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HR Departments can benefit and gain more respect from Six sigma Methodology

HR Departments can benefit and gain more respect from Six sigma Methodology

Preamble

Six Sigma has been well applied in manufacturing through improving processes that use the DMAIC methodology. Some larger corporations have integrated Six Sigma so well into the corporate culture that it can be considered the DNA of the company. However, even in such companies, the human resources department has been practically untouched by Six Sigma. In a conference of the human resources professionals in Chicago, it was clear that HR people are now looking to benefit from Six Sigma initiatives. Two of the questions that have been asked are, "How does HR implement Six Sigma?," and "What can HR do to help Six Sigma initiatives in an organization?" 

Businesses develop strategies for profit and growth. The strategy is driven down through action plans for execution. Most strategies fail to get down to the floor level and get lost in the middle layers of management, but HR can help execute the profit and growth strategy through the use of Six Sigma. Figure 1 shows the important role of HR in driving business strategy through Six Sigma and in creating the Six Sigma culture. The HR department interacts with and influences every employee; therefore, it's the department best suited to facilitate management change. The figure shows that an organization needs HR to integrate Six Sigma methodology and a business scorecard to achieve growth and profitability.

 When Motorola first successfully implemented Six Sigma from 1987 to 1992, its management program of setting goals, sharing savings, risk-taking and linking personal goals to corporate goals all played important roles. As a result, the company grew, made lots of money and rewarded its employees with bonuses. The challenge in implementing Six Sigma in HR includes questions such as, "What should I do?," "What should I measure?," "How would I improve the HR process?" and "How can HR be at 3.4 parts per million as it doesn't deal with a million people?"

 t must be understood that HR isn't a huge part of any business, but it has a huge effect on every business. Human resources should be considered as human capital. HR must ensure that there's good return on investment in human capital. Typical HR functions include benefits management, compensation, recruitment and skills development. Innovation and change management must also become key functions in the HR department. In addition to managing these functions well, managing idea to innovation, improving HR functions, and accountability of employees and executives must also be implemented.

Six Sigma Methodology –A process Map

One must create a process map for HR department to clearly understand HR functions and prepare for implementing Six Sigma. For the critical steps in the HR functions, one can answer the following questions to identify opportunities for improvement that can be exploited by applying the Six Sigma methodology:

• What is the purpose the HR function or sub-function?


• What are the expected deliverables (people, skills, services, value, reports, etc.)?


• What are the measures of goodness of key-deliverables?


• What are the error opportunities for key-deliverables?


• What improvement activities are carried out in the HR function?

 

Answering the above questions, one can identify output (unit), measures of reliability, and items and elements that can go wrong (opportunities for error). Having identified ‘what' to measure, one can establish a baseline for key performance indicators, which may include one or more of the following:

 

• HR Responsiveness


• Employee involvement


• Idea and innovation for improvement


• HR effectiveness in fulfilling its intended functions

 

Implementing Six Sigma in HR is no different than applying it in other functions. The key is recognizing gaps or opportunities for improvement by breaking down processes in manageable chunks. The HR function can take the following steps to implement Six Sigma in HR or to facilitate implementation of Six Sigma in the organization:

 

• Establish a clear and significant role of HR for institutionalizing Six Sigma


• Establish Six Sigma objectives and role in HR


• Seek customer feedback and identify opportunities for improvement


• Establish Six Sigma goals for HR function


• Formulate, prioritize projects and form teams


• Provide Six Sigma Green Belt training


• Implement DMAIC for breakthrough solution.

 

Examples of Six Sigma projects that companies' HR departments have completed include reduction in overtime, reduction in time and cost to hire an employee, reduction in employee retention or turnover, reduction in safety violations, reduction in cost of employee separation, and HR response to internal inquiries for benefits, payroll, promotion and fairness.

 

 

Six Sigma implies dramatic improvement through reengineering or innovation of the HR function. HR involvement in achieving corporate growth and profitability must be defined. The HR role must support leadership and departmental activities provide feedback, and intellectually engage employees in achieving their personal and corporate objectives. Customers expect better, faster and cost-effective solutions. Unless every department performs better, faster and cheaper, the company will be unable to meet customer expectations. HR is no exception to this expectation. It must be set to perform better, faster and more cost-effectively by creating value rather than just rote support of management or training. Creating value could be accomplished through innovative solutions and employee innovation. This is a low-hanging fruit for HR.

