Implementation of Total Quality Management in Mongolian Universities

1. Implementation of Total Quality Management in Mongolian Universities Fenghueih Huarng & Oyunchimeg Zagd Southern Taiwan University 

2. OUTLINE Motivations and Objectives Literature Review Research Design & Methodology Analysis & Results Conclusions and Recommendations

3. Motivations Many higher education institutions have been stimulated and influenced by a total quality framework for both teaching and administrative support functions in Mongolia. • Changes in higher education: • students' requirements and needs, • increasing demands from business and industry, • increasing demands from governing boards and the public sector, • decreasing funds, and increasing competition among higher education institutions. • In addition, no research has been conducted for developing a TQM implementation model that can be used by Mongolian universities to improve their TQM implementation efforts.

4. Objectives • To obtain the effects of TQM implementation on overall business performance in Mongolian Universities • To obtain a TQM implementation model for Mongolian Universities. Research Questions: • What are the effects of TQM implementation on overall business performance in Mongolian universities? • What kind of TQM implementation model should be developed to guide Mongolian universities? • How can this TQM implementation model be demonstrated in practice?

5. LITERATURE REVIEW

6. Framework Comparison of TQM Constructs Included 2 more elements, which were not found in their framework Relatively the same element similar Was excluded in the proposed framework, since every department in organization was involved in quality management. Not included in the proposed framework. They represented TQM outcomes.

7. TQM Definition – in this Study A management philosophy for continuously improving overall business performance based on leadership, supplier quality management, strategic planning, assessment, process control and improvement, product design, quality system improvement, employee participation, recognition and reward, employee training, & customer focus.

8. Definitions of TQM Constructs

9. Definitions of TQM Constructs (cont’.)

10. Definitions of Overall Business Performance Constructs

11. RESEARCH DESIGN & METHODOLOGY

12. Research Model

13. Hypotheses Between TQM Implementation Constructs and Overall Business Performance

14. Hypotheses Among Overall Business Performance Constructs

15. Questionnaire Design The questionnaire of this research comprises of 3 parts: • Part (1): demographic information, such as gender, age and occupation. • Part (2): TQM implementation has 11 sections Leadership (7 items), Employee participation (4 items), Employee training (5 items), Recognition and reward (5 items), Supplier quality management (3 items), Strategic planning (5 items), Assessment (7 items), Process control & improvement (7 items), Product design (5 items), Quality system improvement (5 items) & Customer focus (5 items). • Part (3): Overall Business Performance consists of 4 parts: • Employee satisfaction (5 items), Product quality (7 items), • Strategic Business Performance Product quality (8 items) • and Customer satisfaction (2 items). • A survey questionnaire (both in English and Mongolian) with 78 items was distributed to university lecturers in Mongolia. • 5-point Likert scale, 5 for Strongly agree, 4 for Agree, 3 for Neutral, 2 for Disagree and 1 for Strongly disagree.

16. Analysis Procedures

17. Goodness of Fit Indices – in this Study (Byrne, 2001)

18. RESEARCH ANALYSES AND RESULTS

19. Dataset of the Respondents The data was collected between February and March 2010. 300 questionnaire was distributed to a total of 3 universities and 266 completed forms received giving a response rate of 88.7%.

20. Characteristics of the Respondents (n=266)

21. Estimation of Intra-Class Correlation Coefficient (ICC) • Intra-class correlation coefficient ( ) is a measure of agreement between observers that can be used when your observations are scaled on an interval or ratio scale of measurement. “J” - a number of groups, “F” - the value using F-test in ANOVA, “np” - a sample size of the research. • Based on Cohen (1988), the following criteria are used to decide whether the ICC (ρ) is high enough to use hierarchical liner model: • 0.059 >≥ 0.01 - low correlated among different groups • 0.138 > ≥ 0.059 - medium correlated among different groups • ≥ 0.138 - high correlated among different groups : The results for estimation of ICC provided the requirement , therefore the datasets were combined. ≥ 0.059

