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European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 15 (2009) EuroJournals, Inc. 2009 http://www.eurojournals.com/EJEFAS.

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The Impact of Employee Awareness Toward Quality Management Thrust on Its Implementation
Zulnaidi Yaacob School of Distance Education, Universiti Sains Malaysia Tel: 604-6532283; Fax: 604-6576000 E-mail: zulnaidiyaacob@yahoo.com Abstract The main objective of this study was to test the moderating effect of employee awareness on the relationship between QM thrust and cost savings. Cost savings has been recognised in the literature as among the indicators of a successful implementation of QM. In this paper, employee awareness is hypothesised as having an impact on QM implementation. Data for this study were collected from 205 departments attached to local government organisations in Malaysia. The findings of this study implied that the awareness of the employees toward the QM thrust would bring benefits to its implementation.

Keywords: Quality Management, Quality, Cost Savings, Local Governments, Malaysia

1. Introduction
Quality Management (QM) has been defined in numerous ways by different authors, but in almost all published works, the idea on QM thrust has been maintained. They have concertedly agreed that QM consists of three thrust principles, namely customer focus, continuous improvement, and employee empowerment (Ahire et al., 1996; Powell, 1995). The terms are familiar for almost employees in the QM organisations but still elusive or not really understood by each of them. This misunderstanding would cause the employees to continue doing their tasks in the way they would before, which may be inconsistent with the requirements of QM (Deming, 1990). Thus, the QM organisations should emphasise information sharing among employees or intensify the quality related training as efforts to inculcate the employees awareness toward the implementation of QM. Moving from the assertion that employees are the key of QM implementation (Soltani et al., 2004), the premise of this paper is that the employee awareness toward QM may moderate the successful implementation of its thrust. The focus of this study, whether employee understanding either has or has not moderating effects toward the relationship between QM and performance, was able to shed some light on the unresolved issued of a questionably simple link between QM and performance, as mentioned in the literature (Dow et al., 1999; Sousa & Voss, 2002). Most of these studies had reported the inconsistent findings regarding the relationship between QM and performance. For the researchers who found insignificant direct relationships between the two variables, they had suggested future researchers to investigate a third variable that could influence the successful implementation of QM (Ehigie & McAndrew, 2005).

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2. Problem Statement
Quality Management (QM) has long been promoted as an effective cost saving strategy. Since it became one of the major research disciplines, the literature on it has been extensively developed. Many researchers had investigated the various issues related to it. Some of them, like Terziovski and Samson (1999), had reported a significant relationship between QM and cost savings, but the rest, for example Yasin et al. (2004), suggested that the link between the two variables might not be a simple direct link. Their inconsistent views arose due to different findings reported by them. While most of earlier studies on QM had tested the direct link between the two variables (e.g. Terziovski and Samson, 1999), the latter studies (e.g. Victor et al., 2002) had tested the impact of a third variable on the implementation of QM. Among the variables investigated by them were firm size, capital intensity, and maturity of QM programme (Hendricks & Singhal, 2001); work design (Victor et al., 2002); and international competition (Das et al., 2000). A conclusion derived from their research was that a third variable plays an important role in determining the successful implementation of QM. However, the variables that have been investigated were still not comprehensive and one variable that seemed to receive less attention from the scholars was employees awareness. Therefore, this present study may contribute significantly to the literature by testing the employees awareness as having a moderating effect on the link between QM and cost savings.

3. Research Objectives
The objectives of this study were twofold, namely: 1. to test the relationship between QM thrust (customer focus, continuous improvement, and employee empowerment) and cost savings, and 2. to test the moderating effect of employee awareness on the relationship between QM thrust and cost savings.

4. Literature Review
This section reviews the three thrusts of QM. The focus of discussion is to visualise the importance of employees awareness toward each of these thrusts in assuring the successful implementation of QM. Customer Focus Any products or services delivered by no means can be considered as a good one unless it satisfies the needs of the customers. The same goes for the implementation of QM, whereby the final destination of its implementation is to satisfy the customers (Mady, 2009). Unable to do so means that the QM implementation has been unsuccessful. Customer focus means customer first culture. In other words, all actions are expected to be planned and executed with the customer satisfaction as a bottom-line in mind. As such, the product characteristics like price, package, brand, ingredients, etc. must be able to meet the customer expectations. The high quality of all these characteristics may only be achieved with full commitment given by all employees from various departments (Tari, 2005), included manufacturing, marketing, finance, and product development. This requirement is in contrast with the general belief that customer focus is only the business of front-line employees, i.e. the employees that deal directly with the customer. In contrary, all departments are expected to collaborate and the idea of quality improvement being the role of quality department solely, seems irrelevant. Continuous Improvement In a simple word, continuous improvement means do something better continuously, without stopping. It is a journey and a never ending process. Each element of an organisation, i.e. the product, process, and output should be continuously improved (Benavent, Ros, & Moreno-Luzon, 2005). The term seems very impressive but hard to be precisely defined (Sousa & Voss, 2002). This difficulty is not