 

"How can Six Sigma be applied to the Human Resources (HR) function?"

 

Listed are some simple examples for Human Resource projects:

 1) Employee turnover rate.

2) Job satisfaction issues (surveys).

3) Management satisfaction.

4) Cafeteria food quality.

5) Policy deployment.

6) New hire process quality and cycle time.

7) Health care costs.

8) Safety and compliance issues.

9) Employee exit analysis.

10) University relations.

 

Remember, each "issue" is underpinned by at least one critical-to-quality characteristic (CTQ). For example, consider the issue referred to as "university relations." Given this, we might ask: "What must go right during a typical encounter with a university official?" Also: "What could go wrong?" Such an internal examination of your past experience will help to reveal the CTQ's. Without saying, it frequently helps to involve others. In additions, tools such as fault-tree analysis, failure modes effects analysis, fishbone diagrams, and other such methods can greatly assist.

 

Naturally, this discussion reflects the purpose and intent of the "Define" phase – as related to DMAIC. Following this, it will be necessary to establish a "scale of measure" for each CTQ. For example, let us again look at the issue of university relations. As would be known, it is important for corporations to maintain a good rapport with the university's key staff. Consider the relations that come to play when attempting to recruit new college graduates. Often, executives that have previously cultivated good relations get the "first call" about a really good student. Of course, this constitutes value for the corporation, the university, as well as the student.

 

A metric that could be used to report on such a phenomenon might be related to "university staff satisfaction." By design, such a scale could assume the numeric values 1 through 5. Of course, these quasi-measurements are really "assessments." Nonetheless, this type of scale seeks to rate the "extent to which you agree (or disagree) with the following statements."

 

On the surface, such an analysis appears to be nothing more than a simple "smiles test." However, many things can be covertly gleamed from a statistical examination of the data. For example, it might be possible to surface the demographics that are most highly associated with student recruitment rates. Other "process level" factors can be cross-tabulated and subsequently correlated by way of such statistics as chi-square, the phi coefficient, lambda's uncertainty coefficient, and so on. As one might surmise, such a level of investigation constitutes the "Analyze" phase.

 

The "Improve" phase typically involves the postulation of one or more new ways of doing things and then designing a confirmation study. For example, it might be postulated that "more follow-on by e-mail" will improve relations (on the 1-5 scale). In this case, the study is designed and then implemented. If this factor turns out to be among the "Vital Few" versus the "Trivial Many," the Black Belt must then establish a control plan for the given contributory variable. Thus, the "Control" phase of DMAIC is executed. Of course, the ultimate gain in value must be validated over some rational period of time. Once this has been accomplished, the project is "closed out."

 

How does Six Sigma relate to human resources practices?

 Six Sigma is a methodology that focuses on understanding and meeting customers' needs by using a variety of tools, especially statistical analyses, to drive performance metrics. Although its roots are in manufacturing, there's no reason you can't adopt Six Sigma for your service environment.

 

You could use Six Sigma to tackle a variety of strategic human resources projects, such as:

a.. Lowering turnover

b.. Paring prescription drug costs

c.. Reducing injuries at work

d.. Improving recruiting time-to-fill

 

Six Sigma methodologies include a project plan known as DMAIC that is used to improve business processes within human resources. DMAIC is an acronym that describes the basic steps you take:

 

• Define -- Identify the problem


• Measure -- Establish metrics to quantify


• Analyze -- Figure out what the metrics tell you


• Improve -- Craft a solution based on your analysis


• Control -- Find a way to sustain improvements

 

Let's take an example. Say you want to reverse a trend of high turnover. You would:

• Define the problem: reducing unwanted turnover.


• Measure: identify key measurements underlying turnover.


• Analyze: understand key factors and trends that create turnover.


• Improve: identify and execute a plan to address those factors.


• Control: implement controls to lower turnover on an ongoing basis.

