Bem A key piece of the management puzzle is what W. Edwards Derning calls the theory of variation. by Brian L. Jolner , Management, and ards Deming ACK AND SARAH WERE PREPARING FOR their monthly meeting. Jack, the vice president of sales, wasn't looking for- ‘ward to it, Sales were down again this ‘month, and he was going to have to confront Sarah, a regional sales manager. He really thought Sarah was doing a good job over- all, and the fact that he needed to chastise her periodically frustrated him. But reprimanding Sarah usually improved sales—at least for a ‘month oF $0. Sarah wasn't looking forward to the meeting either, Even though she could easily come up ‘with a thousand reasons why sales were down, they were the same reasons she had used many times before and would use many times again: absenteeism, sales force turnover, poor training, lack of product promotions, and a host of other factors that were mostly beyond her control. Even in those months when she was credited with unusually good sales, Sarah was nervous about the monthly meeting because she was never sure of exactly how she had improved sales. ‘At the meeting, Jack asked Sarah t0 explain the most recent drop in sales. Sarah gave her rea- sons. Jack pretended to believe her. He felt ob- liged to emphasize that her job was to keep sales ‘up, Both felt this meeting was necessary, but both felt they hadn't really solved anything and that the same thing would happen again in subsequent months ‘What were these managers doing wrong? Or, rather, what could they have done better? Both ‘were acting in the best interests of the company Both were competent managers who had risen to high levels in the company. Yet Jack didn’t ‘enjoy reprimanding people, and Sarah felt un- ‘easy each time she had to explain drops or rises in the sales figures ‘What these managers and millions like them. lack is a key piece of the management puzzle, apiece that W. Edwards Deming calls the the- ory of variation, In Deming’s view, the first step is to recognize that variation is « part of every thing: supplier goods, temperature, measurement systems, and even people's performance. But the real benefit comes from knowing smething about the theory af variation so you can act on “i Understanding the theory of variation enableg Tanagers to recognize, interpret, and react apt propriately to variation in the dat, fgu performance, and outputs they deal with dally! ‘Knowledge of the variation theory is one of thé thost powerful npany 8 day, week after week, month after sth collective effect of all common caus's & referred toas system variation beew the amount of variation inherent in «hs ial causes ae factors that sys al duce variation over and above ts nett i the system. Frequently, special cx" v4 appears as an extreme point or sw Weekley identifiable patter in data, Spcia «8 AOE ten referred 10 as assignable cause» W486 OG ‘atation they produce ean be tras S440 808 designed (0 an identifiable source «NT itis usualy dificult, if not impo" Common cause variation to source.) uaty Poss:Variation, Management, and W. Edwartls Deming cont. Tampering is additional variation caused by unnecessary ad- justments made in an attempt to compensate for common cause variation. ‘Structural variation is regular, systematic changes in out- put, Typical examples include seasonal patterns and long-term trends. 3, Distinguishing between the four types of causes is criti cal because the appropriate managerial actions are quite differ- cnt for each. Without this distinction, management will never be able to tell real improvement from mere adjustment of the process or tampering. In practice, the most important differ- ‘ence to grasp frst is the difference between special cause var- jation and common cause variation. 4. The strategy for special causes is simple: get timely data Investigate immediately when the data signal a special cause \was present. Find out what was different or special about that point. Seck to prevent bad causes from recurring. Seek to keep ‘Bood causes happening, 5. The strategy for improving a common cause system more subtle, In & common cause situation, all the dae wy relevant, not just the most recent or offending figure, If wa Ihave data each month for the past two years, you will aed to look at all 24 of these points. In-depth knowledge ofthe process or system being impro is absolutely essential when only common causes are ent, This knowledge can come from basic statistical tols, suc as flowcharts, cause-and-effect diagrams, stratification anal ysis (used for measurement data such as process cycle time) land Pareto analysis (used for count data such as number gf ‘acidents), These and other tools can help identify fund ‘changes to the system, but they should be tried on a scale first to see whether results improve. Statistically des experiments might also be helpful in identifying system ovations." ‘6. When all variation in @ system is due to common causes the result is a stable system said to be in statistical contol Puwoos Ofer Raw Morale ‘wrapper Soppias oa ean sra926 an aad cars 208 oat