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Six Sigma What It is

How It Affects Human Resources

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What is Six Sigma ?

• Measure of how well a process is performing

- Six Sigma process produces 3.4 defects per

million opportunities

- Most companies are at 3-4 sigma level

• Philosophy of reducing defects so we can improve customer satisfaction and reduce costs

• Business Strategy that increases process performance resulting in enhanced customer satisfaction and improved bottom line ($$).

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What is Six Sigma?

• Improvement

• Breakthrough

• Systematic, Focused Approach

• Right Projects - Linked to Business Goals

• Right People

- Selected & Trained

• Project Management

- Management Reviews

• Sustaining Gains

- Identify New Projects

• Right Results

- Process & Financial($$)

• Process Thinking

• Process Variation

• Facts, Figures, Data

• Define, Measure, Analyze, Improve, Control

• 8 Key Tools - Linked and Sequenced

• Statistical Tools

• Minitab

• Critical Few Variables

INITIATIVE METHODS & TOOLS

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ROLES OF LEADERS

Management Team

ProjectChampion

Master Black Belt

GreenBelt

Black Beltand

Team

Functional GroupsHR, Finance, ITEngg, QA, etc.

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Six Sigma Improvement Strategy

• Phase 0: Process Definition

• Phase I: Process Measurement

• Phase II: Process Analysis

• Phase III: Process Improvement

• Phase IV: Process Control

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8 Key Six Sigma Tools

• Maps and Metrics

• Cause and Effect Matrix

• Gage R&R Study

• Capability Analysis

• Failure Mode and Effects Analysis

• Multi-Vari Analysis

• Design of Experiments

• Control Plans including Statistical Process Control

Advanced tools are used as needed to speed up improvement

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Some Manufacturing Black Belt Projects

• Increase process yield $300k

• Increase process capacity $400k

• Increase dryer throughput $130k

• Reduce process downtime and scrap $320k

• Reduce caustic use of Process Z $2000k

• Material loss: Reduce scrap & increase yield $150k

• Reduce wet milling operations costs $300k

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Topics of Non-Manufacturing Projects

• Billing 

• Energy Reduction 

• Engineering 

• Environmental

• Finance & Accounting 

• Human Resources

• Information Technology

• Internal Audits

• Inventory Reduction

• Legal

• Logistics - Transportation

• Customer Service

• Maintenance

• Planning and Scheduling

• Product Design

• Purchasing

• QC Lab

• Safety 

• Sales

• Shipping

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Projects in Human Resources

• Reduce cycle time on hiring process

• Increase “hit rate” on job applicants

• Employee turnover reduction

• Overtime reduction

• Reducing staffing shortages

• Cycle Time Reduction for Long-Term Disability Application Process

Long Term Disability Application Process

Site Determines Condition Prevents Employee from

Returning to Work

IndependentMedical

Evaluation

EmployeeSite

Medical

SiteHuman

Resources

MedicalAuthorization

Medical Evaluation Report

MedicalAuthorization

Case Determination Letter

Enter Total & Permanent Code

Benefits Supplier Review Process

Approval / DenialEmployee Requests

Site to Initiate an Application

Alternative

SupportingMedical Info

Transferrable Skills Analysis & Labor Market Survey

Weekly Disability Claim Notification

Process

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Improvements

• Supplier Processes

- Renegotiate sub-contractors’ terms

- New case management reporting

- Review of case turn-around time performance

• Dupont Processes

- Greater use of email and intranet

- Case tracking and reporting database added

- Use of performance metrics at SBU and sites

- Ongoing communication, training and education

Benefits

• Average Cycle Time reduced 50-70%

• Process performance now meeting customer requirements of decisions in <45 days.

• Hard savings of $192,000. - Reduction in extended short-term disability payments.

- 70% reduction in Independent Medical Evaluation fees paid to Supplier.

- Reduction of ongoing administrative fee paid to Supplier.

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Recognition and Reward for

Six Sigma

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Recognition Vehicles - Company T

• Written feedback via e-mail

• Written feedback via recognition board

• Verbal feedback via - Voice mail

- One-on-one

- Shift meetings

• Company totems

• Gift certificates/luncheons/coffee/donuts

• Annual recognition program

• Quiz money

• Performance evaluation

• Customer trips

• Career plans

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Recognition and Reward at General Electric

“As with every initiative, we backed Six Sigma up with our rewards system”

Jack Welch, CEO

• 40% of annual bonus related to Six Sigma activities

• Stock option grants for Black Belts

• Green Belt certification required for promotion

“With Six Sigma permeating much of what we do, it will be unthinkable to hire, promote or tolerate those who cannot, or will not, commit to this way of work”

Jack Welch, CEO

General ElectricUSATODAY 2/27/98

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Black Belt Compensation at Company Z

• Base Pay

- Potential increase at time of selection

- Retain current salary grade

- Common job code for full-time participants

- Normal group performance review and merit pay

• Incentive Compensation

- Special plan for Black Belts

- Target award at 15% of base pay

- Performance rating on 0 - 150% of scale

- Measured against key project objectives

- Participation ends at end of Black Belt assignment

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Six Sigma Recognition Program

Company K

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Black Belt Recognition

• Selection - Six Sigma Pin

• Certification - $5,000 Certification Bonus

- Six Sigma Diploma/Plaque

• Project Completion Bonus Awards - $500 to $5,000 in cash or stock options available

> Granted by Project Champion

> Approved by Six Sigma Recognition Committee

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Black Belt Recognition (cont.)

