Quality System of Individual Focusing (QSIF)
Today in various sources of information a special attention is given to a new wave of powerful crisis, which would overwhelm a lot of companies this year and in subsequent years. When determining the nature of its origin and progress, several main reasons are considered. Here it appears the economy's dependence on world prices for raw materials such as oil, gas and other natural resources, which are the main source of the country's income. It is much influenced by the state of relations with importing and exporting countries, as well as the number of countries with which a mutually beneficial trade relationship has been established. Economic and political stability in neighboring countries plays also its part. We can list some other typical reasons, among which the internal politics don’t play the last role. But can we say with certainty that only external factors are the reason for reducing the profitability of enterprises and lack of its economic development? The same sources of information say what the crisis is. .
Crisis is, first of all, a dramatic development of both external and internal situation, when the management practices, used up to the last moment, become ineffective and sometimes harmful.
From this it follows, that to increase the efficiency it is necessary to optimize the methods of business process management (to which they haven’t got down in "quiet" times) and to use resources in the best way. Thus the crisis is the time for decisive actions which are necessary for survival. Most often, managers understand that it is necessary to work on efficiency, but do not always know where to start correctly. Pragmatic people do not reinvent the wheel, they know that there is a market of consulting services and chose a service provider there. The category of smart and talented businessmen loves to invent. They try to reinvent the wheel and sometimes they manage to do it, but it takes a lot of time.
Over the past ten years, management counselors have offered and still offer many theories and concepts to improve the manageability of enterprise and to enhance its operations. For example, budgeting, quality management system, SAP system, various information systems and others. At the same time the production system of enterprise often remains at the same level. The introduction of modern technologies has a single character and generally does not affect the production management system. This is due to the fact that the update of production process and of permanent assets is an expensive process, and therefore requires a detailed analysis and an accurate understanding of its feasibility and effectiveness.
And only in the last few years, the owners have paid attention to reserves enclosed in production. Indeed, at any given time the introduction of any technological innovation is associated with certain risks. Therefore, the decision on it should be made only after the optimization of existing production and the definition of true bottlenecks that require technological improvements. Thus, accessing which qualities of product are important for the customer, every company strives to exclude the processes and operations that do not generate the final value, i.e. are additional losses.
Often the analysis of manufacturing process reveals a completely different approach of the participants of production cycle to the technological operations in all its phases and their uncoordinated actions with each other.
The existing modern equipment is not rationally used, sometimes is used erroneously. To a greater or lesser extent, this is the situation in many enterprises and, of course, it does not contribute to minimize additional losses in production of goods or rendering of services.
Almost every company is continuously searching for the most effective methods, improving the performance of production processes or services. At the same time the definition of resources, which allow to increase the efficiency, raise less questions than the method of their full-value realization. With the help of the quality system we have developed, we propose to use the many years’ experience of your every specialist, from among the directors, employees and direct executors, for the continuous optimization of processes or services through the mechanism of individual motivation.
WHAT IS THE EFFECT OF OPTIMIZATION
Let’s look into the definition of the word "quality":
Quality is a set of object properties, which characterize the degree of its compliance with all the expected or imposed requirements.
Any product has a number of properties, including labor costs, defectiveness, cost price, appearance, functionality, etc. Each of these properties characterizes the degree of conformity of the product to the imposed or expected requirements. In any production it is expected to lower labor costs, to eliminate defects, to lower energy consumption, to reduce costs, and to improve other measured parameters. For this purpose, it is developed and updated the production technology, which ideally describes the optimal manufacturing process, adherence to which ensures the maximum degree of product conformity to all the expected requirements. Deviations from the optimal process reduce the degree of product compliance with the requirements and need additional costs for their elimination.ь:
In its turn, the minimization of deviations from the optimal process increases the degree of product conformance to all the requirements and allows to reduce additional costs on elimination of deviations.
Therefore the main objective of QSIF is a global improvement of technology, which is achieved by continuously increasing the extent to which the actual process complies with the optimal process.
HOW WE DO IT
The managers know better, what is necessary to achieve the enterprise target values, the experts develop and implement new technologies, the actual executors, on the level of reflexes, promptly react to the changes of production conditions and have a perfect command of working practices. Intimate knowledge and experience of these experts, which are in constant contact with the production process, are a considerable resource with enormous and, unfortunately, not always realized potential.