Pay ‘ther Raw Matas ‘wtp 30 ovaltyPaees/ scorer 1990 Period 121986 Variances Year-to-Date “his chart was adapestom one used by Hal Har of Static! Studies Ie evel oun 3788 5 ee ss) 236 es (00) (90) (23 (025 (178) (os) (23 (023 Baa fom ua Fauci) — Youme $528 $ as an a9 058 “as 3 {99‘er ae you | need pres. + sch ‘anale time), ber of snental small signed om ine rntrol, TEWAMT TATONOIFMAMIT AS ORDTFMAMITAS OND 1988 1989 ‘The practical value of having a stable system is thatthe proc- ess output is predictable within a range or band, For exam- ple, if stable order entry system handles 30 to 60 orders a ‘day, itwill rarely slip co fewer than 30 or rise to more than 60. If some variation is due to special causes, the system i sai to be unstable since you cannot predict when the next special cause will strike and, therefore, cannot predict the range of variation. IF the order entry system just described were un- stable and subject to special cause Variation, its capability night sporadically (and unpredictably) drop sharply below or rise sharply above the 30 to 60 range. 71. How much system variation is present can be determined by performing statistical calculations on process data, Thus cn:irol limits can be set. Control limits describe the range of variation that is to be expected in the process due to the aggregate effect of the common causes. Calculating these limits lets managers predict the Future performance of a proc- ess with some confidence.>+5 These seven fundamental concepts provide the framework for improving managerial effectiveness, The following exam- ple shows how. The nemicious periodic raport “Managers often base decisions on data prepared daily, week- 'y, or monthly by their subordinates. These data are usually displayed in a table. Figure 1 is a typical example. When asked what they look for in such tables, most managers respond “big negative variances.” Like Jack in the ‘opening story, they will fous on the undesirable figures and 48k, “What happened? What is being done about it?" They'll Say things like: “Manufacturing losses are up this month Why’? What are you doing about i?” “Why have sales gone down two months in a row? What are you doing about it “Your project came in more than 10% over budget. Why’ Look back atthe description of what to do in fesponse to Special cause variation and coramoa cause variation, Which one ‘ost closely describes these reactions? The answer isthe stra "egy for special causes: seek out explanations for that data point a investigate how that point differs from the rest ofthe data 1 this the appropriate strategy to follow? Although its hare ‘0 tell without more data, the answer is probably no. Tables 1990 such as Figure | give no cue as to whether the undesired fig- ute arose from a special cause or common cause. However, experience shows that the overwhelming majority of undesira- bie figures are, infact, due to common causes. Not only do such fables hinder a manager's ability to determine appropri- ste action, they also reinforce the human tendeney to over- react: if you receive a report, you feel the need to use it ‘Yet the responses are characteristic of Western manage- ‘ment: treat everything asa special cause. This invariably lads to tampering, which increases variation and makes matters ‘worse, not beter. The consequences of tampering canbe filly appreciated only when a manager knows the alternatives. A better way “Managers will do better if they use the theory of variation to react to figures. To use this knowledge, they rust first look at the data in a different way. Figure 2 shows the monthly sales data fora product lin. This presentation is different from we | in two important ways: the data are plotted in time ‘order and the overall average and control limits are indicated ‘on the plot. The resulting chart is a statistical control chart. (A product line with no growth in sales was chosen to simp! fy the presentation, If there had been a trend in sales—say, ‘2.5% growth per year—the trend would be used as a center Tine and the control limits would be plotted parallel to that ‘wend line.) How does such a display help managers? It is immediately evident that al the points fall within the control limits. With a litle training, a manager would also recognize that there is no evidence of special causes, pattern, or trends inthe data Thus the graph shows thatthe Variation in tis system is most, likely duc to common causes—it arises from the myriad of ever-present factors, each contributing a small amount to the variation seen each month. Tn a system where only common cause variation is pres- ent, asking why the sales fora given month are lower or higher than the preceding month isa low-yield strategy, which means you won't get much payback for the time and resources you expended trying to answer the question, Worse, investigat- ing one point will not give you the answers you need, and the problem will most likely resuetace. eat Pons] enn 380 StFebruary 1986 report for those accounts that are +£ 6,000 from the budget Sales Region 1 ‘Actual fueled 4151879 Postive Vainnsas