A quality circle is a participatory management technique that enlists the help of employees in solving problems related to their own jobs. Circles are formed of employees working together in an operation who meet at intervals to discuss problems of quality and to devise solutions for improvements. Quality circles have an autonomous character, are usually small, and are led by a supervisor or a senior worker. Employees who participate in quality circles usually receive training in formal problem-solving methods—such as brain-storming, pareto analysis, and cause-and-effect diagrams—and are then encouraged to apply these methods either to specific or general company problems. After completing an analysis, they often present their findings to management and then handle implementation of approved solutions. Pareto analysis, by the way, is named after the Italian economist, Vilfredo Pareto, who observed that 20 percent of Italians received 80 percent of the income—thus the principle that most results are determined by a few causes.
The interest of U.S. manufacturers in quality circles was sparked by dramatic improvements in the quality and economic competitiveness of Japanese goods in the post-World War II years. The emphasis of Japanese quality circles was on preventing defects from arising in the first place rather than through culling during post-production inspection. Japanese quality circles also attempted to minimize the scrap and downtime that resulted from part and product defects. In the United States, the quality circle movement evolved to encompass the broader goals of cost reduction, productivity improvement, employee involvement, and problem-solving activities.
The quality circle movement, along with total quality control, while embraced in a major way in the 1980s, has largely disappeared or undergone significant transformations for reasons discussed below.
Quality circles were originally associated with Japanese management and manufacturing techniques. The introduction of quality circles in Japan in the postwar years was inspired by the lectures of W. Edwards Deming (1900—1993), a statistician for the U.S. government. Deming based his proposals on the experience of U.S. firms operating under wartime industrial standards. Noting that American management had typically given line managers and engineers about 85 percent of the responsibility for quality control and line workers only about 15 percent, Deming argued that these shares should be reversed. He suggested redesigning production processes to account more fully for quality control, and continuously educating all employees in a firm—from the top down—in quality control techniques and statistical control technologies. Quality circles were the means by which this continuous education was to take place for production workers.
Deming predicted that if Japanese firms adopted the system of quality controls he advocated, nations around the world would be imposing import quotas on Japanese products within five years. His prediction was vindicated. Deming's ideas became very influential in Japan, and he received several prestigious awards for his contributions to the Japanese economy.
The principles of Deming's quality circles simply moved quality control to an earlier position in the production process. Rather than relying upon post-production inspections to catch errors and defects, quality circles attempted to prevent defects from occurring in the first place. As an added bonus, machine downtime and scrap materials that formerly occurred due to product defects were minimized. Deming's idea that improving quality could increase productivity led to the development in Japan of the Total Quality Control (TQC) concept, in which quality and productivity are viewed as two sides of a coin. TQC also required that a manufacturer's suppliers make use of quality circles.
Quality circles in Japan were part of a system of relatively cooperative labor-management relations, involving company unions and lifetime employment guarantees for many full-time permanent employees. Consistent with this decentralized, enterprise-oriented system, quality circles provided a means by which production workers were encouraged to participate in company matters and by which management could benefit from production workers' intimate knowledge of the production process. In 1980 alone, changes resulting from employee suggestions resulted in savings of $10 billion for Japanese firms and bonuses of $4 billion for Japanese employees.
Active American interest in Japanese quality control began in the early 1970s, when the U.S. aerospace manufacturer Lockheed organized a tour of Japanese industrial plants. This trip marked a turning point in the previously established pattern, in which Japanese managers had made educational tours of industrial plants in the United States. Thereafter quality circles spread rapidly here; by 1980, more than one-half of firms in the Fortune 500 had implemented or were planning to implement quality circles. To be sure, these were not installed uniformly everywhere but introduced for experimental purposes and later selectively expanded—and also terminated.
