Which Ethical and Social Responsibilities Do Companies Have When It Comes To Quality?

 Corporate Social Responsibility (CSR)

Social responsibility requires businesses must act in a manner benefiting society, rather than just the bottom line. It has become increasingly important to investors and consumers who seek investments that not only are profitable but also contribute to the welfare of society and the environment. Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and even the planet. 

Business Ethics

Companies usually adopt principles of corporate ethics that are imposed by legislation or by itself such as codes of conduct that apply to their employees. Business ethics is what drives that code of conduct. And it also shapes the way companies are seen by the world. Basically, it makes sure a company operates according to all applicable laws and maintains the company's respect among its peers and potential clients or customers.

Which Ethical and Social Responsibilities Do Companies Have When It Comes To Quality?

There are numerous effective quality tools have been used by industry for decades to reduce waste and improve efficiency, but they have not been widely recognized in the corporate social responsibility (CSR) space. Quality is generally based on a set of values and beliefs at its center such as zero waste and maximizing customer satisfaction. Similar to CSR, quality management also has a very strong focus on people, not just customer satisfaction, but also the quality of working life such as employee satisfaction. 

In addition to a strong link in the core values and concepts, CSR and quality management also share an interest in several common issues such as waste reduction, safety, supplier accountability, and empowerment. For CSR, waste minimization and pollution prevention address key issues related to resource use, energy, and significant environmental trends that affect a wide range of stakeholders. 

There is a strong correlation between quality and ethics as well. When leadership demonstrates its philosophy and practice of ethical behavior, it impacts the whole organization, whether in education, government, or commercial enterprises. ISO9000 and the EFQM Model both emphasize heavily on leadership. Great leaders put ethics, quality, effectiveness, and respect for people to eliminate fear in the system, and they look in the mirror often to see if their own thinking is ethical and a cause of quality throughout the system. 

The Consequences of Poor Quality

Poor quality can lead to considerable negative outcomes that are associated with customers, daily operations, or society. Obviously, poor quality can cause customers to take their business elsewhere, leading to job losses and a decrease in company productivity. For example, back in 2011, HTC was the third biggest phone manufacturer by global market share, only behind Samsung and Apple. Poor quality also has an impact on employee productivity. Employees working on products or services of poor quality may be less productive and may experience stress due to the lack of quality assurance. HTC's smartphones were the go-to Android devices and offered an extremely good price-to-performance ratio. However, it took hundreds of millions of years for dinosaurs to evolve, but it takes only a few years for a hot smartphone brand to turn into a dinosaur. That’s what happened to HTC.

Moreover, poor quality can have several adverse effects on society as a whole. These can include increased costs, decreased efficiency, and even harm to people and the environment. For example, the reason pharmaceutical drugs are inherently safer than nutritional supplements is probably due to the fact drugs produced by the pharmaceutical industry are regulated by the FDA. If all these drugs are inadequately produced, how many people will be affected? During the pandemic of COVID-19, it was difficult to ensure the supply of necessary hygiene products, including disinfectants. In many countries, therefore, the framework conditions for production and marketing were eased. The FDA's concerns for quality and safety do not only include hand disinfectants. Since the beginning of the pandemic, the disinfection of surfaces has also played a more important role than before. However, not all devices on the market offer the required safety standard for the user.

Quality, Responsibility, or Maximize Profits for Shareholders?

I reckon that all businesses have certain ethical and social responsibilities that they have to fulfill because of operating in society and using society's resources to produce their products and services. Ethical responsibility includes showing moral characteristics such as providing labor insurance and caring for the environment. Businesses have a social and ethical responsibility to maintain the quality of their products as poor quality can harm the health of the people and the environment. For example, selling expired or unhygienic food can be lethal for humans consumptions and customers can be both the shareholders and stakeholders of the company. Businesses' demand for superior quality can be considered a response to both categories of profit-making and social responsibility. In Taiwan, Ting Hsin Oil Company made illegal profits of more than 100 million NTD by importing low-quality oil products and processing them into edible oil from 2012 to 2014. Chairman Wei Yingchong was charged with violating the Food Safety and Hygiene Management Law and sentenced to four years in prison by the judge.

