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Six-Sigma Hiring
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I keep hearing about Six-Sigma hiring. I guess it was only time before HR started using quality improvement tools. I just hope they are ready to discover that applying Six-Sigma tools to human performance will be like riding a tiger ? and just as dangerous. But first, a few definitions. Definitions TQM (Total Quality Management): There was a time when manufacturers would wait until the product was “ready to ship” before they would check for quality. This was very expensive. Then, about forty years ago, two different management gurus advocated breaking large manufacturing processes into several little ones. They argued that quality would gradually improve if manufacturers could identify and reduce errors at each step of the process. Reducing errors required accurate measurement and statistical analysis. Japanese manufacturers eagerly embraced TQM, and the world watched as Japanese product quality rose from among the worst to among the best. Out of control: A manufacturing process that produces wide differences in product quality. In control: A manufacturing process that has minimal differences in product quality. Variability: The term given to the amount of product quality difference. Six-Sigma: A bell-shaped statistical measure of distribution. “Six-Sigma” is a statistical measure of error. Small Six-Sigma numbers indicate a consistent level of quality (a good thing). Six-Sigma Assumption The whole value proposition of a Six-Sigma HR process is to improve profitability by improving personal productivity. For example, hiring research shows that a company with 100 managers/professionals earning an average of $80K each will lose about $3,484,000 each year from individual productivity differences (100 x $80K x 48% average productivity difference). If that kind of money were being lost in manufacturing, it would warrant immediate corrective action. But reducing Six-Sigma error in individual performance is another matter entirely. Measuring “People Quality” Measuring human performance is harder than measuring widgets. People metrics often include “fuzzy” data like turnover, units, dollars, opinion surveys, integrity, speed, or work accuracy. These measurements are often affected by dozens of unrelated factors such as economic trends, politics, delayed feedback from information systems, etc. The implication for HR is that, unlike weights and measures, human productivity measures are filled with error, making statistical analysis and feedback tricky at best. HR specialists unable to separate artifact from true fact will be unable to measure variability ? a critical part of knowing if your HR process is under control. HR Systems There are four major influences affecting human performance. These are:
Out of Control Hiring Systems Cost a Bundle Factor analysis of job tasks shows that performance tends to cluster into four general areas. These are mental ability, planning skills, interpersonal ability and an area I call “attitudes, interests and motivations” or AIMs. No matter how good the manager, training programs, or environmental factors, performance can never be better than the four skill areas possessed by the employee. An employee’s mental ability affects problem solving, learning, technical knowledge and decision-making. Planning and organizing (although somewhat associated with mental ability) is classified separately because poor organizational ability is often associated with job failure. Interpersonal ability refers to an employee’s ability to get along with team members, a manager’s ability to coach and counsel, a salesperson’s ability to persuade, etc. Finally, all these “can-do” skills require a solid set of AIMs (i.e., “will-dos”) to put them to work effectively. This, most basic, human performance system is usually ignored. But it has significant impact. For example, when job requirements are misunderstood, applicant skills are left unmeasured or overlooked. This leads to wide differences in individual performance. As mentioned in an earlier article, hiring scientists estimate the annual cost of these differences in the millions of dollars (19% of annual salary for unskilled workers, 32% for skilled and semi-skilled workers, and 48% for manager/professionals). Hiring and placement done badly contributes a huge burden to the organization. It should be considered a primary source of Six-Sigma error because it sets the base line for every other system. Management Practices More often than not, direct supervisors are cited as the major cause of employee dissatisfaction; front-line managers are also cited as one of the major reasons for unionization efforts. Yet time after time, organizations promote employees into management positions based on technical or jobholder performance ? and seldom discover why many of them fail! Hiring scientists have estimated the incompetence rate of managers to range from 60 to 70%. They base this estimate on the ability to make good decisions, support subordinates, give clear direction, coach and counsel, acquire resources, possess integrity, and visibly support their team. My own experience shows this number is closer to 90%. Why? Managers are not selected based on management skills. Not withstanding poor management skills, consider the difficulty of making a dull employee smarter, a poor planner an effective planner, an offensive person an interpersonally skilled one, or changing an employee’s AIMs. In should come as no surprise that a manager’s greatest potential for changing subordinate performance resides with squelching it, not improving it. Effective Six-Sigma improvements must address manager quality head-on; unfortunately, as long as promotions are based on the wrong criteria and incompetent managers protected, Six-Sigma improvements won’t have much positive effect among managers. Training and Development Training has limited Six-Sigma impact primarily because of two factors:
Training and development would receive better acceptance if it were more self-aware. Training the “untrainable” and changing the “unchangeable” is fruitless and a colossal waste of money. The fabric of human society is based on consistency and behavioral predictability. Regardless of the claimed impact of training, there is scant evidence that it does more than raise awareness of the subject. Seldom does a bad manager attend a training program and become a good manager, a bad salesperson become a good salesperson, or a dull person become a great decision maker. Training improves skills that are latent or undeveloped, not absent. Training, however, can become more effective if it incorporates the job competencies and applicant expectations identified during the hiring phase. Incorporating job relevancy will migrate training from the classroom to the job. Like management, training has limited impact on Six-Sigma initiatives. A little more, a little less, but it should come as no surprise that training provides little return on investment. Environmental Factors Environmental factors include all the facilitators and inhibitors that impact performance. For example, I was once asked to train managers how to coach and counsel subordinates. Unfortunately, the organization promoted and rewarded both managers and salespeople based on sales. Training was a failure because the environment totally squelched the behavior being trained. It was painful, but one of the most beneficial lessons I ever learned about training and environmental factors. Environmental systems include bonus programs, performance management systems, departmental barriers, compensation programs, performance appraisal programs, etc. As you might have guessed, environmental factors really don’t do much more than interfere with performance. The base skills are set in the hiring phase, training programs have limited effects and managers are most effective at squelching, not improving, performance. Only when all these things are in alignment can Six-Sigma programs discover and control hidden external and internal effects on performance. Conclusion Achieving Six-Sigma HR applications may seem like a topical, leading-edge application, but it will require a Herculean effort to accomplish. The greatest opportunity for improving employee performance is in the hiring phase. After that, manager quality has the next greatest effect (in a negative direction), training usually has limited impact, and environmental factors seldom do more than discourage behavior. But effective Six-Sigma programs must:
As the reader can see, a Six-Sigma program will take a heavy investment in human effort and considerable support from senior management. Alignment of hiring, placement, management, training, performance appraisal, performance management, and environmental systems should be the ultimate HR goal. If unable to implement an entire Six-Sigma quality system, then concentrate where the best return can be obtained ? hiring and internal promotion systems.