tostto WK Karte, businass up Rome branch closed Blcouit Boy, business up Upstate, Utica plant closed Bayer, bosioess up Sales Region 2 ‘fal usased 2908.82 298961 Posie Vainnces ‘Stone Crook, PA, cyclo out (none) Upsist, KY plant losed Upetate, OH lst i overseas Eto, PA sto UK ‘Av, FL Alban, no Feb, ordor Sadie, businass down Biadetmann, production shit ‘THN, business down Naw Day, very ether month ‘Andee now pant dalayed (CBC, Dayton, lst to overseas Royal, OH, business down Savin, fost to WK citrbutor se Foods, businass dowe, on} Bakery, business down MIN. Engiz, MO, business down Sales Region 3 Actual does Toalvasanca 3917.66 2730.88 187.140 Poste Vaionces Upstate, Ciro, business down 6.000 Upstate, business up Edna's, cet to LK 8.000 Olamond, businoss up Gianni, Chicago ost to UK 8,000 Friendly’, gained from bk ‘West business down 421000. Stone Greek, gained fom UK ‘AmBaCo, business down Via t50 Astor, moved production and closed Rocko’ (Baking, roo! box i repair 133750 ABCO, gained from UK ESA, Dato lost o UK 150,000. CBC, gained from Wi My T-Fine Dato, lost 0 WK 10.000 Reyal, business up MNO’, Datrot, business down 40.000 GoodGo, now business, now account Oldie, fst 10 UK 7200. Bl, gained rom UK Supply, business down 184200 CBG, Elkhart, gained trom UK Lake's, Mi, businoss down $0500 Hunters, closed Groen Bay, moved to Miwwavkoe ‘Wels, Rasovio ost to UK 47500 Tommy's, business up FOF, not buying from usin Canada 12.480 MoltaCo, bread special Fab. ‘Jones’ bakery, businass dow 24000 Royal Business aken rom SHAR, SHAR, 172 basin 2 tuay Ps fonconts‘There are additional, less obvious costs incurred when var~ intion is ignored or misinterpreted, including: « attention being diverted from more pressing problems that could be effectively addressed. more variation in the system, * loss of producti * low morale. * subordinates losing confidence in their manager. Jobsicareers being put in jeopardy. Tampering revisited Despite these costs of inappropriate reactions, treating everything as a special cause is exactly what most American ‘managers are asked to do, and they learn to do it well. An example is shown in Figure 3 Here the manager compared the pounds of product he predicted would be sold in a certain month with what was ‘actually sold. As you can see, he came up with explanations for practically every pound of difference between the two num- bers. His reaction to these figures was probably to chastise his salespeople for losing business to competitors. The im- plicit assumption in this reaction is that there are special causes his salespeople could track and eliminate. As displayed, itis impossible to tell which of these figures could, in fact, be credited t0 special causes. His facts were correct, but his use of them (chastising salespeople) had only marginal benefit Another example of typical management practices is when ‘managers concentrate on only the most recent data, although ‘sometimes they might compare them with the previous year's. Figure 4 (which uses the same data as Figure 2) shows the ‘most recent monthly sales figure (indicated by an “‘o"") and the figure resulting from the same calculation a year previ- ously (indicated by an “*x"). Compare this plot with the complete chart in Figure 2. Which is more useful? Which puts the manager in a better Position to plan, predict, and improve? Again the question of whether these approaches are ade Quate arises. The answer, again, is no, Figure 3 represents ‘fe‘ure wo appreciate common ese variation Like the causes produced the data in Figure 2, the causes that produced dlata in Figure 3 are most likely the same forall months. ‘Trying to explain the reason for the exact increase or decrease in the latest point will most likely identify false causes and result in false solutions. Time, energy, and money will be ‘wasted treating the wrong disease, exacerbating the situation instead of improving it—a perfect definition of tampering, Figure 4 shows that managers are seriously handicapped if they cannot see ll the data displayed on a control chact. ‘Managers can make much sounder decisions that will lead to continuous improvement if they plot all the data on control charts and apply statistical theory to interpret what they see. ‘Deming has often said tha the use of statistical control charts should start atthe top, not on the shop floor, to foster an un- derstanding of variation among the leaders of the organiza- tion, to aid them in improvement efforts, and, particularly in the early years of a quality improvement effort, to help them reduce their tendency to tamper. Improvements cannot, really be made until tampering. stops. Appropriate managerial action Charts such as the one in Figure 2 provide the quickest, surest way to determine the appropriate reaction to variation. ‘They enable managers to quickly distinguish common cause variation from special cause variation. Such plots also help managers predict system capability. For example, using the data in Figure 2, it’s clear that unless something changes in the system, sales for this product will almost always fall