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Basic Principles of Total Quality Management (TQM)

Total Quality Management ensures maximum effectiveness and efficiency within a business and secures commercial leadership by putting in place process and systems which will promote excellence and prevent errors. It ensures that every aspect of the business is aligned to the customer needs and the advancement of business goals without duplication or waste of efforts.

Different companies have different approaches to implement Total Quality Management (TQM) . The following principles (which are common to all companies) must be adhered for the successful Total Quality Management (TQM) implementation :

• Continuous improvement . TQM is a long-term process that entails achieving improvements in the company’s operations. This means that management should establish targets for improvement and measure progress by using reliable criteria. The quest for quality and better service to the customer should be a continual, never-ending one. Competitors will seek to provide better service and customers will come to expect it. Hence, to cease improvement efforts will likely lead to loss of competitive advantage and a decreased level of customer satisfaction.
• Customer focus . In TQM, the customer is believed to be the ultimate judge of quality. Therefore, the company must remain close to the customer and understand how he or she views and judges quality.
• Strategic planning and leadership . Achieving quality and market leadership requires a viable competitive strategy that outlines goals and desired outcomes. Moreover, senior executives should be responsible for introducing and supporting TQM programs .
• Competitive benchmarking . This means identifying companies or other organizations that are the best at something and then modeling your own organization after them. The company need not be in the same line of business as yours.
• Employee empowerment . TQM is based on humanistic management principles that suggest employee involvement and participation is essential for success. Giving workers the responsibility for improvements and the authority to make changes to accomplish them provides strong motivation for employees. This puts decision making into the hands of those who are closest to the job and have considerable insight into problems and solutions. Empowered to bring about changes in their workplace, employees can creatively contribute to their company’s well being.
• Teamwork approach . The use of teams for problem solving and to achieve consensus takes advantage of group thinking, gets people involved, and promotes a spirit of cooperation and shared values among employees. Further, teamwork creates opportunities for learning and exchanging ideas.
• Knowledge of tools . Everyone in the organization is trained in the use of quality control and improvement tools.

The entire organization must be subject to the search for improved ways of performing; nothing should be regarded as sacred or untouchable. A sometimes helpful view is to consider the internal customers and strive to satisfy them; that is, every activity in an organization has one or more customers who receive its output. By thinking in terms of what is needed to satisfy these customers, it is often possible to improve the system and, in doing so, increase the satisfaction of the final customer.

Extended Principles of Total Quality Management (TQM)

Total Quality Management principles can be better explained by examining those companies which have been successful like companies which have won the Malcolm Baldrige Award winners in the USA like Motorola ; the Deming Prize winners like Toyota; and The European Quality Award winners like Corning. On examining these companies, we find that the following fundamentals of TQM are common in each of these award wining international companies.

• Putting the Customer First : Achieving customer satisfaction is at the heart of total quality management. This principle supports the traditional view that the “customer is king”. If a company cannot satisfy its customers, another company will. Processes and products must be designed with one thing in mind — satisfying the customer. Companies in India must move from a “product-out” mentality (i.e. pushing a product or service-out) to a “customer-in” attitude (i.e., providing the product or service that customers expect, or better yet, beyond what they expect). These days the emphasis has shifted form the customer satisfaction to delighting the customer. The Indian companies in order to succeed in global competition are to adapt to this latest version of customer focus.
• Management by Fact : The second principle which TQM companies world over the adopting these days is management by fact. This principle is difficult to institutionalize, because every employee in an organisation has opinions, views and notions about how things should be done. They may tell you what the root cause of a problem is but may not give you the facts for solving the problem. This ways people may become the part of the problem itself rather than solvers. Facts are far better than opinions, although opinions, views and views and ideas cannot be ignored. In Indian organizations striving for TQM, senior and middle management, supervisors and employees should all be taught basic statistical techniques and the importance of facts in solving problems. In most Indian organizations, a por decision making process exists and thus it produces poor decisions. If every employee is trained in basic statistical techniques, it will dramatically improve decision making. Decision making must be based on facts that are data. Japanese industry vehemently used simple tools of statistics to solve not only their day-to-day but also major problems. Thus, they could achieve excellence.
• Principle of Continuous Improvement: The plan-do-check-Act (PDCA) principle is another essential tool for implementing a TQM programme successfully in Indian organizations. The PDCA also referred to as the “Deming Wheel” is the principle of continuous improvement. Most Indian companies do not have practices in place that force continuous improvement. Following the PDCA principle would force the organizations in India to examine their business processes. Check is the most important step in processes against a standard and stated business objective. Practice of the PDCA cycle generates numerous opportunities for further improvement. A systematic process for examining how to improve things is necessary successful application of TQM. Because condition are never as good as they might be in any business. Managers should never be satisfied with the status quo. Becoming complacent will allow competitors to win; but by following the PDCA principle they can guard against this complacency. Thus all Indian business organizations implementing TQM must follow the principle of PDCA for their future success. Japanese companies have the PDCA principle as their main forte for improvement
• Focus on Prevention: Indian Companies like Telco, Philips, etc, which have mastered TQM realized that solving problems is the firs step in making improvement. These Indian companies realized that until methods are instituted to prevent the recurrence of problems, long-lasting results can not be achieved. Most companies in India do not understand this fundamental principle and generally end up solving the same problem over and over again. That is they keep on inventing the wheel again and again. The companies must ensure that problems are solved once for all and recurrence of these problems is prevented.
• Principle of Employee Involvement: Surrounding the above four fundamental principles are two others that relate to how people should work together. Sometimes, this principle is referred to as respect for people. In some Indian business organizations, still the workers and employees are treated as persons with brawn only and not with brain. This was the traditional way o exploiting the workers. For becoming TQM Company, we have to respect and optimally use employees’ brainpower along with their technical skills and physical power. Most employees have very good minds and can contribute creatively if recognized. The companies must start aping employees’ innovative and exciting ideas. Employees know about problems within the business much better and can help solve them. Successful TQM companies world over recognize that workers’ energy, enthusiasm, and value to the company can be limitless given the proper forum where their ideas can be expressed, and given the proper respect for their abilities. Thus Indian business organisation must start applying this TQM principle for increasing their effectiveness.
• Principle of Cross-functional Management: Cross-functional management recognizes that no organizational unit can by itself control every aspect of the business operation to ensure that the customer’s requirements are met. Cross-functional management is a method of cooperating across functional organizational boundaries — interacting with each other to make sure that the product or service meets the quality standards that are set. Indian organisatoins may take sometime to fully appreciate the power of this foundational principles of TQM, Because there may be a feeling that each managers in his/her department is functioning well. Generally, there may be every person for him/herself focus. They are interested in getting their jobs done and don’t bother about others. With the application of this principle and more decentralized approach, managers will be able to control the resources necessary to satisfy customers. Thus there would be improvement in customer satisfaction and cost savings. Slowly on implementation of TQM , Indian manages will understand and realize the meaning and application of cross-functional management. Communication among departments will improve. Cross-functional management techniques would reduce design time, improve product and service quality and build a sense of mission among company employees. this principle is very powerful as it aligns the vectors so that everyone and everything is going in the same direction. In the absence of this principle, no other approach for TQM can be successful.

