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TQM Critical Success Factors in Hospitality Industry and their Impact on Customer Loyalty,

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TQM Critical Success Factors in Hospitality Industry and their Impact on Customer Loyalty,
  International Journal of Scientific & Engineering Research Volume 4, Issue 1, January 2013 ISSN 2229-5518 1 TQM Critical Success Factors in Hospitality Industry and their Impact on Customer Loyalty, a Theoretical Model Walid Youssef Montasser - Prof Dr. Abd Alhakim Al Manhawy Abstract- Total Quality Management (TQM) is a management philosophy that seeks to integrate all organizational functions to focus on meeting customers’ needs and organizational quality objectives, TQM is one of the most applied and well accepted approach between the contemporary innovations such as six sigma, just – in – time to achieve business excellence, in the last two decades a large number of organizations working among product and service industries had realized the great importance of adopting and implementing TQM process in order to maintain a sustainable competitive advantage in a rapid changing environment, The aim of this study is to develop and propose the conceptual frame work and research model of TQM implementation in relation to company performance particularly in context with the Egyptians hospitality sector, It examines the relationship between TQM Critical success factors and company’s performance by measuring the quality of service as a performance indicator, and to determine the impact of implementing TQM Critical Success Factors in maintaining customers’ loyalty in the field of concern, which is the (Egyptian 5-stars hotels business), a comprehensive review of literature an TQM, TQM Critical Success Factors, quality of service customers’ satisfaction and customers’ loyalty were carried out to accomplish the objectives of the study, the researcher conducted a pilot study to identify the TQM Critical Success Factors with the greatest impact an enhancing performance of 5-stars hotels, the data gathered from the pilot study was analyzed using the statistical package for social science (SPSS), and as a result four questions, 4 main hypotheses and 20 sub- hypotheses were proposed to re- validate the TQM Critical Success Factors, the adoption of such a theoretical model on TQM and company’s quality of service and its impact on maintaining customers’ loyalty would help managers, decision makers, and practitioners TQM working in the field of 5-stars hotel business in better understanding of TQM Critical Success Factors and to focus on the identified ones while implementing TQM in their hotels, further the scope for future study and to test and validate the theoretical model by using a 5-stars floating Egyptian hotel as a case study for collecting of primary data and re-using statistical package for social science (SPSS) approach for hypotheses testing. Index Terms- Tourism, Hospitality Industry, Hotel Business, Total Quality Management (TQM), Critical Success Factors (CSF), Service Quality, Customers’ Satisfaction, Customers’ Loyalty . - - - - - - - - - - - - - - 1- INTRODUCTION ver the past two decades, TQM has been recognized as a major edge for competitiveness and long term profitability (Isakssan, 2004). This is an art of management that srcinated in the Japanese industry and has become steadily more popular in the west since 1980’s (Clark, 1996). Since the 1980’s, the leading companies around the world have scrambled to adopt the Japanese business model based on quality management, daring the same period, most of the research writings focused on understanding the impact of quality and a competitive tool (Garvin, 1988). As the quality of life improves, demand for better quality products and services also increase, the emphasis an quality in product and services is forces the industries to adopt internationally recognized and proven management systems in their operations to stay in business (Jay, 2004). It has been well accepted by managers and quality practitioners as a change management quality approach (Arumugam et al., 2009). It plays a vital role in the development of management practices (Prajogo and Sohal, 2003; Hoang et al., 2006). Many researchers asserted TQM as an approach to improve effectiveness, Flexibility, and competitiveness of a business to meet customers’ requirements (Oakland, 1993), as the source of sustainable competitive advantage for business organizations (Terziovski, 2006), as a source of attaining excellence, creating a right first-time attitude, acquiring efficient business solutions, delighting customers and suppliers etc. (Mohanty and Behera, 1996) and above all as a source of enhancing organizational performance through continuous improvement in organization’s activities (Claver-Cortes et al., 2008; Teh et al., 2009). TQM is a culture maintained by an organization that is committed to customer’s satisfaction through continuous improvement based upon meeting or exceeding their customer’s expectations (Kanji and Wallace, 2000). It has four main targets; satisfying customers, satisfying staff, increasing revenues and reducing costs (Godfey, 2000). It requires that the principles of TQM should he applied in every branch and at every level in the organization with an emphasis an integration