be- tween $10,000 and $130,000 per month ‘What recourse does a manager have against common cause variation? If the manager is not happy with the range of vari: ation, be or she would have to improve the system as a whole using basic statistical tools and methods, Here's where data like those in Figure 3 are helpful. With such data, you can get a lot of mileage out of a common cause strategy. For instance, you might lump together the gains and losses over a series of months, not just single out the latest ‘month or a month you don’t like. You could look for pat- terns, You could stratify the data by categories: How much ‘business is being lost to each competitor? How much to plant closings? How much to other factors? How much by region? You could also plot the data for each competitor on separate charts to see whether, over time, there were special causes Auatty Press| Doconvee 1980 33Variation, Management, and W. Edwards Deming cont, Within any one competitor, which might be masked if just the ‘aggregate data for all competitors were plotted, (This tactic ‘could, for instance, signal that a competitor was using new promotions or introducing new products that were drawing, ‘away business.) And you could look for other ways to strati- fy and disaggregate the data If the data do signal the appearance of a special cau you should find out what is unique about the particular month and then take action to prevent future problems, Failure to react in such a special cause situation would be inappropriate and costly. ‘Many managers say they are already using the common ‘cause and special cause strategies. That's great, but it will ‘only lead to rapid, continuous improvement if itis done sys- tematically, ifthe focus is always on the appropriate strate- if the manager reacts to the latest figure only when there {sevidence of «special cause, and if employees are not wast- ing their time trying to explain why each month's figures are up or down. An article by Thomas Nolan and Lloyd Provost. provides further background relative to common and special ‘causes of variation.® Through numerous examples, the authors demonstrate the value of appropriate reactions to common and special cause variation. ‘The need for reacting appropriately to variation seems to be relatively easy for managers to accept when the data plot- ted are for widgets or processes, But what happens when knowledge of variation is applied to something much closer to home: the evaluation of employee performance? Varfation and people: “halt below average” Current managerial stratepies used inthis country show a lamentable lack of appreciation for simple math und varia tion. Managers are taught to reward employees who rank highest in groups, work with those employees who perform low average,’” and punish those wo rank lowest An average is simply a number caleaated from data. By virtue of how itis calculated, roughly half the people in any group will perform below average, no matter how smart oF talented they are. Even if you could improve the perform- ance of those people “below average,"" as soon as you gathered new data, you'd find thatthe average had simply 34 aay Prges Decor 1990 bon raised and there are sill people below the new ayy ‘When people are ranked according to performance, will always be highest and someone Will always be 2 ‘These are incontrovertible fact. The issue fof manag is not whether this will happen—itwill—but how to dears this inevitability The red bead experiment, popularized by Deming, ie trates this.” Five workers draw beads from a box witha Ale that as fy holes. The box contains bot red ands beads: white represents good products, and red repress defective products. All workers use the same proceture drawing the beads, withthe five workers alternating dace until each worker has drawn five paddlefus. At the end Gf the demonstration, the two workers who have the largest tal numbers of red beads are fired. Since these workers di nothing different from the workers who were not fice. they are obviously vietims of a game of chance. They were te ones who were “below average,” yet they did nothing o ment being fired. They were merely working within a system of ‘common cause variation. This scenario does occur in real ile and has a demoralizing influence on the entre work fore But people really are different You might be saying, “But people realy are dtfeea,." OF course they are. The point is what to do about i ‘The conceps of variation can help people understand what they should do when itis thei job to guide other employees. Deming say that the manager's job iso learn who, if any- one, performs at a level outside the system of common case vaiaton.