• Six Sigma Spirit Awards

- Made by Project Champion

- Recognizes and rewards efforts and achievements during projects with individual and team awards

> theater/movie tickets,dinners, t-shirts, spot cash bonuses, etc.

• Six Sigma Success Plaque - Awarded at completion of first project

> Engraved placard for project

> Plaque designed to add multiple projects as completed

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Company K - Recognition Program(Cont’d)

• Green Belt Recognition- Similar to Black Belt recognition - No certification bonus

• Project Team Member Recognition- Similar to BB and GB Recognition- No certification awards

• Annual Six Sigma Recognition event- Presentation of key projects- Dinner reception with senior leadership

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Summary• Six Sigma

- It is different - It works if you follow the process- Produces significant bottom line results

• Change is required by all persons who get involved with the initiative

• Six Sigma will last as long as it produces bottom line results ($$)

SHOW ME THE MONEY($$)

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Show Me The Money ($$)

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References

Blakleslee, J. A., Jr. (1999) “Implementing the Six Sigma Solution”, Quality Progress, July 1999, 77-85.

Breyfogle, Forest W. III (1999) Implementing Six Sigma – Smarter Solutions Using Statistical Methods, Wiley-Interscience, John Wiley and Sons, New York, NY.

Breyfogle, Forrest W., Cupello, J. M., and Meadows, B. (2001) Managing Six Sigma, John Wiley and Sons, New York, NY.

Eckes, G. (2001) Six Sigma Revolution, John Wiley and Sons, New York, NY

Hahn, Gerald, J., Hill, William J., Hoerl, Roger W., and Zinkgraf, Stephen A. (1999) "The Impact of Six Sigma Improvement--A Glimpse into The Future of Statistics" The American Statistician, August 1999.

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ReferencesHarry, Mikel J. (1998) “Six Sigma: A Breakthrough Strategy for

Profitability”, Quality Progress, May 1998, 60-64.Harry, Mikel and Schreoder, Richard (2000) Six Sigma – The

Breakthroygh Management Strategy Revolutionizing the World’s Top Corporations, Currency Doubleday, NY, NY

Hoerl, R. W. (1998) “Six Sigma and the Future of the Quality Profession”, Quality Progress, June 1998, 35-42.

Hoerl, R. W. and Snee, R. D. (2002) Statistical Thinking - Improving Business Performance, Duxbury Press, Pacific Grove, CA

Maguire, Miles (1999) “Cowboy Quality – Mikel Harry’s Riding Tall in the Saddle as Six Sigma Makes its Mark.” Quality Progress, October 1999, 27-34.

Pande, P., Neuman, R., and Cavanuagh (2000) The Six Sigma Way, McGraw-Hill, New York, NY.

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ReferencesPyzdek, T. (1999) The Complete Guide to Six Sigma, Quality

Publishing, Tucson, AZPyzdek, T. (2000) The Six Sigma Handbook, McGraw-Hill, New York,

NYQuality Engineering (2000) Volume 12, No. 3. Five articles on Six

Sigma.Snee, R. D. (1999) “Statisticians Must Develop Data-Based

Management Systems as Well as Create Measurement Systems.” International Statistical Review, 67, No.2, August 1999, 139-144.

Snee, R.D. (1999) “Why Should Statisticians Pay Attention to Six Sigma?” Quality Progress, Sept. 1999, 100-103.

Snee, R. D.(1999) “Development and Use of Statistical Thinking: A New Era”, International Statistical Review, 67.

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ReferencesSnee, R.D.(2000) “Impact of Six Sigma on Quality Engineering”,

Quality Engineering, 12, No.3, ix-xiv.Snee, R. D. (2000) “Six Sigma has Improved Both Statistical

Training and Processes”, Quality Progress, Oct. 2000, 68-72.Snee R. D. (2001) “Dealing with the Achilles Heel of Six Sigma -

Project Selection”, Quality Progress, March 2001, 66-72. Snee, R. D. (2001) “Focus on Improvement, Not Training”,

Quality Management Forum, Spring 2001, 7, 8, 16.Snee, R. D. (2001) “Make the View Worth the Climb – Focus

Training on Delivering Better Business Results”, Quality Progress, November 2001, 58-61.

Zinkgraf, S. A. (1998) “An Overview of Operational Excellence and Six Sigma at Allied Signal”, Transactions of the American Quality Congress, 173-175.