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• TQM’s seven basic elements

Successful practice of Total Quality Management involves both technical and people aspects that cover the entire organization and extend to relationships with suppliers and customers. Seven basic elements capture the essence of the TQM philosophy: customer focus, continuous improvement, employee empowerment, quality tools, product design, process management, and supplier quality.

• Customer focus : Decisions of how to organize resources to best serve customers starts with a clear understanding of customer needs and the measurement of customer satisfaction. For example, the Red Cross surveys its blood donors to determine how it can make the blood donation experience more pleasant and convenient. It collects information on the place, date and time donors came in, and asks donors questions of whether the donation time was convenient, whether they were treated with respect and gratitude, how long they had to wait to donate, and whether parking was adequate. By understanding donors’ needs and experiences, Red Cross managers can determine strengths and weaknesses of the donation service process and make adjustments if necessary.
• Continuous improvement: An organizational culture that promotes continuous learning and problem solving is essential in the pursuit of zero defects. The Toyota Production System (TPS) is a universal continuous improvement system that has been effectively applied to many different types of organizations, including the health care industry. Essential elements of the TPS culture include studying process flow, collecting data, driving out wasteful non-value-added activities, and making everyone responsible for quality improvement. In the case of health care, the TPS approach enabled one hospital to analyze the causes of patient infections from catheters and pneumonia in patients on ventilators. With simple changes in procedures that prevented patients from getting these secondary illnesses, the hospital was able to save USD 40,000 per patient in these cases.
• Employee involvement : Employees in a TQM environment have very different roles and responsibilities than in a traditional organization. They are given responsibility, training, and authority to measure and control the quality of the work they produce, they work together in teams to address quality issues, they are cross-trained to be able to perform multiple tasks and have a greater understanding of the total production process, and they have a more intimate understanding of the operation and maintenance of their equipment. Employees are essential to the building of a continuous improvement organization.
• Quality tools: Discussion of the details of quality tools extends beyond the scope of this chapter, but there are seven basic quality tools that are used by front-line workers and managers in monitoring quality performance and gathering data for quality improvement activities. These tools include: cause-and-effect (fishbone) diagrams, flowcharts, checklists, control charts, scatter diagrams, Pareto analysis, and histograms. The beauty of these tools is that they are easy to understand and apply in on-going quality efforts.
• Product design : Product design is a key activity to avoid costly internal and external failure costs. For example, when a dental office designs the service process, it might have patients fill out a form that covers important information on general health issues, allergies, and medications. This helps to avoid future complications and problems. Staff, hygienists, and dentists are highly trained to follow proper procedures, the facility is both functional and pleasant, and the equipment and tools are state of the art to ensure that the patient’s desired outcome is achieved. In a manufacturing setting, products should be designed to maximize product functionality, reliability, and manufacturability.
• Process management: “Quality at the Source” is an important concept in TQM. It means that managers and employees should be focused on the detailed activities in a process where good or bad quality is created. For example, in a Toyota plant in the United States in Georgetown, Kentucky, one of the work stations was responsible for installing seat belts and visors in every vehicle that came along the assembly line. There were 12 possible combinations of visors and seat belts that would go into any particular vehicle and the worker had to select the right combination and install the items in the vehicle in 55 seconds. Even the best workers made several errors during a shift on this activity. After studying the process, the workers came up with an idea to put all the items for a particular vehicle model in a blue plastic tote. With this change, the worker only had to make one decision per vehicle. Almost all the errors from the previous system were eliminated with this simple solution.
• Supplier quality : The focus on quality at the source extends to suppliers’ processes as well, since the quality of a finished product is only as good as the quality of its individual parts and components, regardless of whether they come from internal or external sources. Sharing your quality and engineering expertise with your suppliers, having a formal supplier certification program, and including your suppliers in the product design stage are important measures to take to ensure that quality at the source extends to the supplier network.
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Implementing TQM

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• PMID: 10119429

Total quality management (TQM) is an organized, systematic approach to problem solving and continuous improvement. American corporations have found that TQM is an excellent way to improve competitiveness, lower operating costs, and improve productivity. Increasing numbers of laboratories are investigating the benefits of TQM. For this month's column, we asked our respondents: What steps has your laboratory taken to implement TQM?

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• Total quality and the management of laboratories. Simpson KN, Kaluzny AD, McLaughlin CP. Simpson KN, et al. Clin Lab Manage Rev. 1991 Nov-Dec;5(6):448-9, 452-3, 456-8 passim. Clin Lab Manage Rev. 1991. PMID: 10116378
• Implementing total quality management (TQM) in health-care laboratories. Westgard JO, Barry PL, Tomar RH. Westgard JO, et al. Clin Lab Manage Rev. 1991 Sep-Oct;5(5):353-5, 358-9, 362-6 passim. Clin Lab Manage Rev. 1991. PMID: 10113715
• Quality management series. How we implemented TQM in our laboratory and our blood bank. Beesley J, Helton HD, Merkley A, Swalberg ED. Beesley J, et al. Clin Lab Manage Rev. 1993 May-Jun;7(3):217-27. Clin Lab Manage Rev. 1993. PMID: 10126513
• Total quality management in cytology. Inhorn SL, Shalkham JE, Kurtycz DF. Inhorn SL, et al. Acta Cytol. 1993 May-Jun;37(3):261-6. Acta Cytol. 1993. PMID: 8498128 Review.
• Tutorial: management and planning tools of TQM. Plsek PE. Plsek PE. Qual Manag Health Care. 1993 Spring;1(3):59-72. Qual Manag Health Care. 1993. PMID: 10130528 Review.
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Please note you do not have access to teaching notes, school attendance problems: using the tqm tools to identify root causes.

Journal of Educational Administration

ISSN : 0957-8234

Article publication date: 1 March 2000

Deming’s quality managment principles (TQM) are widely used as a school restructuring vehicle and produce increases in student achievement and self‐esteem and increased teacher morale and self‐confidence. Application of Deming’s principles and the TQM problem‐solving tools and techniques can be used to solve noninstructional problems of schooling. These areas, which create unnecessary costs to the school and community, include vandalism, school dropouts and student absenteeism. This case study presents a model for principals to apply to provide quality outcomes, at reduced cost, in noninstructional areas. Using teachers, parents, community members, and applying the problem‐solving tools and techniques of TQM to identify root problem causes, principals can identify realistic solutions which yield positive results and reduce costs in academic and nonacademic areas.

