Selling the Idea
Pat Townsend & Joan Gebhardt
ptownsend@qualitydigest.com
Still having trouble selling
the idea of a quality effort
to senior management--or to managers at any level? Forget
about all the personal fulfillment and doing-the-right-thing
arguments. There’s only one real argument to present
to someone who considers himself or herself a hard-nosed
businessperson: Quality makes and/or saves money.
For those at the top of the management scale, a review
of Baldrige winners is a solid start for making this argument.
To be blunt, for a business executive to not know by now
that quality makes money requires an act of intentional
stupidity. Of course, starting with that particular statement
is not recommended.
Managers inside an organization need examples that are
more specific to day-to-day operations. What follows is
an example given to the management personnel at a company
after the director of the quality process determined that
dividing the number of hours invested in the quality process
(and rounding up considerably so that the number was conservative)
into the number of hours of time saved gave a return on
investment of 14.4-to-1. Keep in mind that this ROI dealt
only with the “soft dollars,” the time savings.
“Hard dollar” savings due to the quality process--which
were considerable--were in addition to the time savings.
Here are some facts about how making an investment in quality
can be a direct benefit to those in management positions
at all levels. The figures are conservative/antiquality.
For instance, the assumption is made that effort put into
quality in year one won’t have any impact until the
beginning of year two. That’s not actually true, of
course; an idea put into place in month two of year one
would, in fact, have a positive impact for the remainder
of year one in addition to continuing to be a plus for all
of year two.
An admitted weakness of the example is that it deals in
companywide averages. In fact, an hour invested in quality
in one department may bear no fruit at all while an hour
invested in another may yield 28.8 hours of saved effort--to
match the company average of 14.4-to-1. The solution? Have
lots of ideas; build a big enough sample set in your own
department that your average will be the equivalent of the
company average.
For year one, let’s assume there is a work unit
of 10 people at some level. These 10 folks can be expected
to produce (and be paid for) 400 hours of work in a normal
week. However, because this is our very busy company and
the work load keeps going up, let’s assume they’re
being called upon to do 420 hours of work in an average
week.
Now assume further that the boss of this 10-person unit
has decided to take this “quality thing” seriously
and directs her or his 10 folks to spend a half-hour a week
each exclusively on quality all through year one. As a result,
every other week, they have a 30-minute meeting and, in
the in-between weeks, they take 30 minutes each to work
on putting their quality ideas in place. The cost of this
investment in quality: five hours a week.
For year one, these 10 people are going to average 425
hours of work a week, consisting of 400 hours of regular
time and 25 hours of overtime, with the overtime being a
combination of 20 hours of “normal work” and
five hours of “quality time.” So, to be more
precise, the cost of the quality process in year one is
not just five hours a week, it is five hours of overtime
per week.
Along comes year two. Let’s suppose that, predicting
an increase in work, the boss has managed to get the size
of the unit raised to 11 people. These 11 folks can be expected
to produce 440 hours of work a week. But, this still being
our company, they’re now being asked to produce everything
they did last year plus 80 more hours of work. Total expected
work: 520 hours per week. Plus, their boss persists in believing
that the time spent on quality is worth it so there’s
another 5.5 hours (30 minutes for each of the 11 people)
a week.
The good news is that, for year two, there’s some
payback for the time invested in the quality process during
year one. At an ROI of 14.4-to-1, the five hours a week
invested last year now translates to 72 hours of work per
week that is no longer necessary--72 hours that used to
be required using previous work procedures but which is
now available to do currently necessary work.
The totals for year two for this 11-person unit are 440
hours of regular time plus 80 hours of expected overtime
plus 5.5 hours for quality meetings/work minus 72 hours
of saved time. That totals to 453.5 hours--only 13.5 hours
of overtime rather than the expected 80. Net cost of the
time invested in quality in year two: 5.5 hours of time
spent on quality minus 72 hours of overtime saved for a
total of 66.5 hours of overtime pay (and effort) saved.
Net savings for year one and year two combined: Year one’s
cost of five hours per week plus year two’s savings
of 66.5 hours equals 61.5 overtime hours for this one small
unit; and that’s in addition to all “hard dollar”
savings realized when the quality ideas were put in place--from
savings in paper costs to reductions in losses of income
due to poor customer service.
At the end of the example, the author conceded that the
quality process did not “guarantee three-day work
weeks in a year or so”--only that an investment in
quality would make it more possible to “keep up with
the ever-increasing workload that comes with our success.”
For many managers, the prospect of not falling behind
may be what finally convinces them to “do” quality.
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 e-mailed to
letters@qualitydigest.com.
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