Standard Chartered Bank’s Quality Management

Introduction

The purpose of the report will be to analyse the concept of quality management and how incorporating this concept into organizational activities will lead to an improvement in organizational performance. Quality management deals with the functions and operations performed by people in managerial positions within an organization. These functions and activities should be focused towards determining of quality policies for the organization and how these policies can be implemented to improve the performance of the organization. Quality management is important for many organizations and companies as it ensures improved performance and quality of the organizations operations. Improved performance and quality are seen to be important critical success factors for companies that are concerned with service provision and production management.

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Quality management is made up of three principle components which are quality improvement, quality assurance and quality control. Quality management incorporates these three principles to achieve quality within an organization. Quality assurance in quality management deals with managing the quality of the goods or services produced by the company by using planned systems and review procedures to assess the organization’s quality. It involves conducting quality analysis in the development stage of the new product by reviewing the design activities. Quality assurance involves activities such as inspection, auditing and evaluation of the quality of the company’s operations and activities (Cabrera & Meyer, 2010).

Quality control involves the use of technological innovations to measure the amount of inventory held by an organization at a certain time. The quality control system of an organization is designed to provide routine and consistent checks that will ensure that the information held by the information is of integrity and is correct. Quality control is also meant to address any errors that might arise in the quality management process and also document the inventory and quality control activities. The methods that are used in quality control activities include accuracy checks on inventory items, calculations on errors and omissions, estimation of operational uncertainties, archiving and reporting of quality control information. Quality improvement is described as the process of purposeful change undertaken by an organization to improve the quality of its operations (Cabrera & Meyer, 2010).

Quality improvement involves activities that are directed towards improving the overall performance of an organization’s activities by improving product, process and people improvements within an organization. The main techniques that are used in quality improvement techniques include the ISO 9001:2008, ISO 9004:2008 guidelines for performance improvement and total quality management (TQM) strategies. The purpose of the report will be to analyse the quality management frameworks and components that are in use by Standard Chartered Bank as well as review how these quality management frameworks have contributed to the performance of the company.

Standard Chartered Bank

The company also referred to as Standard Chartered PLC is a company based in London that offers financial services. The operations of Standard Chartered extend over seventy countries around the world. Its employee base is made up of 80,000 employees who work in both the headquarter offices as well as the 1,700 branches based in the seventy one countries. The financial services and products that are offered by Standard Chartered include corporate and consumer banking, investment management banking, finance and insurance services, private equity and banking and mortgage loans.

The company is listed in various stock markets around the world which include the London Stock Exchange market, the New York Stock Exchange (NYSE) and the Hong Kong Stock Market. The company has been ranked among the top twenty companies by the FTSE-100. Standard Chartered has been in operation for the past 150 years in various continents which include Europe, Asia, the Middle East and Africa (Standard Chartered, 2009).

The company has incorporated quality management frameworks that have enabled it to improve its performance and financial activities in its various branches around the world. The company’s profits and revenues have continued to increase over the years as a result of quality management activities that have seen improvements the financial products or services that are offered by Standard Chartered. According to an interim management report prepared for the first quarter of 2010, the company has recorded improved performance in its consumer banking operations that have seen the total income and profit improving when compared to 2009 (Standard Chartered, 2010).

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Quality assurance, improvement and control activities have mostly been directed towards improving customer relationships that the bank has with its clients. The customer relationships have been developed into consumer banking activities that have continued to improve within the company. Consumer banking, customer assets, and liabilities have recorded a double percent growth within the first quarter of 2009. There has also been notable growth in mortgage loans. This growth can partly be attributed to quality management activities that have been directed towards sustaining of consumer banking and customer assets. Wholesale banking is another financial product and service offered by the bank that has experienced growth in 2010 when compared to the first quarter of 2009.

The products offered in wholesale banking include trade finance, cash transactions and payments. There has been a recorded improvement in customer income that has increased by 20 percent, contributing to 80 percent of Standard Chartered’s total wholesale banking income. Trade finance has been identified to perform well in the wholesale banking sector with high volume margins being recorded despite the increasing competition for trade finance services by other financial institutions. Cash transactions have however experienced a slow growth because of constant pressure from increasing margins (Standard Chartered, 2010).