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Weller, L.D. (2000), "School attendance problems: using the TQM tools to identify root causes", Journal of Educational Administration , Vol. 38 No. 1, pp. 64-82. https://doi.org/10.1108/09578230010310984

Copyright © 2000, MCB UP Limited

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Total Quality Management (TQM) Framework In A Nutshell

The Total Quality Management (TQM) framework is a technique based on the premise that employees continuously work on their ability to provide value to customers. Importantly, the word “total” means that all employees are involved in the process – regardless of whether they work in development, production, or fulfillment.

Table of Contents

Understanding the TQM framework

The TQM framework was developed by management consultant William Deming who introduced it to the Japanese manufacturing industry.

Today, Toyota is perhaps the best example of the TQM framework in action. The carmaker has a “customer first” focus and a commitment to continuous improvement through “total participation”.

The focus of the TQM framework is the continual improvement of all processes with an organization, irrespective of whether they have a direct impact on customer satisfaction. 

Improvement comes from identifying and then removing or reducing errors that commonly occur in supply chain management, manufacturing, employee training, and customer experience.

The process of problem-solving and adding value to the customer experience is one where every individual takes an active role.

8 principles of Total Quality Management

While there is no universal approach to implementing a TQM framework, many businesses use the following eight principles. These are evergreen principles that can be applied to any industry and are incorporated in more modern management techniques.

1. Customer-focused

The TQM framework acknowledges that the customer is the final determiner of whether company processes are sufficiently high quality.

If the customer is not satisfied, then the company must refocus its efforts on understanding consumer needs and expectations on a deeper level.

2. Employee engagement

Engaged employees are empowered employees who are not fearful of losing their jobs. As a result, they have the confidence and experience to suggest and implement continuous improvement across many systems.

3. Process approach

Refining process is a fundamental component of the TQM framework. Here, refinement means processes are followed in a logical order to ensure consistency and increased productivity.

Flowcharts and visual action plans can be produced so that employees understand their responsibilities.

4. System integration

System integration means that every single employee in a company has a reasonable understanding of policies, standards, and objectives.

It is vital employees understand their roles and how they contribute to the greater success of the company – no matter how insignificant those contributions may seem.

5. Strategic and systematic approach

A business must develop strategies that are quality-centric.

Company mission statements and their associated goals and values should also reflect the quality-first approach to customer satisfaction.

6. Continual improvement

Continual improvement is important in developing a competitive advantage and also in meeting stakeholder expectations.

Toyota’s model for continual improvement places a high emphasis on employee participation, eliminating waste, and reducing bureaucracy.

These factors increase innovation and reduce costs, which ultimately flow to the consumer.

7. Decision-making based on facts

Informed decisions are derived from a deep understanding of a business’s market and its target audience.

Wherever possible, data should be collected to support employee experience and intuition concerning creating value for consumers.

8. Communication

Communication is an often overlooked yet vitally important part of any successful company.

It plays a key role in clarifying expectations while also increasing employee morale and motivation.

Communication also increases collaboration and innovation between previously separate departments in a single company.

How is TQM implemented?

TQM is implemented by following the PDCA cycle, a model that originated in the 1920s that is a core component of many modern quality frameworks.

Although the model was created by engineer and statistician Walter Shewhart, Deming was the one who was responsible for its wide distribution and so it is often called the Deming cycle.

With that said, below is a look at each of the four stages that comprise this cycle:

The most important stage where affected stakeholders come together to determine the root cause of a problem via detailed research or analysis such as the Fishbone diagram , 5 Whys , or Failure Mode and Effects Analysis (FMEA).

In the second stage, the stakeholders develop solutions to the problems identified in the planning stage.

Unlike Six Sigma , the PDCA cycle focuses more on whether employees deem a solution to be effective and less on measuring concrete gains.

Where a before-and-after check is performed to determine the effectiveness of the solution.

Any data can be compared to expected outcomes to ensure objectives are being met. Successful solutions should then be incorporated into broader processes and procedures to avoid problem recurrence. 

In the context of the TQM framework, the fourth and final stage encourages decision-makers to present the results of the test to relevant stakeholders to tell them what has occurred and to chart a way forward. 

TQM and the costs of quality

A fundamental component of the Total Quality Management framework is that the cost of doing something the right way is far less than doing it the wrong way and having to fix the mistake.

Nevertheless, some critics of the framework consider that the process of maintaining quality has an associated cost that cannot be recouped by the business.

To counter this view, Deming along with colleagues Joseph M. Juran and Armand V. Feigenbaum reframed the cost of quality as the cost of not producing a quality deliverable. These costs, they posited, were applicable across four categories:

• Prevention costs – or costs related to the creation of work areas that are safe and efficient. Prevention costs also encompass planning, training, and the conducting of regular reviews. The researchers noted that activities related to prevention were often allocated a minuscule amount of the company’s budget.
• External failure costs – these are costs incurred once a product has been released in the market, such as returns, repairs, recalls, or warranty claims.
• Internal failure costs – or the cost of any failure before the product has been released. Typical internal failures include faulty machinery, improper or poor quality raw materials, product design that requires multiple revisions, and scrapped product runs.
• Appraisal costs – these cover the cost of inspection and testing during the product development lifecycle, such as the evaluation of supplier materials.

Total Quality Management vs. Six Sigma

Similar to total quality management, Six Sigma also seeks to reduce errors.

The specificity of Six Sigma is that if limits govern a process error that separates good and bad process outcomes, the Six Sigma approach has a process mean (average) that is six standard deviations from each limit.

This, Motorola found, provided enough buffer for natural variation in process outcomes to fall within the lower and upper limits.

Six Sigma usually goes through the following process:

• Analyze data
• Improve processes
• Control future implementations

And with the help of the following implementation roles:

• Executive leadership
• Master Black Belts
• Black Belts
• Green Belts

Drawbacks of Using Total Quality Management (TQM):

While TQM is a powerful approach to quality improvement, it has some limitations and potential drawbacks:

1. Time-Consuming:

Implementing TQM requires a significant time investment to develop, implement, and sustain quality improvement initiatives.

2. Cultural Resistance:

Organizational culture may resist changes associated with TQM, leading to resistance from employees and management.

3. Resource-Intensive:

TQM often requires additional resources, including training, technology, and quality control processes, which can strain budgets and operational efficiency.

4. Complex Implementation:

TQM implementation can be complex, especially in larger organizations with multiple departments, making it challenging to coordinate efforts effectively.

5. Potential for Overemphasis on Metrics:

Overemphasis on metrics and data collection in TQM may lead to a focus on quantity over quality in some cases.

When to Use Total Quality Management (TQM):

TQM is valuable in various scenarios within an organization:

1. Quality Improvement:

Use TQM when aiming to improve product or service quality, reduce defects, and enhance customer satisfaction.

2. Process Optimization:

Implement TQM to optimize internal processes, increase efficiency, and reduce waste.

3. Cultural Transformation:

TQM is beneficial when an organization seeks to foster a culture of continuous improvement and quality excellence.

4. Customer-Centric Approach:

TQM helps organizations prioritize a customer-centric approach by meeting or exceeding customer expectations.