Reference

Consequences of poor quality. Quality Gurus. (2022, September 5). Retrieved October 23, 2022, from https://www.qualitygurus.com/consequences-of-poor-quality/ 

ECA Academy. (2022, August 30). FDA draws consequences for poor quality of hand disinfectants and UV wands. ECA Academy. Retrieved October 23, 2022, from https://www.gmp-compliance.org/gmp-news/fda-draws-consequences-for-poor-quality-of-hand-disinfectants-and-uv-wands 

Ganti, A. (2022, September 8). Social Responsibility in business: Meaning, types, examples, and criticism. Investopedia. Retrieved October 22, 2022, from https://www.investopedia.com/terms/s/socialresponsibility.asp 

Indeed Editorial Team. (n.d.). The ethics of Quality. The W. Edwards Deming Institute. Retrieved October 23, 2022, from https://deming.org/the-ethics-of-quality/ 

Sapru, R., & Schuchard, R. (n.d.). CSR and quality - home | BSR. CSR and Quality: A Powerful and Untapped Connection. Retrieved October 23, 2022, from https://www.bsr.org/reports/BSR_ASQ_CSR_and_Quality.final.pdf 

2022 registration trends for ISO9000

 ISO 9001 sets out the criteria for a quality management system and It can be used by many large and small organizations. The standard is based on several key quality management principles such as customer focus, leadership, and process approach. Businesses are using ISO 9001 to ensure that their customers get consistent, good quality products and services, which in turn brings many business benefits. Nowadays, it has adapted to various sectors like manufacturing, technology, and even the healthcare industry.

In the past few years, the global economic situation and the practice of the business community pushed ISO to expedite the finalization of the international standard for risk management. Due to the pandemic of COVID-19, the certification is more focused on the area of risk management. Because of this reason, more and more companies are getting their ISO 9000 certification done, meaning that the registration trend is positive. In addition, Organizations are showing interest now more than ever, in getting their ISO 9000 certification done since it is one of the most effective tools of quality management available in the market. Since workplace safety has become more and more emphasized, high-risk industries such as construction and basic metal production have shown the highest level of registration. With the need for more stringent safety requirements, ISO 9000 certification provides the all-in-one solution to follow. Moreover, not only western countries but also countries in the East have increased the rate of registration for ISO 9000 certification. 

In conclusion, I believe that risk can further be described as a situation involving exposure to danger and also refers to the result of uncertainty in situations that can be avoided through pre-emptive action. If organizations are able to ensure the risk doesn’t threaten the continuity of the organization, they are more likely to thrive in the long run. There are two most recent ISO9000 trends, risk management and eastern countries are increasing their registrations.

Reference

ISO 9000 family - quality management. ISO. (2020, March 11). Retrieved October 17, 2022, from https://www.iso.org/iso-9001-quality-management.html 

Risk management and based thinking in ISO 9001. ISO Global. (n.d.). Retrieved October 17, 2022, from https://isoglobal.com.au/articles/risk-management-iso-9001/ 

How can your organization benefit from organizational learning? How would you implement it?

I think that before we discuss how we benefit from organizational learning, we should understand why we are doing organizational learning first. Briefly, organizational learning allows a business to continue to advance its professional growth and align its employees as a team. As the company improves, it develops and accumulates a broad range of knowledge and information for its future. Now, we know the advantages. Let's look at how to implement it. 

There are many vital aspects we must consider such as leadership, customers, alignment, widespread, support, measurement, and communication. Based on this concept, I believe that I have to plan an organizational learning program. Therefore, I sorted these factors into interconnected principles. Starting with customer satisfaction and leadership, I believe that developing and clearly communicating the desired vision is the first step. Then, develop the measurement system, and align and support the learning processes. After that, widespread the story and keep it in the policies and management. For example, Dyson, a name that has become synonymous with vacuum cleaners and is known for transforming a brilliant engineering idea into a bright success. The consistency in the open culture is embedded in the very fabric of the organization where mistakes are not punished but rather valued because of the potential to be turned into success. In addition, 3M’s unique 15% Culture encourages employees to set aside a portion of their work time to proactively cultivate and pursue innovative ideas that excite them. Whether it’s experimenting with new technology, forming a special interest group around a fresh idea, or finding a new way to run a process, its 15% Culture gives employees in all areas the license to innovate. 

