An Empirical Study on Total Quality Management (TQM) Practice in Commercial Banks of Bangladesh

Abstract

Globalization has made drastic changes all over the world in terms of advancement in information flow proficiencies, a new wave of advancement in technology and most importantly a new dimension in customer choices which leads to forced competition in the open markets. Business organizations responding to these changes with transformation in order to become more challenging, more dynamic, and more competitive. Total Quality management (TQM) is considered as an emerging philosophy of management therefore aligned with this new transformation of business firms. Since the last two eras, a swift revolution in the implementation of TQM principles, methods, tools, and techniques has been observed in major fields from manufacturing to service. TQM has become a management attitude in the region of production, education, banking, hospitality, information and communication technologies even in the state-owned sector on account of the robust effect of TQM on organizational performance and practicing frequently by the decision-makers, managers, quality practitioners and professionals all over the world. Due to the rising binge and acceptance of fierce competition in business with the liberalization of the economy, the banking sector is now more focused on creating new values for its clientele, and in this regard, TQM has got high attention from scholars around the world. Therefore, banks have chosen TQM principles and activities through which differences they are making and formulating new strategies to satisfy customers, accomplish customer loyalty and try to exhibit better values than their competitors. Heretofore, the banking industry is besieged to introduce and offer a new dimension in service which can intensify the attention of customers over their smarter rivals. To date, in the attempt to recognise the practice of total quality management (TQM) in the banking industry of Bangladesh, the empirical studies conveyed in the literature only a handful quantity. Considerations are given to the manufacturing sector highly but the service sector is drawing attention as it requires customer satisfaction most. The banking sector is also betrothed to TQM not only to develop new strategies but also to outmanoeuvre their rivals’ strategies to gratify customers’ needs and gain customers’ loyalty through value addition. With regard to this, an endeavour has been executed to contemplate the level of TQM practice in private commercial banks of Bangladesh. This study has explored the literature pertinent to critical success factors which lead the effective implementation of TQM in manufacturing, service, and banking. After conducting FGD with mid-level bankers and an in-depth literature review, a questionnaire has been developed and checked the reliability by academicians, research scholars, and field experts in the banking sector. The study used both qualitative and quantitative methodology supported by the information obtained from the survey. Within the universe of existing service organizations, the baking sector has been framed for this study as it is vastly structured and competitive. The private sector, exclusively has emphasized due to having differences in structure with state owned and specialized banks. This study is aimed to scrutinise and confer the most critical success factors affecting TQM practice in the banking industry of Bangladesh. An inclusive literature review was conducted on the major concepts being explored on TQM focusing on the banking sector. Plentiful arguments put forward by various researchers, academics, and practitioners. After an extensive literature review, conceptual framework was developed. Dependent and independent variables were identified and the measurement scale was fixed. Top management leadership (TML), customer relationship (CR), supplier partnership (SP), employee involvement (EI), continuous improvement (CI), and organizational culture (OC) were recognized as independent variables and TQM implementation was counted as dependent variables. Subsequently, an FGD was conducted with mid-level bankers of different banks on references. The top level bankers responded to a semi-structured interview. The conceptual framework was amended after analysing the FGD findings, interview outcome, and feedback from the first seminar. Formerly questionnaire was finalized and checked by reputed research and field experts. More than four hundred questionnaires were analysed by SPSS (version-26) and PLS-SEM using Smart PLS 3.0 to examine the level of TQM in private commercial banks of Bangladesh. During the data collection stage, complimentary interviews in semi-structured manner were directed with top level managers in order to accomplish a better interpretation of some supplementary issues concerning TQM practices in the banking sector. The current study result revealed the TQM practice in private commercial banks of Bangladesh with some important variables which are addressed as critical success factors of TQM supported by the literature and input from FGD. The study observed the consequence of TQM implementation on TML, CR, SP, EI, CI, and OC. It was shown, after the analysis, that TQM underwrites significant and positive influence on TML, EI, CI, and OC with regard to the banking sector of Bangladesh. A surprising outcome highlighted from the findings that TQM has a negative association with CR and SP which are utmost significant and positive predictors for quality management practices. TQM programs are aligned with the goals to understand customers, surpass needs, satisfy through providing quality products and services which can be achieved by supplier partnership. The customers of banks, in this digital age, not only borrowing and depositing money but want to be fully embraced with the convenience of technology. All sort of banks needs to adopt a contemporary technology-oriented customer-focused approach to cope up with the increasing and ever-changing customer demands and competition as well. A relationship-based marketing approach ensures the loyalty of customers. The sooner and better banks understand the requirements and preferences of customers, the greater the chance to tailor and launch services leads to customer satisfaction in this customer-centered industry. But the study revealed a very important loophole in the banking sector of Bangladesh and that is, customer relationship is not getting that much attention that it needs to be. On the contrary, in some cases, this aspect is fully ignored. Surprisingly, banks are developing and offering services to their customers regularly without considering them as the prime decision-makers of their banks. Banks need to understand the need and preferences of customers in terms of maintaining long-term relationships, personal counseling before a purchase decision, emotional and psychological needs, service with consistent quality, the guarantee of security, privacy, and confidentiality, use of the internet for transacting, discretionary portfolio management, global accessibility and so forth. In this day and age, banks should not only focus on quality services but to cement long- term, mutually beneficial relationships as customers want full packages of luxury concerning the selection of appropriate loan packages, investment packages and loan repayment methods, planning for cost-cutting, availing of tax redemption, experiencing expertise on financial statements, stock reports, valuation reports, etc. A sense of belongingness in customers’ minds create a long-term association with the bank. Collecting feedback from customers is a very common practice in banks of Bangladesh but responding promptly and incorporating customer input for developing quality statements might not. Faster and better service with error-free result leads long term bonding which can be achieved by incorporating the customer's voice.