Cost-Benefit Analysis of Quality Circles: A Case Study

Abstract

While various studies have examined the impact of quality circles on employees' attitudes and satisfaction, relatively little has been done with regard to quantifying the costs and benefits of such circles, and even less in terms of comparing improvement suggestions in such circles with those of an individual program. This study presents a cost-benefit analysis approach to the assessment of quality circles performance, and applies it to a large manufacturing organization. Results show that the program increased the effectiveness of improvement suggestions by 35% as compared to the individual suggestion structure. The program paid for itself within three years. Peak effectiveness was reached after two years of operations, followed by a significant drop, although still with benefits exceeding the cost accrued by the program maintenance.