Implementation Of TQM As A Tool For Service Delivery In The Nigerian Banking Industry
Implementation Of TQM As A Tool For Service Delivery In The Nigerian Banking Industry
Abstract
This study was carried out on the implementation of TQM as a tool for service delivery in the Nigerian banking industry. For the purpose of this research, the study is restricted to four (4) selected banks in Makurdi, the Benue state capital, namely: First bank plc, United bank for Africa Plc, Eco bank plc and Union Bank PLC. All the selected banks have three (3) branches each respectively in Makurdi, the Benue state capital which was examined from 2005 to 2015.The researcher adopted a field Survey design for data collection in this study. The study consisted of the employees and customers of the four (4) sample banks with their respective branches within Makurdi. From the information gathered through a field survey carried out, the population of the study was 134,874 consisting of 424 members of employees and 134, 450 customers from all the selected banks.
A sample size of 600 was chosen using convenience sampling method by selecting 20 employees and 30 customers each from the respective branches of the study population. The major instrument used for the purpose of data collection in this study was the questionnaire. The hypothesis was analyzed using Chi-Square statistics, while SPSS version 22 was used to run the analysis. The result of the study showed that the implementation of TQM has significant effect on customer’s satisfaction in the Nigeria banking industry. Also, the implementation of TQM does significantly enhance the quality-of-service delivery in the Nigerian banking industry. Finally, the implementation of TQM does significantly improve the performance of the Nigerian banking industry.
Based on the findings of this study, it pertinent to state here conclusively that TQM is a pivotal tool for all organizations that needs to breakeven and stay afloat in this presently stiff competitive global business environment being it small or large organizations, government owned or privately owned. The study recommended that the Nigerian banks should re-invent themselves wholly into s customer-centric organization where the voice of the customer is crucial part of business planning.
Chapter One
1.0 Introduction
1.1 Background to the Study
It is no longer news that business Organizations World over, being it service or manufacturing are coming to terms with the stack reality that customers are kings and they are the main reason why organizations do exist. As such, customer focus and satisfaction through quality service delivery now forms part and parcel of the aims and objectives of any global competitive economic environment (Lemo, 2002).
In the light of the above thinking, the Nigerian banking industry as a vital service organization in the Nigerian economy is not left out.And this is because the banking industry is the bedrock of any developed or developing economy like ours. The pace of economic development depends on the volume and direction of investment provided by the savings of the banks. The ability and propensity of the banks, more than any other segment of the financial system, to mobilize savings and channel these funds towards investment needs of the economy, therefore mark them out as critical agents of the economic growth and development. Without banks and other financial institutions, arrangement of savings and investment will not only be inefficient, but more importantly may lead to less than optimum resources allocation (Nwachukwu, 1998). And owing to the stiff competitive business environment and the pivotal needs to meet and surpass customers’ expectations, banks have adopted the implementation of a strategic management ideology called total quality management (TQM) as a tool for its service delivery (Newman & cowling, 1996).
Nigerian commercial banks in particular have adopted TQM to improve the efficiency and effectiveness of service delivery that is offered to customers via improved business process as well as enhanced managerial decision making and work group collaboration. Suffice to say that TQM is the order of the day in all Nigerian banks and this has brought about innovations like automated teller machines (ATM) which can offer quicker services to their numerous customers even outside the banking hall inclusive of on non-working hours or days of the banks. Furthermore, services like online real-time banking offers to customers the ample opportunity to carryout different transactions on their account(s) at any branch in Nigeria and beyond. Internet banking, mobile banking, SMS and e-mail alerts are among the creation of TQM as a service delivery tool in the banking industry beside the general increase in deployment of information communication technology (ICT) in banking industry (Nwachukwu, 1998).
What then is total quality management if one may ask? It is a strategic management ideology that is concern with managing in totality, entirely or all ramifications the quality of their products/services offered to the customers in a competitive market. The management thinking here is that all eyes should be on the customer in terms of eliciting his expectations and striving to not only meet but surpass them. This is because the customer is the fulcrum around whom all things pertaining to the concept of total quality management revolve.
The concept of customer is indeed the first principle of TQM from which all other principles are derived. And because of the overwhelming importance of the customer, the organization’s goals and values must be establish through his eyes (Akpa, 2014).