 

Historically, human resources professionals have helped with the heavy training requirements when their organizations adopt Six Sigma, either in whole or in part. So expect to play a pivotal role in equipping your workforce. Aside from training, other issues you may need to address include: setting rewards and recognition for project teams; staffing those teams geared toward improving your business processes; and instilling Six Sigma methodology as a staple of your workplace culture. If you're like most human resources professionals, you initially might be uncomfortable with the statistical aspect of Six Sigma. Yet it enables you to get beyond merely measuring HR activities and focus on strategic goals. When integrated with your human resource management practices, Six Sigma should help you improve service levels and efficiency. For your customers, few things are more highly prized.

 

Six Sigma in recruitment

Now six sigma is applicable to all sectors today, and in recruitment function you should do the following:

 

• Reduce the time required to hire an employee.


• Reduce the time to process an insurance claim.


• Improve employee on-boarding and orientation processes.


• Reduce expenditures for recruiting firms.


• Improve timeliness and the value of employee performance reviews.


• Reduce absenteeism.


• Improve training efficiency.


• Improve employee satisfaction.


• Identify and correct retention issues.


• Reduce incentive compensation errors.


• Eliminate over payments to terminated salaried employees.


• Improving grievance handling process.


• Consolidation of employee information databases.


• Integration of multiple payroll system for remote location.


• Increase job posting hit rate.


• Increase retention using exit interview information.

 

The corporate staffing department performs a critical gateway function in a company, bringing people from the outside world into the organization. As such, recruiting has a huge impact on the quality of the assembled workforce. Attaining quality in recruiting and deployment is therefore a natural aim of an organization. How do you pursue quality in hiring and placement?

Measuring the performance of the process is a data-driven exercise, so there must be steps in the process that perform the critical data capture necessary for measurement and reporting. A thorough statistical analysis of all data endeavors to identify those elements of the process that have a direct impact on the quality of its outcome. Once the source of defects has been identified, an improvement program can be defined and implemented to remove these causes of defects.

What is a defect in internal recruiting? The Six Sigma methodology defines a defect in terms of the expectations of the customer, which in the case of an internal recruiting department is the hiring manager. Hiring an unqualified candidate, a below-average performer, or even an employee that demonstrates a lack of fit to the corporate culture could all be considered a defective outcome of the recruiting process. How can you reduce defects in corporate recruiting?

Screening Out Unqualified Candidates

Recruiting can be viewed as a screening process. This is especially true during periods of high unemployment, when the job market is characterized by an oversupply of talent. Under these conditions, the recruiting function in an organization is to eliminate unqualified people as much as to seek out talent. To improve the quality of an overall recruiting process, each step of the process must be designed to maximize the probability that the candidate ultimately selected meets the expectations of the hiring manager. One way to do this is to maximize the chances that an unqualified candidate is screened out at each step. The following are some key areas in which to focus on quality.

Talent Definition

To drive quality into a selection and recruiting process, you must first define what quality is. The selection process must be grounded on the foundation of a proper specification of the requirements of the job. You must articulate the abilities, credentials and experience that will bring about success at the job. Once set, these objective criteria inform all aspects of the recruiting process for the position, from the writing of the job description to the criteria employed by an online pre-screening function.

Employment Branding

The employment brand you project to jobseekers has an important screening role. The corporate Careers website should present a consistent employment brand, and provide visitors with good quality information about the organization, even a realistic portrayal of life working at the company. Cultural fit is as important a factor to the overall quality of hire as the possession of requisite hard and soft skills.

Sourcing Strategy

It is the function of a sourcing strategy to ensure that employment advertising reaches the right audience. The goal is to maximize exposure to qualified candidates while minimizing exposure to unqualified candidates. A job posting appearing in a media vehicle that has too low a proportion of qualified candidates to unqualified candidates will increase the burden on later stages of the selection process to screen unqualified candidates out. A formal sourcing strategy should be informed by actual sourcing yields

 

Job Description

The job description for a vacancy should provide the candidate ample opportunity to self-screen. It should describe the role, and the activities and responsibilities involved. Moreover, the job description should describe the abilities, credentials and experience possessed by the ideal candidate. Other pieces of information on a job description that give candidates the opportunity to self-screen are salary ranges and details on logistics, such as the location of the vacancy and the amount of business travel involved.

