GP's Operational Excellence Practice

Since our acquisition in 1998 by General Physics Corporation (GP), we have retained our Deltapoint name because of its strong reputation as an early leader in TQM, TPM, and Toyota Production Systems in North America. In order to align more closely with GP's other performance improvement solutions, we will now be known as GP's Operational Excellence Practice.

Today, we provide consultation, knowledge transfer, and hands-on implementation in the following disciplines:

• Lean Plant Floor Systems
• Lean Six Sigma
• Reliability Excellence
• Supplier Development

When you work with us, you can expect to realize rapid return on your investment through improved quality, shortened lead time, lowered costs, and increased revenue. While many consultants offer similar words, you can expect real action from us. Using our robust approach, we energize your organization's performance with hands-on involvement from our seasoned team, and help you develop a culture of waste elimination, variability reduction, and innovation that will endure as your organization continues to grow.

We hope that this issue of QUICK, like the others that have come before, helps you keep up to date in the latest advances in operational excellence. Please take a moment to check out our new web pages at www.gpworldwide.com/operationalexcellence to learn more about our services and products. Please contact me if you are interested in having our team help you continuously improve. You can reach me at 206-484-0816 or mbresko@gpworldwide.com.

Respectfully,
Mike Bresko
Managing Director and Principal Consultant
General Physics Corporation

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"Why Standard Work is Not Standard: Training Within Industry Provides an Answer"

Jim Hunzinger

Target

Fourth Issue 2006, pp. 7-13 (available online at www.ame.org)

Training Within Industry (TWI) had its first heyday in the US during World War II, when it was crucial to quickly train inexperienced employees in skilled industrial jobs. Training was delivered in standard and repeatable form as a train-the-trainer program. There are three "J-Programs":

• Job Instruction (JI)—This program trained instructors how to make work easy to understand. The instructor prepares the operator to learn, demonstrates the steps and key points of the job, observes trial runs, and then tapers off coaching while continuing to follow up.
• Job Methods (JM)—Job Methods taught supervisors how to break down jobs into their constituent operations, questioning details and developing new methods by eliminating, combining, rearranging, and simplifying these details.
• Job Relations (JR)—The basic principles of this program included providing constructive feedback, giving credit when due, telling people in advance about changes that will affect them, making the best use of each person's ability, and earning the employee's loyalty and cooperation.

After the War, TWI faded in the US, but was introduced into Japan along with quality methods. Toyota realized that the TWI programs stabilized and standardized work, thereby greatly aiding process improvement efforts. TWI became part of the Plan-Do-Check-Act cycle.

TWI has been an overlooked element of Toyota's success. In North America, a handful of companies are now re-pioneering TWI. One of the first was ESCO Turbine Technologies in Chittenango, New York. Some of the results they attribute to TWI are a 76% drop in re-work, a 96% drop in assembly defects, and a 75% drop in training time.

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"Designing Organizations That Are Built to Change"

Christopher Worley and Edward Lawler

MIT Sloan Management Review

Fall 2006, pp. 19-23

In a world where change has become "business as usual", most organizations are still designed with a stable structure that is based on finding a single sustainable competitive advantage. The authors argue that if organizations want to become "built to change", they must rethink many of their design assumptions:

• Managing talent—Built-to-change organizations hire people who like to change and are quick learners. They hire the person more than hire to the job. The employment contract states that change is expected and support for change is crucial for long-term employment. Training is an ongoing process based on building needed competencies.
• Reward system—Built-to-change organizations avoid seniority-based rewards. Performance bonuses, person-based pay, and broad-based employee stock ownership plans are all used.
• Organization structure—The key design principle is to connect as many employees as possible with customers and the external environment. Some of the structures to do this are cross-functional teams, network structures, multiple independent business units, outsourcing and matrix organizations.
• Information and decision processes—The authors state "there is no reason why the setting of spending patterns should be based on the time it takes for the earth to revolve around the sun." Profit-centers and activity-based costing are often used. Performance-based information systems facilitate moving decision making to wherever decisions can best be made and implemented;
• Leaders—Shared leadership is practiced. This spreads knowledge and power to speed decision-making. A large cadre of leaders is developed. Multiple leaders are in place at all levels to take advantage of opportunities. Leadership development takes on great importance in these organizations.