In order words, TQM refers to a philosophy and set of guiding principles that represent the foundation of an excellent organization and ensure survival of organization in the competitive economy of today (Besterfield, 1999). TQM is a technique that underscores the continuous improvement of products and services quality to satisfy customers and enhance productivity. The emergence of TQM has been one of the most significant developments even in the United States management Practice. The focus on the development of TQM systems in the US appears to have begun around 1980 in response to global competition and stiff rivalry in the US manufacturing sub-section arising from Japan (Easton and Jarrel, 1998). But in the last three decades TQM has become pervasive and widely accepted in services, government, healthcare, manufacturing and banking sub-sectors of the economics (Fotoponlan and Psomes, 2009).
Arora, (2006) assert that continuous attention has been given to TQM in the industrialized countries. Researchers have investigated quality practice in the developing countries in the last ten years and according to Moballeghi and Moghaddam, (2011) there is a growing awareness that a well designed and well executed TQM process is one of the most effective routes to increase products and services quality, productivity and profitability in banking industry.
TQM in whichever way it is viewed, aims at providing quality products and services that meet or exceed the customer’s needs and expectations. It entails a management philosophy and company practice that is aimed at harnessing the human and material resources of an organization in the most effective way to achieve the objectives of organization which may include customer satisfaction, business objective such as growth/profit or market positioning and of course provision of services to the community.
From the foregoing, and in line with the new management thinking, this study therefore, seeks to examine the implementation of TQM as a tool for service delivery in the Nigeria banking industry.
1.2 Statement of Problem
The Nigerian economy as a whole has experienced serious economic problems like persistent inflation, falling profit, wide spread business risk and bank failures in particular; hence, the necessity for banks and corporate organizations to adopt effective and efficient total quality management (TQM) strategies that will invariably reduce cost, enhance quality services and improve its overall total performance all for the purpose of satisfying the customers profitably.
Presently, the Nigerian banks are benchmarked and ranked based on size of capital, deposit, branch network, volume of credit, turnover and profit. All these are quantitative financial indices which do not in any way show light on the effect or impact of customer’s satisfaction and the quality service delivery by the banks. Today, what underline the competitive advantage is the ability of banks to provide products and services that meet and exceed the needs of the customer. This implies that to survive, organizations must device new management systems based on the tenets of TQM and by delivering quality service to customers. Unfortunately, some of the banks in Nigeria have not given the fully desired attention to this new thinking and thus, their poorperformances and service delivery failures in the industry (Beny. et al., 1990).
Chikodila, (2010) asserts that Situations abound where account holders of banks attempt unsuccessfully to withdraw cash via ATM due to poor network service or system failures, yet their account are debited. There are also some ugly incidences of existing hidden charges not explicitly documented on account or loan products which are often implemented without the customers’ consent when such accounts are finally opened or such loans are administered. Other challenging issues has to do with long queues in banks, where it takes hours for customers to get their transactions done in banks either due to bank’s network service failures or inadequate personnel to promptly serve the numerous customers, power failures, arbitrary deductions on customers’ account in the name of account maintenance fees, SMS or e-mail alert charges, ATM maintenance fee and COT. Others are poor or lack of conducive banking hall settings with no or inadequate sites for customers to sit and wait for their transactions, poor or no air conditioners or fans for customers to cool off their heat, no portable water and toilets facilities for customers to ease themselves when pressed, very low interest rate on customer’s savings but high interest rate on loans, and so on.
These and more are some of the evidences of poor service delivery that often leads to customer’s dissatisfaction, disagreement and conflict with their banks (Ebiringa, 2010). It’s against this back drop that this study seeks to examine the implementation of TQM as a tool for service delivery in the Nigerian banking industry.
1.3 Objectives of Study
The main thrust of this study is to examine the implementation of TQM as a tool for service delivery in the Nigerian banking industry. However, the study seeks to achieve the following specific objectives:
- To examine the effect of the implementation of TQM on customers satisfaction in the Nigerian banking industry.
- To examine the effect of the implementation of TQM on enhanced quality service delivery in the Nigerian banking industry.
- To examine how the implementation of TQM has improved the performance of the Nigerian banking industry.
1.4 Research Questions
- What effect has the implementation of TQM on customers’ satisfaction in the Nigerian banking industry?