In the early 1990s, the U.S. National Labor Relations Board (NLRB) made several important rulings regarding the legality of certain forms of quality circles. These rulings were based on the 1935 Wagner Act, which prohibited company unions and management-dominated labor organizations. One NLRB ruling found quality programs unlawful that were established by the firm, that featured agendas dominated by the firm, and addressed the conditions of employment within the firm. Another ruling held that a company's labor-management committees were in effect labor organizations used to bypass negotiations with a labor union. As a result of these rulings, a number of employer representatives expressed their concern that quality circles, as well as other kinds of labor-management cooperation programs, would be hindered. However, the NLRB stated that these rulings were not general indictments against quality circles and labor-management cooperation programs, but were aimed specifically at the practices of the companies in question.
In the mid-2000s, quality circles are almost universally consigned to the dustbin of management techniques. James Zimmerman and Jamie Weiss, writing in Quality, summed the matter up as follows: "Quality and productivity initiatives have come and gone during the past few decades. The list of 'already rans' includes quality circles, statistical process control, total quality management, Baldrige protocol diagnostics, enterprise wide resource planning and lean manufacturing. Most have been sound in theory but inconsistent in implementation, not always delivering on their promises over the long run."
Nilewide Marketing Review said the same thing in similar words: "Management fads should be the curse of the business world—as inevitably as night follows day, the next fad follows the last. Nothing more typifies the disastrous nature of this following so-called excellence than the example of quality circles. They rose to faddish heights in the late 80s presenting the so-called secret of Japanese companies and how American companies such as Lockheed used them to their advantage. Amid all the new consultancies and management articles, everyone ignored the fact Lockheed had abandoned them in 1978 and less than 12% of the original companies still used them."
Harvey Robbins and Michael Finley, writing in their book, Why The New Teams Don't Work, put it most bluntly: "Now, we know what happened to quality circles nationwide—they failed, because they had no power and no one listened to them." Robbins and Finley cite the case of Honeywell which formed 625 quality circles but then, within 18 months, had abandoned all but 620 of them.
Japanese industry obviously embraced and applied quality circles (the idea of an American thinker) and QC has contributed to Japanese current dominance in many sectors, notably in automobiles. If QC became a fad in the U.S. and failed to deliver, implementation was certainly one important reason—as Zimmerman and Weiss pointed out. U.S. adapters of QC may have seen the practice as a silver bullet and did not bother shooting straight. The reason why a succession of other no doubt sensible management techniques have also, seemingly, failed to get traction may be due to a tendency by modern management to embrace mechanical recipes for success without bothering to understand and to internalize them fully and to absorb their spirit.
The problems of adaptation, which have caused quality circles to be abandoned, are made plain by a look at the conditions two experts think are necessary for the success of quality circles. Ron Basu and J. Nevan Wright, in their book Quality Beyond Six Sigma (another quality management technique) specified seven conditions for successful implementation of quality circles. These are summarized below:
"Quality circles have been tried in the USA and Europe, often with poor results," Basu and Wright say. "From our combined first-hand experience of quality circles in Australasia, the UK and Europe, South America, Africa, Asia and India, we believe that quality circles will work if [these] rules are applied."
Any experienced manager, contemplating the rules shown above and the typical management environments in which he or she works or has worked in the past will be able to discern quite readily why QC has not taken a firm hold in the U.S. environment. As for the small business owner, he or she may actually be in a very good position to try this approach if it feels natural. An obviously important element of success, confirmed by Basu and Wright, is that QC must be practiced in an environment of trust and empowerment.
Basu, Ron, and J. Nevan Wright. Quality Beyond Six Sigma. Elsevier, 2003.
Cole, Robert. Managing Quality Fads: How America Learned to Play the Quality Game. Oxford University Press, 1999.
"Imitate Excellence?" Nilewide Marketing Review. 23 October 2005.
Robbins, Harvey, and Michael Finley. Why The New Teams Don't Work: What Goes Wrong and How to Make It Right. Berrett-Koehler Publishers, 2000.
Zimmerman, James P., and Jamie Weiss. "Six Sigma's Seven Deadly Sins: While the seven sins can be deadly redemption is possible." Quality. January 2005.