into business practices and a  balance between technical, managerial and people issues (Oakland, 2003). TQM should be integrated organization – wide in order to be successful in promoting organization efficiency and effectiveness (Rawbings, 2008). In the preceding decades, the tourism industry has  become one of the most important monetary industries. This very important industry has many infrastructures and service institutions in its category, in which, among the most important infrastructures, the hospitality industry can  be named out. The term hospitality has recently became popular as an all – embracing nomenclature for a large grouping of organizations including hotels (Mullins 2001), the industry existed to serve travelers with the provision of food, drink and shelter away from have (Knowles et al, 2004), the hospitality industry is also labor intensive as it employee more people per pound than any other industry (Kus lawn, 2003), The industry and important to the served side as its O  International Journal of Scientific & Engineering Research Volume 4, Issue 1, January 2013 ISSN 2229-5518 2 main purpose is to serve people away from home who are in need of shelter and lodging, and those who are in need F & B (Chan and Sparrowe, 2000) These are many types of  businesses involved in the hospitality industry, the hotel sector & a vital part of the hospitality industry (Baker et al, 2000). The most challenging business in the hospitality industry is the hotel business, this & because hotels offer more than are product to its guest and customers, such as accommodation and foodservice, this means that managing quality in hotels in more challenging to hotel managers and staff that it is in any other hospitality business (Stills and Wortman, 2006). The, operations involved in the accommodation sector in hotels include reservation, reception, housekeeping hilling and concierge (Janes, 2002). While inside the foodservice sector, there are three systems operating, the first system & food production, the second system & the delivery or service sequence, the third system & customer management (Cousins et al 2002). Quality is considered to be of very great importance in the hospitality industry. Mill (1986) identifies the aim of service quality as being able to ensure a satisfied customer. However, the focus of quality initiatives has been primarily on selection and training of front line staff (see, for example, Gober & Tannehill, 1984; Mill, 1986; Cathcart 1988). The issues of measurement and process improvement have been largely neglected. Over the last decade, a significant number of hospitality companies have embraced the concepts of TQM (Cannon, 2002), as service expectation of customers and potential customers have escalated. Hospitality businesses have found the implementation of quality processes to be a vital competitive component (Cannon2002). TQM has been evolving in the hotel business since It was introduced in 1980s (Brecter et al, 1995). However, many hotels are still struggling to reach a real understanding of what is meant by total quality management (Breiter et al, 1995). Hotels managers are not able to reach the right TQM critical success factors mix that might have a direct and positive impact on the hotels performance to reach their own financial and market objectives, and to solve the accumulated and repeated complaints by both clients and employees, 2- Literature review: 2-1 TQM critical success factors: Implementing TQM involves defining and deploying several key elements or factors (Thiagaragan & Zairi & Dale, 2001). Of primary interest among researchers has  been addressing the question “What makes TQM work?” (Sebastianelli & Tamimi, 2003). One of the problems of critical factors of TQM is how to define them and what should be the measure of their impact before they become critical (Zairi & Youssef ,1995). CSFs of TQM are latent variables, which means they cannot be measured directly (Ahire et al., 1996). Thus the critical factors of TQM differ from one author to another, although there are common issues. TQM is much more than a number of critical factors; it also includes other components, such as tools and techniques for quality improvement (Tari, 2005).These methods are a set of practices, tools and techniques deriving from the critical factors, and are the basic elements required to implement such factors (Tari 2005). However, past evidence has shown that TQM programs have failed  because the success factors were not in place (Curry and Kadasah, 2002). The first real attempt which was made at grouping a list of critical factors for TQM was a study conducted in the USA by (Saraph et al 1989), which led to the proposal of a list of 78 factors (Zairi & Youssef 1995). Their work provided a model and measures for assessing managers’ perceptions of quality management practices at the organizational level. Their instrument consisted of the following scales: the role of top management leadership, the role of the quality department, training, product/service design, supplier quality management, process management, quality data and reporting, and employee relations (Sebastianelli & Tamimi 2003). The study by Black in 1993 was an attempt at developing a model for measuring the critical factors of TQM. Using the MBNQA criteria and ten factors were identified as the most critical. These factors appear to be compatible with successful TQM implementation programs. They represent strategic elements, people involvement, emphasis on communication, a focus on the customer, and an awareness of the external market, the need to develop supplier partnerships, measurement and emphasis on developing a culture for quality improvement (Zairi & Youssef 1995).