Two years ago, when I worked at a coffee shop, I found that the barista is more likely to actively practice and make better latte art when they feel valued and respected. Employees can do one thing as good as 60% or as good as they can to make it close to 99%. I think it is the core of effective learning, so I discussed this observation with my boss and provided my recommendations. She(the boss) accepted my idea and began to share their art stories. Moreover, I suggested a Tasty Program. In this program, everyone can discover and find their favorite formula of drink with the support of the shop. And, they can directly benefit from the revenue generated by the formula which means a proportion of the profit per sup of the drink sold. Each week, the most popular top three will be listed in a specific area of the menu called, The Barista, "the innovator's name" series. 

Reference

How leaders can change company culture: Lessons from 3M and Six sigma. Network for Business Sustainability (NBS). (2022, February 21). Retrieved May 14, 2022, from https://nbs.net/other/the-challenge-of-change-3m-six-sigma-and-corporate-culture/

Indeed Editorial Team. (2021, July 7). Career development | indeed.com. What Is Organizational Learning and Why Is It Important? Retrieved October 9, 2022, from https://www.indeed.com/career-advice/career-development

Ltd, A. A. (2021, December 31). Dyson Company Analysis: Industry and Culture. UK Essays. Retrieved February 1, 2022, from https://www.ukessays.com/essays/business/examining-the-rise-of-the-dyson-company-business-essay.php

Quality Management (Knowles) Ch 13 p 150-166, Ch 15 p 177-185

The Expectation of Conformity Implied in Organizational Learning Is A Threat To The Free Will of Individuals? Should Managers Favor Organizational Learning or Individual Learning for Their Employees?

 The Expectation of Conformity Implied in Organizational Learning Is A Threat To The Free Will of Individuals?

To answer this question, we have to understand what is "free will" first. Based on my research, there are two views of free will, libertarians and determinism. According to libertarians, free will is based on the principle of alternate possibilities which means that an action is free only if a person doing a thing could have done otherwise. In brief, truly free actions require options. However, determinism doesn't allow options. It holds that every event is caused by previous events which means that a person can never have done anything other than what they did, and therefore the person is never free. In my opinion, free will is the capacity of agents to choose between different possible courses of action unimpeded. It is somewhat closer to libertarianism, even though it runs counter to what we know about the world with one thing causing another.

So, the expectation of conformity implied in organizational learning is a threat to the free will of individuals? Back to the moment when a person decided to join a company, are they forced or threatened? Most of them "choose" to apply for a job depending on their skills or interests, although they can be either for the paycheck or a better career. So, this is quite a libertarianism since they have options to join other companies. However, at some level, joining a company can mean you are not free because you need a job to feed yourself and your family if you don't have other income sources. 

To summarize, I reckon that the expectation of conformity implied in organizational learning can be both a threat to free will and also a benefit to free will. Before or after we join an organization, we always have options. We can either be in conformity with organizational learning or quit. However, when people think of the results of conformity or resistance, they act differently. Depending on their mental strength, the environment, or many other factors, they can feel free or stressed. Therefore, it can be either free or not free, from case to case.

Should Managers Favor Organizational Learning or Individual Learning for Their Employees? 

For effective organizational learning in the long term, both the processes and the environment are required. However, the processes and environment are constructed by each employee or individual piece by piece. If managers only favor one of them(organizational or individual), it would be like a powerful machine without fuel in its tank. I believe the key factors between the two are spread and keep. Spread the experience and information for members in an organization to learn. Keep the results for the long-term growth and its new blood. 

