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THE BANKING INDUSTRY TOTAL QUALITY MANAGEMENT

10,000 3,000

Topic Description

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study:

Today every organization has to study what customer demand is. Who is our customer? How do we delight our customers? What do customers wish to experience when dealing with us? What do customers frame in their mind about us? All these questions should be taken into consideration hence it is the customer who defines quality (Arora 2006:1).

Quality is fast becoming an essential aspect of banking, and in the coming years it would form a basic requirement for the survival of the industry.  It is indeed worthy of note that quality needs to be natural through positive attitude and quality culture in an organisation.

At a time when the deregulation of financial services and consequent ready access to funds produced a new competitive environment, both the commercial and merchant banks in the country then were competing with finance and mortgage houses, insurance companies and stock brokers. The new competition brought about successes for some and spectacular failure for others.  In the new millennium, banking has gone even beyond expectation, and for the surviving banks, competition has just began.  The financial service sector has not been immune from or ignored the era of quality revolution.  New products sought initial competitive advantage, new attractive interest rate, turnaround time, all in the bid to attract more customers.   Macdonald (1998:13).

In the service sector, we have non-invertible products. Demand for service is variable. Service sectors are hospitals, banks, transportation and public utility e.t.c.

In the early 1990s, there was a sea of change in the banking industry that sent many Chief Executives of the industry back to the drawing board to find new ways to compete.  At this time, the top management of the industry learned the fundamental lessons that customers were willing to pay a price premium for products and services that consistently meet high standard of quality. Customers now perceive that they have the right to demand for good services, since they pay for it. As the service industries are setting promises, all that the customer wants is for the promises to be kept.

According to Arora (2006:50), Reputation is either built or lost through satisfying or dissatisfying customers. What does it take to satisfy a customer today? The customer will have a need which we are trying to fulfill. This may be weakly articulated or very vague.  Either way, it is our responsibility to identify the need as precisely as possible and meet it.  If we do this, then the customer is satisfied.

The loss of a customer can be devastating, although we may be blissfully unaware of it, each customer who walks away, takes away future years of repeat revenue.

We do not sell to customers today, they buy. That is, they call the tune, they have the choice of banking with any bank of their choice (with the advent of a stable capital base for the existing banks).  They will only bank with a particular bank if that bank makes it easy or special.  Excellence in services can be achieved through ISO 9000, ISO 14000, 18000, TQM, team work, Quality Assurance.    Arora (2006:3).

Customer satisfaction can only be achieved when the bank defines customer needs from the customer point of view and not from its own point of view. For this, the customer must be the centre of all the activities carried out in the organization.

According to Arora 2006.9, quality of a product throughout its lifespan is total Quality. All personnel of theZ organization are committed to quality by doing the right thing the first time and every time by employing the organization’s recourses to provide value added quality to the customers.

Total quality accomplishes the business goals by designing and supplying products and services to achieve customer satisfaction at an economic level.

The term TQC (total quality control) was conceived by A. V. Freignbaum 1983, Japan, TQC later became TQM. It is a corporate business management philosophy which recognizes that customer needs and business goals are inseparable. Arora (2008:11).

Management must be able to recognize that TQM will not happen by accident. TQM is a managed process which involves people, system and supporting tools and techniques. Quality should begin to permeate financial institutions as a way of life and it should begin with employee satisfaction.

TQM, though a recent phenomenon is important in the banking sector. It has evolved as a management concept out of the need by organizations for continuous quality improvement and critical importance of increased profitability and survival in the face of competitive challenges in the banking industry.

This starts with the customers by learning to identify and meeting their basic requirements and then empowering staff by giving them the tools they need to perform excellently.

It is in this regard that this research work is aimed at assessing the practice of Total quality management by Zenith Bank Plc.

1.2       Statement of the Problem:

Banks being financial intermediaries are the backbone of any economic system involved in channeling funds from those having surplus to those having its shortage,(Luckett,1994:36). The objective of this fund channeling is to earn profit.  In order to reach maximum number of customers, banks develop a network of branches. Branches are the points where banks offer their products. Banking products are almost the same in any country but what matters is the way the product is offered and the quality aspects associated with those products. Total Quality Management (TQM), a buzzword phrase of the modern age is based on the assumption that quality can be managed in every aspect of a company’s business. Total Quality Management is viewed as virtually a new organizational culture and a way of thinking. So the approach has an intense focus on customer satisfaction, accurate measurement of every critical variable in business operations, continuous improvement of products, services and processes and on work relationships based on mutual trust and teamwork, (Pearce & Robinson 2005:24).

 

Total Quality Management is a structured system for satisfying internal and external customers and suppliers by integrating in the business environment, continuous improvement, and breakthroughs with development, improvement, and maintenance cycles while changing the whole organizational culture,(Cole & Mogab1 999:35). This is the comprehensive approach towards quality management covering all areas of business.

 

Like other industries, quality improvement is taking place at a revolutionary pace in the banking sector,  (Rana,2005:15). Keeping in view the competitive environment in the banking sector where bank officers are trying their best to offer high quality services to their customers, there is great need to develop a TQM model for commercial banking branch operations, highlighting the different departments in the branch and the application of TQM principles to such departments with proper assessment of the extent of practice of TQM principles in our chosen bank of research, which in this case is Zenith bank plc. There is no such comprehensive model available in the body of knowledge covering all departments of commercial banking branch.

 

  • OBJECTIVES OF THE STUDY

The objectives of the study are;

1          To ascertain the level the level of awareness of TQM among staff of zenith bank, Plc

2          To assess the level of adoption of TQM practice by staff of zenith bank plc

3          To determine the extent to which members of staff are involved in the practice of TQM in Zenith Bank, Plc

4          To identify the major limitations of TQM practice in Zenith Bank, plc

 

1.4       RESEARCH QUESTIONS;

The following research questions will be addressed in this Study;

1          what is the level of awareness of TQM among staff of zenith Bank Plc

2          what is the level of adoption of TQM practice by staff of Zenith bank plc

3          To what extent are members of staff of zenith Bank plc involved in the practice of TQM?

4          To what extent does the practice of TQM affect customers service and care in Zenith Bank Plc?

5          What are the major limitations of TQM practice in Zenith Bank plc?

 

1.5       HYPOTHESES.

The following hypotheses are formulated for this study;

1          H0; the level of awareness of TQM among Zenith Bank’s staff is not high

H1; the level of awareness of TQM among zenith Bank’s staff is high.

  • H0; the level of adoption of TQM practice by staff of zenith Bank is

not high

H1; the level of adoption of TQM practice by staff of zenith Bank is

High

  • H0; members of staff of zenith bank are not involved in TQM

practice to a large extent

H1; members of staff of Zenith Banks are involved in TQM practice

to a large extent

  • H0; the practice TQM does not significantly affect customer service

and care in zenith Bank, Plc.

H1; the practice of TQM significantly affect customer service and

 

1.6       Scope and Limitations of the Study:

The study will assess the practice of TQM in Zenith Bank Plc , a service organization. It therefore stands to reason that the principles and practices this study espouses will be applicable to the service sector only.

Due to economic and time constraints in terms of huge amounts of money involved in carrying out the study extensively to cover all branches of Zenith Bank Plc, plus the urgency needed in the early submission of the research result, the study has been limited to cover only the Zenith Bank Presidential Road Branch.

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