How to Use Total Quality Management (TQM):

Implementing TQM effectively involves several key steps:

1. Leadership Commitment:

Top management must commit to TQM principles and lead by example to drive cultural change.

2. Employee Involvement:

Involve all employees in quality improvement efforts, encouraging them to identify and address issues.

3. Customer Focus:

Understand customer needs and expectations, and use them as a basis for quality improvement initiatives.

4. Data-Driven Decisions:

Collect and analyze data to identify areas for improvement and make informed decisions.

5. Continuous Improvement:

Promote a culture of continuous improvement, where employees actively seek ways to enhance processes and products.

6. Training and Education:

Provide training and education to employees to ensure they have the necessary skills and knowledge for quality improvement initiatives.

7. Quality Tools and Techniques:

Utilize quality management tools and techniques such as Six Sigma, Lean, and the PDCA (Plan-Do-Check-Act) cycle.

8. Standardization:

Standardize processes and procedures to reduce variability and improve consistency.

9. Communication:

Maintain open and effective communication channels throughout the organization to share information and progress on quality initiatives.

What to Expect from Implementing Total Quality Management (TQM):

Implementing TQM can lead to several outcomes and benefits:

1. Improved Quality:

TQM initiatives lead to improved product or service quality, reduced defects, and higher customer satisfaction.

2. Increased Efficiency:

Optimized processes and reduced waste result in increased operational efficiency and cost savings.

TQM fosters a culture of continuous improvement, empowering employees to take ownership of quality.

4. Enhanced Customer Loyalty:

Meeting or exceeding customer expectations through TQM efforts builds customer loyalty and brand reputation.

5. Competitive Advantage:

TQM can provide a significant competitive advantage by delivering high-quality products and services.

6. Data-Driven Decision-Making:

TQM encourages data-driven decision-making, leading to better-informed and more effective strategies.

In conclusion, Total Quality Management (TQM) is a powerful approach to quality improvement and organizational excellence.

While it has its drawbacks and challenges, understanding when to use it and how to apply it effectively can lead to improved quality, customer satisfaction, and operational efficiency.

By following the steps outlined in the framework and recognizing its potential benefits and drawbacks, organizations can leverage TQM to achieve continuous improvement and maintain a competitive edge in their industries.

Case Studies

Automotive Industry:

• Toyota’s Lean Manufacturing: Toyota’s successful implementation of TQM principles through Lean Manufacturing has not only improved product quality but also reduced waste and increased production efficiency.
• Ford’s Six Sigma Initiatives: Ford extensively utilizes Six Sigma methodologies to enhance product quality, eliminate defects, and optimize manufacturing processes.
• Honda’s Quality Circles: Honda’s commitment to quality circles allows employees to actively participate in identifying and resolving quality-related issues, contributing to continuous improvement.

Hospitality Industry:

• Marriott International’s Customer-Centric Approach: Marriott’s TQM approach revolves around ensuring exceptional customer experiences, personalized services, and high levels of customer satisfaction.
• Ritz-Carlton’s Service Excellence: Ritz-Carlton has set industry standards for service quality by emphasizing attention to detail, employee training, and service consistency.

Aerospace Industry:

• Boeing’s Quality Control: Boeing’s aerospace products adhere to rigorous quality control standards to ensure safety, reliability, and compliance with industry regulations.

E-commerce Industry:

• Amazon’s Customer Service Excellence: Amazon’s relentless focus on customer service quality and satisfaction has made it a leader in the e-commerce industry.

Healthcare Industry:

• Mayo Clinic’s Patient-Centric Care: Mayo Clinic’s TQM approach prioritizes patient safety, medical excellence, and continuous improvement in healthcare delivery.
• Johnson & Johnson’s Product Safety: Johnson & Johnson is dedicated to ensuring the safety and quality of its healthcare products through robust quality assurance practices.

Logistics Industry:

• FedEx’s Supply Chain Efficiency: FedEx places a strong emphasis on logistics efficiency, on-time deliveries, and error reduction to maintain its industry-leading position.

Technology Industry:

• Microsoft’s Software Quality Assurance: Microsoft’s TQM practices include rigorous software testing, security measures, and continuous improvement to provide reliable and secure products.
• Apple’s Product Quality: Apple maintains high product quality standards and user experience by implementing TQM principles in product design , manufacturing, and customer support.

Airline Industry:

• Southwest Airlines’ Employee Empowerment: Southwest Airlines promotes employee engagement and empowerment, leading to exceptional customer service and operational efficiency.

Electronics Industry:

• Samsung’s Quality Assurance: Samsung ensures the quality, performance, and reliability of its electronic products through comprehensive quality assurance processes.

Coffee Industry:

• Starbucks’ Coffee Excellence: Starbucks maintains the quality of its coffee beans, beverage preparation, and customer experience across its global chain of coffeehouses.

Diverse Industry Applications:

• General Electric’s Six Sigma Success: General Electric’s extensive use of Six Sigma methodologies has resulted in substantial cost savings, process improvements, and enhanced quality control across its diverse business divisions.
• Walmart’s Supply Chain Management: Walmart leverages TQM principles in its supply chain management to reduce costs, minimize errors, and improve inventory control.

Key takeaways

• The TQM framework is an approach to long-term success by increasing customer satisfaction through the reduction or elimination of errors.
• At its core, the TQM framework emphasizes a total commitment to long-term change through a cohesive and collaborative approach to employee problem-solving.
• The TQM framework utilizes eight principles with a focus on customers, communication, employees, and incremental improvements.

Key Highlights

• TQM Overview: Total Quality Management (TQM) is a management approach that focuses on continuous improvement and the provision of value to customers. It was developed by management consultant William Deming and introduced to the Japanese manufacturing industry.
• Customer-Centric: TQM places the customer at the center of quality determination. Customer satisfaction is the ultimate measure of the effectiveness of company processes.
• Employee Engagement: Engaged employees are empowered to contribute to continuous improvement, as they are not afraid of repercussions. They actively participate in identifying and implementing improvements across various systems.
• Process Approach: TQM emphasizes refining processes to ensure consistency and increased productivity. Flowcharts and visual action plans are used to ensure logical process order.
• System Integration: All employees in a company should understand the policies, standards, and objectives. Each employee’s role and contribution to the company’s success are significant, regardless of their function.
• Strategic Approach: TQM encourages the development of quality-centric strategies, ensuring that company goals and values reflect a customer-first approach.
• Continual Improvement: TQM promotes a culture of continuous improvement, aiming to gain a competitive advantage, meet stakeholder expectations, and reduce costs.
• Data-Driven Decision-Making: Informed decisions are made by collecting data to understand the market, target audience, and customer needs, enhancing the ability to add value to the customer experience.
• Communication: Effective communication plays a pivotal role in increasing employee morale, collaboration, and innovation . It fosters a holistic understanding of the company’s objectives.
• Implementation Process – PDCA Cycle: TQM is implemented through the Plan-Do-Check-Act (PDCA) cycle, a model introduced by Walter Shewhart and popularized by Deming.
• Plan (P): Stakeholders collaborate to identify the root cause of a problem through analysis methods like Fishbone diagrams or 5 Whys.
• Do (D): Solutions to identified problems are developed and implemented based on employee feedback and effectiveness.
• Check (C): Effectiveness of solutions is assessed through before-and-after comparisons, ensuring objectives are met. Successful solutions are integrated into broader processes.
• Act (A): Results of the test are presented to stakeholders, and a plan for moving forward is charted.
• Costs of Quality: TQM emphasizes that the cost of ensuring quality is less than fixing mistakes. Critics’ concerns about quality costs are countered by viewing them as the cost of not producing quality deliverables.
• Cost Categories: Costs of quality are divided into prevention costs (creating safe and efficient work areas), external failure costs (post-release issues), internal failure costs (pre-release issues), and appraisal costs (inspection and testing).
• TQM vs. Six Sigma: TQM and Six Sigma both focus on reducing errors and continuous improvement. Six Sigma is data-driven and aims to reduce defects by setting specific process error limits (Six Sigma level).
• Key Benefits: TQM leads to long-term success by enhancing customer satisfaction through error reduction and continuous improvement. It emphasizes a collaborative approach to employee problem-solving and a commitment to change.

