CHAPTER ONE

INTRODUCTION

1.1 HISTORICAL BACKGROUND AND THE ORIGIN OF SKYE

BANK PLC

Banking in Nigeria took a new dimension after the

pronouncement of the former governor of the Central Bank of Nigeria

professor Charles Soludo for the need to improve the banking industry

in Nigeria thereby competing with other foreign banks hence capital

base to 25 billion naira.

According to the governor of central bank professor Charles

Soludo the whole idea of the increment is to give room for other small

financial institutions to strive thereby reducing the rate of competition

amongst banks in Nigeria.

For the purpose of this study Skye Bank PLC came together as

an entity after due diligence was carried out amongst their five banks.

• Prudent Bank

• EIB Eko International Bank

• Reliance Bank

• Bond Bank

• Cooperative Bank Ltd

Currently the bank has a significant network spread across the

nation over 200 branches and also planning to spread across West

African countries turn up before the end of 2007 it major of business

is centered round services hence service delivery is term of Skye Bank

or the hallmark as it term.

As a new generation bank Skye Bank Plc is online real that is to

say every customer can access his/her account from any of location

whether it is savings or current account. It is worthy to know that the

bank is highly aggressive in expanding its numerous clientele world

that is to say that the satisfaction derived by the customers is a key.

As a strategy to preposition the industry in order to offer high

quality products CBN embarked upon a process of scrutinizing products

offered by banks.

Quality management of products in a post consolidation era

been brought to front banner. In order to contribute to this debate

TQM (total quality management) as a policy for assessing and

regulating service delivery process became a very important instrument

in this regard.

At the heart of the survival of any bank the satisfaction of the

clients is most important the clients/customers are only satisfied when

their demands are being met at the right cost and to the right quality.

Ironically it only when the customers are satisfied that the bank in

question can be seen as performing it as a new generation bank.

One particular approach to improve organizational performance

and effectiveness is the concept of the Japanese-inspired Total Quality

Management. This is a set of management practices throughout the

organization geared to ensure the organization consistently meets or

exceeds customer requirements. TQM places strong focus on process

measurement.

The successful organization should as a matter of policy be

constantly seeking opportunities to improve the quality of its products

or services and processes; the bank must also couple quality with a

required level of productivity. TQM represents a total system and as

such increasingly enhances quality circles as a broader means of

addressing the demand for quality.

Total Quality Management is a method by which management

and employees can become involved in the continuous improvements

of their products and services. It is a combination of quality and

management tools aimed at increasing profit and reducing losses due

to wasteful practice.

This research work stems from the need to evaluate the cost of

quality vis-à-vis its benefits in terms of increased productivity of any

organization a lot of banks pay lip service to quality simply because

they do not realize the benefit such investment of time effort and

money will bring to their banking system other are skeptical on whether

or not there is any real benefit at all.

It was the need to clear all these and show through a detail and

systematic study of how a popular quality philosophy such as TQM will

affect the performance of Skye Bank PLC that forms that background

for the study.

1.2 STATEMENT OF THE PROBLEM

The central focus of gravity organization is customer satisfaction

and improved performance. Quality focus seeks to institutionalize

planned and continuous improvement so as to ensure that quality is the

outcome of all activities that takes place within an organization; that all

functions and all employees have to participate in the improvement

process; that organization need both quality culture and management

effectiveness of this approach in making small but steady

improvements. But users and critics of Total Quality Management

universally agree that that approach takes too long to do many

abandon the approach with frustration because it takes too long.

If we were to break a Total Quality Management efforts into its

components it takes more time very little go into problem solving.

Perhaps we should spend more time on identifying the right

problem. After all solving the wrong problem is a complete waste of

time in this section we shall strictly discuss the basic problems

encountered in TQM implementation which was addressed by this

research work.

One nagging and ever present problem with Total Quality

Management is meetings and more meetings; lots of time goes into

meetings. Thus anything that will make meetings effective will reduce

the amount of time spent on the Total Quality Management and then

makes it worth the while.

Another problem with Total Quality Management

implementation is the fact that a great deal of time is spent on charting

a process. Steam members debate how the current process works. In

essence by describing the process teams set the stage for how the

process could be changed. Description of the process creates the mind

set and frame within which solutions would be sought.

Discovering ways to radically reduce the time it takes to do a

process charts will go a long way in helping to solve the problem.

Still another problem is that and effort is spent in data

collection once an improvement is made we need to collect data to

verify that indeed real improvement have been made. This phase takes

considerable amount of time as designed surveys distributed retrieved

and analyzed several months to a few years may be spent on data

collection. Again effort need to be put on strategies to reduce the

amount of time and effort spent on this area.

1.3 OBJECTIVES OF THE STUDY

The broad objectives of this research work are to take a critical

look at the principle of Total Quality Management so as to find out how

its implementation will affect an organization performance. The specific

is to investigate the following:

• The relationship between Total Quality Management variables and

the bank productivity.

• The relationship between Total Quality Management variables

and the bank profitability.

1.4 RESEARCH QUESTIONS

The questions related to this work are:

• Does the implementation of Total Quality Management (TQM)

have any effect on the performance of the bank?

• What kind of effect does Total Quality Management (TQM) has

on the performance of the bank and

• To what extent does Total Quality Management (TQM)

implementation affect performance?

1.5 HYPOTHESES OF THE STUDY

To identify the achievements of the desired objectives the

following hypotheses are formulated:

H0: Represents Null Hypotheses

H1: Represents Alternate Hypotheses

HYPOTHESES I

H0: Total quality management variables will have negative influence on

banks productivity.

H1: Total quality management variables will have great influence on

banks productivity.

HYPOTHESES II

H0: Total quality management variables will have negative influence on

banks profitability.

H1: Total quality management variables will have a great influence on

banks profitability.

1.6 SIGNIFICANCE OF THE STUDY

Looking at the volume of investment required to execute a

formidable quality instrument such as TQM in bank one would agree

that it is important to be able to convince ourselves that such

investment would yield some gains for the bank before embarking on

such a project.

Thus to say that this study is justified is merely repeating the

obvious as without a study like this it might be difficult to get the

support of quality advocators and sympathy of other members of the

organization.

Apart from this management we will also not be able to

measure the benefit derivable from their huge investment in

implementing quality programmes such as TQM. A study like TQM will

therefore provide a guide towards evaluating the gains of implementing

a quality program both for organisations who has done that and those

that are still in the process.

In summary the following listed points could be considered as

justification for a study just as this:

• It provides an opportunity to critically evaluate every quality

program in line of what benefit it will yield.

• It provides a good basis for the justification of proposed quality

program for the advocators of such program.

• It shows vividly what organization stand to gain or lose it

implementing quality programs such as TQM.

• Finally it exposes organization and other readers to the rudiments

of Total Quality Management philosophy.

1.7 THE SCOPE OF THE STUDY

This research work covers the performance of Skye Bank Plc.

in the years before and after the implementation of Total Quality

Management in the organization.

It is a study designed to compare the implementation of the

Total Quality Management principles in Skye Bank Plc. with the

performance of the banks using turn over and profitability as a

measurement yard-stick for the banks performance.

1.8 LIMITATION OF THE STUDY

• Network interconnectivity to enhance elaborate research

• High level of illiteracy

• Organization operational huddles

• Time and cost constraints due to cause of scarcity in gasoline to

go about the research.