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surprising due to the illusiveness of the process of continuous improvement. Some improvements are invisible in the short-term, but it is sometimes needed before the betterment can be realised. For those who are sceptical and impatient toward the positive effects of some improvement initiatives, they might give up midway. On the contrary, those who are passionate and knowledgeable about the principles of continuous improvement would stick to the progress, although the progress would be relatively slow. Employee Empowerment Employee empowerment means giving authority to an employee as much as possible (Gatchalian, 1997), but still working under an allowable and justifiable framework. In this practice, employees are normally given ample opportunity to accomplish any stated objectives, with the organisation believing in the skills, knowledge, capabilities, and experience that are owned by the employees. Empowerment provides opportunity for the employees to take fast and relevant action in response to any complaints received from the customers. The idea is simple: the front-line workers know the regular customers better than the top managers, so the possibility for them to offer better solutions to the customer might be higher. In certain organisations, employee empowerment has been promoted but not translated to the reality. Empowerment does not bring any meaning to the employees if the borders of what is allowed and what is not allowed are not clearly defined and stated. Employees who are confused about the practice of empowerment may possibly find it hard to make decisions, take action, and ended up without receiving any positive benefits from the practice. Employee Awareness The implementation of Quality Management requires commitment from all organisational members across all departments and all management levels (Juran, 1988). In most organisations, the top management acts as an introducer (Arawati & Abdullah, 2000) and the quality department acts as a secretariat for monitoring the implementation. In this scenario, the implementation of QM is seen to become the agenda for a limited numbers of employees. As a result, the employees from other departments and from lower management levels are probably not aware about their role to play in executing the QM. The QM has been consistently discussed in the literature since it requires organisational wide efforts for it to be successfully executed (Jusoh, Yusoff, & Mohtar, 2008). The level of employees awareness would bring effect toward the implementation of QM.

5. Hypotheses Development
This section elaborates the development of hypotheses under study. QM organisations emphasised customer focus as a strategy to satisfy their customers reasonable expectations (Jusoh et al., 2008). For service organisations like the local governments, customer focus means delivering services to the customer within the time, quality, and cost as spelled out in the customer charter. In this scenario, the customer charter becomes the term of reference in delivering services to their customers. Delivering services within the stipulated time and with no errors would help local governments to lower their operational costs. Thus, the customer focus strategy is an effective ingredient for an organisation to fulfil their customer needs at reasonable cost. This discussion has led this study to hypothesise: H1: There is a relationship between customer focus and cost savings. The institutionalisation of QM encourages an organisation to continually seek better ways to achieve cost savings. In the literature, Juran (1988) wrote that the practice of continuous improvement encourages organisations to consistently review the needs, interests, and expectations of their customers. This review process is an effective step to lower the possibility of delivering bad services to the customers, as well as reduce the costs of redo, rework, and waste of resources (Flynn et al., 1995), which in turn would lead to higher cost saving. Thus, this study hypothesised:

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H2: There is a relationship between continuous improvement and cost savings. Employee empowerment plays a key role in providing assurance of success in QM initiative. If empowerment at all levels in the organisation is insufficient, it would probably lead to QM failure (Gatchalian, 1997). Thus, employees should be empowered to plan and perform their own responsibility based on their skills and experience in such jobs. Empowered employees are able to provide quick response to any complaints received from the customers, as well as to respond to any untoward incidents that may occur in the organisation. In this scenario, the time taken to correct the error would be faster and thus save the organisation from bearing higher failure costs. Thus, this study hypothesised that: H3: There is a relationship between employee empowerment and cost savings. The idea of implementing QM is normally started by people at the management level (Jusoh et al., 2008). However, the implementation of QM requires full support from the employees across all organisational levels and it is not the sole responsibility of quality departments (Juran, 1988). Given that, the knowledge on quality through training should be intensely disseminated to all employees. Without appropriate training, the philosophy of quality is hard to be executed (Khazani, 2006). With appropriate training, the employee awareness toward the implementation of QM is presumed to be intensified, thus would contribute the likelihood of the QM to be successfully executed. Considering the above discussion, this study proposed the following hypotheses: H4: Employee awareness moderates the relationship between customers focus and cost savings. H5: Employee awareness moderates the relationship between continuous improvement and cost savings. H6: Employee awareness moderates the relationship between employee empowerment and cost savings.