22. Confirmatory Factor Analysis • For the Measurement TQM Implementation Model • For the Measurement Overall Business Performance Model

23. Assessment of the Measurement TQM Implementation Model - 1st RUN The results of CFA: 2=2831.692, df=1429, p<0.001, 2/df=1.982, RMSEA=0.06. GFI=0.723, NFI=0.736, IFI=0.849, TLI=0.836, CFI=0.847, RMR=0.061 24 items were omitted “Loadings≥0.71” Originally EMP_P3 was with a low loading (0.67), however one indicator cannot form a factor by itself. Therefore, it was not omitted.

24. Assessment of the Measurement TQM Implementation Model - 2nd RUN 2 =664.329, df=409, p<0.001, 2/df=1.624, RMR=0.037, RMSEA=0.049, IFI=0.953, CFI=0.952, TLI=0.942, GFI=0.873, NFI=0.886

25. Assessment of the Measurement TQM Implementation Model – 3rd RUN 2/df=1.437 RMR=0.034 RMSEA=0.041 NFI=0.901, IFI=0.968, TLI=0.959 CFI=0.967 GFI=0.888

26. Assessment of the Measurement Overall Business Performance Model – 1st RUN 2/df=4.5 RMSEA=0.115 RMR=0.059, GFI=0.720, NFI=0.807, IFI=0.844, CFI=0.843 TLI=0.821.

27. Assessment of the Measurement Overall Business Performance Model – 2nd RUN “Loadings≥0.71” For better fit model, the following 5 items were removed: PRO_Q6(0.59), PRO_Q5(0.60), EMP_S4(0.69), PRO_Q7(0.70), PRO_Q4(0.63) 2/df=4.880 RMSEA=0.121 GFI=0.764, IFI=0.880, CFI=0.880 TLI=0.855 NFI=0.854. Only RMR=0.048

28. Assessment of the Measurement Overall Business Performance Model – 3rd RUN 2/df = 2.104 RMR=0.043, GFI=0.908, NFI=0.943, IFI=0.969, TLI=0.959, CFI=0.969 RMSEA=0.065

29. Reliability and Validity (For Two Measurement Models)

30. Reliability - Cronbach’s alpha ≥ 0.7 (Nunnally, 1978) - Composite reliability ≥ 0.7 - AVE ≥ 0.5 (Hair et al., 1999) Cronbach’s alpha ranged between 0.704 and 0.933, indicating a high reliability of the scales. Also each construct manifests a composite reliability greater than the recommended threshold value of 0.7. The AVE range between 0.560 and 0.796, above the recommended 0.50 level. Composite reliability = (sum of standardized loadings)2/ [(sum of standardized loadings)2 + (sum of indicator measurement error)] Average variance extracted (AVE) = (sum of squared standardized loading)/[(sum of squared standardized loadings) + (sum of indicator measurement error)] Indicator measurement error = [1– (standardized loading)2].

31. 1. Convergent Validity - AVE ≥ 0.5 (Bollen, 1989) - Factor loadings ≥ 0.6 (Hatcher, 1994) - C.R ≥ 1.96 (Byrne, 2001) All AVE were greater than threshold value of 0.50. All loadings exceeded the suggested value of 0.6 for all constructs. Also critical ratio (C.R) for all constructs were larger than 1.96. Therefore, all items used proved to achieve convergent validity in their respective scales.

32. Discriminant Validity Test Using Correlations between Constructs Correlations between the constructs ≤0.85 (Kline,2005) All correlations between TQM implementation constructs are in the range from 0.357 to 0.868. The highest correlation (0.868) was appeared between Recognition and reward and Process control improvement. Only this correlation exceeded the threshold of 0.85. Other 54 correlations between TQM implementation constructs were below the recommended value of 0.85. Thus, these correlations proved the discriminant validity in the TQM implementation model.