Shortlist
Even an informed sourcing strategy and a carefully crafted job description will not prevent the unqualified from submitting a resume. The selection process must be armed with systems and procedures that ensure these unqualified candidates do not make it to later stages of the internal recruiting process, where costs increase.

Historically, the next check for quality in the recruiting process was the resume screen. Screening on the basis of a resume is a highly subjective process, wholly unsuited to bringing consistency and quality to an organization's workforce. Resumes are candidate-driven and generally do not contain information sufficient for a recruiter to assess a candidate's ability to do a job. Furthermore, there are no standards for resume content, meaning that the information common on all resumes received by a recruiter is insufficient to make an accurate ranking of candidates. At best, all a recruiter is able to do is look for an indication that the candidate may move forward to the selection next step, such as a phone screen.

 

Why Should HR Know About Six Sigma?

 

Given today's need for HR professionals to be Strategic Business Partners, to be a ‘Voice of Conscience' to the CEOs as well as Champion for the Employees, those with background in proven management methodologies and tools such as Lean, Six Sigma or Kaizen have a great advantage. An HR Professional who can present his business case for HR strategies and interventions with a compelling return on investment will be respected and regarded. Having the knowledge and exposure in cost and time estimates, in analytical thinking processes as well as fact-based strategies and decision making will open doors.

Understanding and using statistics to convey thoughts raises the bar on necessary conversations such as Legal compliance related to Human Resources Management, Developing a Recruiting and Retention Strategy, Performance Management, Job Design, Knowledge Management, Human Resource Information Systems.

 

HR Role and Management Methodologies

The role of the HR professional is typically divided into four main categories – Strategic Business Partner, Change Catalyst, Employee Champion and day-to-day Administrative Operator. In today's world an HR professional is expected to act with confidence in all four categories.

Modern Management methodologies such as Six Sigma provide a framework for confidently capturing and presenting information in all these four areas, for acting upon gaps in performance and continuous improvement. HR professionals cannot fall behind in use of modern management methodologies in order to be able to speak the same language as the business, to support them if needed and last but not least for the sake of being accepted as business partners.

 

Contributing to Metric Design

Today, HR faces demand from the CEOs and senior business managers for metrics that capture the impact of HR activities on business performance. Despite worthy goals, few HR professionals have confidence that their measurement systems provide line managers with the information they need to make critical workforce decisions. Often their metrics are not even linked to the corporate strategy and are unsuitable for contributing to improvement in overall business performance.

Therefore, it is important to distinguish which metrics are truly adding value to the organization. Measuring for measurement's sake is time consuming waste. To determine which metric should be used is imperative to understand both the strategic initiatives of the department as well as the organization's needs. Being familiar with the strategic initiatives, is key to many HR processes such as performance reviews, training, recruitment, succession planning, job descriptions/profiling and employee orientation. Six Sigma provides simple yet valuable tools to help translating the needs of your organization into metrics, identifying and closing gaps hence contributing to business results.

Voice of the Customer (VOC) is a structured multi-step process focusing on capturing the voices of HR's customers – leaders and staff of your organization – and translating it into CTQs (Critical to Quality), metrics and actions.

Kano Diagram is a simple yet powerful tool used to prioritize Customer Needs. Firstly, Musts are expected by your internal customers. By not delivering on Musts, dissatisfaction is inevitable. Since as mentioned earlier, Musts are expected, there is no need for reinforcements on them. Secondly, The-More-The-Better are satisfiers. More providence on these will contribute to satisfaction. Any form of deficiency will definitely create dissatisfaction. Thirdly, Delighters are defined as representatives of a special set of requirements that can contribute vastly to satisfaction if received and diminutive disappointment if they are not present. They are difficult to detain since the customers usually don't even think of them due to the minimal expectancy from them.

 

VOC and Kano are just an extension of what many organisations do anyway: capturing the employee satisfaction. Unfortunately, not everybody play by the rules. In other words, they rather draw conclusions on high-level data without going to the root causes. The result is often sobering.

