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TQM in the Banking Industry


This research explores the issue of total quality management (TQM) in banking. The issue is addressed in three contexts, as follows: (1) defining quality management within the context of the banking industry; (2) application in the banking industry of the TQM mandate to involve all members of an organization in the quality program; and (3) relating the key principles of TQM to the operations of the banking industry.

Defining Quality Management Within the

Context of the Banking Industry

The service sector of the economy, of which banking is a part, is highly dependent upon the interactions of employees with customers (Port, Carey, Kelly, and Forest, 1992, pp. 6674). A high proportion of a service product is created by employees in their interactions with customers. Thus, the effectiveness of the interrelationship between the TQM concept and human resource management is critical to the application of the TQM concept by banking organizations.

Product quality came to the forefront in the American economy in the late1980s, as the top managements in American companies learned that American product quality was generally perceivedby Americans and foreign consumers aliketo be inferior to products from other countriesparticularly Germany and Japan (Port, Carey, Kelly, and Forest, 1992, pp. 6674). Initial emphasis in the American quality reawakening was on manufactured goods. In the service sectors, including banking, American companies were generally competing against other American companies; thus, the pressures to improve quality were not perceived to be as significant as they were in the manufacturing sector. The advent of the longestduration economic recession in the United States since the 1930s in the early1980s, however, led to changes in the appreciation of quality outside of the manufacturing sector of the economy. Companies in services, including ba...

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TQM in the Banking Industry. (1969, December 31). In Retrieved 11:00, May 06, 2016, from