This paper examines the relationship between quality management systems—particularly Total Quality Management (TQM) and lean production—and employee satisfaction. Drawing on empirical literature, it explores how quality systems positively influence employee behaviors such as turnover, attendance, and suggestion rates over time, and why integrating human resource management within these systems is critical. The paper also addresses the link between employee satisfaction, service quality, and customer satisfaction, ultimately arguing that quality management systems improve organizational performance when they are deliberately designed to develop and sustain employee satisfaction as a core outcome.
The human resources of any organization are among its most valuable assets. The continued productivity, innovation, commitment, and contributory spirit of employees can create a profitable and strong business in any industry. When these characteristics are lacking across much of the workforce, the business can be stifled and perform far below its capacity. There are many factors associated with employee satisfaction and, by extension, optimal production and innovation. The literature on the subject is plentiful and demonstrates how process change and the pursuit of employee satisfaction goals improve the bottom line as well as the overall business environment (Chang, Chiu, & Chen, 2010, p. 1299).
According to Yee, Yeung, and Cheng, the link between employee satisfaction, service quality, customer satisfaction, and firm profitability is well established:
"Using structural equations modeling, we found that employee satisfaction is significantly related to service quality and to customer satisfaction, while the latter in turn influences firm profitability. We also found that firm profitability has a moderate non-recursive effect on employee satisfaction, leading to a 'satisfaction-quality-profit cycle.' Our empirical investigation suggests that employee satisfaction is an important consideration for operations managers to boost service quality and customer satisfaction." (2008, p. 651)
The connections in the literature between employee satisfaction and quality improvement also lead researchers to examine how quality management programs address the issues associated with employee satisfaction. This paper briefly reviews available literature linking quality management systems to employee satisfaction in order to develop a greater understanding of how these two elements of quality production work together.
The quality management programs most relevant to this inquiry are those that attempt to create quality through the constant development and improvement of processes. One prominent example is Total Quality Management (TQM). According to Tsang and Antony, "Total quality management (TQM) is an integrative management philosophy aimed at continuously improving the performance of products, processes and services to achieve and surpass customer expectations" (2001, p. 132). Although TQM is not the only quality management system used by businesses to improve overall performance, it was among the first in a broader trend, making it a useful subject for inquiry into how quality management programs positively influence employee satisfaction. Another relevant example is lean production, which utilizes just-in-time inventory systems, continual improvement, and team-based quality circles that allow workers at every level to have input and involvement in production and job-related issues that might improve quality (Cappelli & Rogovsky, 1998, pp. 636–637).
Much of the literature on this subject demonstrates that quality management systems do indeed improve employee satisfaction along measurable dimensions. Cappelli and Rogovsky (1998), for instance, show through primary research that employee empowerment is linked to employee satisfaction. What this means in terms of the present inquiry is that employees have greater job satisfaction when they are involved in making decisions that affect their work. Empowerment describes the individual's perceived and actual opportunity to participate in decision-making in ways that improve performance.
According to Pakdil, the factors most useful for understanding employee sentiments include "employee turnover rate, number of employee complaints, employee satisfaction rate, attendance, suggestions sent by employees, and number of strikes" (2010, p. 246). In primary research examining a number of quality-award-winning companies, Pakdil found that the length of time a TQM or other quality management system had been in place was significantly correlated with employee sentiments and behaviors associated with higher productivity and customer satisfaction:
"Winners display a significant difference for employee turnover rate… in the fourth year (p=0.013), employee complaints… in the second, fourth, and fifth year (p=0.033), employee satisfaction rate… in the second and fourth year (p=0.024), attendance after the fourth year (p=0.032), suggestions… in the first year (p=0.008)." (p. 242)
What this research suggests is that many aspects of employee sentiments and behaviors — that is, indicators of employee satisfaction or dissatisfaction — improve over time, possibly once the cultural shift associated with TQM or another quality system begins to take hold within the organization. Other aspects, such as employee-submitted suggestions, require continuous nurturing and encouragement to sustain positive behaviors. These findings also support the idea that the measurement tools used to understand how and why employee beliefs and behaviors influence overall quality reflect a relatively well-defined set of indicators.
Many issues associated with employee satisfaction have traditionally been assigned to human resource management (HRM) to address and improve. Yet HRM is not always given the tools it needs to meet employee needs, and it is frequently disconnected from TQM or other quality development systems. This disconnect is partly practical: TQM and similar systems are generally focused on production improvement and are not necessarily oriented toward HR issues or toward understanding how TQM and HRM interact as a continuum with an overall positive effect on the business.
Chang, Chiu, and Chen stress that TQM must be extended to the HRM system through a set of standards and principles that support and improve "employee training, employee empowerment, teamwork, employee compensation and management leadership" (2010, p. 1301). These findings are also supported by Huselid (1995), who contends that measuring productivity in a system where HRM is integrated with TQM or another quality management approach produces significantly different results than the same measurements taken against a control group where HRM operates independently and without quality-system integration.
"Satisfaction shapes customer experience and firm profitability"
There is clear evidence in the literature that quality management systems, whether TQM or others, have a significant impact on employee satisfaction, and that in turn there is a positive link between employee satisfaction and overall quality of productivity and the public face of the business. This review of the literature affords a greater understanding of both the connections among these three factors and the importance of considering them together in the application of any quality management system. Productivity and overall quality are fundamentally improved by quality management systems that demonstrably develop and sustain employee satisfaction as a core organizational outcome.
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