* When @ manager finds an individual outside the system—that is, above ot below the “contol limits""—the ‘manager needs to follow a special cane strategy: investigate how this person's case difers from those of others working in the same process or system. IF this employee consistently performs beter than anyone else, pethaps he or she uses different equipment or hs vented more effective procedures. In that case, tis inthe bet interests ofthe company that this person's knowledge andi sight be shared mong all employees performing this asks that every effort be made to improve methods, equipment and so forth Ifthe person consistently performs worse than others, et haps he or she was never propery trained or ha a physic limitation height, vision, hearing, dexterity) tha impairs his or her abiliy to perform this parcular job. In such ca, the manager owes i tothe employee to identify the case of the difficulty and work to eliminate the source ofthe dif ence, if possible 1F no one's performance falls outside the system of com ‘mon cause variation, then the manager neods to work on system to bring everyone to % higher level of performance with reduced variation. The common cause strategy describe éarlie isthe high-yield improvement strategy in such ast ation. Focusing on these who are below average or on tit person withthe lowest performance rating is na effective 4 has serious negative psychological effects, (An example of tow the theory of variation relates 40 the supervision of salespeople canbe found inthe previously mentioned atc by Nolan and Provost)erage, '&, smeone: 's be lowest, ‘management 210 deal with ering, ils: ith a pa Sand wae od represents, recede for rating das she end of ve largest t- workers di ved, they fey were the hing o ment system of st ine ie ‘work fore, 2 different.” out it erstand what ~ employees. who, if any- Vo. ae the limits""—the + investigate vers working than anyone Cor has ine is in the best edge and in- this task and equipment, others, per- 1s a physical ‘impairs his such 2 case, the cause of of the differ- em of com- work on the Variation and kdcking tush I is very hard to get managers to apply common cause and special cause strategies to people. Their experience tells them tose what works: punishment and negative feedback. Praise “an employee for exceptional work this week, and that em- ployee’s performance almost invariably worsens next week. But chastise an employee for poor work, and that employee's performance will probably improve. ‘The key to the puzzle is the fact that employees are usually © functioning in a common cause system. A portion of the data twsed in Figure 2 is reproduced in Figure 5. Let's treat the data as if they represent one employee’s performance over a 12-week period. ‘When Luella performs very well one week, achieving high siles, she’s unlikely to perform better the following week. Infact, it’s likely her sales igure will go down. But if Luella performs badly one week, then she’s likely to perform at a higher level the following week. Thus, as many managers have discovered, giving praise for a good week seems to lead 10 worse results and kicking tush after a bad week seems to lead to better performance. The lesson is “obvious” to those who do not understand variation: kicking tush works better than giving praise! The kick tush approach to managing is just an- ‘other example of destructive behavior nurtured by ignorance | of the theory of variation.’ Learning the basic concepts of variation can prevent a lot of fension between managers and the people they lead and ‘ean ercate opportunities for real improvement. Had Jack and [Sarah the people in te opening story, understood the theory ‘of variation, they could have dispensed with their monthly. praise-or-blame sessions. Instead, Jack could have been help- ing Sarah figure out how to study and improve the systems and processes that affected her work and that of her salespeo- ple. He could have helped her identify special causes and shape hier tactics for tracking them down and preventing their recur- rence, They could have worked on the common cause sys- tem to reduce variation and to bring all Sarah’s salespeople 1 improved levels of performance. Tn short, Jack and Sarah’s working relationship would have changed. Knowledge of the theory of variation alters people’s view of the world forever. It influences practically every as- pect of how companies are managed. That is why variation {sa central theme of Deming’s 14 points. Varlation and Deming's 14 points. ‘Deming maintains that management's job is to optimize the enterprise as a whole, creating. a win-win situation for cus- ‘tomers, shareholders, employees, and suppliers. Think about ‘what this would mean for your company. What would you have to do to make sure customers received high-quality goouls and services all the time, shareholders were saisfed with their return, employees looked forward to coming to work, and suppliers worked closely with your employees to ensure the ‘supplied goods were exactly what was needed? What would it take for you to do all this simultaneously? ‘Thats the challenge that Deming presents. An in-depth un- derstanding of variation is central to your ability to meet this challenge. Point 1. Create constancy of purpose. Having a clear goal ‘everyone can work toward every day, month after month, allows employees to focus on tasks important to the organi- zation and its customers. Changing the goal from time to time to meet managerial goals and quotas