Date of Award

1996

Document Type

Thesis

Degree Name

Master of Business Administration

Department

Business

First Advisor

Daniel W. Kemper

Second Advisor

Joseph Silverio

Third Advisor

Jan Kniffen

Abstract

This thesis will focus on the concept of Return on Quality, which allows managers to measure their company's return on investment on quality-improvement programs. Although over 90 percent of American companies have some form of quality-improvement initiatives in place, studies have shown that as much as 66 percent of the programs implemented have failed to produce satisfactory results.

This finding does not mean that all quality programs should be scrapped. Rather, it underscores the importance of assessing the program's ability to contribute to the company's bottom line. Top financial executives should actively participate in measuring the performance of such programs to ensure the adoption o f a bottom-line approach to the quality initiative: Return on Quality. They must see to it that the quality improvement proposals agree with the company's investment criteria, verify costs and customer-profitability figures, test programs before implementation, and develop procedures for monitoring the program's progress.

A review of the total quality management and return on quality literature revealed that there has been very little empirical research into the concept of return on quality. The literature review supported the view that a return on quality manual should be developed, containing procedures for companies to evaluate their quality-improvement alternatives based on their profit impact.

A return on quality manual was developed, and evaluators for the manual were selected. Criteria for selection of the evaluators were: knowledge of total quality management principles and practices and experience in quality management. Evaluators were chosen from the corporate and small business sectors. The data collection instrument was a self-developed questionnaire.

The results of the questionnaire supported the need for a return on quality handbook. The evaluators' comments suggested both immediate and future needs for the manual.

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