Mamo Adhana

TQM has become a competitive strategy for organizations and has been widely

implemented throughout the world. Over the previous three decades, there has been a

dramatic growth globally in the implementation of total quality management (TQM) in

many organizations with the aim of improving the quality of their products and services,

and meeting customers’ needs. Although the literature in the field relates the success of

many organizations in the implementation of TQM, it also refers to the fact that there

have been some failures or shortcomings and barriers to the implementation of TQM.

These failures or barriers to adoption and implementation are due to lack of top

management commitment or weak understanding of total quality management, and

encompass organizational cultural factors. A firm’s performance is a function of how

well managers use quality management practices to improve the quality of products and

services. In today’s global environment, organizations are constantly looking for ways to

expand and improve their businesses in terms of quality to enhance performance. Quality

management practices have been used by banking firms in Ethiopia to improve on

performance. However, customers are still complaining that the quality of service

products has been compromised. The purpose of this study was to establish the effect of

total quality management practices on organizational performance of commercial banks

in Ethiopia. The specific objectives of the study were: to identify the extent that the

commercial banks in Ethiopia have adopted TQM principles; to explore the TQM

elements that are significantly associated with the Organizational Performance (OP) in

the Ethiopian Commercial Banks; and to investigate the effect of each TQM elements on

the organizational performance of the commercial banks. The study used both descriptive

and explanatory research design. The target population comprised all 17 commercial

banks and a sample size of 330 branch manager respondents from Addis Ababa, Adama

and Hawassa cities. The study adopted simple random proportional sampling technique.

The study used primary data which was collected using self-administered questionnaires.

Validity of the instruments was ensured through face, and content validity and reliability

was tested using Cronbach’s Alpha with a coefficient of 0.7, which was considered

acceptable. Data was analyzed using descriptive and inferential statistics. Descriptive

statistics was used to summarize data while inferential statistics, specifically Multiple

Linear Regression, was used to test the hypotheses. The analysis used SPSS version 22 to

aid in data analysis. The results were presented using tables and figures. Out of variety of

TQM factors affecting OP, five were identified and selected through pilot results for

TQM implementation in the Ethiopian banks. These factors were ranked as: top

management commitment, education and training, customer focus, employees’

involvement, and people management according to their level of significance of effect

over the organizational performance on the basis of the analysis made. The study

recommended that the management should be committed to quality by providing strategic

direction with respect to quality management practices, which should be aligned to the

firms’ objectives. Policy makers should create a quality framework that is geared towards

improving performance and ensure it is adhered to by all stakeholders in the commercial

firms in Ethiopia. Finally, the study recommends that similar research be done in other

sectors like manufacturing industries.