Deming says eliminate employee incentives, reviews, quotas. Thats different!

If your a reader of this blog I have more then a few posts on the subject of employee incentives, reviews and quotas. It is clear that I have considered these the holly grail for supporting employee productivity. I have argued that incentives lead to greater productivity and less management, I have stated that reviews should be a positive experience, and that quotas are a part of guiding the employees to what is expected and what they should be producing with rewards for exceeding expectations.

I have argued that this is the way to effectively increase productivity and therefore increase the bottom line…

And then I read Deming. I must say I am stunned. It is clear that Deming was a visioneer. A gifted thinker who rethought the entire management process and designed a new way, at least new to America and while he certainly was influential and positively influenced many businesses in America, the cultural pressure has made it very difficult for business managers to implement a true Deming strategy.

However Deming proved the value of his program in Japan as he introduced his theories to them and they absorbed it and ran with it. Toyota, considered to be one of the leading businesses in the world, was heavily influenced by the Deming management program. In fact the entire Japanese manufacturing success formula is based on Deming principles, including the ones relating to incentives, reviews and quotas, non existent in Japan.

Here is what Deming argues… Such practice, he says, is built on fear, is contrary to team building and defeats regard for quality and long term goals. Whew, Houston we have a problem…which is correct.

Performance reviews sacrifice log term goals for short term performance and prevents long range planning, argues Deming.

It discourages risk taking, builds fear, destroys team work and cooperation for the better of the company, long term productivity, or service to the customer, and pits co-workers against each other for the same rewards.

On a real functioning team, it is difficult to determine who did what. The results of measuring individual success and performance, creates fiefdoms and competition within the ranks, people working for themselves and not for the company. In fact to reach a goal, people will sabotage, will cheat, will make inferior product and provide inferior services just to elevate personal performance measured by numbers and a desire to reach higher measurable goals. To hell with the team, the company, the customer and the product or service, “I must produce more to achieve my bonus”.

With reviews, by definition there are always the best workers, the middle and the least skilled. Reviews pit the three sections against each other with the highest producers setting the benchmark that the lower producers must work towards achieving, yet will never be able to reach these goals thus reviews create depression, anger, bitterness, and lowers self image, causes less productivity, stimulates jealousy, sabotage, and on it goes.

In many situations were ingenuity, creativity, problem solving, are considered very important, they are sacrificed for production measured by numbers, as creativity cannot be measured, so the work effort that is measurable by numbers become supreme and creativity is routed out.

Clearly Deming’s philosophies require many principles, 14 of them which work together to achieve the appropriate Deming results. Thus merely applying this one concept without the other 13 principles in play would never yield the desired result. Deming creates an entire business culture including management as well as the production section.  Deming’s commitment to total quality which lowers cost and increases profitability, also foreign to American standards, is just as important and must be in play for the “no review, quotas or incentives” principle to be effective, as must all fourteen principles.

In short all of Deming’s 14 points and the avoidance of the seven diseases resulting in a total Deming environment must be in play for any of it to make sense and work. It remains very interesting to compare the different approaches and consider which makes more sense. Alternatively we really do not have to consider this question, we can simply look at what Japanese manufacturing has accomplished and were ours is and the question answers itself.

For example, one might argue that Unions support the team development and thus are on the right track, but this would not be very true at all as with Unions it appears its all about getting highly paid for time spent not the unmeasurable results, and the Deming philosophy is not present at all, thus the two are incomparable.

Consider the value of developing a team approach in your business and de-emphasizing individual accomplishment and measure success on the long term basis by consumer satisfaction, increased quality and decreased costs as demand expands, delivered by a successful team approach. Its a small slice of Deming while isolated from the entire process ad thus incomplete and not a real Deming experience but may yield positive results.

At least we now know why or manufacturing sector is declining and Japans is increasing. It may be partly because labor is cheaper, but maybe its cheaper because they are following the Deming management model.