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THE SIX SIGMA BUSINESS SCORECARD
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1. LEADERSHIP AND PROFITABILITY
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Any organization is only as good as its leadership. Leadership requires a strong sense of righteousness, a vision for setting the direction, values to make effective decisions at a personal level, and beliefs that define actions consistent with those values. The main characteristics of a good leader include honesty, knowledge, integrity, and a futuristic outlook. Good leaders look at their businesses as a continuation of their lives, with the purpose of achieving service to society, value to customers, and growth of their employees and themselves. Leaders create the corporate culture based on the business s values and beliefs. True leaders do not ask employees to satisfy customers, deliver excellence, and do more while the leaders themselves ignore quality and excellence, demonstrate a careless attitude about customer needs, and spend a lot of time on the golf course. Such a poor display of care for the company and its customers promotes similar behaviors in employees. Leaders have additional responsibility, commensurate with their compensation, to make the right decisions. The impact of a leader s decision is multiplied by the number of employees in the business and the suppliers. If the leadership, in order to meet end-of-the-month revenue goals, takes one shortcut, the company s employees may likely make similar decisions throughout the month, triggering a downward trend in performance. One good way to check consistency of actions is to examine the ratio of exceptions to standard procedures as well as the level of leadership involvement in daily decisions. Less leadership involvement in daily activities is preferred so that employees can then take an appropriate leadership role in their own areas. Leaders must make decisions at the corporate level and let employees make decisions at the process level. This allows employees to prepare for growth and innovation. Another critical role of leadership is to maintain the financial health of the company. In no uncertain terms, the leadership is supposed to be accountable for the financial success of the company. For as long as businesses have existed, they have
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CHAPTER FOUR
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been using financial measures. As many as 50 of these financial measures can be used in conjunction with the process-level measurements. The financial success of the business correlates directly to its operational excellence. Good operational performance correlates directly to good financial results. Conversely, poor operational measures eventually lead to poor financial results. This relationship is so direct and simple, but it is still overlooked by management, as seen in many decisions on a daily basis. Employees are almost always aware of this managerial oversight. They wonder why the leadership overlooks the facts of what employees see on the floor. Especially in tough financial times, this leads to employees perception of leadership s hypocrisy and lack of commitment to corporate success. Employees believe that one bad leadership decision can have an adverse impact on hundreds of things that the employees do well. Assuming that a company s leaders are well meaning, their seemingly inconsistent decisions can best be viewed as stemming from the absence of information. Any leader s first priority, therefore, must be to get current and accurate information about the state of business in order to make effective decisions. The Six Sigma Business Scorecard contains leadership measurements designed to enhance the role of leadership by providing leaders with subjective as well as objective feedback and to facilitate leaders in making decisions based on facts and experience rather than gut feelings. We commonly read about examples of poor business leadership in the newspapers after all, after-the-fact poor performance is what makes news. Examples of good leadership are more often hidden from the public. Good leaders have to publicize themselves through their actions. In the late 1980s when the guidelines for the Malcolm Baldrige National Quality Award were published, they reflected the behaviors of Robert Galvin, then CEO and chairman of Motorola. Those guidelines included performance expectations in terms of interaction with the community, positive behaviors, and the well-being of corporations.
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