New research, commissioned by the Chartered Quality Institute (CQI) and the Chartered Management Institute (CMI) from the Centre for Economic and Business Research (Cebr), shows that in 2011, quality management practices contributed £90 billion to Gross Domestic Product (GDP), accounting for 6.0% of UK GDP.I
According to Cebr, if quality management programmes had been rolled out as fully as possible throughout the UK economy, then GDP could have been £52 billion higher in 2011. This is a 3.4% increase.II
This means that in 2011 alone, quality management practices contributed approximately £9.1 billion to the Exchequer.III According to the report, if quality management programmes had been rolled out as fully as possible in 2011, they would have contributed an additional £8.6 billion to the Exchequer.IV
Cebr also estimates that quality management programmes, as they were actually instituted in 2011, caused UK economy-wide employment to be 1.4 million higher than it would otherwise have been. It found that, if quality management programmes had been adopted as fully as possible across all sectors of the UK economy in 2011, it could have created an additional 455,000 jobs, a potential increase in UK employment of 1.57%.
The research also concludes that organisations implementing quality management could expect an average Revenue RoI of 6:1, i.e. for every £1 spent on a quality management programme, revenues can be increased by £6. The research also indicates an average cost saving from quality management of 16:1, that is for every £1 spent on a quality management programme, costs were reduced by £16.IV
Simon Feary, CQI CEO, says:
“This research quantifies the extent of quality management’s contribution to organisations and the wider UK economy for the first time. As well as demonstrating the enormous contribution quality management already delivers, this research reveals its even greater potential for the UK economy.
“These findings should send powerful messages to organisational leaders, that quality management needs to be fully implemented in, and across, all organisations, and to policy makers, that they need to create an environment in which quality management is encouraged and can thrive. This report shows that we cannot afford to forgo the huge economic, business and employment potential that quality management provides.”
Ann Francke, CMI CEO, says:
“The report clearly shows the value to UK employers of raising the standard and adoption of quality management. At a time when controlling costs and maximising return on investment is at a premium, quality management programmes have a critical role to play.
“However, you cannot achieve quality management systems unless you have quality people. And to get these high quality managers employers need to invest in leadership development. Then quality systems and quality people work hand in hand to deliver the business results.”
The research also comprised in-depth interviews with UK business leaders, of which 93% agreed that quality management is a key driver of business success and on average identified 4.8% cost savings due to quality management.
NOTES TO EDITORS
I. The model used to derive this estimate used 2009 as a base year. Hence, in real terms, the contribution of QM in 2011 was £86 billion in terms of 2009 pounds.
II. Similarly, the potential contribution of QM, had it been rolled out as fully as possible in 2011, was £46 billion in terms of 2009 pounds. Again, 2009 was the base year of the model, which is why this “real terms” figure is given.
III. This is £8.4 billion in terms of real 2009 pounds.
IV. This is £8.0 billion in terms of real 2009 pounds. These tax contributions refer to taxes on products and production.
V. These figures are average estimates. Individual businesses may experience different outcomes.
The Chartered Quality Institute (CQI) is a professional membership body which exists to advance education and knowledge of the practice of quality in industry, commerce, and the public and voluntary sectors. The CQI has a professional membership of 10,000 and its courses and qualifications provide the industry standard for quality professionals, training in the region of 1,000 quality professionals every year.
Quality management is an organisation-wide approach to understanding precisely what customer’s need, and consistently delivering accurate solutions within budget and on time. Quality management techniques ensure the effective design of processes that verify customer needs, plan product lifecycle and design, and produce and deliver the product or service. Finally, quality management techniques measure all process elements, the analysis of performance and the continual improvement of the products, services and processes that deliver them to the customer. The benefits of quality management include increased profits, cost savings, customer satisfaction and better risk management. For a full definition and preliminary discussion on quality management please see page 22 of the report.
CMI is the only chartered professional body dedicated to raising standards of management and leadership across all sectors of UK commerce and industry. CMI is the founder of the National Occupational Standards for Management and Leadership and sets the standards that others follow.
By setting minimum professional standards – built into our qualifications, membership criteria and learning resources – we recognise individual capability and give employers confidence in their managers’ performance.
As a membership organisation, CMI has also been providing forward-thinking advice and support to individuals and businesses, for more than 50 years. As the only organisation to offer qualifications from Level 2 (GCSE) to Level 8 (PhD), CMI is committed to equipping individuals with the skills and knowledge to be exceptional managers and leaders.
Qualifications and accreditations such as Chartered Manager, combined with products such as CMI’s Continuous Professional Development scheme and the online support resource, ManagementDirect, support the development of management and leadership excellence across the UK.
Through in-depth research and policy surveys of its 90,000 individual and 450 corporate members, CMI maintains its position as the premier authority on key management and leadership issues.
CebrCebr is a leading independent commercial economics consultancy with particular strengths in macroeconomic and market forecasting. The report has been co-authored by Cebr staff.
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