create Serious loss. Fore- ing a system © produce predetermined figures to delight executives or shareholders is extremely costly in terms of fu- {ure profits, customer loyalty, and employee morale. Doing 40 represens a fundamental failure to understand that var tion will inevitably be present in any system. Constancy of purpose toward delighting the customer each and every Is far beter. Ie reduces variation because the employees will tot have to constantly shift their priorities. Point 2. Adopt the new philosophy. We are ina new eo- nomic age, says Deming. Higher levels of quality at ower costs are possible if you lean to manage differently. Learn- ing to manage differently involves learning how to improve tems inthe presence of variation. As previously described, 3 diflerently includes reducing variation in mater als, people, processes, and products. Tampering antl over- reacting to variation, which only inetease variation, must end. Point 3. Cease dependence on inspection. Depending on inspection i ike treating symptom while the disease i Kill ing you, The need for inspection results from excessive varia- bility in the process, The disease isthe variability. Ceasing dependence on inspection means you must understand your ‘processes so wel that you can predict the quay of their output from upstream activities and measurements. To accomplish this you must have a thorough understanding of the sources of variation in your processes and then work toward reduc~ ing the variation. Ceasing dependence on inspection forees you to reduce variability Point 4. End purchasing on price tag. Reducing varia~ tion requires that you rethink your purchasing practices. Work- ing with « selected supplier on a long-term basis of loyalty and trust reduces variation in incoming material and henee in the finished product, Involving the supplier inthe collabors- tive design of new products further improves quality and reduces variation. Pint 5. Improve constantly. You must constantly improve your production and service systems by understanding the ‘causes of problems and seeking to reduce variation. Every- ‘one in the company must participate ina disciplined way Us ing the plan-do-check-act cycle. Point 6, Institute training. Some of the most insidious sources of variation are the lack of documentation on the best known methods for performing tasks and the lack of stan- ardized training forall employees working on the same func- tion, The best-known methods quickly dissipate without training and retraining. Variation creeps in. Having the last ‘worker training the next is a pervasive source of variation." ‘Organizations rst take ation to train employees effce- tively and consistently There is variation in how people earn, and training programs must accommodate it. How mc tain ing is needed should be addressed using common and special cause thinking." In the words of Eadie “The King" Feige- ef the famous fast-pitch softall pitcher who struck out more than 100,000 baters in his career, “Practice makes perma- nent, not perfect” Once the practice has reduced the varia- tion tothe point where only common causes are present the effect of the traning hes become “permanent,” and further twat Pramts[Osonoe 80 98Variation, Management, ait Wi Edwards Deming cont. training of the same kind is not likely to be effective. IF the results are not good enough, moving £0 a new job with a fresh start at effective training is usually the best course Point 7, Institute leadership. Managers who ask “Why is that point up? Why is this one down?" are not leaders. Managers who merely find fault with their employees or ‘who punish the lowest-ranking employee without knowledge Of the system increase variability. According to Deming. f leader is someone who, enlightened with an understar ding of variation, helps employees do their jobs better with jess elfort. Such a person works toward diminishing the differences among peaple by learning which employees are within the system and which are not and then acting appro priately. A leader also supports the goal of the company focuses on internal and external customers. funetions. as ‘coach, an nurtures pride of workinianship. In doing these things, a leader provides constancy of purpose and helps reduce variation Point 8. Drive out fear. Companies who have struggled ‘with implementing Deming’s 14 points know that fear is a powerful force that maintains the sstus quo and impedes many {changes that accompany the transformation to x quality and customer driven organization. “Theodore Lowe and Gerald McBean identify six “monsters fof fear" and discuss their consequences.” Rear of reprisal ‘and fear of failure are closely related monsters that result in ‘a please-the-boss mentality and an aversion (0 accepting tisk ‘of generating new ideas. Fear of providing information, which derives from fear of reprisal and fear of failure, leads 10 cot cealing information that could help identity and solve prob- Jems. This monster also encourages the fabrication of Figures to please management nl the accompanying increase in proe ess variation