Reference

Libertarianism.org. (n.d.). Retrieved October 7, 2022, from https://www.libertarianism.org/what-is-a-libertarian 

If you have to implement a continuous improvement methodology in your organization, how will you deal with resistance to change from various stakeholders?

First of all, I think before we consider the possible solutions, we have to understand what are stakeholders and then the possible reasons why they resistance to change.

What Is A Stakeholder? 

A stakeholder is a party that has an interest in a company and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees, customers, suppliers, communities, and governments(Fernando, 2022). Stakeholders can be internal(employment, ownership, or investment)or external(suppliers, creditors, and public groups).

Resistance To Change from Various Stakeholders

No matter the size or scale, people resist change. Overcoming this resistance to change is an inevitable challenge. A common problem that arises for companies with multiple stakeholders is that the various stakeholder interests may not align(Fernando, 2022), or even in direct conflict such as labor costs and maximizing profits. If a company may seek to keep these costs under tight control, it is likely to upset other stakeholders such as its employees. I think leadership is one of the vital elements of any solution to deal with these kinds of resistance. If leaders better understand resistance and successfully motivate those opposition to support for change, it would be a huge competitive advantage.

In addition, I have to identify the company’s stakeholder groups first. Then, I reckon that creating a value proposition for each stakeholder group targeting how you will create value for them may be helpful. This value creation for each stakeholder group needs to be balanced by what the business will gain in return. For example, switching a fossil fuel automaker to an electric car maker inherently feeds the fear of a possible massive layoff. However, we can provide training for employees to upgrade their skills and keep them aligned with the company. 

Usually, implementing a change inevitably means some trade-offs among the stakeholder groups, especially a big one. Leaders have to understand the levels of influence of the stakeholders. Some stakeholders may interact directly with the company, some were not. I think for companies to build a successful stakeholder management strategy to figure out what each stakeholder needs and how the leaders can best communicate with them.

Reference

Dolfing, H. (2020, January 3). How to deal with stakeholders resistance to change. Henrico Dolfing - Interim Management and Project Recovery. Retrieved October 2, 2022, from https://www.henricodolfing.com/2020/01/deal-with-stakeholders-resistance-to-change.html 

Fernando, J. (2022, September 9). What are stakeholders: Definition, types, and examples. Investopedia. Retrieved October 2, 2022, from https://www.investopedia.com/terms/s/stakeholder.asp 

(Fernando, 2022)

Reflection on the article “Why You Can Safely Ignore Six Sigma” in Fortune Magazine, Jan. 22, 2001(http://money.cnn.com/magazines/fortune/fortune_archive/2001/01/22/295545/index.htm). Why You Can Safely Ignore Six Sigma The management fad gets raves from Jack Welch, but it hasn't boosted the stocks of other devotees.

 Reflection on the article “Why You Can Safely Ignore Six Sigma” in Fortune Magazine, Jan. 22, 2001(http://money.cnn.com/magazines/fortune/fortune_archive/2001/01/22/295545/index.htm). Why You Can Safely Ignore Six Sigma The management fad gets raves from Jack Welch, but it hasn't boosted the stocks of other devotees.

Let's read the original text first:

A few years back Whirlpool, the appliance maker that had been reliably pumping out dishwashers and dryers for decades, decided to tackle quality head-on. Executives at the company implemented their proprietary version of the highly touted principles of Six Sigma, a quality-assurance strategy that has come into vogue in the past several years. Companies like Motorola and General Electric swear by Six Sigma. But as an investor, can you use it as a litmus test of whether a stock is going to appreciate? Probably not. 

Six Sigma, and a couple of similar-looking knockoffs, are nothing short of a full-on corporate fad, the latest in a long line of must-have efficiency crazes that perpetually spread through corporate America. Fueled in large part by GE CEO Jack Welch--who frequently talks it up to the media--companies today are constantly pumping out press releases hyping their own Six Sigma initiatives. What's more, consultancies have sprung up across the country to help CEOs muster the troops, and the term itself has turned into the financial equivalent of a Good Housekeeping seal of approval. (Incidentally, the name comes from statistics, where the Greek letter sigma is used to measure how far something deviates from perfection. Six Sigma means a company tries to make error-free products 99.9997% of the time--a minuscule 3.4 errors per million opportunities.) 

