TQM and HRM: Improving Performance Appraisal Research, Theory, and Practice

Total Quality Management (TQM) has become a major movement in North American organizations, across private and public sectors and across manufacturing and service types. What exactly constitutes TQM differs across quality constraints and gurus. However, TQM is typically associated with the application of statistical process control and other statistical tools to improve the quality of products and services. Organizations often implement the tools of TQM, only to find that basic human resource management (HRM) practices and polices prevent the effectiveness of those tools. The purpose of this paper is to examine performance appraisal, a key HRM function. Performance appraisal practices can cause managers to ignore system factors and cause employees to compete instead of cooperate. Before we examine performance appraisal in TQM organizations, we will provide a brief overview of the TQM philosophy and techniques and contrast them with the traditional Western approach to managing work. TQM The TQM approach emphasizes a prevention, rather than a detection, approach to work (Walton, 1986). Specifically, the traditional detection approach to ensuring quality relies on post hoc inspection of the product or service. Deming, one of the most influential quality advocates, has identified important disadvantages to the detection approach to the work process (e.g., Deming, 1986; Walton, 1986). One disadvantage is that not all defective products or inadequate service interactions will be identified. The obvious costs associated with such oversights include disgruntled customers and a decrease in the demand for the product or service. A second problem is the direct cost associated with the occurrence of defective products or inadequate services. For example, labour and the value of materials that went into the inadequate product or service and, if detected, labour and materials that were allocated to rectify the undesirable outcome, are all obvious and direct costs. Third, the indirect human costs of the detection approach may be the greatest (Walton, 1986). The human costs of the detection approach include fear and loss of pride in workmanship. According to Deming, these maladies result from an after-the-fact concern with quality and post hoc evaluation based on inspection of results. While detection can obviously catch errors, a better approach according to TQM is to prevent the occurrence of errors in the first place. A prevention approach to the work process underlies the TQM thrust currently overtaking Western organizations. A central tenet of the prevention approach is that it is best to do things right the first time. Enacting this simple truism is, however, often easier said than done. TQM approaches this goal by providing workers with statistical tools and empowering them to use the tools. The purpose of the tools, such as Pareto charts and control charts (see Walton (1986) for a description of the seven basic quality tools), is to allow workers to determine if a process is in control. That is, the tools are used to determine if the production or service process is stable and affected only by random error or if the process is influenced by systematic factors. In essence, the prevention approach of TQM incorporates the function of inspection directly into the work process itself. The inspection function is decentralized and is considered an integral component of the work process for all workers. In addition to decentralizing inspection, a fundamental characteristic of the TQM approach is that customer satisfaction is the driving force behind work processes (Bounds & Dobbins, 1993). Whether internal or external, the customer of the product or service becomes the focus for determining standards and for improving performance. While the traditional view of the structure of work emphasizes a top-down flow chart with vertical reporting relationships, the TQM perspective emphasizes a lateral flow culminating in providing products or services to internal or external customers. …