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Building and Sustaining Performance Excellence in Organizations

Building and Sustaining Performance Excellence in Organizations
The Competitive Construction Companies
Case Facts
Company A embraced total quality, whereas Company B did
After an initial transition of whitewater turbulence created
by various change initiatives; during which Company A lost
some of its employees because of the quality initiative, a
period of equilibrium and growth ensued.
Company B actually hired the former employees from
Company A and watched as Company A’s employees talked
to customers and spent their off-season conducting
employee training and forming problem and project teams.
Company B began losing good customers to its rival, and
they were replaced with other customers who had strained
credit and multiple grievances
Some of Company B’s finest employees left for Company A
despite promises of higher salaries and future bonuses.
Time was spent advertising for and screening an appropriate
consultant – empowered to lead the program, with the
blessings and support of the owner and president.
The new quality program included training all employees in
the concepts and principles of total quality.
Valuable off-season time was expended, and the new
construction season is drawing near.
Profit opportunities quickly replaced quality meetings,
tempers flared, scapegoating developed, and employees
were left angry and confused.
The initial hope of more involvement with work activities,
better contract with customers, and increased
communications was replaced with frustrations and
 Later, the consultant had difficulty finding volunteers to staff
the quality teams.
 Conscripts were found, and teams resumed their work.
 Team meetings were plagued with personal attacks, finger
pointing, general apathy, and conflict.
 Employees were threatened and sometimes fired before the
whole quality program was shelved.
Statement of the Objectives
Quantitative: To increase market share of the company without
negligence to total quality.
Qualitative: To build and sustain performance excellence in Company
Statement of the Problem
Point of View
How can Company B build and sustain performance excellence in
the organization without mimicking Company A?
The owner/President of Company B
SWOT Analysis
Capacity to hire a consultant
whenever needed
Absence of teamwork and
Inability to adopt the TQ
Create a “learning”
Redesigning the organization to
performance excellence
Presence of competitor
Decreased number of good
Alternative Courses of Action
ACA 1: Create a “learning” organization.
a. Company B will be able to address and resolve the problems.
b. They will develop company teamwork and camaraderie
including leadership on the part of the top management.
a. Plans may not be executed properly.
b. Company B might not get positive results at first.
c. Full cooperation, commitment, and participation by all levels
of management is essential.
Step 1. Planning
Step 2. Execution of Plans
Step 3. Assessment of Progress
Step 4. Revision of plans based on assessment findings
Step 5. Implementation
ACA 2: Redesigning the organization to performance excellence through
total quality management.
a. Company B will be able to improve what they have been done
last season.
b. They will regain lost customers and employees.
c. They will be able to manage the organization effectively, and the
employees can efficiently work and achieve total quality.
a. Change can be accomplished, but it is difficult. This may take
more time.
Step 1. Focus on Processes
Step 2. Recognize Internal Customers
Step 3. Establish “helping” teams.
Step 4. Reduce hierarchy.
Step 5. Use Steering Committees.
ACA 2: Redesigning the organization to performance excellence through
total quality management.
Principles of Six Sigma
The key principles of Six Sigma: What are they and why are they important?
Aim of Six Sigma
Six Sigma is an approach to reduce the defects in the processes of any kind. The
motive of every business is to satisfy the customers and make a profit. These
motives can be addressed by reducing the defects in the process. By reducing the
defects, the business can produce more products and increase profit. By reducing
variation in the process, the business can provide product or service whatever the
customer needs.
Two Methodologies of Six Sigma
Six Sigma uses two methodologies to approach a problem. They are:
1. DMAIC - The DMAIC methodology has 5 phases; Define Measure Analyse,
Improve and Control. It is used to improve the existing process. In this
methodology problem is identified, the impact of the problem is measured and the
root cause of the problem is analyzed. Then the root cause is eliminated in the
existing process and the process is controlled so that it does not go back to the
previous state. This controls the variation in the process.
