THE EFFECTS OF TOTAL QUALITY MANAGEMENT ON PRODUCTIVITY USING THE PROBIT MODEL (A CASE STUDY OF SKYE BANK PLC EDO STATE)

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.

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