Six Sigma: Performance Management System Redesign (DMADV)

AUTHORS: SRUJIT BIRADAWADA, LAWRENCE OSEI

Executive Summary:

  • Performance management is a process by which managers and employees work together to plan, monitor and review an employee’s work objectives and overall contribution to the organization. 
  • Performance management is more than just an annual performance review, it is the continuous process of setting objectives, assessing progress and providing on-going coaching and feedback to ensure that employees are meeting their objectives and career goals

An effective performance management system should :

  • Be job specific, covering a broad range of jobs in the organization 
  • Align with your organization’s strategic direction and culture 
  • Be practical and easy to understand and use 
  • Provide an accurate picture of each employee’s performance 
  • Include a collaborative process for setting goals and reviewing performance based on two-way communication between the employee and manager 
  • Monitor and measure results (what) and behaviors (how) 
  • Include both positive feedback for a job well done and constructive feedback when improvement is needed 
  • Provide training and development opportunities for improving performance 
  • Ensure that employee work plans support the strategic direction of the organization 
  • Establish clear communication between managers and employees about what they are expected to accomplish 

Performance Management Cycle:

http://hrcouncil.ca/images/performance-management-phase-overview.gif

Prologue to Case Study: 

  • To encourage the improvement of its employees and better react to the changing business environment, one bureau of an extensive monetary administrations organization chose to redo its current performance management system through a Six Sigma venture. 
  • A preproject investigation uncovered that a complete overhaul of the system was needed. 
  • This case study covers a couple of significant parts of the project, which could promptly be connected in comparative circumstances crosswise over different commercial ventures and business situations. 
  • The project team took after the Design for Six Sigma (DFSS) DMADV (Define, Measure, Analyze, Design, Verify) guide, consolidating best practices from Six Sigma, project management and information technology (IT) service management

Define phase:

  • The team created a goal statement to implement a comprehensive, well-aligned consistent performance management system for Department A.
  • The group took a gander at the current execution administration framework and had the accompanying 

Noticeable Attributes: 

  1. The system upheld all product offerings of Department A, covering more than 200 representatives. 
  2. The organization had utilitarian storehouses, and worker objectives were dead set inside the office. 
  3. Individual execution was looked at against the situated target. 

Measure stage: 

As some piece of the Measure period of the undertaking, the group examined the current execution administration framework by talking key partners, colleagues and recognized what the organization needed from such a framework. 

Specifically, the improvement team concentrated on the ID of: 

  • Most useful features of the current system 
  • Not-so-useful features 
  • Missing features (i.e., needed improvements)

At the point when talking with supervisors, colleagues asked the accompanying inquiries: 

  • How can this system help you in coaching, performance appraisal and decision making? 
  • What information do you want to receive in order to develop and maintain employee and service performance?  

The group further needed to consider these components for the performance management system:

  • Frequency: How frequently ought to measurements be overhauled? 
  • Availability: At what time ought to the performance management system ought to be accessible?
  • Security: Who ought to have the capacity to see what data? 
  • Continuity: Is it a business-critical application? What needs to happen amid/after a disaster? 
  • Capacity: what number clients need to be bolstered? What amount of information needs to be stored? 

Analyze phase: 

  • Based on the data assembled amid the Measure stage, the group recognized the key issues of the current framework and inferred key prerequisites for the new system as a yield of the Analyze stage (table underneath). 
  • Deriving the Key Requirements of a New Performance Management System 
Problem with Existing System Key Requirement for New System 
Directors had the capacity impact the targets vigorously and were setting up permissive targets. Subsequently, considerable measures of representatives were evaluated superior workers while the business was not profiting similarly.• Head of division to set product offering targets. These targets ought to be utilized to think about move up level metric qualities to focus each unit’s execution. • Current accomplished execution levels at unit and division level ought to be utilized to determine the future execution targets. 
Execution measurements and evaluations crosswise over product offerings were not standardized, in this manner making it exceptionally hard to decipher and move up measurements from individual worker to office level.Standardize performance management process, metrics and ratings to enable quick understanding of process, roll-up of metrics and comparison of employees across product lines. 
Performance metrics were accessible just toward the end of the month, making it troublesome for administrators and individual partners to make remedial move proactively.System should be refreshed daily to provide up-to-date information. 
Productivity was weighted much higher than quality. The focus on productivity came at the expense of quality. Level with significance to be given to profitability and quality. Division head ought to additionally have a component to change relative significance as per business need.
People inside every product offering were analyzed against one another, regardless of the fact that performing distinctive undertakings. This correlation was not standardized, making whole framework one-sided toward a few sorts of undertakings.Set up peer groups to enable fair comparison. Together with standardized performance metrics and ratings, this should enable comparison across the board. 
Individual employees did not have access to their own performance metrics, thus hindering self-directed performance improvements. Each employee should have access to their own performance metrics and should have away to compare it against the baseline and against the peer group. 
Month-over-month metric trends were not available. Creating such a trend report required a lot of manual effort. Month-over-month metrics values and trends should be automatically generated. Also, provide a facility to select the reporting period. 

