations, customer relations, and employee relations, they also cited significant barriers that stand in the way of their ability to achieve ultimate goals.
 One of the most commonly cited barriers in that survey was the lack of commitment and cooperation from the chief executive officer and other senior managers.
 Nayak points out that these survey findings "are particularly telling, given that medical products firms as well up the quality improvement curve by now." Other barriers to success cited in the survey included: unrealistic expectations, a failure to focus on the needs of the external customer, a failure to set priorities, a dearth of effective measurement tools, and a failure to tie quality improvement efforts to a firm's long-term corporate strategy.
 "The long and short of it," says Nayak, "is that the leadership and vision to inspire action must come from the chief executive in deeds as well as words." He adds that the transformation can be invigorating for those who make the commitment to becoming a high performance business. "What's more," he says, "a transformed company will find that it can overtake its competition."
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 NOTE TO EDITORS:
 (a)-The survey of 500 executives mentioned in this release was conducted by Opinion Research Corporation for Arthur D. Little in the fourth quarter of last year. It consisted of telephone interviews with executives drawn from a sample of the 1,000 largest manufacturing companies; the 100 largest commercial banking, diversified financial, and diversified service companies; and the 50 largest utilities, transportation, merchandising, and life insurance companies.
 (b)-In the medical devices survey project, Arthur D. Little consultants interviewed senior managers at 13 companies whose combined annual medical products sales totaled nearly $7 billion in 1991.
 -0- 3/24/92
 /CONTACT: Patrick Pollino of Arthur D. Little, 617-864-5770 ext. 2200/ CO: Arthur D. Little ST: Massachusetts IN: SU:


EG -- NEFNS4 -- 0879 03/24/92 07:34 EST
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Date:Mar 24, 1992
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