- Has the implementation of TQM enhanced quality service delivery in the Nigerian banking industry?
- Has the implementation of TQM improved the performance of the Nigerian banking industry?
1.5 Statement of Hypotheses
For this study, the following hypotheses are formulated in their null form:
- Ho: The implementation of TQM has no significant effect on customers’ satisfaction in the Nigerian banking industry.
- Ho: The implementation of TQM has not significantly enhanced the quality of service delivery in the Nigerian banking industry.
- Ho: The implementation of TQM has not significantly improved the performance of the Nigerian banking industry
1.6 Study Justification
The main objective of any business organization is to satisfy the customers profitably. This objective has given rise to the adoption of TQM by business organizations that are desirous of surviving in the today’s global competitive market. The significance of this study lies in the fact that the study will be useful to both the banking industry and the Nigerian economy at large. This is because the banks house the bulk of the money in the economy and the pace of economic development depends on the volume and direction of investment provided by the savings of the banks. And as such the knowledge of the implementation of TQM will bring about prudent management of resources by the banks which will in turn result to:
- Enhanced customer satisfaction
- Enhanced quality service delivery in the banking industry.
- Improved performance in the Nigerian banking industry.
From the aforementioned, it is pertinent to state here that the significance of the study of TQM implementation in the Nigerian banking industry cannot be over emphasized as findings from this research work will also help even management of other organizations to know that TQM is a carefully managed process that allows every employee to be involved in its implementation so as to deliver quality products and services to customers via continuous innovations and improvement of process.
Another significance of this study lies in the fact that it will contribute to the body of knowledge and provide an invaluable reservoir of information to guide organizations to roll out quality products and services for their customer’s needs and satisfaction leading to profitable financial earnings and growth as a return.
1.7 Scope of Study
Total quality management as a subject matter is very wide, though relatively new concept especially in service industries in Nigeria. For the purpose of this research, the study is restricted to four (4) selected banks in Makurdi, the Benue state capital, namely: First bank plc, United bank for Africa Plc, Eco bank plc and Union Bank PLC. The choice of these banks lies in the fact that they have multiple branch networks within the state capital Makurdi. That is, all the selected banks have three (3) branches each respectively in Makurdi, the Benue state capital which was examined from 2005 to 2015.
The four (4) banks selected represent both the tagged new generational banks and the old generational banks. The respondents are both members of staff and customers of these selected banks respectively.
1.8 Definition of Operational Terms
Benchmarking:
This refers to analyzing what the best competitor or leading companies in the industry are doing to satisfy customer’s needs so as to follow suit.
Communication:
This entails a process of transmitting meaningful information from one source to another.
Customer Focus:
It entails that all eyes should be fixed on the customer in terms of eliciting his expectations and striving not to only meet but surpass them.
Customer satisfaction:
This refers to the degree of the customer’s positive or negative feelings about the value received from using a firm’s products/services.
Customers:
These are the greatest asset of any organization; they are the reasons why organizations exist for operation. We have internal and external customers. Internal customers refer to staff members that work in the organization. While external customers refers to the people outside the organization that patronize and transact business with organizations and needs to be satisfied at all times by the organization in order to remain in business profitably.
Quality:
The quality of a product or service is the totality of attributes possessed by that product or services. These attributes are the unique functional or ornamental features that differentiate one product from the other in market place.
Strategic Management:
This term is all about self assessment in terms of internal strength and weakness, critical assessment of environmental forces in terms of external opportunities and threat that are capable of shaping the organization’s fortunes.
Technology:
This entails the sum total of knowledge or ways of doing things.
Total Quality:
This term entails that the entire firm must be brought to a point of top quality in order to deliver the type of quality that will excite the customers which is usually introduced in bits in an innovative manner and on a continuous basis.
Total Quality Management (TQM):
In the context of the foregoing, TQM is a strategic approach to management that focuses on the system or integrated methodology and insist on continuous innovative improvement in the quality of product /service on offer (Akpa, 2014).
Chapter Five
5.0 Summary, Conclusion And Recommendations
5.1 Introduction
This chapter marks the end of this research study. It therefore brings to bare the summary, conclusion, recommendations and the contribution of the study to knowledge, as well as suggestions for further study.
5.2 Summary
The main thrust for which this study was carried out was to examinethe implementation of TQM as a tool for service delivery in the Nigerian banking industry: a study of selected banks within Makurdi town of Benue state.
