472 Int. J. Productivity and Quality Management, Vol. 9, No.

4, 2012

The impact of implementing total quality management

on organisational structure

Zahra Aghasizadeh* and

Mohammad Aghdassi
Department of Industrial Engineering,
College of Engineering,
Tarbiat Modares University,
Tehran, Iran
E-mail: [email protected]
E-mail: [email protected]
*Corresponding author

Bakhtiar Ostadi
Department of Industrial Engineering,
College of Engineering,
Tarbiat Modares University,
Tehran, Iran
E-mail: [email protected]

Abstract: This study is an investigation of the effect of implementing total

quality management (TQM) on organisational structure based on the plan–do–
check–act cycle. By accomplishing a questionnaire, information elicited from
quality experts working in various organisations. The results of statistical
analysis (descriptive statistics, paired t-test and Pearson correlation coefficient)
showed a strong and meaningful relationship between the level of informal
components (trust-based relationship, externally oriented interactive
relationship and emotionally inclusive relationship) and the implementation of
TQM. Actually, TQM could increase the level of these components. On the
other hand, formal components, the level of centralisation and the complexity
of structure decreases and the level of formalisation remained unchanged. The
results specified that departmentalisation is more process-oriented. Therefore,
the implementation of TQM focuses on a simultaneous attention to formal and
informal components of structure. The research findings will provide managers
an opportunity to make decision and apply TQM to their own organisations.

Keywords: TQM; total quality management; organisational structure;

restructuring; change management.

Reference to this paper should be made as follows: Aghasizadeh, Z.,

Aghdassi, M. and Ostadi, B. (2012) ‘The impact of implementing total quality
management on organisational structure’, Int. J. Productivity and Quality
Management, Vol. 9, No. 4, pp.472–485.

Biographical notes: Zahra Aghasizadeh received her BSc in Industrial

Management from the Ferdowsi University, Iran, and her MSc in Industrial
Engineering from Tabiat Modares University, Iran. She is a Member of Iranian

Copyright © 2012 Inderscience Enterprises Ltd.

 The impact of implementing TQM on organisational structure 473

Industrial Engineering Society. She has published three papers in national

conferences. Her research interests include quality engineering and
management, business process management and change management.

Mohammad Aghdassi is an Assistant Professor in the Faculty of Industrial

Engineering at Tarbiat Modares University. He received his PhD in JIT
production planning at the University of Tsukuba, Japan, in 1988. He was
appointed as the National Expert for carrying out a regional basic research on
‘TQM implementing in industries’ by Asian Productivity Organization (APO)
in 1995 to 1996 and appointed to the strategic planning exercise committee by
the secretary general of APO from 1996 to 1997. He was awarded Sabbatical
Leave in Wilfrid Laurier University, Waterloo, Ontario, Canada, as a Visiting
Professor on the area of ‘Supply Chain Management and TQM’. His published
articles have appeared in Organizational Sciences, Quality Management
Journal, Int. J. Production Research, Int. J. Knowledge Management,
European Journal of Operation Research and Australian Journal of Basic and
Applied Sciences.

Bakhtiar Ostadi received his PhD in Industrial Engineering from the School of
Engineering at Tarbiat Modares University, Iran. Also, he received his MSc
from the University of Tehran in the Industrial Engineering and his BSc in
Applied Mathematics from K.N. Toosi University of Technology. His main
areas of research interests include business process reengineering, quality
engineering and management, change management, flexible manufacturing
systems and activity-based costing. He has published several articles in
international conferences and academic journals including Int. J. Production
Research, Computers & Industrial Engineering, Applied Mathematics and
Computation, Journal of Industrial Engineering and Management, Int. J.
Management Practice, Information Technology Journal and Journal of Applied
Sciences.

