This policy brief examines the fundamental principles that undergird the current Total Quality Management (TQM) movement, describes application examples and discusses application problems particular to higher education. An opening section reviews the basic premises of TQM and differentiates between two perspectives on the approach: the first see TQM as a management system with customer satisfaction as the crucial element, and the second sees TQM as a philosophy fostering change in the culture of the organization. Samples of institutions from universities to community colleges are described in order to demonstrate the various ways the TQM approach can be applied in higher education settings. These applications are grouped as follows: unit-wide initiatives; institution-wide two-year college initiatives; institution-wide four-year college initiatives; and state-wide initiatives. The paper examines challenges to TQM implementation in higher education in the areas of customer image, faculty identity, reward systems, and tenure systems. A look at common implementation mistakes covers lack of leadership and commitment at the top, insufficient base of support, failure to recognize costs, failure to recognize the complexity and difficulty of solving some problems, and confining efforts to administration and support functions. It is concluded that acceptance of TQM at the faculty/teaching level is far off. (JB)