In recent years, modern -oriented companies are subjected to numerous economic, political, technological and
social changes. Increasing competitive struggle, the appearance of new knowledge and technology, information and
communication capabilities, constantly increasing needs and demands of consumers, the new regulations and the
likewise, influenced the emergence of a new philosophy of business companies. During the '80s, in the business
world, appeared a new management concept -quality management (QM). Total Quality involves the implementation
of total quality management (TQM) that is used to integrate business operations to create products /services with
maximum quality. Quality has become a key element in the survival of the companies in the competitive market [1].
Delivering high quality products and services leads to achieving and maintaining competitive advantage
[2].
Because business success lies in its ability to effectively implement total quality system that will maintain a high
level of quality products and / or services at a relatively minimal cost.
TQM has emerged as a response of successful companies to rapid and significant changes in the environment.
Over the years, there have been altered needs and demands of customers primarily in terms of a higher level of
quality products and services at lower prices. To be able to identify the requirements and expectations of customers
and respond quickly to identified requirements, it is necessary to systematize and develop a set of approaches and
methods that are commonly referred to as TQM.
According to the study by Mehra et al. [3], TQM concept should be seen as a consumer -oriented concept. It is a
system that starts with consumers and ends with them. The basis of TQM lies in creating value for customers,
continuous improvement and quality advancement, accurate and precise measurement of the performance of each
business process, as well as the teamwork of human resources. Successful implementation of TQM improves
organizational performance of companies and leads to a high degree of satisfaction to consumers and employees.
TQM system refers not only to the quality of products, but also includes the quality of the services sector [4]. For
the successful implementation of TQM practices, in addition to identifying the key dimensions of TQM, of great
importance is performance measurement [5]. Based on a study [6], consumer satisfaction is a key dimension of
determining the quality of services provided by the organization and, as such, is a key feature of TQM [7]. Although
there are a number of scientific research dealing with the study of the relationship of TQM, business performance
and customer satisfaction in the services sector [4, 8, 9], this study aims to effectively contribute to and support the
importance of the implementation of total quality management on customers' satisfaction and improve performance
in the banking sector. The aim of this study was to investigate the nature of the practice of total quality management
(TQM) and its relationship to customer satisfaction.
Empirical research was conducted on a sample of 124
respondents, who are managers of small and medium enterprises that operate through banks in the Republic of
Serbia. The results of this research will help bank management to improve the performance of their service offers to
the ultimate aim to improve and enhance the overall organizational performance of companies.