33. Discriminant Validity Test Using Correlations between Constructs (cont’.) All correlations between overall business performance constructs are in the range from 0.643 to 0.795. This result indicated that correlations of these constructs below the recommended value of 0.85. Therefore, discriminant validity proved in the overall business performance model.

34. Discriminant Validity Test Using AVE • “Squared correlation among factors AVE” • This criterion did not provide the following 5 cases: • Leadership and Strategic planning (0.610). • Leadership and Employee participation (0.608). • Recognition and reward and Process control improvement (0.753) • Strategic planning and Employee participation (0.656). • Process control improvement and Employee participation (0.619). • Other 50 squared correlations between TQM implementation constructs were provided this criterion.

35. Discriminant Validity Test Using AVE (cont’.) For overall business performance model, only one case did not provide the criterion “squared correlations among factors < AVE”:The squared correlation between Strategic business performance and Employee satisfaction Other 5 squared correlations among factors for overall business performance model were provided this criterion.

36. Assessment of the Research Model (SEM)

37. First Run of SEM 2/df=1.654 RMR = 0.051 RMSEA = 0.050 IFI=0.931, TLI=0.921 CFI=0.930 GFI=0.801 NFI=0.842

38. Second Run of SEM 2/df=1.345 RMR = 0.041 RMSEA = 0.036 IFI=0.965, TLI=0.958 CFI=0.964 GFI=0.838 NFI=0.876

39. Results of Hypotheses Testing for the Second SEM Twelve of the 17 SEM hypothesis tests were fully supported. This finding indicated that the second SEM model fitted quite well in representing the data. Three hypotheses regarding to employee satisfaction and two hypotheses regarding to product quality were not supported by the data in this study.

40. CONCLUSIONS AND RECOMMENDATIONS

41. Research Question 1: What are the effects of TQM implementation on overall business performance in Mongolian universities? • First, leadership is the decisive factor in determining the success of organizational overall business performance. Mongolia is now trying to establish modern higher education system. All universities, especially state-owned have received more decision making autonomy than ever before. Regarding day-to-day operations, the government has no direct administrative authority. It is the role of top management to determine the university’s vision, strategy, policy, long-term goals, and the way to achieve these objectives. Top management is in charge of managing employees, motivating them to participate in quality improvement activities, encouraging them to share in the university’s vision, empowering them to solve quality problems, arranging resources for their education and training, and rewarding them for their quality improvement efforts. In other words, without strong leadership, it is impossible for a university to achieve a good overall business performance. • Second,the research findings can suggest that it is not necessary for all the TQM elements to be present to ensure the success of the TQM implementation and overall business performance. In other words, even if a few of the elements are not present, it is possible to obtain the required level of overall business performance. • Third,in this study, 5 hypotheses were not supported by the questionnaire survey data. This disconfirmation does not imply these constructs are unimportant or useless. Instead, universities should identify the problem areas of these constructs and implement them more effectively. For example, (1) assessment, (2) process control and improvement, and (3) quality system improvement are nearly alike functions for Mongolian universities.

42. Research Question1: (cont’.) • Because, • the university products are created using certain processes. Student knowledge is gained by learning, courses are taught, and new knowledge is achieved by researching. • In a university environment, there is an interrelationship among these processes that has an impact on the quality of the products. The quality of teaching/learning/researching is inspected against specifications. • A process quality system must be documented with an appropriate quality manual, procedures, instructions and records. This allows proper communication, audits and verification activities. • Therefore, the author preferred to combine these 3 constructs. Due to this solution, they should emphasize the implementation of actions that are formulated on the basis of various evaluation activities and establish their quality management systems according to the requirements of higher education institutions effectively. Thus, quality management systems will be effectively implemented in practice. • Fourth,Also university’s employees have the capacity to do their jobs better and study by themselves. In fact, improving employee satisfaction and overall business performance were not the major goal of training. Therefore, the author decided to remove the construct “Employee training”.

