Checking in with the Real World

Pat Townsend & Joan Gebhardt
ptownsend@qualitydigest.com

As those who have been reading this column for the last few years know, one of the authors (Pat) is the director of a quality process for an insurance company that has grown from approximately 850 employees to more than 1,100 since early 2000. Holding a job in the “real world” was the result of his taking the unusual step of moving from the speaker/author circuit to the corporate world. The catalyst for the move was a challenging question from his current employer: “You’ve been telling people all over the world how to do this quality stuff. Can you do it yourself?”

That was more than three years ago and the quality process—named Quality First—is now just over two and a half years old. And, it’s time for another periodic progress report.

In brief, the process continues to thrive. In the two years and eight months since the process was officially launched the quality teams (this is a complete quality process so every employee in the company is always on at least one quality team) have implemented 2,643 quality ideas, Innovations, improvements and corrections have had a total annualized financial savings of $9,867,048 soft dollars and $6,287,184 hard dollars.

It’s appropriate to define soft dollars. Soft dollars can be thought of as a measurement of an organization’s capacity for work. At this company, saved time is valued at $15 per hour across the board. If an hour of work is eliminated, it’s worth $15, no matter what the hourly wage of the person(s) involved. If, because of the implementation of a quality idea, a clerk (or an executive) need no longer perform a particular task that took two hours per week, 104 hours of effort have been saved on an annualized basis, and that’s worth $1,560. Most important, there are now 104 hours of work capacity available to do something that actually needs to be done.

With this in mind, let’s take a second look at the soft dollar savings to date. The total of $9,867,048 divided by $15 means that there has been 657,803 hours of work—on an annualized basis—eliminated. Assuming the average person works 40 hours a week for 50 weeks a year, that means that 328.9 person-years of work need no longer be done. Without the Quality First process, in order to accomplish everything that’s currently being done, the company would have to hire 328.9 people in addition to the 1,100+ folks on the payroll.

Most encouraging is the fact that the numbers—quality ideas implemented, dollars saved, time saved—have all increased each year. How is this level of activity sustained? There are two primary factors: having a solid system and having unwavering support from the president of the company.

Put mildly, the company’s complete quality process system was not a routine approach and was first implemented at a time when Six Sigma (thanks in large part to highly publicized GE successes) was the reigning fad. About a year after this CQP process was initiated, Pat was given an article about a quality process that had been put in motion at a large insurance company under the guidance of a couple of GE/Welch veterans. The process was praised in a nine-page article in a leading insurance industry magazine.

Remembering the old days of the U.S. quality revolution when anybody could share information about how to do this quality stuff, Pat placed a call to the Welch disciple named in the article as the director of the quality effort. He never got past her secretary, who offered (at the direction of the quality process director) to give him the name of their consultant.

At that point, he compared the results-to-date of the Six Sigma/Black Belt-driven process to the one he was helping to direct and discovered that his process was at least three and a half times as effective in terms of measurable results. A year later, the other company filed for bankruptcy.

A solid process would, however, be of little use if the head of the organization wasn’t personally and obviously involved. The company president with whom Pat works says that there are three components that define an organization and its success: mission, quality and culture.

“Mission,” he says, “is what we want to do; culture is who we are; and quality is how we do what we do. We aren’t going to get anywhere if we don’t pay attention to all three and do all three as well as possible.”

Over the last three-plus years, the Quality First process has grown to embrace all activities in addition to the core activities of defining and implementing quality ideas. These activities (all of which affect the company culture) have ranged from staging a one-hour musical production, to presenting the strategic plan to employees, to defining and directing ceremonies on holidays. As the process has grown and the responsibilities of the quality department have expanded, the department has grown from three members to four.

Quality isn’t nuclear science, and it’s here to stay (ask any customer when she or he intends to stop taking quality into consideration in making purchasing decisions, and you will get, at best, a quizzical, “Are you nuts?” look). With the right process and the strong support of senior management, a quality process, which is both efficient and effective, can be initiated within six to eight months (elapsed between senior management’s approval and the kick-off of the Quality First process: five months and 16 days).

It’s not easy but it’s frequently a great deal of fun. And it’s profitable.

About the authors

Pat Townsend and Joan Gebhardt have written more than 200 articles and six books, including Commit to Quality (John Wiley & Sons, 1986); Quality in Action: 93 Lessons in Leadership, Participation, and Measurement (John Wiley & Sons, 1992); Five-Star Leadership: The Art and Strategy of Creating Leaders at Every Level (John Wiley & Sons, 1997); Recognition, Gratitude & Celebration (Crisp Publications, 1997); How Organizations Learn: Investigate, Identify, Institutionalize (Crisp Publications, 1999); and Quality Is Everybody's Business (CRC Press, 1999). Pat Townsend has recently re-entered the corporate world and is now dealing with “leadership.com” issues as a practitioner as well as an observer, writer and speaker. He is now chief quality officer for UICI, a diverse financial services corporation headquartered in the Dallas area. Letters to the editor regarding this column can be sent to letters@qualitydigest.com.