QSIF is developed based on the principles of qualimetry - the science of quality measurement. At the implementation stage it allows to summarize all the accumulated knowledge, taking into account the individual experience of each expert, to identify weak areas and to pose problems before the division sites. With the help of performance indicators, the problems are transformed into targets values and it is made their cascading to direct executors –the workers directly influence the production workflow. After the implementation of QSIF, a specially developed motivation algorithm ensures that each worker will make every effort to achieve the target values.
PROBLEM OF EFFECTIVE MOTIVATION
The effective motivation of staff involved in the main process is one of the most efficient ways of development of the enterprise. Today motivation systems exist almost at every enterprise. At the same time, with their help, many companies do not manage to achieve the desired goals: to reduce the cost of products or services, to increase the labor productivity, etc.
In most cases, the reason of low result is the lack of system adaptability to the conditions of a particular company. Many systems were either inherited by enterprises from the Soviet past or implemented to a "template" by reputable western consulting companies without deep study of individual evaluation of an employee, according to the criteria typical for a particular enterprise department.
As a typical example, let’s consider the final evaluation of an employee as described in the methods of one of the reputable Western companies (left picture). The employee is evaluated according to the following criteria:
Knowledge and skills;
In what units you can measure the listed criteria? The best or high result - this is how much? How to determine whose result is the best for the company – R.A. Ivanov’s or S.V. Petrov’s result, the final evaluation of which will likely have different names only? The situation, when neither the head nor Petrov along with Ivanov cannot answer these questions, is critical. Consequently the fairness of remuneration distribution always leaves much to be desired, and many enterprises do not find a better compromise, than the almost even distribution of remuneration between workers performing similar functions.
The owner of the company is fully justified in wanting to get the most out of employees and, consequently, the most effective result. Unlike managers, ordinary employees, due to the lack of real motivation, are not often imbued or imbued not for long with high purpose.
In this situation, you can endlessly set ambitious targets and develop corrective actions to achieve them. But as practice and analysis of implementation reports show, in most cases, oddly enough, the failure reasons are of objective nature.
How to determine the boiling point, when the staff actions really reach the peak of their capabilities, and further improvements are possible only by means of new investments, outsourcing, etc.?
QSIF is the quality system of individual focusing, which in order to optimize processes, uses as an instrument the mechanism of individual motivation for basic specialists. Most of the incentive schemes, introduced in companies like McKinsey or HayGroup today, deal with the motivation of managing staff of departments, senior managers and top managers. At best, it is proposed a remuneration system of the direct executors for the collectively achieved performance. But in practice, it has been repeatedly proved that if the responsibility lies on all employees, then nobody is responsible.
Only a vested interest of staff in improving the performance leads to the achievement of high-quality results and economic performance. This is the basic principle of the quality system of individual focusing.
The life of an ordinary specialist almost doesn’t change with the introduction of reward systems for his supervisors. Maximum change is an increased number of meetings, at which he will be imbued with the company problems and hear about how to work better. “Work better” means to expand more effort, the effort is the same expanse, that he can use for other purposes and in a different place, where it would bring him a benefit of any kind. This is the way how thinks the majority of the enterprise’s employees, from the highest to the lowest positions. And the head, even having a complete command of declamatory skills, can encourage them to work better for the idea or for a distant prospect of wage increase but for no longer than a week. Thus QSIF appeals directly to the performance of an individual worker of the basic specialties of the enterprise divisions. These are highly qualified specialists, who often are the operators of the main units of the production process, and it depends on their actions to which extant the manufactured products meet the best expected results.
Deviations from the optimal result have always existed and will exist, but we are talking about the reduction of their number.
Most deviations can be eliminated at each process stage of the manufacturing chain, but it always entails additional costs, which grow in industrial production from a meager amount in huge sums.
Here critical deviations, which lead to an apparent product discrepancy, almost always are eliminated in spite of the additional costs, but many minor deviations, which are within the tolerances, become already a problem for the next enterprise division. In the next division, these deviations eitherare eliminated with additional costs, or cause various defects, or become the reason of the deviation from optimal process of further production, etc.
Individual Focusing in QSIF has two meanings. The first meaning is an evaluation of the performance of a particular employee. The second meaning is a focusing on each deviation from optimal process and its minimization through limiting by the performance indicators for the employees of specific professions, who have a direct impact on the process.
QSIF-MEASURABLE EVALUATION ONLY
Individual orientation, both in regard of a person and of a problem, is the key difference of QSIF from other incentive schemes. But there is another no less serious difference.
