Vol. 9, No. 5

May 2007

PQ Systems

New CHARTrunner release

Quality Quiz: With a video!

Data in everyday life

Six Sigma

Bytes and pieces

FYI: Current releases


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Six Sigma and more:
Profits and jobs

Eugene Allevato recently responded to one of my earlier columns in which I advocated taking Six Sigma beyond the bottom line. He responded with, “…Six Sigma, the bottom line and the spirit are not completely compatible, because if reducing waste will involve laying off a worker that supports a family according to a Six Sigma study, we cannot claim spirituality. Six Sigma does not accommodate the human factor. Six Sigma is strictly the bottom line of the business.”

I believe the reader’s observation is accurate for most Six Sigma efforts, but I also believe it does not have to be that way. As I’ve discussed in earlier columns, when we began the Participative Management/ Employee Involvement effort at Ford in the late 1970s, we explicitly committed to no layoffs as a result. We were asking for improvement ideas from the very people who would be laid off in order to achieve the improvement benefits, and we knew no one was likely to offer ideas that would result in the loss of their job.

Because we had a natural attrition rate of 6 percent in those days, we could get our savings simply by buying less from suppliers and taking advantage of natural attrition by not hiring so many new employees. That involved some retraining costs, naturally. But we went beyond simple retraining for existing jobs to planning to retrain people for the new jobs that would come as our market share increased as, in fact, it did. In those days, we were able to take market share away from our domestic competitors.

The principles still hold although the ability to gain market share may be more difficult today. It may require the creation of new products and services besides the improvement of existing ones. Those displaced employees may need to be retrained to support other areas of the firm such as marketing, information technology, research and development, and new product, service, and process development. The numbers show that it is usually less expensive to retrain existing employees than to hire new ones. By the way, if the only savings from Six Sigma come from lower employment, pretty soon, the successful Six Sigma effort has no employees at all!

So here are my recommendations if you want to move from using Six Sigma to lay people off to improving profitability AND taking care of your employees. First, polish up your resume. Dr. Deming used to say, “Raise your hand three times and you’re a marked man.” My experience confirms that. Any time you try to change an existing living system, such as Six Sigma, it will push back, sometimes by causing the person attempting the change to find themselves without a job.

Then give change a try. Help people understand that if people are not in fear of their jobs, they are more likely to come up with great ideas for improvement. Focus on ideas that will result in lower use of purchased products and services. Develop plans for what to do with the people who are likely to be displaced when the ideas are implemented. Contrary to current trends, you could even have those displaced employees provide some of the products and services you currently buy. And let the public know what you are trying to do. You never know how the goodwill you generate might help your organization with increased sales and in other unanticipated ways.

If that doesn’t work and you are still employed, try moving to another part of the enterprise. That part may be more receptive to your idea. They may even be doing what you are advocating already.

You could also move to another organization. I understand there are many firms and nonprofits that operate in a “spiritual” way. The names of Patagonia and Interface come to mind. There are also investment funds that seek out these kinds of “responsible” companies. Calvert is one of those investment firms. Do a little research. Check for second or third opinions to be sure the companies, themselves, are not just marketing responsibility. There’s a lot of that going on these days.

Finally, start your own organization. There’s a lot of action in that area these days; and there’s a lot of help out there. Besides libraries and the internet, there is free help from the Small Business and Development Centers in many American communities. There are also SCORE organizations that provide similar, free assistance.

Six Sigma does not have to be simply about putting more money in the hands of top management and investors to the detriment of the people doing the work. We are better than that and so is Six Sigma.

As always, I look forward to your comments and questions. I’m at support@pqsystems.com.

Copyright 2007 PQ Systems.
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