• Read also: Business Strategy, Examples, Case Studies, And Tools

Read Also:  Continuous Innovation ,  Agile Methodology ,  Lean Startup ,  Business Model Innovation ,  Project Management .

Read Next: Agile Methodology , Lean Methodology , Agile Project Management , Scrum , Kanban , Six Sigma .

Connected Agile & Lean Frameworks

Agile Methodology

Agile Program Management

Agile Project Management

Agile Modeling

Agile Business Analysis

Agile Leadership

Andon System

Bimodal Portfolio Management

Business Innovation Matrix

Business Model Innovation

Constructive Disruption

Continuous Innovation

Design Sprint

Design Thinking

Dual Track Agile

eXtreme Programming

Feature-Driven Development

GIST Planning

ICE Scoring

Innovation Funnel

Innovation Matrix

Innovation Theory

Lean vs. Agile

Lean Startup

Minimum Viable Product

Rational Unified Process

Rapid Application Development

Retrospective Analysis

Scaled Agile

Spotify Model

Test-Driven Development

Scrum Anti-Patterns

Scrum At Scale

Stretch Objectives

Toyota Production System

Total Quality Management

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What Are Soft Skills at Work?

What are soft skills examples, why are soft skills important, what soft skills do employers look for, how to improve your soft skills, including soft skills on a resume, what careers are right for you, based on your soft skills quiz, what are soft skills definition and examples.

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Forage puts students first. Our blog articles are written independently by our editorial team. They have not been paid for or sponsored by our partners. See our full  editorial guidelines .

Table of Contents

Soft skills are non-technical skills that describe how you work and interact with others. Unlike hard skills , they’re not necessarily something you’ll learn in a course, like data analytics or programming skills . Instead, they’re something you often build through experience. Soft skills reflect your communication style, work ethic , and work style. 

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Soft skills are interpersonal skills that describe how you work and interact with other people. These skills apply to all kinds of jobs and careers. For example, a professor and an investment manager can both be great communicators and have exceptional leadership skills, although how those skills translate into their professions can look quite different. No matter what field you’re interested in, these skills won’t just come in handy — they’ll be integral to your success at a company.

These skills generally fall into a few different categories:

• Communication skills
• Leadership skills
• Teamwork skills
• Problem-solving skills
• Critical thinking skills
• Time management skills

Communication Skills

Communication skills describe how you interact with the people you work with — from your boss to your friendly colleague to an important client. These skills are vital in getting your ideas across in a meeting, sharing status updates on a project, or effectively negotiating with a coworker about how to move forward. Some soft communication skills include:

• Public speaking
• Negotiation
• Conflict resolution
• Verbal communication
• Friendliness
• Empathetic listening

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Leadership Skills

Leadership skills are essential in all types of roles, even if you’re not directly managing someone. Adding these skills to a resume shows your potential employer that you’re confident in taking charge and leading by example. Some soft leadership skills include:

• Decision-making
• Adaptability
• Team-building
• Reliability

Teamwork Skills

No one works in a silo, even if they’re on a team of one. Teamwork skills are critical in any job to work harmoniously with stakeholders across projects, teams, and departments. These skills aren’t just about getting along, though. It’s also essential to know when to disagree and push back to get the best result. Some soft teamwork skills include:

• Rapport-building
• Respectfulness

Problem-Solving Skills

Companies hire people to help them solve problems and find the best solutions. No matter what role you’re taking on, you’ll need to think creatively, analytically, and logically to understand why problems are happening and how to solve the issue.

Whether it’s understanding why there’s not enough traffic to a website or how to raise students’ test scores, problems in the workplace are everywhere, and companies want new hires to bring fresh and innovative ways to solve them. Problem-solving skills include:

• Communication
• Creative thinking

Critical Thinking Skills

These skills help people identify the root cause of an issue. Critical thinkers analyze, research, identify, and think outside the box to make sense of information. At work, critical thinking helps people solve problems and challenge preconceived notions to help create the best path forward. Some soft critical thinking skills include:

• Analytical skills
• Questioning

Time Management Skills

Time management skills ensure employees perform their jobs efficiently and productively. While time management is essential to any role, these skills are critical in hybrid and remote work environments. Employers want to know they can trust employees to get things done even if they’re not physically in an office with them. Some time management skills include:

• Prioritization
• Detail-oriented

“We all have soft skills because they are part of who we are,” Sabrina Cortes, resume writer, says. “Top soft skills are teamwork, attention to detail , time management, organization, verbal and written communication, leadership, emotional intelligence, adaptability/flexibility, problem-solving/conflict resolution, and interpersonal skills. … Unfortunately, all too often, these personality traits are overlooked [by applicants]. But they play a role in each job out there.”

Of course, some skills are more applicable to specific jobs than others. Here are some examples of how soft skills can be applied to specific industries:

Soft skills are important because they make you a successful employee and a helpful team member — and they’re a crucial part of helping you land a job. 

“Employers want to see how well [potential employees] work with people and can think beyond their learning,” Joanne Rosen, Chief Operations Officer at Write Choice Resumes, explains.

Employers look for soft skills because these skills are helpful indicators of how successful a new hire will be. According to a Leadership IQ study, 89% of new hire failures were a result of poor soft skills, not a lack of technical failures. New hires were more likely to fail because they lacked soft skills like coachability, emotional intelligence, and motivation. Only 11% of new hire failures were a result of technical incompetence. 

This trend especially rings true for entry-level hires. Because entry-level applicants don’t have advanced technical skills yet, having good soft skills can set you apart from the competition.

>>MORE: Learn what careers are right for you based on your skillset with our career aptitude test .