6. Theoretical Framework
Figure 1.0 visualises the framework of the study which was developed accordingly with the research objectives and the hypotheses under study.
Figure 1: Theoretical Framework

Employee Awareness

Customer Focus Continuous Improvement Employee Empowerment

Cost Savings

7. Methodology
Research Instrument The closed ended questions were used to obtain the necessary data of the variables under study. All questions were presented in the form of five-point Likert scale, ranging from 1 (very low) to 5 (very high). An average score was calculated for each of the constructs based on their assigned items. Higher scores indicate higher practice of QM thrust, the higher the level of employees awareness and higher the cost savings. Table 1 tabulates the variables under study and reference sources for developing their respective items in the questionnaires.

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Table 1:

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Instrument development
Items Customer feedback is used effectively Actively seeks ways to improve quality of service Aware of the results of customer surveys Customer complaints are examined by managers Quality initiatives is an ongoing process Believes that continuous improvement results in good performance Continuous improvement is practised in all operations Continuous improvement overrides short-term results Employees are responsible for error free output Employees are encouraged to provide suggestions for continuous improvement Involvement of operational workers in quality related decision Employees are given authority to provide quick solutions for problems encountered Quality objective is translated into action that can be communicated Quality information is communicated to entire organisation Translating quality thrust into action that is understood Translating quality thrust into specific measures at operational level Operation cost savings Decreasing in work defect Reduced unit cost of service delivered

Variables (Source) Customer Focus (Mady, 2009; Zu, 2009)

Continuous Improvement (Mady, 2009; Zu, 2009)

Employee Empowerment (Mady, 2009)

Employee Awareness (Kaplan & Norton, 1996; Sinclair & Zairi, 2001)

Cost savings (Zu, 2009)

Data Collection The sampling frame of this study consisted of all departments attached to city councils and municipal councils in Peninsular Malaysia. As of 1 January 2008, there were 341 departments attached to 35 local governments. However 36 departments attached to four municipal councils, namely Kota Bharu, Kuala Terengganu, Kajang, and Seremban, were used for the pilot study, and so were removed from the sampling frame of the main study. Thus, the finalised sampling frame contained 305 departments attached to 31 local governments. Stratified cluster sampling was applied to this study due to the characteristics of intra-group heterogeneity and inter-group homogeneity of the local governments in Malaysia. All those local governments have similar functions, objectives, and roles as prescribed in the Local Government Act 1976, Town and Urban Planning Act 1976, and Road, Drainage and Building Act 1974. However within each local government, there are various departments with different kinds of objectives, functions, and activities. During the first stage, the local governments were stratified according to their status of either being a municipal or city council. At the second stage, all departments attached to city councils were selected due to the small number of departments involved. There were only 85 departments attached to city councils. The sample size of 250 was decided for this study, taking into consideration the possibility of non-responding respondents. Therefore, a total of 165 (250 85) respondents were selected from departments attached to municipal councils. The chosen municipal councils were randomly selected where the researcher pulled out the shuffled papers with a unique number written on it, one by one until the desired sample size was adequate.

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8. Data Analysis
Table 2 reports the distributed and returned questionnaires. Out of 250 questionnaires distributed, 205 were returned and usable for further analysis.
Table 2: The number of questionnaires distributed and returned (num=205)
Distributed Questionnaires 22 7 8 13 9 12 14 6 9 7 10 10 8 11 9 11 13 7 8 10 10 10 10 9 7 250 Returned and Usable 14 6 5 10 9 10 12 5 8 5 8 8 7 9 7 10 10 6 7 8 10 8 8 9 6 205 Percentage 63.64 85.71 62.50 76.92 100.00 83.33 85.71 83.33 88.89 71.43 80.00 80.00 87.50 81.82 77.78 90.91 76.92 85.71 87.50 80.00 100.00 80.00 80.00 100.00 85.71 82.00

Local Governments City Hall/Councils Kuala Lumpur Johor Bharu Alor Setar Melaka Ipoh Shah Alam Petaling Jaya Municipal Councils Batu Pahat Johor Bharu Tengah Muar Sungai Petani Kulim Langkawi Alor Gajah Port Dickson Kuantan Temerloh Kuala Kangsar Kangar Pulau Pinang Seberang Prai Ampang Jaya Klang Subang Jaya Kemaman Total