In the right hands, admittedly, it works. Welch wrote in GE's 1999 annual report that its initiatives had saved the company more than $2 billion in 1999, just three years after implementing Six Sigma. And there's certainly nothing wrong with a company's trying to improve quality and reduce errors. Whirlpool wanted to make itself more efficient by building its products right the first time rather than spending cash later to fix malfunctioning dryer doors and appease disgruntled consumers. 

But like a lot of management trends, certain aspects of Six Sigma can get downright silly. The corporate efficiency experts who implement it are coined "black belts"--martial artists who get deployed to chop, kick, and block until errors are virtually nonexistent. Raves Mikel Harry, one of the founders of Six Sigma at Motorola in the 1980s and now head of the Six Sigma Academy, a consulting firm that helps companies train their warriors: "A black belt can save $300,000 to $400,000 per project and return that to the company, and they can do four to six projects a year. On the conservative side, they can save the company $1 million to $1.5 million per black belt!" 

So what happened at Whirlpool? Though a company spokesman says the program has resulted in "substantial" efficiency gains, analysts aren't quite as impressed. "You'd have to get out an electron microscope" to see any real impact, says Nicholas Heymann, an analyst who follows the company for Prudential. And incidentally, the stock is down 12% over the past two years. So much for the martial arts. "It can be wildly successful," says David Fitzpatrick, the worldwide leader of Deloitte Consulting's Lean Enterprise Practice, "but I would say fewer than 10% of companies are doing it to the point where it's going to significantly affect the balance sheet and the share price in any meaningful period." 

Why? First are the obvious pitfalls: a CEO who isn't committed, an inability to motivate employees, or a company that allows its initiative to trail off before there's been any progress. But beyond that, Six Sigma can be mind-numbingly vague. If you're manufacturing pills, defects are easy to track, but what about at a customer service center? Exactly what constitutes an "error" or "mistake"? You guessed it--it depends on which black belt is counting. 

Then there's the latecomer issue raised by some analysts. "Six Sigma's ability to incrementally improve performance and shareholder value is highly correlated to how early a company has implemented it," says Heymann. Bob Hendricks, the CEO of international consulting concern Holt Value Associates, also ventures that the competition is a factor: "If Whirlpool implements it, and then Maytag does too, who wins? The consumers--those savings will mostly get passed along to them." 

But the main reason Six Sigma is no guarantee of stock market success is also the most obvious one: Defects don't matter much if you're making a product no one wants to buy. As one consultant notes, referring to Motorola's disastrous foray into satellite-linked mobile phones: "Remember, Iridium came out of a company that's famous for Six Sigma." 

So while dozens of companies may be saving money with these error-reduction programs, a lot of others are spending valuable time and resources on something that may never have any tangible payoff for shareholders. Even the concept's biggest booster can't argue with that. Says Mikel Harry: "I could genetically engineer a Six Sigma goat, but if a rodeo is a marketplace, people are still going to buy a Four Sigma horse."

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Now, let's discuss its criticism of the Six Sigma approach. Do you agree with its criticism of the Six Sigma approach? Before we discuss them, we have to understand what is Six Sigma. 

What Is Six Sigma?

Six Sigma is a statistics and data analysis process for analyzing and reducing errors or defects in management or manufacturing. It is a method that offers organizations tools to improve their capabilities in managing their businesses such as reducing defect rates, improving employee morale, and improving the quality of products or services(Kumar, 2022). Six Sigma methodology is based on the concept of six standard deviations from the product or process goal, and it's the average distribution of variations with a specific data set of your process(Simplilearn, 2021). Six Sigma can help businesses reduce defects by effectively solving problems. In addition, Six Sigma develops a sense of ownership and accountability for employees and increases their effectiveness at delivering results for any improvement project they are involved in.

How Does The Six Sigma Work?