Quality Management Frameworks in use within Standard Chartered

As with any financial institution, quality improvement in products and services has continued to gain more attention due to the changing economic environment that requires all service industries to continually change their operations. These changes have also been felt in the banking industry where customer banking habits have continued change with economic globalization. These habits affect customer’s attitudes towards banking services and products that are offered by financial institutions. Consumers of financial services are now basically looking for institutions that can meet their needs and expectations. The few mobility barriers that exist between financial institutions make it easy fro customers to switch from one institution to another in the event their needs are not satisfied. The strategic trends in the banking sector have developed themselves around the fact that the customer is the most important asset to the institution (Montes et al. 2003).

The frameworks that are used in quality management activities are basically derived from the eight principles of quality management. These frameworks are based on defined sustainable organizational practices that have been developed to reflect these principles. The framework enables employees to question the leadership and management practices within an organization as well as gain an understanding of how performance, quality improvement is managed within the organization. Quality management frameworks are designed to challenge the current systems of operation in use within the organization. The frameworks usually involve incorporating systematic approaches that will enable the company achieve its goals and objectives (Parker, 2001).

The quality frameworks in use by Standard Chartered are analysed in terms of their relevance to the company’s management and technical systems. The technical systems in use by the bank involve IT support frameworks that are used to manage the ATM networks of the various branches of the bank. These systems need to under quality improvement activities that will ensure that they are up to date and efficient. Morrall (2010) notes that there are a lot of factors that go into quality management of ATM machines and other technological systems that are used by financial institutions that customers cannot be able to see. The technological systems of the bank involve the IT infrastructure that is in use to manage the operations of the bank effectively and efficiently (Morall, 2010).

The quality management framework that is used by the Standard Chartered management system involves the use of service quality measurement systems that are made up of programs that provide customer feedback and complaints programs. The measurement systems also involve customer expectation surveys that provide customer feedback necessary for improving the sale of the banks products. The bank’s management has incorporated employee training programs designed to improve their performance and increase their efficiency. The training program ensures that the employees are focused on providing quality service to the company’s clients. The company has also developed process improvement teams that will ensure the company’s procedures and services are in tune to quality standards. The products or services that are being offered by the bank have also undergone constant improvement and innovation to ensure that they meet with the changing customers demands.

Understanding customer needs has enabled the bank to develop quality management programs that have improved the performance of the company (Morall, 2010). Standard Chartered has received ISO accreditations in the form of ISO: 9000 and ISO: 9002 certificates for its services which include transaction banking which mostly involves cash management. Services offered under cash management include payment and collection services, clearing services, liquidity management, trade finance and security management (Wholesale Banking, 2010).

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Principles of Quality Management

The application of quality management will involve analysing the quality management principles which provide a guideline to managers within an organization to practise quality management. The International Organization for Standardization (ISO) developed eight quality management principles that would be used by organizations around the world to improve their business operations and activities. These principles are outlined below:

The first principle deals with developing quality management systems that are customer focused. This is an important principle as most organizations depend on customers for their success. Quality management activities under this principle should therefore be focused on customer satisfaction. The second principle states that managers or people in authority should exercise leadership by providing the people under their authority with a sense of direction and unity of purpose.

Managers who exercise leadership are meant to create an organization environment that encourages employees to participate in achieving organizational goals and objectives. The third principle deals with involvement of people in quality management activities. This principle advocates for employees at the various levels of management to participate in management activities, thereby utilising their work capabilities. The process approach which is the fourth principle of quality management requires managers in organizations to manage the organization’s operations as a process (Kristerforsberg, 2010).

There is also the system approach system which is the fifth principle and it incorporates managing some of the know interrelated processes in an organization in order to achieve efficiency and effectiveness. The continual improvement principle requires that managers should continually improve the organization’s performance by providing steady and incremental improvement activities. There is also another principle referred to as Factual approach which aids in making decisions and it involves the use of measured and calculated data in makin managerial decisions. Managers or leaders are encouraged to base their decisions on data that has been properly developed and analysed. The eighth principle that deals with mutually beneficial supplier relationships requires managers to form independent relationships with their stakeholders, supplier and investors (Kristerforsberg, 2010).

The Role of Six Sigma in Quality Management

The term six sigma is defined as programs, tools or techniques that are used to eliminate any defects that might be found in products or services. One can also define it as one of the strategic schemes that involves the use of statistical tools to improve the company’s profitability, improve its customer’s satisfaction and also increase its market share. The six sigma concept was developed by Motorola in 1987 as a result of various changes that were undertaken in the company’s quality assurance department. The six sigma concept led to the development of the six sigma scale that incorporated the use of probability of failure characteristics, and defects per unit characteristics (Park, 2010).