9. Findings
Descriptive Analysis and Goodness of Measures Table 3 reports the mean score and standard deviation for each variable. The mean scores ranged between 3.57 and 4.00. The standard deviation ranged from 0.60 to 0.78.
Table 3: Mean score and standard deviation
Mean 4.00 3.87 3.57 3.66 3.67 Standard Deviation 0.60 0.70 0.78 0.66 0.74

Variables Customer Focus Continuous Improvement Employee Empowerment Awareness Activities Cost Savings

The reliability of scales was tested based on the value of Cronbach alpha coefficients. Table 4 indicates that the alpha values for all scales exceeded the acceptance level of 0.70 (Nunnally & Bernstein, 1978).

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Table 4:

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Reliability test
Number of Items 4 4 4 4 3 Alpha 0.792 0.825 0.708 0.827 0.796

Variables Customer Focus Continuous Improvement Employee Empowerment Awareness Activities Cost Savings

The construct validity was tested using factor analysis and the results are reported in Table 5. The results indicated that the KMO values for all variables exceeded the threshold value of 0.60 (Kaiser, 1970), thus suggesting the procedure of factor analysis is appropriate to be conducted. The results also indicated all of the items for their respective constructs, had factor loadings higher than threshold of 0.30 (Hair, Anderson, Tatham, & Black, 1998) on their single factor. The eigenvalues for each factor were greater than 1.000. These results indicated that the items understudy was grouping into the same construct, thus providing evidence to support the construct validity.
Table 5: Factor Analysis
Factor Loading 0.761-0.882 0.701-0.894 0.755-0.849 0.788-0.870 0.746-0.861 KMO 0.810 0.664 0.687 0.721 0.825 Eigenvalue 2.800 2.437 4.114 3.251 6.319 % of Variance 56.006 48.735 51.424 52.076 57.443

Variables Customer Focus Continuous Improvement Employee Empowerment Awareness Activities Cost Savings

Hypotheses Testing The hypotheses under study were tested using regression analysis. In order to confidently draw conclusions from the analysis, the five assumptions of regression analysis were evaluated, namely normality, linearity, homoscedacity, outliers, and multicollinearity. Based on the results of histogram, the normality assumption was not violated. A further examination of the Scatter plot provided evidence that the data satisfies the assumptions of linearity and homoscedacity. The Mahalanobis distance values indicated the non-existence of outlier cases. The VIF measures for all variables under study were below the threshold value of 10 (Hair et al., 1998). In other words, the results indicated that there were no indications of severe collinearity amongst the independent variables. Thus, it could be concluded that the regression analysis performed in this study had satisfied the five assumptions required to ensure the validity of the results. Table 6 shows the results of hierarchical regression performed.

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Table 6:

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Hierarchical Regression
Model 1 0.203* 0.301* 0.114 Model 2 0.176* 0.161* -0.056 0.116 Model 3 -0.057 1.129* -0.833* 0.436 0.446 -1.696* 1.254* 0.385 0.363 0.000

Dependent Variable: Cost Savings Independent Variables Customer Focus Continuous Improvement Employee empowerment Moderator Variable Employee Awareness Interaction Customer Focus * Employee Awareness Continuous Improvement * Employee Awareness Employee Empowerment * Employee Awareness R2 Adjusted R2 F change * p 0.05

0.278 0.267 0.000

0.360 0.347 0.000

Table 6 reports the results of model 1, model 2, and model 3. Model 1 indicated that the customer focus and continuous improvement were significantly related to cost savings at =0.05. However, the relationship between employee empowerment and cost savings was not significant at =0.05. Based on these results, H1 and H2 were sufficiently supported. On the other hand, the H3 was not sufficiently supported. Model 2 indicated the insignificant relationship between the employee awareness and cost savings. This result provides evidence to support the non-existence of a direct relationship between the two variables. A moderating variable is a variable that does not have a direct relationship with the independent or dependent variables (Shields, Deng, & Kato, 2000). Model 3 showed the result of interaction effects between employee awareness and the three independent variables understudy. The results showed that the interaction effect of customer focus and employee awareness on cost savings was found to be insignificant. Thus, H4 was not supported. The results also showed that the other two interaction effects, namely the interaction between continuous improvement and employee awareness, and the interaction between employee empowerment and employee awareness had significant relationships with cost savings. Thus, H5 and H6 were sufficiently supported.

