The Effect of Total Quality Management on Organizational Effectiveness: The Case of Nile Insurance Company S.C
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Date
2019-06
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Addis Ababa University
Abstract
Over the last few decades, many studies have reported on the implementation of total
quality management (TQM) principles and methods in organizations around the world.
However, there have been only a few attempts to empirically establish the link between
TQM practices and organizational effectiveness in the Insurance sector, especially in
Ethiopia. The paper’s aim is to determine how the Total Quality Management practices
affect an overall effectiveness of Nile insurance company. The study type is descriptive
and explanatory and in line with this both qualitative and quantitative methods were
employed. The data has been taken from a sample of 100 employees from selected
branches including the head office in Addis Ababa. The data is analysed by using a
structural equation modelling methodology. The results indicate that the level of
awareness regarding TQM practices and the role found at moderate level. Concerning
the dimensions of TQM practises, strategic planning effectiveness and customer
orientation found to be in low category whereas dimension to communication, leadership
and employee’s involvement were in moderate category. Consequently, an overall
dimension of TQM practices endeavoured categorized under moderate category. As the
descriptive findings indicate that all TQM Practices (Strategic Planning, Communication,
Employees Involvement, Customer Orientation and Leadership) are found to have
significant and positive association with both employee’s satisfaction and profitability. As
the regression finding depicted, except communication other four namely strategic
planning, employee’s involvement, customer orientation and leadership are found to be
significant in employee’s satisfaction. On the other hand, except employee’s involvement,
all variables were significant concerning about company’s profitability. Therefore,
organizational effectiveness has been positively impacted by TQM practices. Finally,
appropriate remedial measures/recommendations have been forwarded for identified
gaps such as communication, employee’s involvement, strategic planning as well as
related to information technology usage, rewarding mechanisms and on job training.
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Keywords
Nile Insurance Company Share Company, Organizational Effectiveness, Total Quality Management Practice