due to tampering. ‘Another of Lowe and McBean’s rnonsters is fear of not knowing. This monster emerges in organizations where managers are expected to control everything inthe fefloms. The waste 0 the organization is incalculable. A manager in this environment gets involved in even the most obscure de- tails of work and ends up losing track of the role his depart ‘lays in the organization—“he has his hands in all the ashirays but doesn't know what the Noor plan is Fear of giving up control lurks in organizations where ‘managements job is viewed as controlling people rather than processes. This fear results in suboptimization. attaining oe Uepartment’s oF group's goals at the expense of others, nd squelehes the work force's intrinsic motivation. The final mon: Ser, fear of change, is an obvious impediment to process i= provement Such fears create an environment where accurate data are nonexistent and where people are too protective of thei jobs to aceuratcly report on problems, failures, or defects, Wil ‘out accurate data, itis impossible to describe or measure var jation and thus impossible to reduce or eliminate it. Fear pparalyzes a work force that could otherwise be actively en- aged in reducing variation. ‘Point 9. Break down barriers between departments. Separate goals and objectives for different departments result jn variation and obstruction rather than cooperation, Reduc~ ing variation for the organization as a whole requires co- “operation across departmental boundaries. An understanding 36 uty Prass/Decomber 1900, ‘optimize the organization as a system, tt for different resus while continuing to-do the sane thing fare dite (0 commion causes. only management Can nak 5 the As shown int the eases diser required chang Tir, the results af slogans and exhortations aimed sa oe only lead to demoralization, tampering. and in ii bility rather than 1 effective change Point 11a). Eliminate work standards (production tas), Work standards are an assertion that there is Title or pho variation in a tusk. They presume, For instance. thatthe time to complete a job or the amount of work that cane done in-an hour is the same for all people undes all citnces, ‘This presumption obviously ignores variation in ow ditions. materials, and methods, Another flagrans ick ot uy derstanding of variation i portrayed in the statement: “You've one it once, that proves you ean do it every’ time.” There wwll always be variation, Some day’ will be better than others, Work standards lead to failure to measure and plan for var iation, which in tuen leads fo missed deadlines. short ship. nents, sandbagging. and poor morale. Production schedules are, of course, necessat sirw ble. Knowledge of the variation in a common caus. system enables managers t0 forecast what can be realistically produced. This can then be translated info workable pro fion schedules. Knowledge of process variation helps managers plan for variation. thus minimizing missed deadlines. short Shipments, sandbagging, and poor moral. Point. il(b). Fliminate- management by «hjectives Management by objectives rewards people aril es | for reaching short-term measurable goals. Mani jectives leads fo suboptimization, one deparunent’s zo be ing reached at the expense of the company as whole. For instance, it is common in many companies that sales sells products that production cannot prextuce. The sles depart fnent therefore reaches its monthly or quarterly goal. (ut the rest of the company (production, customer service, te.) 789% the price in stressed systems, employees who rush yp} she the products. and lash fron unsatisfied cus ‘Some managers fake cenformance to goals. Fa exatle they might store products that exceed this mom's uot thee next month's quota or fl the preduetion quot 2 he expense of product quality. The system also breeds feat atl Frosty, encourages fingee pointing, and limits the wut of possible improvement." Allof these consequences Support mechanisms that stew real variability while often giving the ihsion of i ‘ariability, Tn effect, they destroy mechanisms that might © | Tacs real variability." Management-by-objective ysems | svaed rests without paying Sulieient attention wo He metioes by which they are received. A system that rewards people's clfons toward improvement would have greater value" Instead of pleasing the manager by providing the “eit figures, the focus needs to he on pleasing the custome tnd every day. Ie should not be acceptable wo have &" the-month rushes fo meet quotas or goals.vint 12(a). Remove barriers to pride of workmanship Fenourly workers. Examples of barriers to pride of work Np forthe hourly worker include pressure to use defec- eters in production to meet daily quotas, inspection He ares tha Tack operational definitions, instruments and Frees that donot function properly oF are nt in contro Poor supervision, Worker often have no way of know- neer te jos performed corety, In ation to con- ving othe demoralizaton ofthe work fore, these bares Shute to variability in output Point 12(b). Remove barriers to pride of workmanship urmanageent and