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"Benchmarking for Functional HR Metrics"

HR Focus

November 2006, pp. 1, 13-15

The Saratoga Institute has compiled a set of leading metrics for the assessment of HR departments. Data has been collected from a number of companies that use these metrics, and the article includes benchmark numbers for the 25th, 50th, and 75th percentiles on each metrics. The following is a summary of the metrics, showing the 50th percentile score.

Metric	Formula	50th Percentile Score
HR headcount ratio	Regular Headcount/Direct HR Headcount	93
HR headcount investment factor	Direct HR Costs/Regular headcount	$1,409
HR revenue %	Direct HR Costs/Revenue	0.46%
HR expense %	Direct HR Costs/Operating expense	0.56
HR leadership & strategy FTE	HR Leadership & Strategy FTE/Direct HR FTE	6.8
Benefits FTE %	Benefits FTE/Direct HR FTE	10.5
Compensation FTE %	Compensation FTE/Direct HR FTE	6.7
Recruiting & staffing FTE%	Recruiting & Staffing FTE/Direct HR FTE	19.8
HR talent management FTE%	HR talent management FTE/Direct HR FTE	3.1
Employee & labor relations FTE %	Employee & labor relations FTE/Direct HR FTE	8.1
Workforce mobility services FTE %	Workforce Mobility Services FTE/ Direct HR FTE	0.7
HRIT FTE %	HRIT FTE/Direct HR FTE	6.3
Vendor management FTE %	Vendor management FTE/Direct HR FTE	0.0
Employee records & administration FTE %	Employee records & administration FTE/Direct HR FTE	8.1
Communications FTE	Communications FTE/Direct HR FTE	1.0
HR customer service center FTE	HR customer service center/Direct HR FTE	6.2
Business partners FTE	Business Partners FTE/Direct HR FTE	3.7
HR generalist FTE	HR generalist FTE/Direct HR FTE	20.4

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"Is Six Sigma Beneficial for Midsize Companies?"

Kathy Williams

Strategic Finance

November 2006, pp. 23-24

A recent report by the Aberdeen Group titled "Lean Six Sigma Benchmark Report" has found that "midsized" companies (defined as companies having revenues under $1 billion) save approximately 50 percent more ($1,281,000 vs. $825,000) per Six Sigma project than do larger companies. Midsize companies also saw an increase in Earnings Before Interest, Tax, and Amortization (EBITA) of 15 percent and an 18 percent increase in revenue.

The companies that follow the rigors of Six Sigma achieved better results. These are the companies that:

• Have formal Six Sigma programs in place
• Have adopted the DMAIC model
• Require Black Belts to have completed two projects or one project with savings in excess of an established amount
• Require Six Sigma project results to be validated by the finance area
• Have produced real financial savings

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"Enhancing the Benefits and Overcoming the Pitfalls of Goal Setting"

Gary Latham and Edwin Locke

Organizational Dynamics

2006, Vol. 35, no. 4, pp. 332-340

The authors of this article are probably the world's best-known experts on the use of goal setting as a motivational and performance-enhancing tool. This is their best statement thus far on the use of goal setting in organizational situations.

In summarizing what is known from their research, they state "...if a person has the adequate knowledge and skill, there is a linear relationship between the degree of goal difficulty to which a person is committed to attaining and that person's subsequent job performance. High goals lead to greater effort, focus and persistence than moderately difficult or easy goals...Yet a second core aspect of our theory of goal setting is that goals that are specific and difficult lead to a higher level of performance than a vague goal or no goal at all."

The motivational mechanisms by which goal setting works include:

• Goals give direction to our efforts, and affect our plans of action
• Goals increase our efforts and prolong persistence
• Goals help us search for new strategies to attain the goals
• The goals help us see if we are on track in our performance, and lead us to make new, more effective adjustments
• Goals can provide more meaning to tasks
• Goal attainment provides a motivating sense of accomplishment.