It has been observed that what underline the competitive advantage nowadays is the ability of organizations to provide products and services that meet and exceed the needs of the customers. This implies that to survive, organizations must device new management systems based on the tenets of TQM by delivering quality services to customers. But unfortunately, some banks in Nigeria have not given the fully desired attention to this new thinking and thus, their poor performances and service delivery failures in the industry as witnessed via services issues like ATM failures, due to poor bank network services, long queues, poor banking hall setting, arbitrary deductions on customer’s accounts, etc.
These and more are some of the evidences of poor services delivery by the Nigerian banks that often leads to conflict with their customers and or collapse of the banks. It is against this backdrop that this study was carried out to achieve the following specific objectives: to examine the effect of the implementation of TQM on customers satisfaction in the Nigerian banking industry, to examine the effect of the implementation of TQM on enhanced quality service delivery by the Nigerian banks and to examine how the implementation of TQM has improved the performance of the Nigerian banking industry.
In order to achieve the above stated objectives, three research questions were drawn with three hypotheses formulated in their null form as: Ho1: the implementation of TQM has no significant effect on customer’s satisfaction in the Nigerian banking industry, Ho2: the implementation of TQM has not significantly enhanced the quality of service delivery in the Nigerian banking industry and Ho3: the implementation of TQM has not significantly improved the performance of the Nigerian banking industry.
The scope of this study was restricted to four (4) selected banks in Makurdi, namely, First bank plc, UBA Plc, Eco bank plc and Union Bank Plc. They were chosen due to their multiple branch networks (3 branches each) in Makurdi, the Benue state capital, and they equally represent the faces of both the new and old generation banks.
A review of related literature was undertaken in three major faces covering conceptual clarifications, baseline theories and empirical works. The concepts clarified in the study includes: quality, total quality, total quality management, quality service delivery and customer satisfaction. The related theories to the study as discussed were Edward Denning’s theory and Joseph M. Juran’s theory. More to these, an extensive review of the related empirical works was equally done in this section with a statement on the gaps to the review and a tabular summary of the review done.
The components of the research methodology implored in this study consisted of research design, area of study, study population, sampling plan, data source, data collection instrument(s), data collection techniques etc. Survey design was adopted for the study and the study population was manipulated through direct questionnaires, oral interview and direct observations. The population of the study was 134,874 comprising of 424 bank employees and 134, 450 bank customers; out of which a sample size of 600 was chosen, comprising of 240 bank employees and 360 bank customers using convenience (accidental) sampling methods.
Data were collected through the primary and secondary sources of data using questionnaires, oral interviews and personal observations for primary data. While, textbooks, journals, internets etc for secondary data.
Furthermore, the data collected was analyzed, presented and discussed. The method of data analysis implored was descriptive statistical tools, frequency counts, tables and simple percentages. The hypothesis was tested using chi – square. While SPSS version 21 was used to run the analysis.
Finally, the findings of the study revealed that:
- The implementation of TQM has significant effect on customer’s satisfaction in the Nigeria banking industry.
- The implementation of TQM does significantly enhance the quality of service delivery in the Nigerian banking industry.
- The implementation of TQM does significantly improve the performance of the Nigerian banking industry.
5.3 Conclusion
Based on the findings of this study, it pertinent to state here conclusively that TQM is a pivotal tool for all organizations that needs to breakeven and stay afloat in this presently stiff competitive global business environment being it small or large organizations, government owned or privately owned.
The surest way to improve performance, service delivery and service quality in any organization for customer’s satisfaction is to have adequate technology and infrastructures in place, well – trained and motivated staff that imbibes the concept of TQM, as the greatest asset of TQM is a satisfied customer. A successful TQM environment requires a committed and well trained workforce that participates fully in quality improvement activities. And the success of TQM strategy rest squarely on the management and employee commitment, performance, values, communication, culture change, teamwork and of course leadership.
There is no doubt that the banking industry in particular cannot afford to toy with the implementation of this TQM concept as the pace of economic development depends on the volume and direction of investment provided by the banks savings. The degree of success of banks and other financial institutions in performing the above functions depends on how effective and efficient they are in achieving quality in people, process and products/services.