( Deming ,1982, 1986) underlined the use of statistical techniques for quality control, and proposed his 14 principles to improve quality in organizations, based on the following ideas: leadership, an improvement philosophy, the right production from the beginning, training for managers and employees, internal communication aimed at the elimination of obstacles for cooperation and the suppression of quantitative objectives. (Ju et al, 2006) have selected the following ten critical factors through literatures for their study: top management commitment, adopting philosophy, quality measurement,  benchmarking, process management, product design, employee training, employee empowerment, supplier quality management, customer involvement and satisfaction. And also (Arasli, 2002) considered seven major factors for implement TQM successfully as follows: top management leadership, employee participation, teamwork, employee satisfaction, empowerment, organizational change, and training, Literature reveals that if organizations focus on the management of these critical factors, improvements in service quality and is reflection in financial results is bound to happen. Wali, Deshmukh and Gupta have made an attempt to synthesize various critical factors given by authors shown in table (1), although the factors and the approach may vary from author to author, eventually it leads to the same goal i.e. continuous improvement. These factors are shown in Table (2).  International Journal of Scientific & Engineering Research Volume 4, Issue 1, January 2013 ISSN 2229-5518 3 Table 1 Authors  Juran 1974 Ishikawa 1976 Grosby 1979 Feigen-baum 1983 Deming 1986 Garvin 1987 Saraph et al. 1989 Lu and Sohal 1993 Potter and Parker 1993 Motwani et al. 1994 Powel 1995 Black and Porter 1995 Table 2: TQM CSFs introduced by various authors Factors   Employer relation/empowerment Top management/ leadership Quality polices,/process management Quality measurement system/ quality data Training Quality technology / process design (SQC) Supplier quality management Quality planning/ product design (service) Role of quality department Team work structures Customer satisfaction orientation Strategic quality management Communication of information Benchmarking Zero defect External interface management/ environment Sila and Ebrahimpouri have analyzed and compared 76 empirically validated TQM factors and their impact on various performance measures across countries. The findings showed that top management commitment and leadership, customer focus, information and analysis, training, supplier management, strategic planning, employee involvement, human resource management, process management, teamwork, product and service design, process control, benchmarking, continuous improvement, employee empowerment, quality assurance, social responsibility, and employee satisfaction were the most commonly extracted factors across these 76 studies. These factors are shown in Table 3. Table 3: Most commonly extracted factors across the 76 studies and the 23 countries Top management commitment and leadership Customer focus Information and analysis Training Supplier management Strategic planning Employee involvement Human resource management Process management Teamwork Product and service design Process control Benchmarking Continuous improvement Employee empowerment Quality assurance Social responsibility Employee satisfaction Source: Sila and Ebrahimpour, 2003 TQM effectiveness and organizational performance can  be measured by using the self assessment framework of quality management, such as European Quality Award (EQA), Deming Prize (Japan), and Malcolm Baldrige National Quality Award (MBNQA)(Kunst & Lemmink, 2000, Zairi 2002). Awards are indeed strongly based on the foundation of TQM and Successful implementation of TQM is determined by the successful implementation of CSFs as proposed by award criteria (Zairi 2002). Two of the most frequently used self assessment models are the MBNQA and the European Excellence Model 2000. The MBNQA and European Excellence Model are now in widespread use in many organizations. Further to an analysis of literature in relation to the award examination criteria of both the MBNQA and the EQA, the critical success factors covering the seven key areas are presented in Table 4. Table 4 Critical success factors Winners MBNQA/EQA criteria (condensed) MBNQA/EQA (1999) Critical factors of success Leadership Senior management commitment Senior management involvement Shared-values Passion for excellence Inspire, guide, coach and support Corporate citizenship Public responsibility Policy and strategy Quality function deployment Strategic direction Performance tracking Planned development and implementation Strategic business and quality plans Customer focus Customer quality measurement Customer relationships Customer satisfaction Market research Information and analysis Managing supplier resource Supplier performance evaluation  International