November 2003  

Vol. 5, No. 11


Six Sigma and More: 
David muses about jobs

by David R. Schwinn

I recently led a workshop on Six Sigma Strategic Planning at the annual American Small Business Development Center conference.  When the conversation with participants turned to involving all employees in generating ideas necessary to achieve Six Sigma targets, I was reminded of the early continuous improvement planning we did at Ford World Headquarters in the early 1980s. 
 
At those sessions, we anticipated that employees’ improvement ideas would lead to considerable cost savings due to less rework. Back then, asking employees for ideas was highly innovative. Nonetheless, it seemed like a good idea--until we realized that the result would be laying off the very people who gave us the improvement ideas.  We concluded that this would not work – at least not for long—something that seems pretty obvious today, but at the time, this whole line of thinking seemed fairly transformational. 
 
So we set about trying to figure out how to solve that dilemma.  First, we thought that if we did a more consistent job of meeting customer expectations, sales would improve.  Although we were a little skeptical about that projection, we did, in fact, end up taking significant market share from our nemesis, General Motors. We also noticed that most of our costs were in purchased goods and services. Maybe the necessity of laying off employees to gain the cost savings we needed might not be as drastic as we originally thought. Finally, we realized that any savings we needed would be taken care of by taking advantage of our natural attrition rate and by simply not hiring replacements.  Taking advantage of attrition would require a lot of retraining, but we thought it would be worth the effort.  So we committed to the union and the employees that no one would be laid off as a result of our continuous improvement effort.  Eureka!  We had an approach to improving quality and reducing costs without significant layoffs.
 
We all know that conditions are different today.Your competitors may be improving too, at a rate that provides you with no edge from the customers’ perspective. Your current costs may be much more employee-related. Your natural attrition rate may not be adequate to achieve the savings you need. We have also learned since then that the diminished hiring associated with savings through attrition may begin to nurture a culture with fewer new ideas and less willingness to take risks.  So those strategies from the 80s may not work so well after all. But one thing remains the same. People will not provide improvement ideas that are likely to result in loss of their income.
 
Another change has occurred since the 80s.  Globalization has intensified the export of jobs. Sending jobs overseas may seem to be a necessary strategy for survival, but it entails some risks that a Six Sigma attitude can reduce. Those risks were raised recently in an organizational ethics class I teach. I am blessed to have several international students in the class. They continually provide a perspective I don’t find elsewhere. Our discussion of the impact of exporting jobs from rich to poor nations naturally flowed toward the issues of child labor, inhumane working conditions, and slave-like working agreements found in some of Third World countries where these jobs are relocated.  Besides the pain to all of the workers involved, some of the companies, such as Nike, have paid a price, at least in public relations. But one of my students pointed out a risk that isn’t quite so obvious. If Third World workers are paid too much, the results could be equally devastating. In countries with 60 percent unemployment rates, for example, people will literally kill for a job that gives them enough money to feed their families.
 
So think about the implications of Six Sigma for jobs. If you can get the results you need without job loss, go for it. If you need to lose jobs, try to involve all of your employees in the planning, management, and execution of the changes necessary to achieve your Six Sigma results. If jobs need to go overseas, take the time to understand the implications for all involved. 

As always, I welcome your thoughts. I'm at support@pqsystems.com



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