Before rushing out to implement a goal setting approach to motivation, the authors caution about a number of potential problems that must be considered:

• When people do not have the appropriate knowledge or skill to achieve a goal, setting difficult goals can lead to poorer performance
• Individual performance goals can have a negative effect on group performance if there is conflict among group members
• Goal setting may be viewed as a threat rather than as a challenge (so it must be framed positively)
• Goals may have a bad effect on risk-taking if failure to achieve the goals is punished
• Past success in goal attainment may lead to dysfunctional usage of old strategies when the business environment changes
• People may overstate their actual performance related to goals if money is tied to the goals
• If goals are too closely tied to one's identity, this may lead to irrational strategies that disregard possible consequences or costs
• Performance dimensions not related to the goals may be ignored
• Challenging goals may increase an employee's stress level
• As performance gets higher, it may become progressively harder to attain new, more challenging goals

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SDCA OK with TWI's JI

John McNeil, GP
 

As Hunzinger points out, Training Within Industry is closely linked to successful implementation of the PDCA cycle. PDCA is of course also known as the Deming Cycle, the Shewhart cycle, or the Deming Wheel and is an iterative four-step quality control strategy that can be wrapped around or mapped to the 6-sigma DMAIC cycle, our 9-step QIS cycle or shorter failure treatment cycles. PDCA was made popular by Dr. W. Edwards Deming; however it was always referred to by him as the "Shewhart cycle." Later in Deming's career, he modified PDCA to "Plan, Do, Study, Act" (PDSA) so as to better describe his recommendation to consider the long-lasting and sustainable results of Doing, rather than conducting a short check.

Indeed, the sustaining of the results from PDCA remains a critical challenge for any organization attempting to improve its operational effectiveness. That is why we refer to a second interlinked cycle: SDCA (or SDSA in homage to Deming). SDCA stands for Standardize, Do, Check, Act and it refers to the reinforcement and standardization of the processes necessary to deliver stable levels of the specified results. We use a diagram to illustrate this cycle:

Once Standard Work has been developed or specified (often by means of the PDSA cycle), it must be followed without fail to produce stable results. To do that, understanding of the necessary activities is taught by using TWI's Job Instruction. As a result of the unprecedented, extensive study of new workers entering the workplaces of the second World War, the originators of TWI found that specific preparation steps and specific teaching steps provided the best overall job instruction. As simple as these steps seem, our own experience shows that they are seldom followed in untutored practice and that they must be drilled and learned themselves, just as the job steps must be.

Preparation

The specific preparation steps are:

• Make a timetable—Who is to be trained in what and when
• Break down the job
  • Select only the Important Steps that advance the work
  • Emphasize and standardize Key Points
    • Those that make or break, that are vitally important, and have been shown to fail in practice
    • Those that do or can injure workers
    • Those that can be performed more easily
• Get everything ready—Equipment, tools, materials
• Arrange the worksite—Neat, actual working conditions

Conduct the Training

• Prepare the workers
  • Put them at ease
  • State the job
  • Find out what they already know
  • Get them interested in learning the job
  • Place them in the correct position
• Present the operation
  • Tell, show, and illustrate one Important Step at a time
  • Do it again, stressing Key Points

Instruct clearly, completely and patiently, but don't give them more information than they can master at one time.

Try Out Performance

• Have them do the job. Correct errors.
• Have them explain each Important Step to you as they do the job again
• Have them explain each Key Point to you as they do the job again

Make sure they understand. Continue until you know they know.

Follow Up

• Put them on their own
• Designate whom they go to for help
• Check on them frequently
• Encourage questions
• Taper off extra coaching and close follow-up over time

Follow these steps and you will have conducted complete and effective job instruction. Effective job instruction, coupled with effective treatment of the inevitable failures in standard work (both in execution and in results) embodies the true standardization of work. Thus the job instruction component of training within industry is a central component of effective standardization leading to key-process stability. Indeed SDCA can really only be OK with TWI's JI.

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