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The Role of Quality in Business Ethics Spencer Hutchens, Jr. Chairman

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Thomas Pyzdek, Pyzdek Consulting, Inc. Gregory H. Watson, Academician, IAQ ... John Ryan, American Society for Quality. 3. International Academy for Quality ... – PowerPoint PPT presentation

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Title: The Role of Quality in Business Ethics Spencer Hutchens, Jr. Chairman


1
The Role of Quality in Business EthicsSpencer
Hutchens, Jr.Chairman
National Quality Forum Manila, Philippines 9
October 2008
2
Acknowledgements
  • Thomas Pyzdek, Pyzdek Consulting, Inc.
  • Gregory H. Watson, Academician, IAQ
  • David B. Luther, Academician, IAQ
  • John Ryan, American Society for Quality

3
Questions 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?

4
Part I Business Transactions are Based on
Promises
5
What 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.

6
Business exists to serve its customers with value
Academician Noriaki Kano Theory of Attractive
Quality
7
Business 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
8
Value 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
9
Part II Quality and Ethics
10
Customers care about the result, not our process!
From the outside our organization is a black
box!
Customers expect businesses to deliver good value.
11
What 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.

12
What 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.
13
A 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.

14
A New Definition of Quality
  • Quality is conformance to
  • stakeholder requirements!

15
Stakeholders
  • Owners or stockholders
  • Customers
  • Employees
  • Suppliers
  • Communities
  • Society at large

16
The 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.

17
Achieving 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!
18
Part III Quality and Governance
19
Review 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?

20
Governance 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

21
Governance 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

22
Governance 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

23
What 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

24
What 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

25
Ethics 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.

26
What are the promises that must be kept?
  • Deliver value for all stakeholders.
  • Minimize loss to society.
  • Everyone pledges to do his or her part!

27
Conclusion
  • 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.
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