Based on the DMAIC concept, there are five procedures.

i. Define: Define the problem and what is required to satisfy your customer. 

ii. Measure: Map the current process to collect data.

iii. Analyze: Investigate and identify what causes the problem.

iv. Improve: Implement a fix that will solve the problem.

v. Control: Sustain the improved results.

Now, let's look at each of the criticism of the Six Sigma approach. 

Do the results of Six Sigma have an impact on the financial statements, and therefore on stock value?

Financial statements can have a drastic effect on the stock price of a company. Many investors look at the financial statements when making investment decisions. If information is presented in a financial statement that is better or worse than expected, it can send the stock price up or down. Investors often use financial ratios based on information from financial statements to make assumptions. The income statement and statement of cash flows are two crucial parts of the financial statements. When Six Sigma reduces the number of defective products manufactured or services provided, resulting in increased revenue and greater customer satisfaction, it also means higher income and increasing cash flows.

Is Six Sigma only valuable to early adopters?

I think logically if Whirlpool succeeds with Six Sigma and has a cost advantage, latecomers may have to implement the Six Sigma or better methods just to keep up. For example, what do you think when Ford, Toyota, or Volkswagen(the latecomers) are chasing after Tesla? Of course, consumers can benefit from a competitive market compared with a monopoly market. However, does it means that Tesla start to lose its advantages? Six Sigma goes beyond defect reduction to emphasize business process improvement in general, which includes cost reduction and increased customer satisfaction. 

Does Six Sigma apply to the service industry, since it focuses on defects, which are difficult to identify in services?

Six Sigma is only a manufacturing concept? This is incorrect. Service organizations can also incur the cost of poor quality and that can be a significant amount of the overall budget. In the manufacturing process, the actual product is going through the process and the customer sees it only at the end. In contrast in the service process, it is the customer who is going through the process(Wanniarachchi, 2020). Consider a hotel service process. Customers book a stay and interact with the waiter throughout the sub-processes. When the room is not clean, it will significantly affect customer satisfaction. Therefore, the hotel has to define the problem, map the current process to collect data, investigate what causes the problem(what causes the room unkempt?), and implement a fix that ensures the rooms should be always clean and sustain improved results.

Does Six Sigma help products find a market?

In my opinion, Six Sigma is a fact-based, data-driven disciplined approach to growing market share by providing targeted markets with superior value. Therefore, I think Six Sigma is not so good at "FIND" customers in a market. Instead, it is good at "ATTRACT" the customers in a market. However, attracting customers can also mean discovering a new market.

Leadership

Finally, I would like to mention that leadership is one of the vital elements to successfully implementing Six Sigma or any other methods. A leader who isn't committed and inability to motivate employees is probably the major cause of defects rather than Six Sigma itself.

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Reference

Arthur, L. (2016, October 26). The impact of financial statements. Small Business - Chron.com. Retrieved October 1, 2022, from https://smallbusiness.chron.com/impact-financial-statements-23794.html 

Kumar, P. (2022, September 7). What is Six sigma: Everything you need to know about it [updated]. Simplilearn.com. Retrieved October 1, 2022, from https://www.simplilearn.com/what-is-six-sigma-a-complete-overview-article 

Simplilearn. (2021, October 28). Your complete guide to six sigma methodology. Simplilearn.com. Retrieved October 1, 2022, from https://www.simplilearn.com/six-sigma-methodology-article 

Six sigma in service sector a comprehensive review. Six Sigma In Service Sector A Comprehensive Review. (n.d.). Retrieved October 1, 2022, from https://www.greycampus.com/blog/quality-management/six-sigma-in-service-sector-a-comprehensive-review 

Thomas Pyzdek and Six Sigma--Quality Digest columnist. (n.d.). Retrieved October 1, 2022, from https://www.qualitydigest.com/april01/html/sixsigma.html 

Wanniarachchi, P. (2020, June 14). Can we apply lean six sigma in service industry? LinkedIn. Retrieved October 1, 2022, from https://www.linkedin.com/pulse/can-we-apply-lean-six-sigma-service-industry-pradeesh-wanniarachchi-