43. Research Question 2: What kind of TQM implementation model should be developed in order to guide Mongolian universities in implementing TQM? • Based on the results of testing the model of TQM implementation and overall business performance (Research model), the author decided to modify TQM implementation model for Mongolian universities in implementing TQM. • Modification of the model should be based on theory; modifications to the original model should be made only after deliberate consideration (Hair et al., 1992). • To modify the theoretical model of TQM implementation, the author tested SEM for all TQM implementation constructs one by one. Consequently, SEM test is conducted for each TQM implementation construct and the results are presented as follows:

44. 1. Run for the Leadership SEM 2 = 356.630 (df=189, p<0.001), 2/df = 1.887,NFI=0.923, IFI=0.962, TLI=0.954 CFI=0.962,RMSEA=0.058 & RMR=0.049 GFI=0.891 “Leadership has a positive effect on strategic business performance and on employee satisfaction”. O SEM: “Leadership has a positive effect on employee satisfaction” was not supported. “Leadership has a positive effect on strategic business performance”

45. 2. Run for the Employee Participation SEM 2/df=2.034, GFI =0.901, NFI=0.943, IFI=0.965, TLI=0.955, CFI=0.965.RMR=0.044 and RMSEA=0.062 “Employee Participation has a positive effect on strategic business performance and on employee satisfaction” O SEM the hypothesis “Employee Participation has a positive effect on employee satisfaction”

46. 3. Run for the Employee Training SEM 2/df=2.031,GFI =0.894, NFI=0.929, IFI=0.963, TLI=0.952,CFI=0.963, RMR=0.045, RMSEA=0.062 “Employee Training has a positive effect on strategic business performance and on employee satisfaction”. O SEM: “Employee Training has a positive effect on employee satisfaction” was not supported. Also, this study was concluded that “improving employee satisfaction and strategic business performance was not the major goal of training”. Thus, this construct omitted for the modified model.

47. 4. Run for the Recognition and Reward SEM 2/df = 2.180,NFI=0.920, IFI=0.955, TLI=0.944,CFI=0.955, RMSEA=0.067,RMR=0.054GFI=0.883 “Recognition and Reward has a positive effect on strategic business performance and on employee satisfaction”. O SEM: “Recognition and reward has a positive effect on employee satisfaction” was not supported. “Recognition and Reward has a positive effect on strategic business performance”.

48. 5. Run for the Supplier Quality Management SEM 2/df=2.079,GFI=0.901, NFI=0.934, IFI=0.964, TLI=0.953, CFI=0.964. RMR=0.043, RMSEA=0.064. “Supplier Quality Management has a positive effect on product quality” was not supported. O SEM the hypothesis “Supplier quality management has a positive effect on product quality”. author prefers “Supplier Quality Management has a positive effect on employee satisfaction”.

49. 6. Run for the Strategic Planning SEM 2/df=2.026,GFI=0.894, NFI=0.931, IFI=0.964, TLI=0.953,CFI=0.963, RMR=0.042,RMSEA=0.062 “Strategic Planning has a positive effect on customer satisfaction” was not supported. O SEM: “Strategic planning has a positive effect on product quality” was supported. However, in university practice, strategic planning more influences to Strategic Business Performance than product quality and employee satisfaction. Thus, “Strategic Planning has a positive effect on strategic business performance”selected for the modified model.

50. 7. Run for the Assessment SEM 2/df = 2.004,NFI=0.933, IFI=0.965, TLI=0.955,CFI=0.965,RMR=0.044,RMSEA=0.062,GFI=0.896 “Assessment has a positive effect on customer satisfaction” was not supported. O SEM: “Assessment has a positive effect on product quality” was not supported. This study concluded that “assessment, process control and improvement, and quality system improvement are nearly alike functions for Mongolian universities. Thus, the author combined these 3 constructs under the name assessment. “Assessment has a positive effect on product quality”.