Internal benchmarking is a field that numerous HR professionals recognize. Internal benchmarking involves the process of comparing operations/departments within an organization to each other. Metrics drawn from CTQs can assist benchmarking an organization regarding their internal customer satisfaction.

Another popular Six Sigma tool is Process Mapping (SIPOC, Value-Added Analysis). SIPOC maps Suppliers, Inputs, Process Steps, Outputs and Customers of any given process. The profit of a SIPOC is in the high-level understanding of the process and the definition of process metrics that lead to CTQ metrics. A straightforward example should show the effect of process mapping:

Mapping a recruitment process was done to identify why recruitment takes so long. After studying the typical processing time each of the steps took it became obvious that the "Short listing Process" consumed a considerable portion of the entire processing time. Why? Digging into the details of this process the team found that one of their HR officers performs batching, i.e. she kept all the recruitment files until end of the week and tried to complete them on each Friday. If the workload was too much, she kept the remaining of the files until the following Friday…

These kinds of findings are everywhere waiting to be discovered. They are easy to embark upon and to resolve once the root cause has been identified. However, resolving the issue is only part of the task. The other – sometimes even more important – part of the task is to promote solutions – without blaming people – and to encourage cross company learning.

HR professionals can help by establishing and supporting Best Practice Communication linked to R&R systems. To be successful, organisations must implement a process that promotes and rewards the sharing of ideas.

 

Building Six Sigma Competency Model

Offering to build a Six Sigma competency model, for example, will not only serve to identify candidates with the right mix of technical and leadership skills but also allow the HR professionals to work closely with the Process Excellence team to develop management and leadership competencies of the Six Sigma Green Belts, Black Belts, and Master Black Belts. After all, these Belts are often the best potential personnel in the organisation.The four roles Business Advocate, Change Agent, Process Excellence Expert and Integrator/Enabler together with the competencies shown – to a certain degree – ought to be part of every company's Leadership Profile.

HR professionals also have the opportunity to utilize skills such as change management, and leadership development. Acting as a resource and/or coach for Black Belts who encounter team-related problems will quickly build credibility. Sometimes, the HR professional is positioned better to function as a liaison with the Sponsor and Champion than the project manager.

Managing Change

One of the 4 key roles of HR for an organization is in facilitating and managing change. Introducing Six Sigma into an organization means major changes that will have a profound effect on a broad group of stakeholders. Managers and employees at many levels of the organization will be asked to engage in new behaviours. HR professionals shall be champions in making change happen by owning the change process, customizing the change model and guiding the business through the change process. HR professionals as change agents, helping their businesses both to meet new objectives and to do so quickly, should consider taking the following steps: (a) identify key success factors for building capacity for change; (b) provide the extent to which these key success factors are being managed; (c) identify the improvement activities for each success factor; (d) see the review of the key factors as an iterative process, not an event.

 

Conclusion

HR professionals with knowledge of Six Sigma tools and other methodologies can deliver better service to their customers – their leaders and colleagues. Identifying requirements and gaps, analyzing and improving processes as well as measuring the performance long-term to sustain the gains applies to all business processes, including HR.
Moreover, HR professionals can support driving and sustaining business initiatives such as Six Sigma that are driving performance and business results. Developing recruitment and retention strategies for Six Sigma personnel, creating job descriptions, and establishing reward and recognition programmes as well as leadership development are only some of many opportunities to become involved.

HR Professionals with Six Sigma knowledge are absolutely an added advantage and a starting point for any organization embarking on achieving a strategic HR role.

References:

 

[1]. Six Sigma in Human Resources -Human resources departments benefit from the methodology.  by Praveen Gupta  ,Quality Digest

[2]. www.isixsigma.com

[3]. www.coe-partners.com

About the Author

V V Narendra Kumar

MS(Software Systems),M.Tech(IT),[PhD]

Assoc.Professor,Informatics

Alluri Institute of Management Sciences,

Warangal,A.P.,India

HR Podcast 23: 60 Minutes - Tough Journalism or Biased Reporting?


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