In QSIF there are no vague evaluation criteria, such as good and bad results, initiativity, self-dependence, complete dedication, etc. And the employee’s remuneration is not determined by the scale of expectations. Whether the employee exceeds the expected result, complies or does not comply with the expectations, with no specific measurement units - it's all a subjective opinion of a person, which may vary depending on the personal attitude to the worker, friendly and family relations, etc. It is natural that in this case, even the most objective evaluation can be contested and definitely will cause complaint of certain workers.
In QSIF the evaluation of employee performance is made only on the basis of a complex of efficiency indicators expressed in measurement unit– percentages, pieces, heats, etc.
Every day, open for everyone, monitoring of these indicators and their automatic registration, without human intervention, do not give a reason to doubt the objectivity and fairness of evaluation. At the same timethe remuneration discreteness corresponds to the discreteness of results. Knowing that every action is assessed and changes the accumulated result for better or worse, does not give occasion to the employee to "stand by", even having the highest score. And in the case of poor results, the employee will not give up, because every action can worsen or improve the result, and then change the level of remuneration.
The key principle of guaranteed improvement of each performance indicator lies in the accrual of remuneration with respect to the deviations value of each particular result of employee relative to the average value for the division. In other words, at any given time, the current average efficiency value with respect to a shop corresponds to the average remuneration value. If this indicator is negative, then its value characterizes the number of violations or deviations of a certain character, made during the production process. Accordingly the employee, who has a greater percentage of such deviations than the average with respect to his division, receives a lower remuneration than the average, and the higher is the percentage of deviations, the greater is the remuneration reduction. On the contrary, the maximum remuneration is paid to the employees, who don’t have such deviations.
The employees, whose accounting remuneration is below the average, strive to increase it, in its turn, the employees, who have the above-average remuneration, look to increase it as much as possible. Comparable discreteness of work results and of remuneration enables one and another to change his results every day. Thus, in order to increase their remuneration, all employees tend to reduce the number of deviations, each of which corresponds to a specific performance indicator.
Even a partial realization of the objective by each worker will inevitably lead to a decrease in the average level of deviations in the production division.
QSIF is a quite clear and uncompromising answer to the question of individual evaluation of an employee. Guaranteed enterprise efficiency increase is ensured by the actual compliance of the system with all the requirements for a system of motivation:
In QSIF the employee evaluation methodology is developed based on the principles of qualimetry - the science of quality assessment;
Each performance indicator of employee is measured in quantitative terms.
All employees participate personally in determining the level of their influence on the performance indicators, and each employee's opinion is taken into account in the calculations when implementing a system;
Terms of remuneration are simple and clear to every employee.
- Remuneration is absolutely adequate to labor contribution of each worker. If the level of efficiency indicators of an individual employee is above the average performance of the group of similar workers, the remuneration is directly proportional and above the average, otherwise the remuneration is below the average.
The employee clearly understands what remuneration he will receive depending on the results of his work;
The remuneration indicator is updated daily, based on performance and is available for public viewing.
The difference between the wages of the best employee and of the employee with the lowest rates can reach up to 25% (permissible difference is determined by the management when implementing QSIF);
The high importance of remuneration is the best stimulant for workers with low and high rates.
Automatic determination of remuneration is carried out daily according to the storing system;
Remuneration follows immediately after the end of the working month at one time with the wages.
SYSTEM EFFECTIVENESS EVALUATION
The abbreviation QSIF primarily includes the Quality System and not the system of motivation, so traditional methods are not suitable for evaluating the system effectiveness. The main reason lies not only in the multifaceted effect but also in the fact, that the measurement methods of processes quality are not very common. The word "quality" is often used to evaluate the object, but unfairly with low discreteness. Usually it is high quality, simple quality and low quality. Why is it used such a poor evaluation scale in such a variety of similar products and services?
Returning to the word definition, think how often, before he gives an estimate to an object, the consumer checks - how many and which expected requirements exactly it complies with and to what extant? The evaluation is made intuitively and is often limited by "yes" or "no." At the same time two people can give a completely different evaluation of the same object, each of which can be disputed. Western incentive systems offer us to make an evaluation of employee by a very similar method – intuition.
QSIF proposes to evaluate the quality of an object with unlimited discreteness, for what the basic principles of qualimetry - science of quality assessment – are put into the system structure. In this case the object of the system is the result of a particular employee, and the direct workflow of production.
Following the same principles, it is evaluated the system effectiveness and determined the main part of payment for QSIF implementation.
