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CHAPTER NINE
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Management Performance Review
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Improvement Expectations Rate of Improvement Breakthrough Solutions Direct Value Creation (including Six Sigma projects) Leadership Practices Demonstrated Improvement (Measurable Value Added) Rate of Improvement Breakthrough Solutions Direct Value Created Leadership Practices Areas for Improvement Improvement Goals Not Met Resource Management Growth Plans Leadership Training New Areas of Interests Incentives for Group s Superior Performance Value Action Plans (Including Six Sigma Projects) Plans for Innovation Thought Leadership
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FIGURE 9-5. Management performance evaluation elements.
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in their departments through teamwork, maintain a sense of urgency, and demand value creation. In many companies, management has said, Let s work smarter, not harder. In this competitive environment, however, we must work both smart and hard to the best of our abilities. Being smart without the desire to put that smartness to good use is a waste of valuable corporate resources. In many companies, smartness is used to manipulate the measurement system instead of to achieve greater improvement. Such smart tactics should never be permitted. Managers, therefore, must be expected to deliver results and be assessed for demonstrating results and positive behaviors. Again, the goal of performance evaluations is to strengthen the management process, not to punish weak managers. At the management level, failure is not personal failure is the system s failure, since management personnel have been successful in previous years. In the case of poor performance, questioning a manager s individual integrity, desire, and dedication is counterproductive. Instead, the focus of the effective feedback should be on aligning management goals with the leadership and
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effectively applying management skills to achieve business objectives. Continual improvement at an aggressive rate must be management s mantra, and subconscious actions must communicate management s performance.
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Successful implementation of Six Sigma combines expectations for dramatic improvement with recognition and reward. At Motorola, teams achieving extraordinary improvement and cost reductions shared the savings based on formulas designed to ensure corporate profitability. At General Electric, senior-level executives are expected to perpetuate the Six Sigma philosophy and methodology. For Six Sigma to be effective, the organizational structure must be revised to inspire, stretch goals, encourage innovation, plan dramatic improvement, and achieve significant savings. The leadership and management must ensure savings through effective planning and superior execution. Incentives, such as sharing in any savings realized and personal growth opportunities, must be linked with commitment to corporate strategies, measurement using a Six Sigma Business Scorecard like system, and profitability improvement. The revised organizational structure requires the business to identify opportunities for improvement, develop a sound corporate strategy, and train the necessary human resources, including management. The organization must have a Chief Growth Officer (CGO) to drive growth initiatives, a Scorecard Manager to monitor performance, and Project Managers to realize project benefits. While devising compensation plans for employees to reward them for improvement, there are several things to keep in mind. Most important, the improvement must be real without any manipulation of numbers or opportunities. The improvement and savings must be visible and measurable without any uncertainty. If any doubts about improvement and savings exist, compensation must wait for the next cycle when the real improvement and benefits are realized.
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CHAPTER NINE
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COMMUNICATION WITH THE COMMUNITY
Ensuring continual commitment to the Six Sigma initiative and the Six Sigma Business Scorecard requires setting appropriate expectations within the entire community that a business touches. All customers, stakeholders, employees, and suppliers must understand the company s commitment to the Six Sigma initiative. Businesses must routinely communicate a consistent message to all players, including employees, suppliers, customers, and stakeholders. They may want to regularly report on the status of institutionalization of Six Sigma, success of projects, resultant savings, and alignment with business initiatives. An important aspect of the communication is to ensure that both the leadership and the stakeholders do not focus on the numerical goals of Six Sigma instead of on the institutionalization of the methodology. The institutionalization must include a common understanding of Six Sigma, the leadership s vision, companywide project selection, and personnel growth. In the case of Motorola, the expectation, communicated by the leadership, was that the company had a 5-year plan to implement Six Sigma. As a result, the general perception was that the company would achieve a defect rate of 3.4 parts per million throughout the corporation. This, however, was an impossible task due to changing customer requirements and new products. Even experts predicted that, based on a statistical analysis, achieving a defect rate of 3.4 parts per million was impossible. However, Motorola s plan focused on institutionalizing the Six Sigma methodology throughout the corporation and across the supply chain. This goal was mainly accomplished as planned; however, the journey to achieve a defect rate of 3.4 parts per million continued beyond 1992.
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