All 3 entries tagged Deming
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October 30, 2013
Reading Deming's The New Economics, (I literally recommend this book to everyone I know!!!) offered an interesting insight into failure and success. When discussing variation in his concept of System of Profound Knowledge, Deming offers a good example. When a student receives their grades, some of the class will be above average, and some of the class will be below average. If you are rated as being below average, I personally (and believe most people would too) feel greatly inferior in comparison to others. What is irrelevant here is how good the average could be. The average could be 95%.
Therefore, understanding this variability is of key importance to an organisation. In order to understand this, Deming argues that data needs to be brought into a state of statistical control. This subsequently allows for future outcomes to be far more predictable. What is more important is to understand whether any variation is a special cause or common cause. A common cause of variation is something that is built into the process. For example, my times when jogging may vary based on how much energy have I already expended in the day, what have I eaten, how recently have I last exercised and my general mood. A special cause of variation is something that is unique and outside the system, such as having to alter my route because a road is closed, thus varying my time.
Therefore, and back in a business context, understanding this variation and drawing knowledge from it is of significant importance to an organisation looking to develop and grow. That's what the System of Profound Knowledge exactly tries to do, it is aimed at making employees within an organisation get an external view of what is going on in the organisation. If you complain that David Cameron is not doing a good job as Prime Minister, would you be able to do a better job by taking over and working harder? No. You would make exactly the same decisions leading to the same outcomes that David Cameron has. It is only new knowledge that guide an individual in a different, (and hopefully) better direction. As Deming states himself, best effort and hardwork only dig deeper in the pit we are in. It is new knowledge that allows us to climb out of this pit.
Therefore in the future, when I apply for jobs and undertake online tests, if I fail and fall below the average, I will not be to aggreived. Why? Because half of the applicants will fall short of the average, because results will always vary. Who knows in the future what I will achieve? I could be by far a better potential worker for an organisation, but lose out of a job because of variability in my performance on online tests. The candidate that beats me could have experienced a common cause of positive variation, whilst a special cause of variation could have caused me to fall far short of my potential.
October 08, 2013
Today's class again brought about some interesting views and topics, one of these was instigated by Paul Roberts. He offered the students in today's class a 'reward'; £1000 for the person with the best PMA for our CBE module, and that the person with the lowest mark would be kicked off the course. This created a heated debate. Interestingly, Paul asked one of the students, Ana, who happened to be sitting next to me, whether she would help me or not if the reward of £1000 was not available. Ana said she would help me, then Paul asked again if she would help if the £1000 reward were on offer, and Ana struggled to decide before saying that she would not help me!!! (She later insisted to me that she would help, even if one million pounds were on offer for the best marks in the class!!!).
Anyway, the point this highlights links to one of Demings arguments over competition within an organisation. I thought it was an interesting tactic used by Paul to highlight this. Collectively as a class, we are encouraged to help one another, as it develops ideas and encourages learning from students, as we pick up points of view that we may not have otherwise considered. However, once a compeitive element is added, in the form of financial reward for the most successful student, this idea of helping one another goes largely out the window, as students want to keep their ideas for themselves, in the hope it will ensure that they come out top of the class.
This in a business enviornment, perhaps in the form of financial bonuses or promotion opportunities, could have an extremely negative impact on a businesses' performance, as individuals or seperate departments within an organisation may fight against each other and not help each other out. This is a contrast to the idea of a Learning Organisation, where knowledge is freely shared between different branches and divisions to help achieve maximum efficiency and productivity. This practical experiment by Paul highlighted the negative impact internal competition can have on a group of people. Furthermore it highlights the importance of one of Deming's points that co-operation is needed rather than compeition, as businesses are already competing against rival organisations!
October 07, 2013
Todays class on Creating Business Excellence certainly resulted in a lively debate on performance related pay! This stemmed from a theory put forward by Deming, and stoutly defended by Paul Roberts, that performance related pay has a negative impact on an organisation. Whist initially, it appeared to many students that this may not be the case i, I would have to argue to the contrary and agree with Deming and Paul's views on this subject.
My argument will simply draw on something everyone can clearly see. In a football team, certain players are rewarded with "goal bonuses" in their contracts, earning thousands of pounds extra if they happen to score a goal for their side. Whilst at a a basic level, this may seem a smart idea by increasing that players motivation to score a goal, it can infact hamper a side. For example, if a side is losing or need to score a goal, a selfish player may try and score when not in the best position to get his goal bonus, rather than pass the ball to a better placed team mate who may be in a much better position to score. This could ultimately result in a goal not being scored, and the team subsequently losing the match that they must quite simply win.
I believe this theory can be applied in a business environment, where workers may become apprehensive about helping out fellow employees as it takes time away from them being able to earn extra money, or may prevent employees within different departments helping each other out, or offering solutions to problems as it would boost a different department's productivity. As Paul mentioned today, I feel offering bonuses on a pro rata basis across the entire business is more beneficial to being given bonuses based on your individual work. This is because it creates a better culture within the organisation, with all individuals being rewarded on a pro rata basis. I believe this would help improve the overall standard of work within an organisaton across all levels, rather than sales staff being self focussed on driving higher numbers, irrespective of whether manufacturing could meet higher sales for example.