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By Ranjan Sinha
Jack Welch, the former CEO of General Electric, applied the Six Sigma approach to transform GE’s business and helped popularized the discipline. According to Welch, it is “A highly disciplined process that helps us focus on developing and delivering near-perfect products and services.” Today, this methodology can also be applied in a number of ways, including how companies recruit valuable workers.
Six Sigma was developed 20 years ago at Motorola, which, at the time, was suffering huge losses in the electronic market due to competition from Asia. The name Six Sigma is statistical in nature and reflects a measurement of how far a given service deviates from “perfect.” In practical terms, it helps to determine how much a service provider deviates from delivering perfect service.
WHY IS SIX SIGMA IMPORTANT?
Six Sigma measures variability and aids companies in improving overall quality. It is fact-based and data driven and is executed on a project basis before it is applied throughout the organization. This management system achieves sustainable competitive advantage by providing a set of tools for improvement efforts to eliminate defects for its users. Six Sigma is a highly customer-focused program—management listens to the voice of the customer to find out what is important and captures what he wants. The program defines a structured way for businesses to solve problems. Users of Six Sigma try to pinpoint which elements of service delivery are critical to overall quality.
They begin by grasping a better understanding of business processes and which good or bad elements can be controlled. This is the strength of Six Sigma. Most Fortune 1000 organizations use Six Sigma to some capacity in manufacturing and customer service and are now looking into how to implement it for HR. Some Six Sigma practitioners include: Allied Signal, Avery Dennison, Bose, Caterpillar, CitiGroup (Visa/MasterCard), Deere & Co., Delphi, Dow, DuPont, Eaton, Ford, Foxboro, G.E., IBM, Johnson & Johnson, J.P. Morgan, Lockheed Martin, ServiceMaster, and Sony.
Some skeptics question whether Six Sigma matters. The answer is yes. Businesses have to be managed within a deviation of six sigma; anything less would be catastrophic. In HR, particularly, the impact can harm competitiveness and a company’s success if results fall outside of six sigma. Here are some examples:
- A regional postal sorting facility operating at 2.6 sigma (99% effective) might lose 20,000 articles of mail each hour; at six sigma (99.99966% effective), only seven articles are lost per hour.
- In hospitals, a 2.6 sigma level may lead to 5,000 incorrect surgical operations in one week, compared with just two incorrect procedures per week if they operate at Six Sigma.
- Even more astounding, at 2.6 sigma there are two short or long landings at most major airports daily; operating at six sigma, the number of short or long landings is one every five years .
Six Sigma has applications related to transactional components of HR. If you polled HR executives, nine out of ten would be familiar with Six Sigma. In payroll processing and recruitment process outsourcing (RPO), Six Sigma has been implemented successfully. Some estimates show that only 33 percent of companies are happy with their external staffing agencies. With the war for talent increasing, employers want to lower recruitment costs and reduce the administrative burdens associated with RPO. You may have effective recruiters but across the project or in different branches of an agency, there are differences in the quality of recruiters used by staffing firms. Six Sigma removes variation from the human aspect of recruiting such as interviews, because performance levels are based on the nature of each recruiter.
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