1 Introduction

The growth and diversity of international business has raised new competitive challenges
and requirements, forcing firms to re-examine their internal environment to improve their
performance and achieve a sustainable competitive advantage (Prodromos et al., 2011).
Total quality management (TQM) is universally accepted as one of the most understood
change management programmes and is one of the strategies for confronting the global
competitive challenge both manufacturing and service industries facing (Sharma and
Kodali, 2008). Over the past two decades, as a result of increasing consumer
consciousness of quality, rapid technology transfer, globalisation and low-cost
competition, organisations of all size are experiencing dramatic organisational changes
by implementing TQM (Arumugam et al., 2009). There is a direct relationship between
the adoption of TQM and organisational structure (Douglas and Judge, 2001;
Punnakitikashem et al., 2010). The identification of necessary structural changes during
the implementation of TQM has been a highly complicated issue. This complexity may
be due to the broad field of TQM and also being multiple definitions of organisational
structure. This study serves as an attempt on the definition of TQM and organisational
structure and tries to probe the effect of TQM on organisational structure.
474 Z. Aghasizadeh, M. Aghdassi and B. Ostadi

We adopt a knowledge-based perspective to understand how the structure of an

organisation may be affected by implementing TQM. Finding this relationship leads to a
stable structure-scope matching. This matching helps us to explain why some
organisations may have difficulty in adjusting their structures to implement TQM; which
involves moving towards creating design quality, conformance quality and innovation.
According to the above discussion, the structure of this paper is as follows. Section 2
reviews the literature. Section 3 presents the research methodology including instrument
development, sample description, and reliability and validity of the survey instrument. It
is followed by results from statistical analysis in Section 4. Research finding and
conclusion are described in Section 5.

2 Literature review

This section begins by explaining the concepts of TQM implementation and its principles
in the plan–do–check–act (PDCA) cycles, as well as reviewing major concepts and
empirical studies relevant to the organisational structure in formal and informal
dimensions.

2.1 Total quality management

Although TQM is a relatively recent term in organisational development, its historical
roots go back a long way. From a taxonomy standpoint, TQM emerged in the 1980s, but
its roots go back to the scientific management principles of the 1920s (McAdam, 2000).
TQM can be viewed as an organisation-wide philosophy requiring all employees at every
level of an organisation to focus his/her efforts to help improve each business activity of
the organisation. TQM is a dynamic process, not a static one. It is a continuous effort
with no deadlines or target dates (Mehra et al., 2001). In recent years, many organisations
have demonstrated that significant improvements in business can be achieved through
TQM. The main benefits of TQM implementation are sustaining a competitive
advantage, improving customer satisfaction, increasing awareness of quality and
improving operating procedures (Brah et al., 2002). Lack of motivation and complacency
attitudes have been perceived as the main reasons for people resistance in TQM
implementation (Ali et al., 2008). Firms that focus on continuous improvement, involve
and motivate employees to achieve quality output and focus on satisfying customers’
needs are associated with TQM and enhanced organisation performance. It motivates
managers and provides a justification to invest in the time and resources to implement
TQM programmes (Joiner, 2007; Kaynak, 2003). A literature review of the previous
empirical studies on TQM suggests that researchers have defined TQM practices in
various ways, although they are complementary to each other. For example, quality
practitioners or gurus such as Deming, Crosby, Juran and Gryna, Feigenbaum, Ishikawa,
etc. have developed certain propositions in the areas of quality management (Arumugam
et al., 2008).
 The impact of implementing TQM on organisational structure 475

Successful integration of TQM elements relies on the application of the process

approach and the PDCA methodology. This approach enables top management to assess
requirements, plan activities, allocate appropriate resource, implement continual
improvement actions and measure results to determine effectiveness. Methods and tools
for each of the TQM principles based on the PDCA cycle are extracted from ISO
10014:2006.
International Organisation for Standardisation (ISO) has standardised the quality
system based on analysis of frequently encountered problems in ensuring the quality of
products/services, finding out the ways/means for preventing such problems, minimising
the occurrence of such problems, finding their best solutions (Srivastav, 2011). Larson
and Kerr (2007) found ISO to be a process management tool for TQM implementation.
Sun (2000) argued that ISO certification and TQM should be systematically implemented
together. Since integrated implementation would make quality system becomes more
effective. Each principle plus its methods and tools have been shown in Table 1; some
methods and tools are utilised in more than one sub-clause indicating the interrelationship
between principles.