Consequently, achieving these is a function of the TQM principles, practices and philosophies adopted. Therefore, embracing TQM is a call for aggregate organizational excellence, as there is no doubt that organization that offers quality products/services to customers will be on the resounding success chart no matter how stiff the competitive business environment may be. And this has been the tool embraced by most Nigerian banks after the industry consolidation induced by the regulations of CBN.
Therefore, TQM is not a program; it is a systematic, integrated and organizational way of life directed at the continuous improvement of an organization. Its successful implementation will no doubt assist organizations to position themselves to the challenges in the dynamic business world.
Conclusively, the findings of the study equally reviews that TQM implementation has significant effect on customers satisfaction, enhanced quality service delivery and improved performances of the Nigerian banking industry. And as such, TQM strategists of organizations should try to establish at every point in time what quality service or products their customers expect and then, offer them such products or services that will not only meet and satisfy their needs, but continually exceed their expectations.
5.4 Recommendations
In view of the findings of this study, the following recommendations are made:
- The Nigerian banks should re-invent themselves wholly into s customer-centric organization where the voice of the customer is crucial part of business planning. The needs of customers must remain the most critical source of information in the design, implementation, enforcement and sustainability of the TQM programme by bank. To this end, banks needs to set up robust system for customer information gathering as it relates to their needs and wants based on changing taste, fashion and economies. This can be achieved by setting up both on – line and off – line customer suggestion and complaints channel in all branches.
- In order to ensure sustainability of TQM project by the banks, efforts must be made by the management to ensure continuous training and re – training of its workforce that will be committed to participates fully in quality improvement activities. As the surest way to improve performance, service delivery and service quality in any organization for customer’s satisfaction is to have adequate technology, infrastructuresand a well – trained employees that imbibes the concept of TQM, as the greatest asset of TQM is a satisfied customer.
- The process and procedure for TQM policy, design, implementation and enforcement must ensure adequate internal stakeholders involvement. To this end, the banks must build its internal capacity by way of continuous staff and customer orientation at all times. This must be supported by effective communication by all levels of management, and there should be periodically total quality management performance review by the management with a view to improving the organization’s performance hence quality improvement is a continuous process.
- The success of TQM strategy rest squarely on the management and employee commitment, performance, values, communication, culture change, teamwork and of course leadership. To this end, motivation,reward and recognition are surest means of reinforcing the emphasis on TQM in an organization. Therefore, salaries, welfare packages and other forms of remuneration should be improved upon to motivate the workforce to peak performance, where they will be happy to in turn delight customers with their impeccable services. This will equally help to check employee’s turn -over in the industry as well as.
- Last but not the least, as earlier captured, the success of TQM strategy in an organization rest squarely on the management and employee commitment, performance, values etc, therefore, adequate training should be equally provided to the management in the banking industry as they are the bed rock of TQM implementation. They should be sent on various course facilitated by experts in the industry to keep them abreast of new development from time to time to enhance their effectiveness and efficiency on anchoring TQM in their organization.
5.5 Contribution to Knowledge
This study has established that the implementation of TQM has enhanced quality service delivery and improved performances by Nigerian banking industry which has brought about significant customers satisfaction, which is already a great contribution to knowledge.
The study would equally be useful to the TQM practitioners and quality experts in evaluating the effectiveness of their current TQM program as the findings of the study has provided practical understanding of the effect of TQM practices and their adoption or implementation. Through this study, managers and practitioners would be able to identify gaps for further improvement and contributions to the enhancement of quality of their products and services.
5.6 Suggestion for Further Study
This study was carried out on the implementation of TQM as a tool for service delivery in the Nigerian banking industry: a study of selected banks in Makurdi, the Benue state capital. The researcher after a careful examination of the entire variables involved in the study and being aware that TQM is a new evolving concept in the Nigerian service sector as a whole, do hereby wished to suggest that:
This study should be replicated in future with a greater number of Nigerian service companies such as real estate, auto service providers, hospitality services, educational services, medical services, ITC and many others where customers play an important role in the growth of the industry and add significantly to the wealth generated by the Nigerian service sector.
In addition to the above, future study may include a diversity of other nations too, to make the study more versatile and all inclusive. Finally, future study may be carried out on a combination of two or more services companies at a time (e.g. ITC/banking) to understand the level of their TQM programs.
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