2. DMADV - This methodology has 5 phases; Define Measure Analyse, Design
and Verify. It is used to design the new process in such a way that no variation is
there. This is called design for six sigma (DFSS). In this methodology problem is
identified, the impact of the problem is measured and the root cause of the
problem is analyzed. Then the system is designed eliminating the identified
problem and verified.
DPMO - Target of every six sigma project
The target of every six sigma project is to achieve a metric of 3.4 defects per
million opportunities. The six sigma methodologies aim to make the system more
sophisticated in such a way that the process will not produce more than 3.4
defects per million opportunities. Target may not be achieved overnight or in a
single project. It takes a series of projects at different levels of businesses, which
involves all the stakeholders of the business.
There are 5 key principles of Six Sigma:
Principles of Six Sigma
1. Focus on Customer Requirements:
The initial phase in Six Sigma process is defining the “quality" from the point of
customers. Every customer defines quality differently. A business needs to
measure quality in a similar way its customers do. By addressing the needs of the
customer business can define the quality to the customer.
2. Use data to identify the variation in the process:
Variations in the process are of two types; Special cause variation and Natural
variation. Special cause variation is caused by external factors. Natural variation
is random variation present in the process. Six Sigma aims to reduce the special
cause variation. To identify the root cause of the variation, understating the
process is necessary. The understanding of the process should be deep and
extensive. Knowledge about the process cannot be gained unless it is studied. To
understand the process clearly, detailed data about the process is important.
To collect detailed data:
Define the goals for data collection clearly
Identification of the data.
Define the reason for the data collection
fine the expected insight
Define the data collection method
Eliminate the error in the data collection by doing Measurement System Analysis
Define the Data collection plan
Data collection in the Six Sigma process includes interviewing with people,
taking observations, and asking questions.
Data collection
Once the data collection is finished, check whether the collected data gives the
required knowledge to meet the objectives which were set up. If not, repeat the
data collection plan and get more information. The process is repeated to find
answers. Identify the potential root causes for the variation in the process and try
to eliminate it with the help of collected data. After identifying the potential root
causes, analyze it. To identify the significant root cause that makes the variation,
use Statistical analysis.
3. Continually improving the process to eliminate the variation:
After identifying root causes, make changes to eliminate variation in the process.
Thus the defects in the process are removed. Additionally, search for ways to
remove steps that do not add value to the customer. This will eliminate waste in
the process. Identify variation and eliminate it. Don't wait for the variation to
show itself. Collect data, talk to people, and study the data to identify variations in
the process. variation may have become the routine because “that's the way we've
always done things.”
4. Involve people from different levels of management and process:
Six Sigma is formed on the foundation of good teams. The good teams comprise
of peoples who take responsibility for the Six Sigma processes. The people on the
team need training in Six Sigma's methods. Forming a cross-functional team with
peoples from different backgrounds will help identify variation.
Cross-functional team
For example, six sigma team from health care project consists of top management
people, doctors, nurses, managers, people from operations and purchasing.
5. Be flexible and thorough:
Six Sigma requires adaptability from various points of view. The business’s
management system needs to acknowledge positive changes. People should be
motivated to accept the changes in the system to eliminate the variation. To
motivate the employee, the benefits of the six sigma system should be made clear
to all levels of employees. This will make the changes easily acceptable.
Six Sigma also requires reducing variation to be thorough. So understand all the
aspects of a process—the steps, stakeholders, and methods involved. This will
help to ensure that any new or updated process works.
The importance of Six Sigma Principles:
Six Sigma is such a popular approach for process management as it forms a way
through which one can improve their processes. It is centrally a customer and
product-driven approach. The main purpose of this approach is to avoid waste and
delivering the product by meeting all the requirements of the customer thereby
increasing customer satisfaction. To accurately analyze the process, Six Sigma
requires precise data. The below goals also known as business success facts can
be achieved by implementing Six Sigma in a company.Increased Productivity
Increased Quality
Reduced Operation Cost
High Customer Satisfaction
Improved Employee Morale
Efficient Work environment