Project Materials




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Chapter one

1.1 Background of the Study

Total Quality Management (TQM), according to Lester, R.B. (1985), is a functional management concept responsible for defining and implementing professionally developed programmes of quality improvement, error control

and defect prevention with an organisation for the purpose of ensuring that the organization’s products and services will conform to their requirements; that customers will be protected and satisfied; and that the cost of quality will be continuously reduced.

This management idea arose from organisations’ desire for continual quality improvement, as well as the crucial relevance of increasing profitability and survival in the face of challenges in a highly competitive business climate. Today, no firm can afford to overlook its two most crucial customers and competitors.

As a result, companies who place a high value on product and service quality outperform their competition.

Oceanic Bank, Skye Bank, and Eco Bank are a few Nigerian organisations that have successfully implemented the TQM culture.

The modern trend in a volatile business environment is the adoption of TQM, as the old view of quality, which is based on Acceptable Quality Level (AQL), which allows tolerable levels of faults in the system, resulting in a high frequency of re-testing, re-working, or rejection, which is often very costly, has been abandoned.

However, TQM, which is centred on delivering defect-free products or services that avoid faults by implementing preventative measures from profit, can only survive in the following conditions:

v Clearly defined policy statement and corporate objectives.

v An organisational structure that supports the Total Quality Management Process and encourages strong leadership and excellent communication.

v Training for all critical staff.

v Motivation to secure employee commitment.

Evans, P. (1992).

There is little doubt that the number of bank failures in Nigeria has increased dramatically in recent years, preceding the N25.0 billion recapitalization. The number of distressed banks is rapidly increasing, and the magnitude of distress has reached dangerous proportions.

Confidence and credibility are gradually and steadily eroding. In December 1994, there were 55 occurrences of distressed banks, compared to 38 in December 1993. By the end of 1996, the number had reached an all-time high of 60.

(Ebhodaghe, 1996).

Following the banking industry’s difficulties, banks must re-engineer and restructure their systems to ensure the effective and efficient use of available resources.

With the impact of increased competition, combined with increased consumer awareness and demand in a more complex and dynamic market, Skye Bank must assess and streamline its processes and services.

The bank’s management recognised that this step was critical for the bank’s long-term survival and performance, thus they determined through the corporate mission,

“An industry leader through excellent customer service, leading to superior bottom line performance and first class return on investors capital, whilst contributing positively to staff development and to society”.

It was thought that completing this task would boost the bank’s bottom line, which is the primary goal of any firm.

Because of the dynamic nature of the banking business, banks must be regularly filled with skilled personnel in order to maintain a high level of efficiency. Many banks are increasingly focusing on ensuring profitability through the quality products and services they provide. As a result, banks now want:

ü additional satisfied consumers who will be inspired to bring additional business to the bank.

ü More passionate, dedicated, and productive staff.

ü Reduced delays, blunders, bottlenecks, and missed opportunities.

ü Get more work done correctly the first time.

ü Streamlined, efficient, and cost-effective systems and processes that lower overheads and boost performance.

ü Profitable opportunities will be found and exploited faster than competitors.

Given this context, the purpose of this research is to examine the impact of TQM on staff morale and productivity in the banking industry, using Skye Bank as a case study.

1.2 Statement of Problem

The problem of quality scarcity in the Nigerian financial market can be ascribed to a lack of modern management, which resulted in systemic leakage. Quality suffered as a result of the expansion of banks in the system; rather than engaged in pure banking activity, banks were often involved in sharp tactics such as round tripping and non-declaration of actual profits.

Poor quality, in most circumstances, results in rework, waste, errors, delays, low morale, and rising overhead costs. These result in client loss, as well as profit and potential losses.

All of these issues and their associated repercussions necessitate a renewed effort to implement change by enhancing key business processes; hence, the Total Quality Management (TQM) programme comes to the rescue.

Because quality is the best and simplest way to improve productivity, performance, customer satisfaction, dependability, teamwork, profitability, and employee morale.

the problem this study seeks to solve is Skye Bank Plc’s ability to use TQM to improve quality, employee morale, and productivity, which in turn positively affects profitability in the banking sector.


Skye Bank Plc is a combination of five banks, including Prudent, Eko, Reliance, Bond, and Cooperative Banks. It began operations in 2005 as a limited liability company, and many analysts consider it to be one of the strongest bank mergers in Nigeria following the N25 billion recapitalization mandated by the Central Bank of Nigeria. This study aims to achieve the following objectives:

1) To determine the methodologies employed by Skye Bank Plc to implement the TQM project.

2) Evaluate the impact of TQM on profitability, staff morale, and productivity before and after its implementation.

3) To identify the issues encountered by the bank throughout their quality improvement efforts.

4) Develop recommendations based on the research findings.


This project will provide answers to the following research questions:

1) To what extent did Skye Bank Plc’s efforts to quality improvement drives suit the expectations of their customers?

2) To what extent has TQM helped Skye Bank maintain its high quality standards in the industry?

3) How did TQM affect staff morale and productivity?

1.5 Research Hypothesis

A research hypothesis is a tentative assertion regarding the relationships between two or more variables that, when tested with facts, can be verified or disproved. The study’s hypothesis is as follows:

TQM has been linked to improved staff morale and productivity.

1.6 Significance of the Study

Total Quality Management is extremely important for establishing a competitive advantage in corporate operations. As a result, only organisations who can consistently deliver high-quality goods and services on time and at the correct price will survive.

The significance of the study is indicated below, among other things; the study will:

v Be advantageous to staff of other banks where TQM is not currently operating, based on the success of Skye Bank Plc.

v Ensure that top management recognises and improves on their inadequacies.

v Although limited to Skye Bank Plc, the conclusions could be extended to a wide range of other organisations.

v Be beneficial to other researchers who want to apply TQM as a novel management idea to boost profitability, employee morale, productivity, customer relations, communications, and teamwork.


Due to time and financial constraints, the scope of this study would be limited to Skye Bank Plc’s Lagos Corporate Office.

1.9 Limitations of the Study

The following restrictions will be encountered when carrying out the study.

v Time constraints are typically a significant limiting factor for research of this magnitude.

v Financial constraints due to the country’s current economic state, where per capita income is minimal, making it nearly hard for the researcher to cover more than one firm at a time.

1.9 Operational definition of key terms and concepts.

1) Quality.

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