Design phase:

  • Before the choice was made to move from an altered fixed-target-based system to one based with respect to an dynamic target, there was much consideration on that question. A portion of the conspicuous focuses that exited those exchanges would be of enthusiasm to all professionals: 
Fixed-Target SystemDynamic-Target System
Gives unmistakable focuses to employeesMakes it hard to focus the target
Does not oblige complex computations and makes it simple for individual representatives to focus their own rating exclusively in view they could call their own performanceLeaves workers with some mystery until the last execution targets are determined and declared. 
Susceptible to violations, Targets could be set with the goal that they are either excessively strict or too lenientFills this crevice, self-remedial in nature, and adjusts itself as per business and representative execution
For example: if there were insufficient work to attain to profitability targets, representatives would not have enough chance to meet the targets and would be appraised ” below target.”Accommodate such vacillations and is along these lines a more vigorous framework.
  • Setting the average performance as a baseline reduces this vulnerability, making the framework more strong 
  • Identification of choices 
  • Comparison of choices 
  • Selection of the most practical option 
  • Creation of an execution arrangement 
  • Implementation of the arrangement 
  • Equipped with data from partners and the determined prerequisites for another execution administration framework, the group advanced with an answer taking after these five stages: 
  • Those steps were considered from both an functional and an IT perspective.  

Verify phase:

As a major aspect of procedure control, a method for automated data validation and verification was employed. This system aide demonstrates any out-of-request information point to line supervisors and the division executive. 

Around 12 months after execution, the framework has been performing to desires. An assessment to either keep up business as usual or to enhance the framework further would be made as a component of the vital arranging session for the accompanying year. 

RECOMMENDATION

The new system should incorporate 

1.Employees training and development plan

2. Continuous coaching

3. Feedback

CRITICAL REVIEW

LINK TO STRATEGIC IMPERATIVES

The strategic imperative of this case is HIGH. The look into the future problems and solving them ahead is the key principle of an organization success. Each step the organization took for the future problems made the company to step into the success of project. The way the industry kept the confidentiality, security made us think that it has got the Link to Strategic Imperatives Criteria. The project has a very great impact on the key metrics for the organization. It is very important to maintain the grip over strategic drivers of business as it ensures that leadership remains engaged during the long run improvements. 

APPLICATION OF SIX SIGMA TOOLS 

There were no tools used for this application and so I would rate it LOW. Even though not a single tool is used a deep analysis was conducted to recognize the root causes of issues. 

ACTIVE SPONSOR ENGAGEMENT 

I will rank it HIGH because there is active sponsor engagement in this project to guide the project to the right direction to achieve major business goals. They have identified the issues earlier and stepping towards solving the problem. the active sponsor engagement was very high because top level management people in the company always doing some background work and provide the sponsorship to the six sigma project team to solve the roadblocks those are faced by team. In each and every stage of this six-sigma case study, a top-level management support is necessary to reach the desired goals at the end of the project completion. Here initially project team give some specifications related to improving the company brand value and growth to the top level staffing.  There is industry data that progress report need to be compared. This will serve as checks and balances for the team. The sponsor engagement was really very good as the business results were clear and that tell how actively the sponsor has engaged in the project.

TEAM ACTIVELY ENGAGED 

I will rank it HIGH.  Team members are proud of being part of the team and they see themselves as part of the team. The team has a clear understanding of the overall goal of the process. There has to be team participation for the successful project we can see that the team is maintaining a better understanding and each one playing their role effectively and actively. Most number of the decisions taken by the leader of the team because he is the leader of the team

BROAD ORGANIZATIONAL AWARENESS OF THE PROJECT

The entire organization is aware of the project and they are all involved in the six-sigma project. Every member of the organization is aware of the project and has a clear understanding of how it will impact their area of responsibility and plays an active role in communicating the project. I will rank it HIGH. Team leader developed an active communication plan.

PROJECT DELIVERED ANTICIPATED RESULTS

The project delivered the anticipated results. Everybody in the project is aware of the project changes, results and outcome. I will rank it HIGH, because the project delivered the anticipated results. 

PROJECT COMPLETED ON TIME

The project was completed within 12 months since there is no fixed target time I will rank it MEDIUM. Completing the project within the specified time period indicates a sign of success. If a target has to be reached successfully there should be a time period to be set. Finishing a project within the time period is a signal for the starting of success. Short project duration boosts the morale of the team members and long duration projects make team members lose focus. 

SUCCESSFUL TRANSITION OF OWNERSHIP TO PROCESS OWNER

I will rank it LOW. A process owner has not been identified. 

IMPROVEMENT SUSTAINED OVER TIME

This is HIGH because the improvements attained has sustained over the period of time. The results have been sustained and showed that changes have been adopted by the organization. The performance during the process is far much better as compared to the project start date .The team has embraced the changes and the manager was efficient in managing the time and team efficiently. 

REPLICATION OF RESULTS

I will rank it HIGH. The team has developed a thorough plan to show how the improvement would be duplicated. Changed management has been put in place for successful continuation.

IMPROVEMENT

A project never gets finished it just takes another stage in a cycle called Improvement. It moves from one stage to another stage in a cycle. It enters into the stage called Improvement where changes are made to the plan and implemented again for better results. Improving the measurement system allows a Six Sigma team to focus on the right issue, increase its chances of project success or simply provide day-to-day operations with a tool that helps them in continuous improvement effort. What is measured gets done. Ensuring quality, efficiency and profitability in perioperative services requires a comprehensive approach and the right set of tools. Given current competitive pressures, hospitals must address inefficiencies at their source in order to optimize quality, throughput and the bottom line. The department of perioperative services must understand the linkages with the rest of the facility, and how to align its goals with organizational objectives. When processes can be tightened and delays avoided, the hospital achieves multiple and measurable benefits. Aiming for Six Sigma performance levels can help to improve cost and quality, maximize staff time and resource utilization, and raise satisfaction for both physicians and patients.