10. Discussion
The results indicated a positive significant relationship between customer focus and cost savings. The implication of this finding is that the practice of customer focus would be benefiting local governments for achieving the objective of saving cost. The practice of customer focus means the services offered by each local government are developed with the customer-first culture. Therefore, the community views should be treated as essential to any new rules or community projects. This approach may hinder the local governments from developing projects or offering services that are inconsistent with the community interest. If the local governments fail to do so, the projects would tend to become a white elephant project and cause the taxpayers money to be wasted without any benefit. The results also reported a positive significant relationship between continuous improvement and cost savings. Continuous improvement means doing something better than before without stopping. It includes producing the products, rendering the services, processing the customers application, or entertaining the customers complaint at a quicker pace, with lesser errors or lower cost. In other words, these practices would help local governments to reduce their administration and operation costs. Surprisingly, the relationship between employee empowerment and cost saving was found to be insignificant. Although empowerment aims to provide wider flexibility to the employees in performing

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their duties, empowerment, if badly practised, would cause various negative consequences. Empowerment with whatever reasons must be continuously monitored and employees who are empowered must have adequate training, skills, and knowledge. The characteristics of local governments in Malaysia may provide a vague explanation for this finding. According to new criteria for upgrading the status of any local governments (Circulars of Ministry of Housing and Local Governments, 2008), having competent employees is one of the criteria for city councils/halls. However, the same criterion was not mentioned as one of the criteria for awarding status to the municipal council. This criteria needs to be redesigned since competent employees are the prerequisite for all organisations to run smoothly. In a local newspapers, the Minister of Housing and Local Government said that the empowerment practices in local governments, particularly with reference to enforcement officers, would lead to corruption and thus jeopardise the overall performance of local governments (New Straits Times, 29 June 2004, p.14). Furthermore, the insignificant relationship between employee empowerment and cost savings could also be linked to the issue of the inexperience of many managers of local governments. As commented by the Menteri Besar of Selangor (The Sun, 21 April 2004, p.1), many heads of department of local governments did not fully understand their job responsibilities. Therefore, it can be presumed that empowerment practices without having adequate experience may bring local governments to nowhere. Additionally, the hypothesis on the moderating role of employees awareness on the relationship between customer focus and cost savings was not supported. This finding perhaps could be due to the respondents misunderstanding toward the concept of customers. Generally, customers were limitedly referred to as the external customers, and the concept of internal customers was not clearly spelled out. In other words, the customer focus is understood as a responsibility of front-line workers and not the rest. Therefore, the awareness of employees from other departments toward QM did not help them to improve the positive effects of the practice of customer focus. The profile of respondents of this study covered heads of department attached to various kinds of departments with different rates of direct interaction with external customers. Hypothesis 5 of this study, namely employee awareness moderating the relationship between continuous improvement and cost savings, was supported. As had been reviewed in the literature, continuous improvement needs support from all organisational members before it can be successfully executed (Khazani, 2006). This finding implies that the higher the level of employees awareness toward continuous improvement, the more benefits would be reaped by the organisation. Employees awareness is a prerequisite for successful implementation due to the fact that the practice of continuous improvement tends to be rated as a philosophy and thus it is less measureable. Due to the illusiveness of the philosophy of continuous improvement, this practice may be hard to sustain without the employees awareness. The last hypothesis under study, namely employee awareness moderating the relationship between employee empowerment and cost savings, was also supported. As had been discussed in the literature, employee empowerment would not bring any positive effects to the organisations if the employees themselves fail to prepare for it (Juran, 1988). Employees have to be aware about the power given to them, the limits of it, and also the skills, knowledge, and training needed before the empowerment can be fully utilised. Therefore, this finding implied that the more the employees are aware about the practice of employee empowerment, the more benefits would be gained by the organisation.

11. Limitations and Suggestions for Future Research


This study is not without limitations that must be carefully considered before any implications can be drawn from the findings. Firstly, the study used single informants to respond to the independent, moderating, and dependent variables. This practice resulted in the problem of common method bias. Therefore, future research should consider using different respondents for different types of variables.

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Secondly, the independent variables under study were restricted to only three thrusts of QM. However this study is aware about the other thrusts. In order to strengthen the model under study, future research may consider other thrusts of QM, i.e. teamwork and benchmarking.

12. Conclusion
Like any management initiatives, the initial step taken to introduce QM into any organisation is a step full of challenges. However, the introduction of any great idea may be hard to sustain without receiving full commitment from the employees. This unified commitment is something that can be anticipated with awareness. Therefore, the employees must be educated about the new initiative introduced. The findings of this study implied that the awareness of employees on the QM thrust would bring benefits in its implementation.

References
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