Not all soft skills are created equal in employers’ eyes. According to a 2023 survey conducted by the National Association of Colleges and Employers (NACE), the top skills employers look for are problem-solving skills and the ability to work in a team.  

“In my experience, it’s valuable [for students] to convey these three key soft skills: time management, communications, and customer service,” 5X Certified Resume Writer Virginia Franco says. “They are most relevant to entry-level success across diverse industries and job functions.”

Now you know — soft skills are a major way to stand out in the job search when you’re just starting out. But how do you start to improve yours?

Go Out of Your Way to Work With Others

If you’re like me, group projects are the bane of your academic career. Yet they’re a valuable way to build soft skills and experience that you can talk about in interviews. Proactively seek out group settings when working on projects, whether you’re in the classroom or for an extracurricular. Even if the project takes a little longer than it would have on your own, you’ll practice skills like problem-solving, collaboration, communication, and feedback. If you’re lucky, you’ll even build conflict resolution skills !

Practice Responsive Soft Skills

Soft skills aren’t just what you bring to the working world, but how you respond to it. Start with how you communicate with others. It’s not just about what you’re saying to another person, but how you listen and process what they’re saying back to you. 

Instead of just hearing the words someone is saying, make a conscious effort to truly understand their perspective, emotions, and underlying needs. Give them your full attention, maintain eye contact, and provide verbal and non-verbal cues to show that you are engaged in the conversation. By actively listening , you can develop a deeper understanding of others, build trust, and respond in a more thoughtful and empathetic manner.

Self-Reflect

Finally, the best way to work on your soft skills is to reflect on your progress. Soft skills can be a lot harder to measure than hard skills because they’re often unquantifiable. Instead, you can track your progress by thinking of examples of when you have (or haven’t!) used your soft skills when working on a school project, or in an internship , volunteer opportunity, part-time job, extracurricular, or any other experience you might talk about in an interview. Where are your gaps? Could you have been a more effective communicator? Were you a great negotiator? What can you do differently next time?

Because employers are looking for soft skills in the entry-level hiring process, it’s crucial for you not only to include them, but to know the right ones to include.

What Soft Skills Should I Include on My Resume?

One of the best ways to know what skills to include on your resume is to look at the job description. Just as you’d include hard skills based on a job description’s requirements, reading what a company is looking for can help determine what soft skills to include. 

>>Forage find: Unlike hard skills, the exact soft skills an employer is looking for might not be as spelled out. Look for clues on what kinds of workers they’re looking for — Team players? Independent? Self-motivated? — to understand what skills to include.

Is the company looking for someone who can handle communicating big ideas with customers and clients? Demonstrate those communication skills. Does it want someone strategic who can tackle big issues? Show that you’re an excellent problem-solver.

How to Include Soft Skills on a Resume

Resume experts agree that you don’t necessarily need a dedicated skills section to flaunt your soft skills on a resume.

“Soft skills need to be demonstrated, not listed,” Rosen says. “Example: Rescued at-risk account by communicating with the client about needs and creating innovative customer-facing solutions.”

By using the phrases “communicating” and” “creating innovative, customer-facing solutions,” the candidate shows off their communication skills and problem-solving skills.

>>MORE: How to Write a Resume

You can also use a professional summary to flex these skills.

“I like to mix soft skills with hard skills,” Wendi Weiner , attorney and resume expert, says. “You can include a sentence in your professional summary that speaks to some of your soft skills. Example: ‘Record of leading projects from concept to completion through strong problem solving, team building, and solid time management.’ The hard skill in this sentence is project management, and it’s leveraged by the soft skills of problem-solving, team building, and time management.”

If you do include a skills section on your resume, you can use the same section to list both hard and soft skills . It’s a great way to save on space while sharing a well-rounded picture of your abilities.

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What is Total Quality Management?

How does total quality management (tqm) work, the key players in total quality management: customers, suppliers, and employees, implementing tqm principles and processes, history of total quality management, what are the principles of total quality management (tqm), customer focus, leadership commitment, employee involvement, process-oriented approach, continuous improvement, evidence-based decision making, supplier relationships, the seven basic tools of total quality management, examples of total quality management in action, related resources, total quality management (tqm).

A comprehensive approach to organizational management that emphasizes the continual pursuit of quality and operational excellence

A commonly known quality management approach is Total Quality Management (TQM). This philosophical approach focuses on leading and achieving quality excellence in every aspect of an organization. It emphasizes continuous improvement , involving all employees in the pursuit of customer satisfaction .

TQM fosters a culture where quality is ingrained, encouraging teamwork , proactive problem-solving , and a commitment to excellence . By integrating quality into all processes and departments, TQM aims to eliminate defects, streamline operations, reduce waste, and enhance overall performance, ensuring long-term success and competitiveness in the market.

Key Highlights

• Total Quality Management (TQM) emphasizes continuous improvement, involving all employees in achieving quality excellence. It fosters a culture of ingrained quality, teamwork, proactive problem-solving, and commitment to excellence, aiming to eliminate defects, reduce waste, and enhance overall performance.
• TQM focuses on customer satisfaction, employee involvement, process-oriented approaches, continuous improvement, evidence-based decision-making, supplier relationships, and leadership commitment to drive a culture of quality excellence.
• TQM requires strong leadership commitment, systematic processes, and employee engagement. Real-world examples like Toyota Production System (TPS), Motorola’s Six Sigma, and healthcare sector applications illustrate TQM’s impact on quality enhancement in various industries.

Total Quality Management involves continuous improvement , leveraging data and metrics to make informed decisions, fostering a culture of teamwork and innovation, and aligning strategies with customer needs.  Among the primary TQM principles is customer satisfaction – in other words, meeting and exceeding customer needs.

Quality is integral in every aspect of operations , with the goal of striving for excellence in products, services, and internal processes while adapting to evolving market demands. Satisfied customers is the outcome of such a quality-integrated system.

Related to TQM is the concept of Kaizen , a Japanese term for “continuous improvement.”  This concept emphasizes incremental changes made by every employee. It’s ideal for organizations looking to instill a culture of constant, small-scale improvements. Kaizen encourages employee engagement , fosters creativity , and is effective in workplaces where innovation and adaptability are paramount .

In Total Quality Management (TQM), customers , suppliers , and employees play pivotal roles as key stakeholders contributing to quality assurance and quality control in an organization.

Customer focus is central ; customer satisfaction steers the direction of quality standards. Understanding the feedback they provide on-demand products, preferences, and experiences is fundamental to delivering products or services that surpass expectations.

Suppliers represent another critical element. They provide the raw materials and inputs necessary for a production process or insight into the planning phase of the overall manufacturing processes, directly impacting the quality of the final output. Collaborating closely with suppliers ensures consistency and reliability in the inputs, thus influencing the quality of the end product or service.

Employees must be on the same page as top management to properly apply total quality management tools. Examples include the integration of each production process as a holistic view of the overall manufacturing processes. The widely agreed-upon approach to TQM helps build integrated systems that foster customer satisfaction.

