Title: The Role of Quality in Business Ethics Spencer Hutchens, Jr. Chairman
1The Role of Quality in Business EthicsSpencer
Hutchens, Jr.Chairman
National Quality Forum Manila, Philippines 9
October 2008
2Acknowledgements
- Thomas Pyzdek, Pyzdek Consulting, Inc.
- Gregory H. Watson, Academician, IAQ
- David B. Luther, Academician, IAQ
- John Ryan, American Society for Quality
3Questions Addressed Today
- What does quality have to do with governance?
- What does quality have to do with business
ethics? - What are the promises that must be kept?
4Part I Business Transactions are Based on
Promises
5What is the nature of a commercial relationship?
- All businesses have three primary activities
innovation to create something of value for a
customer, marketing to communicate value and set
customer expectations, and operations to transfer
value to customers through a commercial exchange.
6Business exists to serve its customers with value
Academician Noriaki Kano Theory of Attractive
Quality
7Business makes promises to deliver customer value
We create customer expectations by designing value
Customers evaluate our performance to our promise
Academician Gregory H. Watson Model of Business
Transactions
8Value is delivered by our integrated supply chain
We deliver through a set of related work
processes.
We translate customer need into process language!
Academician Yoji Akao Concept of Quality
Function Deployment
9Part II Quality and Ethics
10Customers care about the result, not our process!
From the outside our organization is a black
box!
Customers expect businesses to deliver good value.
11What is Ethics?
- Ethics is that branch of philosophy concerned
with a code of values that guide human choices
and actions. - Ethics is synonymous with morality.
- Ethics is personal.
12What is Business Ethics?
- There are three fundamental questions
- For what end should the organization exist?
- By what fundamental principle should the
organization act to achieve this end? - Who should profit from the organizations actions?
The answers to these interrelated questions form
the ethical code of an organization.
13A Code of Ethics
- The organization exists to achieve its vision.
- The organization should act rationally based on
the available information and predictions. - All of the organizations major stakeholders
should benefit. - Loss to society due to the organizations
activities should be minimized.
14A New Definition of Quality
- Quality is conformance to
- stakeholder requirements!
15Stakeholders
- Owners or stockholders
- Customers
- Employees
- Suppliers
- Communities
- Society at large
16The Quality Functions New Mission
- The mission of the quality function is to provide
information to leaders so they can assure that an
organizations outcomes conform to stakeholder
requirements AND that the loss to society is
minimized.
17Achieving the New Quality Mission
- Determine the shared vision of the leadership
- Determine the stakeholder requirements
- Measure the loss to society
- Obtain information on organizational outcomes
- Compare the outcomes to stakeholder requirements
to determine conformance - Help identify root causes of non-conformance
Quality must grow into its new role!
18Part III Quality and Governance
19Review of Business Ethics
- Three fundamental questions must be asked
- For what end should the organization exist?
- By what fundamental principle should the
organization act to achieve this end? - Who should profit from the organizations actions?
20Governance and Vision
- The Board of Directors examines the
organizations vision - Do all the leaders understand this vision?
- The Board of Directors must assure that the
vision is shared by all leaders - The Board of Directors assures that leadership is
committed to achieving the vision
21Governance and Organizational Rationality
- The Board of Directors judges the actions of
management - Input from the quality organization is used
- Brings outside knowledge and perspective to
determine if information and predictions are the
best available - Decides if managements actions are moving the
organization toward its vision
22Governance and Beneficiaries
- The Board of Directors must examine stakeholder
requirements identified by the quality
organization - The Board determines if management has harmonized
the interests of all its stakeholders - The Board evaluates societal impact data provided
by the quality organization - The Board decides if managements actions are
minimizing impact - The Board examines quality data on conformance to
stakeholder requirements - The Board decides if managements actions and
plans for closing gaps is adequate
23What does quality have to do with governance?
- Business ethics is doing what is right for all
stakeholders AND for society - Different stakeholders have different
requirements - The requirements define what is right for each
stakeholder - Quality identifies stakeholder requirements,
operationalizes them, determines conformance - Leadership harmonizes stakeholder requirements
- Loss to society must be minimized and value
delivered - Quality operationalizes loss to society
- Management acts to minimize loss to society
- The Board of directors assesses adequacy of all
the above
24What does quality have to do with business ethics?
- A quality culture AND a habit of ethical business
behavior cannot exist without each other - American Society for Quality
- Statement on Business Ethics, 2002
25Ethics engage people in deploying strategy.
- Business leaders plan work in the strategy
process and execute in their operations. People
provide the transfer function for value to assure
it is consistently embedded in their customers
experience! Quality methods define and support
all three processes to assure consistent and
enduring performance.
26What are the promises that must be kept?
- Deliver value for all stakeholders.
- Minimize loss to society.
- Everyone pledges to do his or her part!
27Conclusion
- International Academy for Quality
- Promoting research into the philosophy, theory,
and practice of all activities involved in
achieving quality for the best use of the worlds
resources.