Table 1 Methods and tools for TQM principles based on PDCA cycle (ISO 10014:2006)

Plan Do Check Act

Customer Strengths, Bottleneck Balanced scorecard In accordance with
focus weaknesses, management (BSC) continual
opportunities, threats E-data interchange Benchmarking improvement
(SWOT) (EDI) Dashboard principle
Quality function Product part Trend analysis
deployment approval process Customer satisfaction
Customer Value management survey and feedback
relationship
management
Market surveys and
analysis
Leadership Strategic planning Management by BSC In accordance with
SWOT objectives Benchmarking to the continual
Business planning Incentive and business excellence improvement
Risk analysis recognition model principle
Organisational programmes Dashboard
development Failure modes and
effects analysis
(FMEA)
Management review
Involvement Authority matrix Mentoring BSC In accordance with
of people Competence matrix On-the-job training Benchmarking continual
Job design Team building Employee satisfaction improvement
Responsibility matrix Focus groups survey principle
Succession planning Open book Performance
management appraisals
suggestion Trend analysis
programmes



476 Z. Aghasizadeh, M. Aghdassi and B. Ostadi

Table 1 Methods and tools for TQM principles based on PDCA cycle (ISO 10014:2006)
(continued)

Plan Do Check Act

Process Contingency Activities-based BSC In accordance
approach planning management Benchmarking with continual
Critical path method Bottleneck analysis Trend analysis improvement
Flowcharting and Team building FMEA principle
process mapping Statistical process
FMEA control (SPC)
System BSC Dashboard Control of non- In accordance
approach to Flowcharting SPC conformities with continual
management Process mapping Business intelligence Corrective actions improvement
systems Management review principle
Value management System analyse
Factual BSC Capability studies
Customer satisfaction In accordance
approach to Design of Knowledge survey and feedback with continual
decision- experiment management Employee satisfaction/ improvement
making Enterprise resource Value management perception surveys principle
planning Materials Market survey
requirement EDI analysis Pareto
planning (MRP) analysis Supplier
SWOT performance
evaluation
Mutually Cost–benefit Supplier ranking Benchmarking In accordance
beneficial analysis Strategic list Supplier Supplier performance with continual
supplier planning Trend self-assessment evaluation improvement
relationships graphs MRP Supply base Trend graphs principle
management
Business
information systems

The companies continually improve the effectiveness of the quality management system
through the use of the quality policy, quality objectives, audit results, analysis of data,
corrective and preventive actions and management reviews.
Continual improvement contains the following steps:
x action plan development
x allocation of resources
x application of all principles and selected tool
x data analysis
x identification of action items
x prioritisation
x re-conducting self-assessment and evaluations
x results evaluation
x self-assessments
x set and cascade objectives
x trend identification (ISO 9001:2008).
 The impact of implementing TQM on organisational structure 477

Various classifications of management practices have been proposed in many of the

papers (Motwani, 2001; Zhang, 2000). For instance, Ferguson-Amores et al. (2005)
classified these practices into three main categories in accordance with the classification
of Voss and Sousa (2002):
x managerial practices issued from the top management
x infrastructure practices intended to support core practices
x core practices based on tools and techniques specifically related to quality.
In another study of Lakhal et al. (2006), these practices have been classified into
following categories as given in Table 2:

Table 2 Classification of quality management practices

Practice Related practices

Top management commitment and support Top management commitment, top management
team involvement, leadership
Organisation for quality Quality management design, open organisation,
cross-functional teams, control and improvement of
processes
Employee involvement Participation, delegation, employee involvement,
employee relations
Supplier quality management Supplier quality management, supplier management,
suppliers, supplier relations
Customer focus Customer focus, strong relations with customers,
customer satisfaction, customer driven
Continuous support Continuous improvement, recognition and rewards
Quality system improvement Quality system improvement
Information and analysis Information and analysis, information, information
flow, quality information system, process
measurement, use of internal, information on quality,
quality data, measurement of quality, benchmarking
Using of statistical quality techniques Use of statistical procedure, total quality methods
Source: Lakhal et al. (2006).

2.2 Organisational structure

The organisational structure refers to an internal model of links and relationships between
and within its factors, at all levels of the organisation, in precisely defined quantities
(Prodromos et al., 2011). Organisational structure not only consists of hard components,
such as individuals, groups, teams and departments, but also soft components (Wang and
Ahmed, 2003). The hard components of organisation make the formal structure. These
components consist of centralisation, formalisation, complexity and departmentalisation.
The structure based only on these components has following limitations:
x Unavoidable and significant costs for restructuring are imposed.
x Employees work in a specific field and do not know any other expertise.

