Finance management in quality management

Quality topic is considered in the organizational framework in the traditional professional quality management references. Quality management is not any distinct management area, but it is seamlessly integrated with all actions of the business management of any organization. Quality management refers to the business management with regard to quality or in more details to the coordinated activities to direct and control the organization with regard to fulfilling the needs and expectations of all the different interested parties of the organization [1]. In fact, quality management equals the quality of management.

   Owners (shareholders) and business leaders are important interested parties of all organizations, and the financial performance of the organization is their major subject of interest. Hence the financial management also is an important area of the quality management. In addition, Juran considers in his classical Trilogy Model [2] that quality management and financial management are analogous subjects. Many external partners and the organization’s own personnel also have certain needs and expectations of the financial performance of the organization, e.g. through proper financial reports. Additionally market reactions are intensified by the aggregated opinions of newsagents, commentators, market analysts, experts, citizens, and the community at large on the organization’s finances, which may have a significant impact on organizations’ overall operations and sustained success. Price is an important quality characteristic for the customer.

   Holistically the performance excellence models, which are today recognized practices to evaluate organizations’ overall quality performance, consist of four categories of performance [3]: (a) product, (b) customer-focused, (c) financial and marketplace, and (d) operational performance. Evaluation criteria against these models include the established general financial business indicators like financial return, financial viability, or budgetary performance [4].

   Prerequisite for good management consists of clear management principles, effective managing tools, and efficient managing infrastructure [5]. All specialized managerial areas have their recognized managerial methodologies and tools. This also applies to the financial management [6].

   Different needs and expectations of the interested parties should be considered in a balanced way in the organization’s quality management. However, today it is a danger that business leaders overly prioritize financial performance aspects according to the neoliberalistic [7] tradition, and it is difficult for other specialized viewpoints, e.g. customer satisfaction, to get a remarkable role in their agendas. However, as the counterbalance to such development, due to general global influence, the impact of many other aspects, including environmental protection, ethics, social responsibility, etc., strengthen organizations’ holistic management and the role of financial management within the quality management. Especially, in the global business environment we have to remember that the Earth’s resources are not unlimited, and hence the prevailing judgements on market capitalism and shareholder value maximization will not be sustainable for a long time [8]. We have to take into account that sustainable development meets present needs without compromising the needs of future generations, and that long-term and holistic thinking is essential also for the business success.

References

1.     ISO, (2015), ISO 9000:2015. Quality management systems – Fundamentals and Vocabulary, ISO, Geneva

2.     Juran, J. (1988), Juran on planning for quality. Juran Institute, Inc., The Free Press, New York

3.     National Institute for Standards and Technology, NIST (2010), Malcolm Baldrige Criteria for Performance Excellence, NIST. Washington

4.     Ipid.

5.     Senge P., Roberts C., Ross B, and Kleiner A. (1995), The Fifth Discipline Fieldbook, Nicholas Brealey Publishing Limited, London

6.     Jussila, K. and Anttila, J. (2015), Quality management in enhancing firms’ financial performance in global operations, The World Quality Forum, Budapest

7.     Martinez, E. and Garcia, A. (1996),What isNeoliberalism?

8.     Dunlop, I., Kanninen, T. and Aaltonen M. (2015), Manifesto for a sustainable planet. Transforming global emergency toopportunity and action