engineering. In this point, Desning calls ert abolishment of annual or merit ratings nd manage- er by objectives. A merit ating system “nourishes short- «a ovbriance,amiits long-term planing, bis fx, ‘salts longs wlishes teamwork, nourishes rivalry and polities."""7 Iman Fal wong the sanecommoncaie gece sig ct geile whos nf tape eons ayond their control. Managers should not wet as judges, reing results atthe end of the proces; instead they shoul Tr ess, working upstream with employees to reduce varia- Pity atthe early stages ofthe process, In short, meri rating Systems Support behaviors that increase variation and destroy Sehaviors that reduce variation." | Point 13. Institute a vigorous program af education and F setinprovement: Knowledges needed forte advancemest Stan organization as well as society. Providing information 0" There un others, an for var- Short ship- ca. ally ‘Sis jon vari and ter elements of what Deng alls “De He wre IP vet tsovioige sens hor. theory of wld nd samannges ay ology) i am obvious place 1 start." Bat, 0 have tenefits, education and self-improvement need not be direct- objectives. fare yb. Any, education oF self egarnent ployee’ selfestee and poten- caer Pits const to improvements in existing proseses and vera be.) advances in technolony Beal Pe Poin 14. Put everybody to work to accomplish the trans- sales sells ‘formation. Coordinating the activities of everyone connect: BESS et wath the organization contributes significantly t0 the ve ebtke reduction of variation and the optimization of the entire soc) pos | xem wo proluce mers. The unknown and unknowable cramp, I Doning woes, was Br. Loyd Neton we. yee “svt gear hat hot nora figures or manage ds fear and fare unknown and unknowable. We could add that the most is feat ad TG rant Jen and gin arent eve under sicion 7? ‘The effects of the reward system, the efficacy of the training setinreae ogra, loses tt esl from trpeing, [sss tha o> of reducing: ‘sue from suboptimization, and loss of ‘market share due to eeu OD ersaished costomers all seem to defy quantification. Yet ‘systems Fe fhe are prominently among ‘the most important figures for ke [management ds oole's ‘The best weapons against these losses are embodied in Dem- y + ing's 14 points: providing constancy of purpose, understand Acknowledoments ‘Sue Reynard did her usual outstanding job of improving the com teat and exposition inthis paper. Many people have contributed to the lnowledge presented here, including W. Tdwards Deming, Tho thas W. Nolan, John Dowd, Peter R. Scholtes, Kevin Little, Rob Stirateli, and Harold Haller. References 1. Lynda Fino, Tim Kramer, and Sve Reynaed, Design of periments: Shing Quality Improvement into High Gear (Miaison, WI: Joiner Associates Ine., 1987). 3. Georte Box, Willian: Hunter, and J. Stuart Hoster, Stases for Experimenters (Now York: John Wiley and Sons, 1978). 3. Hitoshi Kume, Statistical Methods of Quality Improvement Tokyo: The Assocation for Overseas Technial Scholarship, 1988). Donald Wheeler and David 8. Chambers, Understanding Staristca! Process Control (Knoxville, TN: Statistical Process Con- trols, Inc, 1986) "5 Continuing Process Control and Process Capability Improve ment (Dearborn, MI: Ford Motor Company, Statistical Methods Of- fice, 1983). “6 Thomas W. Nolan and Lloyd P. Provost, “Understanding Var- jation,"" Quality Progress, May 1990, pp. 75-77. “7 W. Edwards Deming, Out of the Crisis (Cambridge, MA: MIT Press, 1986) pp. 346-353. 8. Ibid, p. 248. 9, Nolan and Provost, “Understanding Variation,” pp: 75-77. 10, Daniel Kabneman and Anyos Tversky, "On the Psychology “of Predichon,” Peychological Review, Vol. 80, 1973, pp. 237-251, 11 Thomas J. Boardman and Eileen C, Boardman, “Don’t Tovch ‘That Funnel!” Quality Progress, December 1990. 12. Deming, Our of the Crisis, Chapter 8. 13, Theodore A. Lowe and Gerald M. MeBean, “Honesty With ‘oat Fear,” Quality Progress, November 1989, 4, Brian L. Joiner and Peter R. Scholtes, Total Quality Leader- ship vs, Management by Results (Madivon, WT: Toiner Associates TInc., 1985). 15, Lowe and MeBean, “Honesty Without Feat 1. Stanley M. Moss, “Appraise Your Performance Appraisal Process,” Quality Progress, November 1989. 17. Deming, Our ofthe Criss, p. 102 18, Ronald D, Moen, “The Performance Appraisal System: Der ing’s Deadly Disease,” Quality Progress, November 1989. 19. Peer R. Scholtes, An Elaboration on Deming’s Teachings on Performance Appraisal (Mison, WE: Joiner Associates Ye. 1987). "20. Moss, “Appraise Your Performance Appraisal Process.” 21. W. Bawards Deming, “Foundation for Management of Quality inthe Western World,” unpublished manuscript, 1990. 22. Wid. Brian L. Joiner is the chief executive officer of Joiner Assoc: ene, in Madison, WI. He received his PRD in statisti from Fryers University in New Brnswick, NJ. Joiner is « member of ASQC. “Marie A. Gaudard is an associate profesor in the Departinont of Mathsmvaties a the University of New Hampshire in Durham, NH. ea eteived her PRD in stastcs from the University of Mas: Srchusetts in Amberst. Gaudard is an ASQC member. ay rents |oooen 000 37