478 Z. Aghasizadeh, M. Aghdassi and B. Ostadi

x Relations between units due to lack of trust is not effective.

x Organisation cannot fit itself with external environmental conditions.
x Human aspects of staff and their needs are often ignored (Gulati and Puranam,
2009).
Today, organisations based on four components of structure mentioned above cannot
respond effectively to modern structuring transformation. This leads to thinking about
organisational structure at higher level and discovering the deeper dimensions of
structuring in dynamic marketplace. This higher level is characterised by trust-based
relationship, emotionally inclusive relationship and externally oriented interactive
relationship.
Trust is one of the most important factors for creating an integrated and effective
environment in organisations. Trust-based relationship always starts at top, with the
leaders of companies. Although trust in traditional organisations is important, trust in
modern one’s because of unstable conditions is more important (Tyler, 2003).
The key element for the organisation development is the role of people in the
organisation. Emotionally inclusive relationship enables structure to allow organisational
members to replay organisational values and competencies in personalised ways. The
quality of leadership’s knowledge and relationship with its employees will enhance,
impede or reduce employee competence. Strong and positive relationships between and
among leaders and employees offer the opportunity of creativity and innovation and
improve the effectiveness of the organisation’s maintenance system (Razak et al., 2011;
Sonea et al., 2010). These relations are based on emotional intelligence and effects on
human resource strongly (Higgs, 2004).
The essential structure of today’s organisation is an externally interactive relationship
that guides interaction rather than internal schedules and procedures (Miles and Snow,
1994). The degree of external interaction reflects the openness of organisation structure
and the ambiguity of organisational boundary, as well as the competitiveness of the
environment.
This study will propose that TQM efforts and implementation affecting some
components of the organisational structure. Although there has been some empirical
investigation of TQM and organisational structure, no research to date has examined
empirically the influence of implementing TQM based on PDCA cycle on both formal
and informal components of organisational structure. Thus, the main objectives addressed
in this study are as follows:
x Describe the relationship between TQM practices and principles and components of
organisational structure.
x Examine the impact of TQM practices and principles on components of
organisational structure.
x Examine the relationship between formal and informal components of structure by
implementing TQM.
 The impact of implementing TQM on organisational structure 479

3 Research methodology

This study attempts to identify the structural changes during the implementation of TQM.
This will be achieved through the survey of quality experts.

3.1 The instrument

To address the objectives mentioned above, a questionnaire was designed for gathering
required information according to our critical looking into the related literature. The
questionnaire consists of five-point Likert type items.
The main framework for designing the questions took the following order: practices
of TQM principles were the first part of every question and structural components were
the second part. The purpose of this order was to survey the effect of the first part,
practices of TQM principles, on the second part, structural components. For instance, by
evaluating the effect of customer-focus principle on the centralisation component of
structure, we found that focusing on customer, predicting their needs and responding
quickly to their expectations are directly related to authority delegation that gives an
employee the right to control and to use organisational resources effectively to bring
desired organisational outcomes (Dotun and Dennis, 2001; Jabnoun, 2005).
Undoubtedly, each principle does not influence each component. Identification of the
effective principles and the way of their effects is based on literature. This questionnaire
has been comprehensively designed, considering all practices of TQM and their effects
on formal and informal components of structure.

3.2 Sample description

The target population of this study includes academician conducting research on quality
management, quality managers and quality consultants. About 140 questionnaires were
presented to them personally or via e-mail. Then, they were asked to answer the
questionnaires two times: before and after employing TQM. The response rate of
questionnaire disturbed personally was more than that via e-mail. The total number of
responses was 81.

3.3 Validity and reliability of the questionnaire

Validity and content of the questionnaire were established by a group of quality experts.
The group was asked to eliminate or modify inappropriate items or questions. After some
modifications, the questionnaires were redistributed among the experts. All of them
recommended the use of the modified questionnaire for this study.
To assess the reliability of the questionnaire, Cronbach’s alpha was employed. The
questionnaires were disturbed to small sample of 25 quality experts. An alpha value of
0.70 or higher was considered acceptable reliability for group. The reliability coefficient
computed by the SPSS 18 software was 0.8896 for entire questionnaire. According to
Guilford and Fruchter (1978), a reliability coefficient (Cronbach’s alpha) greater than 0.7
indicates a high reliability, whereas values between 0.35 and 0.7 are considered fair.
Thus, the reliability of the results from the questionnaire is highly stable and consistent.
480 Z. Aghasizadeh, M. Aghdassi and B. Ostadi