The use of the six sigma model by Motorola saw a reduction of business process variations which also led to increased cost saving by the company in the amount of $13 million dollars. The productivity and performance of the company’s workforce also saw some improvement with an increase of 204 percent between 1987 and 1997. The success of the model saw other companies dealing in electronic products and services such as IBM launching their own six sigma models in the 1990s. It was not until 1995 that General Electric and Allied Sigma incorporated the six sigma model into their strategic plans that it began to gain prominence as an effective tool for quality management. 1997 saw major global companies such as Samsung and LG introducing six sigma models in their company operations. The results of using the model saw Samsung recording cost savings in the amount of $150 million (Park, 2010).

The six sigma model has been viewed as a strategic paradigm that managers use to innovate their products and services in line with economic globalization and changing customer habits/behaviours. According to Park (2010), the six sigma model incorporates three components which include the culture of quality management within an organization, strategic management and statistical measurement of the quality levels of products, processes or service transactions.

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Statistical measurement relays to managers important information on whether the company’s products or services are of a high quality. Management strategy is important in the six sigma model as it ensures that product or service innovations are of a high quality and the products are able to meet the customer’s needs, expectations. The quality management culture provides a general guideline that will be followed to ensure the company’s operations are performed in the proper way (Park, 2010).

The Benefits and Pitfalls of Using Six Sigma

While the six sigma has been adopted by many global corporations, the model has mostly been used in the healthcare industry, construction service industry, customer relations, procurement, supply chain management, and the banking or financial industry. Financial institutions around the world have incorporated the use of the model in their financial service transactions. The six sigma model has been applied in loan refinancing activities, credit services, retail banking, wholesale banking and transaction management. The model has also been used in improving the IT infrastructure of most banks with computer systems used in managing clients and ATM machines undergoing process improvements. The model is also important in improving the business operations of most banks by improving service and quality products (Nakhai & Neves, 2010).

The benefits or success factors that will be gained once Standard Chartered uses the six sigma model includes stronger commitment to the company’s operations by management, a reduction in process variations, notable changes in the organizations culture, aligning the six sigma projects to be in line with the business objectives, goals and strategies formulated by Standard Chartered Bank, extensive training of employees on quality standards, linking the projects to customer satisfaction, improving the levels of accountability within the bank, improving the cost savings of a company and improving the financial performance of the company.

The pitfalls of using the six sigma are that difficulties arise when it comes to identifying what is to be measured and how it will be measured. The studies that have been conducted on the subject have mostly focused on the manufacturing industries and their business process which are repetitive in nature. These processes have limited or no human behaviour components which make the six sigma insufficient in improving a company’s service operations as well as meet customer expectations (Nakhai & Neves, 2010).

Conclusion

The purpose of the report has been to evaluate the aspect of quality management and how Standard Chartered Bank has incorporated quality management activities into its operations. The paper has highlighted the fact that financial institutions around the world are constantly facing changes which have forced them to continuously renovate their product offerings to meet the changing demands in the economic market. Also, Quality management has been identified as an important technique that can be used to improve the business operations of financial institutions such as Standard Chartered by providing quality control, quality assurance and quality improvement techniques that can be used to improve financial services.

The eight principles that make up quality management have been viewed to be important guidelines and standards that organizations world over can use to determine if they are up to the ISO standards set forth by the international standardization organization. The six sigma has been viewed as an important tool in quality management activities as it provides newer and efficient techniques to deal with quality improvement within an organization. The six sigma is viewed to be an improvement of the total quality management approaches that were used in quality management activities. This is because it enables organizations to practice cost saving activities while at the same time reducing any process variations that might arise during the performance of business operations.

References

Cabrera, C.M.L. & Meyer, L.A., (2010). Quality assurance and quality control. Web.

Kristerforsberg (2010). The quality management principles. Web.

Montes, J.L., Funetes, M.M., & Fernandez, L.M.M., (2003). Quality management in banking services: an approach to employee and customer perceptions. Total Quality Management, Vol.14, No.3, pp 305-323.

Morall, K., (2010). Building the bank on total quality management. Web.

Nakhai, B., & Neves, J.S., (2010). The service quality model and the challenges of the six sigma in services. Web.

Park, S.H. (2010). Six sigma and its role in quality management. Seoul, Korea: Department of Statistics, Seoul National University.

Parker, J., (2001). Framework for sustainable organizational best practice. Web.

Standard Chartered (2009). About us. Web.

Standard Chartered (2010). Press releases: Standard Chartered interim management statement (IMS) for the first quarter of 2010. Web.

Wholesale Banking (2010). Clearing services: making the right connections for financial institutions. Web.

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