Six Sigma

What It is How It Affects Human Resources

Presented by

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 ($$).

What is Six Sigma?

INITIATIVE METHODS & TOOLS

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($$)
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Process Thinking Process Variation Facts, Figures, Data Define, Measure, Analyze, Improve, Control 8 Key Tools - Linked and Sequenced Statistical Tools Minitab Critical Few Variables

ROLES OF LEADERS
Management Team

Master Black Belt Green Belt Functional Groups HR, Finance, IT Engg, QA, etc.
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Project Champion

Black Belt
and

Team

Six Sigma Improvement Strategy

Phase 0: Process Definition Phase I: Process Measurement Phase II: Process Analysis Phase III: Process Improvement Phase IV: Process Control

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 Increase process capacity Increase dryer throughput Reduce process downtime and scrap Reduce caustic use of Process Z Material loss: Reduce scrap & increase yield Reduce wet milling operations costs

$300k $400k $130k $320k $2000k $150k $300k

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

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

Alternative Approval / Denial Site Determines Condition Prevents Employee from Returning to Work Employee Requests Site to Initiate an Application

Site Human Resources Case Determination Letter Enter Total & Permanent Code

Site Medical Medical Evaluation Report Supporting Medical Info Medical Authorization

Employee

Medical Authorization

Weekly Disability Claim Notification Process

Benefits Supplier Review Process

Independent Medical Evaluation Transferrable Skills Analysis & Labor Market Survey

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

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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.

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 Electric USATODAY 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(Contd)

Green Belt Recognition

- No certification bonus

- Similar to Black Belt recognition

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, WileyInterscience, 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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References
Harry, 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 Worlds 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 Harrys 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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References
Pyzdek, T. (1999) The Complete Guide to Six Sigma, Quality Publishing, Tucson, AZ Pyzdek, T. (2000) The Six Sigma Handbook, McGraw-Hill, New York, NY Quality 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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References
Snee, 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.

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