Journal of Scientific & Engineering Research Volume 4, Issue 1, January 2013 ISSN 2229-5518 4 Process partnership improvement Comparative benchmarking Organizational performance measures Human resource focus Human resource development Participatory environment Employee well-being and satisfaction Process management Process design Process implementation Process management Process review and improvement Supplier and partnering processes Product and service processes Business results Stakeholders satisfaction Special impact Customer focused results Financial and market results Human resource results Organizational effectiveness results Source: Mcdonald, Zairi & Idris (2002) 2-2- Critical success factors in service industry One of the earlier empirical studies in QM area by (Saraph et al. 1989) have used data obtained from 162 managers of 20 manufacturing and services industries collected in the regain of USA to identify the critical success factors of TQM, they identified eight factors top management leadership, role of quality department, training, product design, supplier quality management, process management, quality data reporting and employee relations (Behra and Gundersen, 2001) discussed TQM practices which contribute in TQM program applied in service industry, they are: compensation, benchmarking, training, empowerment, technology management, assessment, process management participation, teamwork, training and outcome measurement. A recent study conducted by (Tahib and Rahman, 2010) identified nine are top- management commitment, customer focus, training and education, continuous improvement and innovation, supplier management, employee involvement, employee encouragement, benchmarking and quality information and performance. (Al – Marriet al., 2007) proposed 16 TQM for successful implementation of TQM practices for successful implementation of TQM in service sector they are: top management support, customer focus, strategy,  benchmarking, employee involvement, recognition and rewards, problem analysis, quality technologies, service design, service scopes, service culture, social responsibility, HRM, continuous improvement, quality department, quality systems, while (Sures hchamder et al., 2001) identifies 12 TQM critical success factors that are critical for the institution of a TQM environment in service organizations that are: top-management, visionary, leadership, HRM, technical system, information and analysis system, benchmarking, continuous improvement, customer focus, employee satisfaction, union intervention, social responsibility, service scopes and service culture. One of the earlier empirical studies in the quality management area that analyzed the TQM CSFs in the SMEs was conducted by ( Yusof and Aspinwall ,2000). This study found that the CSFs for TQM implementation in the SMEs are management leadership, continuous improvement system, measurement and feedback, improvement tools and techniques, supplier quality assurance, human resource development, systems an processes, resources, education and training, and work environment and culture. More importantly, (Hodgetts et al., 1999) found that the CSFs of TQM implementation in the SMEs are top management involvement, customer focus, employees “training, employees” empowerment and generating new ideas. In this line of work, a study by (Dayton ,2003) used data from American industrial companies to determine whether the ten TQM critical factors (i.e. people and customer management, supplier partnerships, communications, customer satisfaction external interface management, strategic quality management teamwork structures for improvement, operational quality planning and quality improvement systems) identified by the (Black and Porter ,1996) study could be considered as important TQM CSFs  by USA small and large companies( taking in consideration that a considerable number of these companies are working in the tourism industry ). From his conclusion he identified the strategic quality management as the most important TQM critical factor. The empirical findings from (Rahman’s, 2001) study of 53 Australian SMEs found that the critical factors of the successful implementation of TQM are leadership, strategy and planning, employee empowerment and employee involvement, employee training and development, information and analysis and customer management. (Demirbag el al., 2006) carried out an empirical study to identify factors critical to the success of TQM in the Turkish SMEs. They concluded that there are seven CSFs of TQM practices, i.e. quality data and reporting, role of top management, employee relations, supplier quality management, training, and quality policy and process management. However, in contrast to the previous studies, organization culture was used as a separate variable in the current study since an organization's culture affects  behaviors and attitudes at all levels and it determines, to a large extent, how employees act (Robbins and DeCenzo, 2005). from the previous studies a comprehensive list of TQM CSFs in service industry is shown in table 5. Table 5: TQM CSFs for service industry 1- Leadership. 2- Customer focus. 3- HRM practices. 4- Quality improvement.  International Journal of Scientific & Engineering Research Volume 4, Issue 1, January 2013 ISSN 2229-5518 5 5- Continuous improvement. 6- Teamwork. 