Accountancy & Management: A different route to quality - Roger Trapp reports on accountants' key role in changing company culture

'TOTAL quality' - the management theorem that ruled supreme before 'business process re-engineering' came along and stole its thunder - is so closely linked to the Japanese that many critics say it is not really workable in Western companies.

Apparently ignoring the fact that some companies in the West, including the US electronics giant Motorola, copier maker Rank Xerox, international manufacturer United Technologies and our own British Airways have embraced the concept with some success, they say that it suits the Japanese because they are culturally more prepared to sacrifice individuality for the common good.

However, this seems to overlook the fact that many of the industrial relations and management practices of British business are based on conformity - removing people's discretion over their activities.

Consider the example of the company that, in the current terminology, 'empowered' its workers to stop the production line if they thought they had seen a quality problem only to find that the defects situation got no better: nobody had stopped the line because operators were fearful of the consequences of doing so mistakenly.

This is not just bad news for the production system: it is bad news for the customer.

There are shining exceptions, notably Royal Bank of Scotland's move into direct telephone sales via its Direct Line Insurance arm.

But to Nick Develin and Max Hand, authors of a recently published book on the subject, such attitudes are indicative of the real problem facing those who want to implement quality programmes - an inability to change company culture. Although the solution has a lot to do with such notions as leadership and commitment, it is, they believe, also tied up with the enduring emphasis on financial performance. As a result, there is a key role for accountants.

Pointing out that accountants will readily admit that the profit-and-loss account and balance sheet leave a lot to be desired as management information, the authors suggest that these specialists are in a unique position to give their fellow managers meaningful information about the business that could change attitudes sufficiently to allow the total quality approach to work.

At the moment - for all the efforts to find fresh ways of assessing performance - management thinking is largely conditioned by the conviction that what is measured gets done. Since this tends to mean that financial results are seen as the ultimate measure, the accounts function within an organisation assumes great importance.

This is, however, a misplaced importance, argue Mr Develin and Mr Hand in their book Total Quality Management - Breaking the Cultural Barriers. They suggest that costs and income, the prime components of the profit-and-loss account and balance sheet, are not the vital statistics many believe them to be.

'In the same way that income is the consequence of delivering a product or service, costs are the consequence of decisions to acquire resources - people, equipment, premises, raw material, consumables, and so forth. It is the decisions that need to be better informed. Information on the consequences is secondary.'

But because our culture is results- oriented, so are our conventional systems of management information. They focus on the financial consequences, rather than the means, conditions and circumstances that produce them. And it is here that the accountants can be of great help - by assisting their colleagues to understand the management of cause and effect, a concept that is at the heart of sound decisions and commercial success.

'Understanding activities and business processes provides the missing link. It is missing from conventional financial and management accounts, and often misleading in conventional standard costing systems,' write Mr Develin and Mr Hand, directors of Develin & Partners, a management consultancy in London that specialises in total quality and related issues.

All this is important, they add, because most of the barriers to continuous improvement and innovation - on which true quality programmes depend - originate in organisations' methods of motivating their staff. And financial measures play a leading part in most such incentives.

Until this situation is dealt with, goes the thinking, initiatives such as empowerment, flatter hierarchies and the like are bound to fail. Emphasis on internal budgets, staff appraisals and performance-related pay deals will break down the trust and team spirit needed to make them and total quality work.

The result may not be as clear-cut as that envisaged by W Edwards Deming, the leading quality guru who has predicted that by the end of the century there will be only two kinds of company - those practising total quality and those no longer in business.

But it is highly likely that much of Western industry will still be playing the same kind of catch-up game that the car maker Ford found itself in several years ago, when it sought to eliminate the competitive advantage established by its Japanese counterparts.

As part of a study of the quality of Toyota radiators, an engineer was sent to buy four of the Japanese company's radiators so they could be dismantled and examined by Ford's specialists. He reported back that they could not be purchased as spare parts, because they were only supplied direct from a central warehouse to accident repairers. Ford was somewhat shocked to hear that if they were still required as spares, they would be flown from Japan accompanied by a team of engineers whose job it would be to find out why the radiators had failed in normal service.

Since then, of course, Toyota has built on its ability to produce high quality at low cost to take on the likes of BMW, Mercedes and Jaguar with its luxury model, the Lexus. The targets are always moving.

'Total Quality Management - Breaking Down the Barriers' is published by Accountancy Books. Price pounds 28.

(Photograph omitted)