The Impact of Tqm on the Performance of Banks

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Advances In Management THE IMPACT OF TOTAL QUALITY MANAGEMENT ON BANKS PERFORMANCE IN NIGERIA By: ADEOTI JOHNSON OLABODE Business Administration Department, University of Ilorin. ABSTRACT Banking authorities in every country of the world are paying great attention to the state of the three ‘S’ (3S) - safety, soundness and stability in their different banking systems. The competitive nature of the banking system in Nigeria has increased the number of district banks from eight in 1992 to forty two (42) in 1994 and by the end of 1995 the figure has risen to fifty-one (51). Facts emerging from already distressed banks revealed that bad management is indisputably a major factor for distress. The concomitant effect of the distress situation is the general erosion of banks confidence. This article looks at the application of Total Quality Management as a panacea to many unethical practices that spell the doom of the distressed banks. The objective of the study is to examine the gains of application of total quality management in the service industry’ with particular reference to the commercial banks in Nigeria and also to see how the application of TQM can prevent future threats of distress in commercial banks. The entire commercial banking sub-system was partitioned into three categories, first, second and third generation. The first generation banks are defined as those having a track record of more than 50 years, second generation banks as those that emerged after the indigenisation act of 1976 and the third generation banks are defined as post - distress banks or New generation banks. Three banks were selected randomly one to represent each of the three generation banks. The selection of the three banks was based on their proximity to the author. The data analysis employed is ANOVA. The major results of the article shows that the quality and quantity of employees employed determine to a very large extent the survival of any bank, also that the application of TQM is not an immunity against distress but a preventive mechanism for distress. The TQM elements application determines the vulnerability of commercial banks to distress. Introduction Total Quality Management (TQM) is the management Philosophy and company practice that is aimed at harnessing the human and material resources of an organization in the most effective way to achieve the objectives of the organisation. These objectives include: (a) Customer satisfaction (b) Business objective such as growth, profit or market positioning and (c) Provision of service to the community. ADVANCES IN MANAGEMENT Vol. 3 No. 1 (2003) (A Journal of Department of Business Administration, University of Ilorin, Ilorin Nigeria).

The impact of total quality management on banks performance in Nigeria


These objectives must always be compatible with the requirements of society, whether legislated or perceived by the organisation. Since there are regulations guiding the operation of every organisation, the conduct of such organization must conform to the requirements of the society or organization legislations. The ability to meet customer requirements is vital not only between two separate organization but within the same organization. The behaviour of a cashier in a bank can spell doom for the bank if it is negative to the customers. The word processor operator in a computer firm is a supplier to the boss. The number of errors per page will determine the quality of job done by the word processor. In which case, there is specified requirement. If the output is error free, we can then say that the output is of a high quality. Throughout and beyond all organizations, whether manufacturing concerns, banks, retail stores, universities or hotels, there are series of quality chains, which may be broken at any point by one person or one piece of equipment not meeting the requirement of the customer which could be internal or external. The interesting thing is that this failure usually...
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