7- Organizational culture. 8- Service design. 9- Strategy and planning. 10- Social responsibility. 11- Information and analysis. 12- Training and education. 13- Union intervention. 14- Employee empowerment. 15- Employee involvement. 16- Employee satisfaction. 17- Rewards and recognition. 18- Quality policy and technologies. 19- Communication. 20- Supplier relationship management. 21- Process management. 22- Benchmarking. 2-3-Service Quality: The emergence of quality as a top priority in many corporate entities is primarily due to the globalization of world trade and the competitive pressure brought about by the escalating demands of consumers, who want better products and services. According to (Feigenbaum, 1999), the key is transforming quality from the past emphasis upon the reduction of things gone wrong for the customer, to emphasize upon the increase in things gone right for the customer, with the consequent improvement in sales and revenue growth Creating better planning, better external and internal focus, better design, strengthening weak processes and protecting strong areas, which give organizations an edge over their competitors, is being achieved through total quality management (TQM). It ensures that the voice of the customer is always matched by the voice of the processes (Fotopoulos and Psomas, 2010). Since the service quality is very important in surviving and profit making of an organization, it affects in customer's satisfaction and motivation after shopping positively and customer's satisfaction also affects in tendency toward shopping positively. (kuo, et al., 2009). The perception of service quality has been extensively studied during the past three decades. Owing to the intangible, heterogeneous and inseparable nature of services, service quality has been defined as ‘‘the consumer’s judgment about a product’s overall excellence or superiority, or ‘‘the consumer’s overall impression of the relative inferiority/superiority of the organization and its services'. Many models have been developed to measure customer perceptions of service quality (Martinez & Martinez, 2010). Service quality can have many different meanings in different contexts. For example, (Bitner and Hubbert, 1994) defined service quality as ‘‘the consumer’s overall impression of the relative inferiority or superiority of the organization and its services’’. (Parasuraman, Zeithaml and Berry, 1985) defined perceived service quality as ‘‘a global  judgment, or attitude relating to the superiority of a service’’ and noted that the judgment on service quality is a reflection of the degree and direction of discrepancy  between consumers’ perceptions and expectations. (Rajasekhar, et al., 2009) Service quality has been conceptualized as an overall assessment of service by the customers. It is a key decision criterion in service evaluation  by the customers. Perceived service quality is believed to be resulting from comparison between customers’ prior expectations about the service and their perceptions after actual experience. Besides service outcomes, service quality perceptions also involve evaluation of the service delivery process. Hence, conceptualization of service quality ought to include both the process as well as the service outcomes. A firm’s ability to serve the customer needs as well as to maintain its competitive advantage also affects the customer perception of service quality (Ganguli and Roy, 2010). Service quality dimensions: In their efforts to reach a model of service quality (A. Parasuraman, Zeithaml and Berry, 1985) identified 10 determinants of service quality used by customers to build their own perceptions and expectations, they are: reliability, responsiveness, effectiveness, easiest to get the service, empathy, communication, credibility, assurance, tangibles understanding the customer, nine determinants of service quality were identified by (Reynosoand Moores, 1995), they are: Tangible, reliability promptness, confidentially, professionalism, help fullness, communication, consideration, preparedness. (Heings and Brooks, 1998) proposed 10 determinants of service quality, they are: Reliability, responsiveness, credibility, competence, courtesy, communication, Access, Proactive D/M, attention to detail, understanding the customer, in 1999 a number of 10 determinants of service quality were introduced by (Brroks et al, 1999) they are: Reliability, responsiveness, credibility competence, courtesy, communication, access, leadership attention to detail, understanding the customer, all these findings are listed in table 6. Table 6: Service Quality dimensions as identified by various authors SERVQUAL   (1985)   Reynoso and Moores   (1995)   Lings and Brooks   (1998)   Brooks et al.   (1999)  Service Quality dimension Tangible Reliability Credibility Security Competence Courtesy Communication Access Understanding the Customer Easiest to get the service Tangible Reliability Promptness Confidentially Professionalism Helpfulness Communication Consideration Preparedness Reliability Responsiveness Credibility Competence Courtesy Communication Access Proactive D/M Attention to detail Understanding the customer Reliability Responsiveness Credibility Competence Courtesy Communication Access Leadership Attention to detail Understanding the customer
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