Abstract :
The present study focuses on total quality management (TQM) implementation in financial service sector companies in Indonesia. The purpose of the study is to determine the effect of latent factors of the TQM practices in Surabaya BUMN Bank and its surroundings. A research project was conducted in Surabaya, Sidoarjo, and Gresik using a questionnaire method involving 209 respondents to test the interrelationships between constructs. The measurement of the model is formulated by covering the practice of TQM as measured by its dimensions. The TQM dimension is the practice of employee quality (HR), customer focus and employee knowledge from the perceptions of bank customers. Empirical results show that service quality has a major influence on customer engagement (CE). The analysis also shows that customer engagement (CE) has the largest total effect on customer loyalty and is followed by service quality. The dimensions of TQM, namely the quality of HR, customer focus, and knowledge of employees also influence service quality and indirectly affect CE and customer loyalty of BUMN Banks through mediation.