£1 spent on quality provides £6 return, says report

Quality management provides a sixfold return on investment on average and results in a 16-fold cost saving, according to a new report.

For every £1 spent on quality, revenues can be increased by £6 and costs reduced by £16, according to the research by the Centre for Economic and Business Research (Cebr) on behalf of the Chartered Quality Institute (CQI) and the Chartered Management Institute (CMI).

It indicates that quality management programmes in 2011 contributed £90 billion to the UK economy, accounting for six per cent of GDP, They also caused UK employment to be 1.4 million higher than it would otherwise. Researchers carried out a review of existing literature and a survey of 120 companies to produce the report.

The literature review found evidence that quality management had increased stock prices, profits, revenues, customer retention and employee, customer and user satisfaction in the public, private and third sectors. It also reduced the costs associated with identifying and rectifying problems during or after production. It found quality management programmes could have their most substantial impacts several years after they were first instituted, in other words there is sometimes a time lag.

David Teale, Chief Executive of North of England Excellence, said: “We have always emphasised the very real returns that a commitment to excellence brings for businesses and this research has certainly confirmed that.”