Empowering and engaging employees at all levels fosters a culture where everyone contributes ideas, innovation, and efforts toward achieving superior quality, ultimately benefiting the customers and the organization as a whole.

TQM processes are used to improve processes, instill an organizational commitment to quality assurance and quality control, and dedication to continuous improvement that materially drives customer satisfaction.

Implementing TQM requires strong leadership commitment to drive cultural change . Clear objectives aligned with the organization’s mission and vision are set, and resources are allocated for training and skill development.

Total Quality Management involves engaging employees at all levels, with effective communication that fosters a sense of ownership and empowerment. It relies on systematic data collection and analysis (such as benchmarking) to foster feedback loops for evidence-based decision-making (also known as the Plan-Do-Act-Check cycle of Kaizen).

Engagement of people is another one of a handful of total quality management principles.  Effective communication is vital, ensuring everyone understands their role in achieving quality goals, promoting transparency, and encouraging collaboration across departments.

Total Quality Management (TQM) originated in the early 20th century with statistical quality control methods in manufacturing. However, its systematic development gained prominence post-World War II.

A key influencer is Dr. W. Edwards Deming, who introduced principles focusing on statistical methods, process improvement, and employee involvement.

Japan notably embraced TQM in its post-war reconstruction era, propelling the nation’s economic resurgence by applying Deming’s principles. Japan’s success in quality and productivity spurred global interest in TQM during the 1980s.

Western countries implement total quality management in response to intense market competition. Alongside the economic shift beyond the manufacturing sector, the versatile approach was adopted in a variety of service sectors, such as healthcare.

Today, TQM is the foundation of many quality approaches, emphasizing customer-centricity, continual improvement, and organizational excellence, influencing operational strategies worldwide.

The American Society of Quality (ASQ) is an international organization sought by companies seeking to implement strong quality management systems.  The international organization advocates for the ISO 9000 family of standards ,

Total Quality Management (TQM) encompasses a set of fundamental guidelines aimed at fostering a culture of quality excellence within an organization.  The American Society of Quality (ASQ) outlines seven principles within their strategic and systematic approach (ISO 9000).

Understanding, meeting, and exceeding customer expectations is at the core of TQM.  With proper training, TQM focuses on an enduring organizational culture to anticipate and respond to customer input and feedback (i.e., customer satisfaction) as the key concept to remain competitive.

Active management participation to demonstrate their dedication and involvement in championing quality management initiatives throughout the entire organization.  To achieve success, the core values of delivering quality are inherent in TQM strategies.

Encourage and empower employees at all levels to contribute ideas and efforts in a continuous effort to achieve quality improvement.  Total employee involvement integrates quality throughout the production cycle.  Quality-related issues and other immediate process issues are addressed promptly.

Emphasizing systematic and structured methods for achieving quality goals.  The systematic approach to process improvements is customer-focused, with quality planning to improve service quality throughout the customer journey.

The core component of TQM is the commitment to delivering quality and the continuous effort to improve the quality of products and services.  TQM strives to achieve excellence and total quality control as part of the strategic plan of optimizing and improving processes.

Tools must collect and apply accurate data and rigorous analysis to drive informed decisions.  Basic tools and organizational performance data used by TQM practices can span cross-functional teams.

Supply chain management is a critical component of modern quality control.  Companies collaborate closely with suppliers to ensure joint quality planning, from basic raw materials and inputs, as part of an integrated system of business processes and production processes.

These principles collectively aim to cultivate a culture where quality is everyone’s responsibility, striving for excellence and continuous advancement in all aspects of the organization to meet or exceed customer expectations.

The American Society of Quality (ASQ) attributes attributes “the basic seven” tools of quality, sometimes known as 7 QC (Quality Control) tools, to Kaoru Ishikawa . These quality management tools are instrumental in analyzing data, identifying problems, understanding processes, and making informed decisions to improve quality within an organization.

Thank you for reading CFI’s guide to Total Quality Management (TQM). To keep learning and developing your knowledge base, please explore the additional relevant resources below:

• Quality Management
• Decision Analysis (DA)
• Supply Chain
• See all management & strategy resources
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Bridging the labor mismatch in US construction

The US construction sector seems set for a jobs boom. The US Bipartisan Infrastructure Law  projects $550 billion of new infrastructure investment over the next decade, which our modeling suggests could create 3.2 million new jobs across the nonresidential construction value chain. That’s approximately a 30 percent increase in the overall US nonresidential construction workforce, which would mean 300,000 to 600,000 new workers entering the sector—every year.

This is a big ask for an industry that is already struggling to find the people it needs. In October 2021, 402,000 construction positions 1 Included both nonresidential and residential construction openings. Further granularity is not available from the US Bureau of Labor Statistics. remained unfilled at the end of the month, the second-highest level recorded since data collection began in December 2000.

In this environment, wages have already increased significantly since the onset of the COVID-19 pandemic, reflecting intense competition for employees, with employers offering higher pay or other nonwage benefits. Between December 2019 and 2021, construction wages grew by 7.9 percent. 2 Quarterly Census of Employment and Wages, US Bureau of Labor Statistics. Competition from other sectors for the same pool of labor is heating up, too. For example, over the same period, transportation and warehousing wages grew by 12.6 percent. The prospect of higher pay and better working conditions is already tempting experienced workers away from construction and into these and other sectors.

No end in sight

Today’s mismatches are likely to persist because of structural shifts in the labor market. The relationship between job openings and unemployment has departed from historical trends. In January 2022—two years from the start of the pandemic—the US unemployment rate stood at 4.0 percent, close to its prepandemic level of 3.5 percent. Job openings remained exceptionally high, however, with 10.9 million unfilled positions as of the end of December 2021, compared with 5.9 million in December 2019.

This labor supply imbalance has multiple root causes, some shorter term and cyclical while others are more structural in nature. For example, the pandemic brought forward the retirements of many in the baby-boomer generation, with an estimated 3.2 million leaving the workforce in 2020—over a million more than in any year before 2016. According to the American Opportunity Survey , among those who are unemployed, concerns about physical health, mental health, and lack of childcare remain the dominant impediments preventing reentry into the workforce. Research on the “Great Attrition/Great Attraction”  also highlights the importance of nonwage components of the employee value proposition. Record job openings and quit rates highlight employees’ growing emphasis on feeling valued by their organization, supportive management, and flexibility and autonomy at work.

Additionally, the pipeline of new construction workers is not flowing as freely as it once did. Training programs have been slow to restart operations after pandemic-driven safety concerns led to their suspension the spring of 2020. The industry is finding it more difficult to attract the international workforce that has been an important source of talent for engineering, design, and contracting activities. Net migration has been falling since 2016, a trend accelerated by COVID-19 travel restrictions. 3 Population estimates, US Census Bureau. Between 2016 and 2021, net migration declined steadily from 1.06 million to 244,000.

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Impact on projects.

