Posted by: Don Diltz | March 13, 2012

Total Quality Management (TQM) for Realtors

At its core, Total Quality Management (TQM) is a management approach to long–term success through customer satisfaction.  It has had many iterations with many names and many variations of focus including Six Sigma, Continuous Improvement, Process Improvement and many others.  But at the core there are a handful of principles that survive the myriad of monikers.

In a TQM effort, all members of an organization participate in improving processes, products, services and the culture in which they work.  As a Realtor, typically most of the components of the process are not directly controlled by the Realtor as they are not directly employed by the Realtor.  Therefore, collaborating with independent and interdependent components of the process is critical.

Important facilitating concepts in TQM are:

  1. An analysis of the flow of work and of the independent, interdependent and independent elements of the work flow.
  2. Careful identification of the customers who are participants in the process.  For TQM purposes, every stage at which there is a hand off or an accountability assignment should have customers identified.  Remember that your customer is not only the end user of the service (typically your client), but each of the participants in the process. 
  3. TQ requires that each hand off be addressed in terms of its contribution to the total quality and that the system be fine tuned to enhance the customer satisfaction of each step along the way.  For example, the lender on the team is involved in several ways in the process of a customer satisfying residential sale.  The consumer is a customer of the lender.  The lender is responsible for delivering the proper loan with the right conditions at the right time.  But the lender is also a customer of the end user; in order for the lender to do the best job, the end user must provide proper information and documents in the right time frame.

The methods for implementing this approach come from the teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming and others.  A core in implementing TQM is Deming’s 14 points, a set of management practices to help companies increase their quality and productivity which I have adapted below:

  1. Create constancy of purpose for improving the real estate service. 
  2. Adopt the new philosophy.
  3. Cease dependence on inspection to achieve quality.  Don’t worry, this does not mean you don’t have to get home inspections.  However, it does mean that you need to design your internal systems so that they are correct in the first place rather than depend on a person to review the file and discover errors.
  4. End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier.   Find your best home inspector, best pest inspector, best roof inspector, best title company, best lending company, best insurance company etc.  Best, in this case means not only the correct delivery of product, but also the customer attentiveness with which it is delivered.  For examples, get home inspections delivered in soft copy directly to the client and to you and the title company as necessary so you don’t have to distribute them yourself.
  5. Improve constantly and forever every process for planning, and service.  Develop an understanding of what your vendors are expecting from you in order to deliver the type of service you count on.  Deliver a copy of the signed contract to the title company, since it is a form of escrow instruction, at the same time that you deliver it to the lender.  Find out when lenders and title companies need information in order to make their systems efficient.
  6. Institute training on the job.
  7. Adopt and institute leadership.
  8. Drive out fear.  Don’t scare your vendors into submission – instead, work with them to assure that they are on the same page and their needs are met as well as yours in order to improve the entire process.
  9. Break down barriers between staff areas.  As a Realtor, you are the hub of the wheel.  When necessary, get your other spokes to talk to each other in order to improve service.
  10. Eliminate slogans, exhortations and targets for the workforce.  Instead, keep the focus on the fundamental work process and always strive to improve it.
  11. Eliminate numerical quotas for the workforce and numerical goals for management.
  12. Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system.  Instead, do a debriefing after each transaction and keep the door open to ideas, suggestions and feedback.  Never decide that your system is “good enough”. 
  13. Institute a vigorous program of education and self-improvement for everyone.
  14. Put everybody in the company to work accomplishing the transformation.  In the case of real estate, it is the Realtor who has to stimulate allegiance and enthusiasm from all the moving parts.
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