4 Results

As shown in Tables 3 and 4, the descriptive statistics including mean, standard deviation
and coefficient of variation were computed for structural components two times: before
and after implementing TQM. As we can see in Table 3, values of mean for formal
components are more than that for informal ones. In other words, before implementing
TQM, organisational structure is formally oriented. On the other hand, Table 4 manifests
that implementing TQM leads to a structure reflecting dynamic interaction between
formal and informal components with a focus on the importance of informal ones. In
addition, standard deviation and coefficient of variation in Table 4 are less than those in
Table 3. These results indicate that after implementing TQM, the spread of values around
the central tendency (mean) is less than before using it. Actually, the distribution of data
after implementing TQM is more integrated.
As illustrated in Table 3, the results of t-test show the level of structural components
before and after implementing TQM.
By implementing TQM, although the levels of centralisation and complexity
declined, no significant change was observed in the level of formalisation. So, more
formalised arrangements permit more decentralised decision-making. The level of
departmentalisation also reduced, which means that departmentalisation moves from
task-oriented towards process-oriented. Traditional organisation structures give a static
view of responsibilities and reporting relation. On the contrary, a process-based view is a
dynamic view of how the organisation can deliver value. The result of t-test indicates that
the level of all three informal components of structure has increased notably.
Consequently, organisation could improve both external and internal relationships,
respond to environmental changes rapidly, improve the trust-based relationship between
its employees and focus on human aspects (Table 5).
For the structure to deliver success in implementing TQM, it must be compatible with
internal and external demands. For competition in world market, an effective
organisational structure has to provide means of improving effectiveness and
performance towards achieving world-class status. In this perspective, structures based on
formal components lack vigour in meeting the demands of world market, but structures
enriched by informal components carry vigorous energies, create boundary-less, fluid and
flexible channels to respond as quickly as possible to rapid changes of world market.
A Pearson’s correlation analysis was carried out to examine the bivariate
relationships among the main variables. Figure 1 displays the results of the correlation
analysis of the study variables.
As illustrated in Table 6, the Pearson’s correlation analysis revealed that r is 0.478
between formal and informal components, which is very significant. According to the
analysis, formal components decrease while informal components increase. So,
organisational structure reflects the system view that considers organisation as consisting
of both formal and informal components, relation between them and relations as a whole
to constitute one unit. Actually, simultaneous attention to both formal and informal
components is one of the success key factors for implementing TQM.
 The impact of implementing TQM on organisational structure 481

Table 3 Descriptive statistics for structural components before implementing TQM

SD (standard CV (coefficient
Measurement Number Mean deviation) of variation)
Centralisation 81 3.6895 0.81398 0.22062
Complexity 81 3.5159 0.91896 0.26137
Formalisation 81 3.8447 0.82158 0.21362
Departmentalisation 81 3.8381 0.98608 0.21887
Externally oriented relationship 81 2.2733 0.61659 0.27123
Emotionally inclusive relationship 81 2.9482 0.80959 0.27460
Trust-based relationship 81 2.9174 0.19303 0.31264

Table 4 Descriptive statistics for structural components after implementing TQM

Measurement Number Mean SD CV

Centralisation 81 2.06699 0.33762 0.16334
Complexity 81 2.0329 0.34705 0.09026
Formalisation 81 3.3224 0.48304 0.15470
Departmentalisation 81 2.8456 0.39347 0.21319
Externally oriented relationship 81 4.0633 0.44898 0.11049
Emotionally inclusive relationship 81 4.0823 0.38961 0.09543
Trust-based relationship 81 4.1055 0.46084 0.11224

Table 5 The results of t-test for structural components before and after implementing TQM

