{"id":8299,"date":"2022-12-12T07:00:13","date_gmt":"2022-12-12T07:00:13","guid":{"rendered":"https:\/\/www.humatica.com\/?p=8299"},"modified":"2022-12-20T11:31:12","modified_gmt":"2022-12-20T11:31:12","slug":"tqm-your-organization","status":"publish","type":"post","link":"https:\/\/www.humatica.com\/de\/insights\/tqm-your-organization\/","title":{"rendered":"Applying TQM to management processes and behaviour to ensure stable returns"},"content":{"rendered":"

Edwards Deming, the father of modern-day statistical process control and Total Quality Management, understood that reducing sources of variability in business produces consistent results with greater efficiency. Quality issues increase output variance and exceptions that incur a disproportionate cost to resolve. Deming was an engineer, mathematician and physicist. He understood system analysis and optimisation. His TQM has been successfully applied by Toyota and countless other top manufacturers to identify and reduce sources of variability and waste in production. Investment managers face a similar challenge. They need to reduce variability as a means to increase average returns.<\/p>\n

Deming\u2019s TQM is the right approach for private equity also. \u00a0It starts with identifying sources of variability in investment performance. And there are many. Demand can vary. New competition can take share. And technology may disrupt. But these are longer-term external factors that can be assessed and mitigated through fact-based due diligence. Funds are steadily industrialising their investment processes to reduce these sources of variability.<\/p>\n

The bigger problem facing buyouts today is internal variability with organisational effectiveness. Variance with management as a key enabler is particularly important right now, as companies face unprecedented external risks including supply bottlenecks, geopolitical disruption, commodity price and currency fluctuations, and a likely recession. This is the moment when Deming\u2019s TQM should be applied to organisations in order to reduce variability and ensure stable returns despite increased market turbulence.<\/p>\n

Funds have tried to reduce organisational variability with management assessments. But these don\u2019t deliver pragmatic insights about the way an organisation is working below the senior team. Culture surveys don\u2019t work either because they measure a broad set of factors, many of which don\u2019t link with implementing the value creation plan.<\/p>\n

What\u2019s needed is an objective measure of organisational behaviours that drive the ability to make and implement decisions at all levels and in each function – the foundation for collective adaptation and agility. This understanding of organisational \u201csystem response\u201d is the missing link between Deming\u2019s fact-based TQM and PE value creation. Humatica\u2019s Altus too<\/a>l and behavioural benchmarks provide the necessary statistical process control for measuring the quality of interactions that drive the collective ability to adapt and implement the value creation plan. By comparing behaviours in a team with the statistical distribution from thousands of other teams, behavioural bottlenecks that impair the ability to implement the value creation plan are identified and can be resolved.<\/p>\n

Deming understood the power of statistical process control and feedback to improve business performance. It\u2019s time to apply his proven methods to organisational systems. Humatica\u2019s behavioural benchmarking is delivering the hard facts to leverage TQM methods across private equity portfolios for reducing variability and increasing returns.<\/p>\n

This article was originally published as the\u00a0Humatica Corner in Real Deals magazine.<\/a><\/p>","protected":false},"excerpt":{"rendered":"

Edwards Deming, the father of modern-day statistical process control and Total Quality Management, understood that reducing sources of variability in business produces consistent results with…<\/p>","protected":false},"author":4,"featured_media":8313,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[8],"tags":[138,137,68],"class_list":["post-8299","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights","tag-total-quality-management","tag-tqm","tag-value-creation"],"acf":[],"yoast_head":"\nApplying TQM to management processes and behaviour to ensure stable returns - Humatica<\/title>\n<meta name=\"description\" content=\"Deming\u2019s TQM is the right approach for private equity also. \u00a0It starts with identifying sources of variability in investment performance.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.humatica.com\/de\/insights\/tqm-your-organization\/\" \/>\n<meta property=\"og:locale\" content=\"de_DE\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Applying TQM to management processes and behaviour to ensure stable returns - 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