The interconnected nature of the construction value chain means that the labor mismatch generates knock-on effects across the project life cycle and supply chain. By late 2021, project owners were reporting that up to 25 percent of material deliveries to sites were either late or incomplete. In project execution, the combination of higher hourly rates, premiums and incentives, and overtime payments was resulting in overall labor costs as much as double prepandemic levels. Meanwhile, difficulty accessing skilled and experienced people was leading some owners to report project delays related to issues around the quality and productivity of on-site work.

In some US cities and their suburbs, wage growth has surpassed the level seen in core Gulf Coast counties at the height of the shale oil boom. Labor shortages in the shale sector drove wages up by 5 to 10 percent and were correlated with steep drops in productivity. The productivity of some tasks fell by 40 percent or more during shale construction peaks (exhibit), and overall productivity declined by about 40 percent per year when labor was in short supply. This forced owners to extend project timelines by 20 to 25 percent. The impact of a long-term, nationwide labor mismatch might be even more severe than the shale industry’s experience, given that oil companies were able to attract new workers from around the country.

Getting back into balance

The labor mismatch in the construction sector is bad today, and set to get worse. To avoid a decade or more of rising costs, falling productivity, and ever-increasing project delays, companies in the industry should consider thoughtful actions now.

Those actions could address three components of the challenge. First, companies could do everything possible to maximize productivity through measures aimed at improving efficiency across the value chain. Second, they could expand the pool of available labor by doubling down on accessing diverse talent and working harder to retain the employees already in their organization. Finally, they could consider making labor a strategic priority, with senior leadership attention within companies.

Improving construction productivity

Companies could access a range of levers to reduce the labor content required per job and drive to improve productivity in project development and delivery. Those levers involve changes to project designs and fresh thinking about when, where, and how work is done.

Improvements in productivity occur long before work starts on the ground. They include rigorous control of project scope, design simplification, and standardization. Increasing the use of off-site and modular construction , for example, could allow projects to capture multiple benefits, including accelerated design cycles; the greater productivity associated with industrialized, factory floor manufacturing techniques; automation; and less time spent on site.

Smarter execution management, enabled by digital technologies and analytics techniques could drive better, faster decision making during project delivery. Real-time data collection, for example, gives project managers earlier, more detailed insights about progress, allowing them to intervene more effectively to maintain productivity and keep projects on track. Intelligent simulation software allows teams to evaluate hundreds of thousands of possible critical paths, identifying approaches that could be more efficient or less risky than the conventional wisdom.

Lean construction is another proven way to drive significant and sustainable productivity improvements. Establishing a centralized, continuous improvement engine could enhance on-site execution through integrated planning, performance management, and waste elimination. Key stakeholders across the project work with a common, agreed set of key performance indicators. That allows them to address issues in real time and facilitates collaboration to reduce waste and variability work. Capability building across the planning and construction teams could help team members understand and adopt lean construction practices.

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Reimagining talent.

To ensure access to the skills they need, construction sector companies can accelerate the onboarding of recruits, boost retention by revisiting what employees want beyond wages, and invest more in developing their pipelines of future workers.

In the near term, employers could prioritize review of job applications and reduce the number of steps in both the interview and onboarding process. In the medium term, both the public and private sectors could look to reduce hiring timelines and shift to a skills-based approach when hiring.

In the medium term, retaining current staff and attracting new talent will both turn on understanding of what employees value beyond wages. Competitive wages are now table stakes, so employees are thinking about a broader set of benefits and workplace characteristics when making decisions about where to work. Research on attrition in the postpandemic workplace  has shown that they are placing more emphasis on autonomy, flexibility, support, and upward mobility.

In the longer term, the construction industry can consider a new approach to talent attraction, development, and retention. Talent acquisition could begin early, through partnerships with educational institutions including universities, colleges, and high schools. These partnerships could boost awareness of the possibilities of a career in the sector and ensure future employees have appropriate skills prior to onboarding.

Companies could also look more widely for potential recruits, considering individuals who have taken alternative educational paths, such as technical degrees or hands-on experience. The Rework America Alliance , a Markle-led coalition in which McKinsey is a partner, illustrates the importance of skills-based, rather than credential-based, hiring. A skills-based perspective  is key to tapping into the talents of the 106 million workers who have built capabilities through experience but whose talents are often unrecognized because they don’t have a four-year college degree. A skills-based approach could be complemented by reimagining apprenticeships to bring younger students and vocational talent into the industry at an earlier stage in their careers.

Employers could consider working with a range of nontraditional sources of talent, including veteran-transition programs, formerly incarcerated individuals, and others. Homeboy Industries provides an example of the local impact, effectiveness, and potential of working with often overlooked population segments. Moreover, identifying and attracting talent from outside the traditional paths used by the construction industry could also help it to increase the diversity of its workforce. Today, 88 percent of the sector’s workforce is White and 89 percent is male. 4 Labor Force Statistics from the Current Population Survey Database, US Bureau of Labor Statistics, accessed March 10, 2022.

Looking at labor through a strategic lens

Labor and skills shortages have the potential to slow growth and erode profitability across the construction value chain. For C-suites, there’s no other single issue that could protect against significant cost erosion. Companies could consider establishing a systematic talent acquisition and retention program, led by a C-level executive and a core part of the CEO agenda. That program could first be tasked with building a robust fact base on current and emerging labor needs and availability gaps. It could then identify a bold set of initiatives that address labor-related issues across the value chain. This exercise starts in the boardroom, but it doesn’t stop there. Leadership will likely need to be increasingly present in the field and on the job site too, celebrating and recognizing top talent throughout the organization.

The labor challenge extends well beyond corporate boundaries. Since the successful delivery of a project could be jeopardized by labor shortages in a single value-chain participant, project owners and contractors may want to adapt the structure of project relationships and contracts. Moving away from traditional contracting methods to collaborative contracts , for example, allows participants to share market risks and opportunities as a project evolves, rather than baking in worst-case estimates at the outset of negotiations.

The US construction sector is poised to revitalize, replace, and expand the country’s infrastructure. Done right, that will power inclusive growth and set up the economy for success in the 21st century. To do so, the sector will need to address its labor challenges. That calls for the application of a diverse set of tools and approaches to create better jobs, get the most out of its people, and optimize agility and collaboration across the value chain.

Garo Hovnanian is a partner in McKinsey’s Philadelphia office, Ryan Luby is a senior knowledge expert in the New York office, and Shannon Peloquin is a partner in the Bay Area office.

The authors wish to thank Tim Bacon, Luis Campos, Roberto Charron, Justin Dahl, Rebecca de Sa, Bonnie Dowling, Bryan Hancock, Rawad Hasrouni, Adi Kumar, Jonathan Law, Michael Neary, Nikhil Patel, Gaby Pierre, Jose Maria Quiros, Kurt Schoeffler, Shubham Singhal, Stephanie Stefanski, Jennifer Volz, and Jonathan Ward for their contributions to this article.

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