TQM Mean SE
Structural components implementation Mean SD t Significance difference difference
Centralisation Not-implemented 3.6895 0.81398 16.214 0.002 1.62255 0.10007
Implemented 2.0669 0.33762
Complexity Not-implemented 3.5159 0.91896 13.182 0.004 1.48300 0.11250
Implemented 2.0329 0.34705
Formalisation Not-implemented 3.8447 0.61158 0.9154 0.18 0.5223 0.09714
Implemented 3.3224 0.48304
Departmentalisation Not-implemented 3.8381 0.98668 14.648 0.001 2.1925 0.12921
Implemented 1.6456 0.39347
Externally oriented Not-implemented 2.2733 0.61659 20.59 0.002 1.78999 0.08924
relationship
Implemented 4.0633 0.44898
Emotionally inclusive Not-implemented 2.5482 0.80959 15.132 0.003 1.53412 0.10138
relationship
Implemented 4.0823 0.38961
Trust-based Not-implemented 2.5174 1.11303 10.806 0.002 1.58813 0.14697
relationship
Implemented 4.1055 0.46084
482 Z. Aghasizadeh, M. Aghdassi and B. Ostadi

Figure 1 Pearson’s correlation between formal and informal components

Table 6 The result of Pearson coefficient

Formal Informal
Formal Pearson coefficient 1 0.478
Significance 0.002
N 81 81

5 Conclusion and research limitations

5.1 Conclusion
While implementing TQM, awareness of required changes of structure components will
help organisation to plan TQM appropriately and implement it successfully. This study
sets out to assess the influence of implementing TQM on organisational structure based
on PDAC cycle. No research to date exists, which adequately covers the effects of TQM
on both formal and informal components of organisational structure.
A positive relationship between decentralisation, reduction of the complexity and
being process-oriented with design quality, on the one hand, and between formalisation
and conformance quality, on the other hand, is empirically confirmed (Douglas and
Judge, 2001; Meirovich et al., 2007; Palmer and Dunford, 2002). The results of formal
components confirm this issue strongly. During the implementation of TQM, while the
levels of centralisation and complexity decreased, the level of departmentalisation moved
towards process-oriented, and that of formalisation did not change significantly.
 The impact of implementing TQM on organisational structure 483

Consequently, by focusing on process rather than product and through appropriate

delegating of authority to their employees, managers can follow design quality in their
organisations, and conformance quality of an organisation can be maintained by
concentrating on formalisation and documentary concepts.
Those structures with focus on formal components suffer from many limitations such
as unavoidable and significant costs, inflexibility against environmental changes,
neglecting human aspects of staff and their social relations and monopoly expertise due
to lack of trust (Gulati and Puranam, 2009). The findings of this study have proved that
through implementing TQM, informal structural components such as externally oriented
interactive relationship, emotionally inclusive relationship and trust-based relationship
can be increased. Hence, TQM can contribute to an organisation to improve both external
and internal relationships, to respond to environmental changes rapidly, to improve the
trust-based relationship between its employees and to focus on human aspects.
Furthermore, the employees who participated in the TQM processes gained numerous
benefits from TQM adoption, including an increased willingness to accept change,
improved teamwork, enhanced problem-solving ability and better meeting-management
skills (Mersha et al., 2009). Moving towards more creativity and innovation are the least
benefits of creating such integrated environment in an organisation (Lutfihak et al.,
2010).
Desire for having design quality, conformance quality and innovation cannot be
achieved unless organisations pay simultaneous attention to both formal and informal
components in their organisations and be ready to make suitable changes in the structure.
Therefore, as the results of this study proved, during implementation of TQM,
organisation should reduce the level of centralisation and complexity, establish the
process teams and focus on processes rather than products. In addition, informal
components including externally oriented interactive relationship, emotionally inclusive
relationship and trust-based relationship should be improved strongly.

5.2 Research limitations/suggestions for further research

In doing any kind of study, there may be some problems or limitations that either cannot
be disposed or are not the factors to be considered in those studies. However, these
limitations can be different aspects to be wondered for further research by others. The
investigations of this study were also liable to some restrictions. The first potential
limitation of this research has to do with the sample size, which is considered relatively
small; it is generally accepted that it is the right one for this kind of survey. The second
limitation is that our study relies on the perceptions of the respondents to operationalise
the survey instrument. Although the survey participants were asked to report their actual
and not desired responses, some of them may not have done so. Another possible
limitation is the fact that the research sample is derived from firms belonging to various
industries.
So, it is crucial for further research to systematically investigate the theoretical links
proposed in this study and also to examine the effect of TQM on organisational structure
in a particular industry and to compare their result with this study.
484 Z. Aghasizadeh, M. Aghdassi and B. Ostadi

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