Implementation of QSIF ensures the minimization of deviations from the optimal manufacturing process comparing to the status before the system implementation.
Number of deviations is easily registered and analyzed for a given period of time, and that’s why it is the most transparent method of assessing the system effectiveness. Other effects are a chain reaction caused by the optimization of the production process. Here are the economy caused by the optimization of the rate of consumption, and the quality due to reduced defects, and again the economy as a consequence of reducing defects, and the expansion of variety of responsible products due to optimal technology performance, and again the economy due to expanding range of products. The list of effects is practically unlimited and depends on the efficiency indicators specified at the stage of system implementation. It will take more time to put all the effects in money equivalent than it is required for the system implementation. Considering the multifaceted character of the processes, the causes of many effects are complex and almost all of them can be contested. Even the most labour-consuming process of evaluating the system effectiveness will not be able to estimate all possible effects, derived directly or indirectly as a result of the introduction of QSIF. However, when the efficiency indicators can be classified as economic with a sufficient degree of accuracy – it is possible to estimate particular economic effects, the origin of which does not cause obvious disagreements. In any case:
The most objective method of evaluating the system effectiveness –to evaluate the improvement of performance indicators, specified at the implementation stage for each group of specialties.
QSIF is based on the operating system of individual motivation at one of the metallurgical enterprises.
This system has been operating for about 5 years and the actual results quite clearly reflect the effectiveness evaluation of the primary model of QSIF.
Six months after the introduction of motivation system for distributor operators in converter shop, it was assessed the change in efficiency indicators specified for the workers of this specialty. The data of the previous year were taken as the base period.
Actual results confirm the growth of all positive and the reduction of almost all negative indicators. The diagram shows that the proportion of heats with deviations from the optimal process, measured as a percentage of total production, significantly decreased. These data suggest a complex optimization of steel-making process.
Actual results of the change in performance indicators definitely demonstrate a positive effect. At the same time the absolute values of indicators change vary widely, from a few hundredths up to a dozen percent, because these values are determined by the basic value of indicator. Therefore, in order to quantify the QSIF effectiveness, it is determined a relative change in the positive and negative indicators:
Relative evaluation of the change in performance indicators let determine the extent of their improvement, which actually is from 15% to 65%. Thus, some indicators are registered to be improved more than twice.
We should note the negative indicator "T> 1680 ° C", which, instead of the expected decrease, has considerably grown. The negative effect may be due to the following reasons:
Wrong choice of an efficiency indicator at the stage of system development, because it can’t be “controlled” by the workers of this specialty;
In the considered period of system activity, a strong external impact is made on this indicator, such as a sharp change in range of production, changes in quality indicators of charging materials such as scrap bulk weight, iron temperature, etc .;
Noncompliance of the approved technology with the actual manufacturing process.
Such factors are often indicators of imperfections in the manufacturing process, so their detection is especially important. In case of prolonged lack of positive effect, it may require an analysis and subsequent correction of technology as one of solutions of the problem.
Obvious differences and individuality of QSIF take it to a completely new level of quality systems and systems of motivation in comparison with many reputable Western systems.
When optimizing the actual process, it is used the knowledge and experience of each expert from among managers, specialists and employees, as well as of each evaluated employee from a specific group of one specialty
Within six months after the introduction of the system, positive dynamics are achieved by almost every specified efficiency indicator. The improvement of some efficiency indicators is over 50%.
A significant reduction in deviations of the actual process from the optimal guarantees improvement of all quality characteristics of production, including the yield, rejections, power consumption, labor costs, production cost and many other measurable characteristics.
The advance of technological discipline allows to implement more sophisticated technologies and to expand the range of responsible productsи
It is detected the presence of indicators uncontrolled by personnel, what suggests the need for corrections of technology or focus transition to another structural subdivision of the enterprise
Algorithm of reward calculation in respect to deviations from the average level of performance invokes a healthy competition in the group of workers of similar specialty, what guarantees the inevitable decline in the average level of deviations in the division.
The performance of each worker is measurable. Based on a comparison with the performance of the group of employees of similar specialty, it is charged a remuneration, the discreteness of which coincides with the discreteness of the performance.
Distribution of remuneration is made within the current payroll, no further increase of the award fee.
The main part of the payment for the system implementation is determined according to the results of relative improvement of efficiency indicators.
Actual results invite to implement QSIF almost at any enterprise.
Contact us to obtain more detailed information or to organize a presentation of QSIF.