Unit 1

Unit -1

•HRM is concerned with the people’s dimension in the organization

•Facilitating the competencies and retention of skilled force

• Developing management systems that promote commitment

• Developing practices that foster team work

• Making employees feel valued and rewarded.

Scope of HRM

Very Vast Covers all major activities in

the working life of a worker-from time an individual enters

into an organization until he or she leaves

comes under the purview of HRM

Prospects of

HRM

HRM

Nature of HRM

Industrial

Relations

Employee Maintenan

ce

Employee

Hiring

Employee &

Executive

Remuneration

Employee

Motivation

The Nature of the Employment Relationship

Facilitating the retention of skilled and competent employees• Building the competencies by facilitating continuous learning and development• Developing practices that foster team work and flexibility• Making the employees feel that they are valued and rewarded for their contribution• Developing management practices that endanger high commitment• Facilitating management of work force diversity and availability of equal opportunities to all.

Functions of HR

MANAGERIAL FUNCTIONS

•Planning

• Organizing

•Directing

• Controlling

OPERATIVE FUNCTIONS

•Staffing

•Development

• Compensation

•Motivation

•Maintenance

• Integration

•Emerging Issues

Operative functions of HR

STAFFING Job analysis, HRP, Recruitment, Selection, Placement, Induction, Internal Mobility

DEVELOPMENT

Competency profiling, Training and development, Performance & potential management, Career management, 360 degree feedback

COMPENSATION & MOTIVATION

Job design, Work scheduling, Job evaluation, Compensation administration, Incentives and benefits

Operative functions of HR (contd.)

MAINTENANCE

Health, Safety, Welfare, Social security

INTEGRATION

Employment relations, Grievance, Discipline, Trade unions, Participation, Collective bargaining

EMERGING ISSUES

HRIS, HR audit, HR scorecard, International HRM, Workforce Diversity

Objectives of HRM Societal objectives

To be ethically & socially responsible to the needs of the society while minimizing the negative impact of such demands upon the organization

Organizational objectivesTo recognize the role of HRM in bringing about organizational effectiveness

Functional objectivesTo maintain the department’s contribution at a level appropriate to the organization’s needs

Personal objectivesTo assist employees in achieving their personal goals in a manner that their personal goals enhance the individual’s contribution to the organization

• People – core strength of an organization

Any resource can be replaced but not HR

• Processes – evolve over a period of time

IT enabled environment facilitates engineering

effortlessly

• Performance – the pillars of performance are people and IT

Organizational performance in terms of value creation

and return on investment

Evolution of HRM in India

Welfare (1920s-1930s)

Administration (1930s- 1940s)

Employee relations (1940-1960s)

Functional expertise (1970s-1980s)

Business partner / player(1990s)

History of HRMIndustrial revolution-18th -19th Century

Robert Owen – 1800 -1828Practiced reduced working hours, housing facilities, education for worker’s etc.

Worked towards British Factory Act, 1819

Charles Babbage: 1828-1839British Mathematician

Worked on work measurement, cost determination and incentives

Daniel McCallum Initiated JD’s merit promotions

Growth of trade unions Scientific Management-F.W. Taylor

Experiment on machinery ,motion study, piece rate system, standardization of tools, working conditions

Principles: Replacement of rule of thumb Scientific selection & training of wkers Cooperation b/w labor & mgmt. Max output Equal division of responsibility

Industrial Psychology Human relations approach-Hawthorne

experiments -1932-Elton Mayo

From PM to HRM

Commodity concept

Humans were considered as a commodity Factor of production concept-Mechanistic

Factory system Ppl employed against fixed wages Human were other factor of production People had better wkin conditions than commodity

concept.

Paternalistic concept During trade unions Maintenance of health and workers. Appointment of welfare officer Orgn have protective nature towards employees

Humanistic concept ( social system approach)

Focused upon responsibility of employers to provide facilities for social and psychological satisfaction

Human Resource concept 1950’s –behavioral sciences Motivation, leadership, grp dynamics & teamwork Value of HR being considered Efforts to integrate objective with HR Mgmt practices like-MBO, QC’s etc were used

Partnership concept Modern view ESOP’s

HRD concept Learning organization, OD, QWL,

conducive wk place, Potential appraisals Employees development Enabling employee capabilities Work culture and climate

Why Study HRM?

Taking a look at people is a rewarding experiencePeople possess skills, abilities and aptitudes that

offer competitive advantage to any firmNo computer can substitute human brain, no

machines can run without human intervention & no organization can exist if it cannot serve people’s needs.

HRM is a study about the people in the organization-how they are hired, trained, compensated, motivated & maintained.

Post 70s Features of HRM

The collective bargaining role The implementer of legislation role The bureaucratic role The social conscience of business

role. A growing performance

improvement role

Personnel Versus Human Resource Management

Sometimes means the same things. HRM can mean a particular

philosophy

Traditional HR Functions

Differences between PM & HRMDimension Personnel Management Human Resources

Management1. Employment Contract Careful delineation of written

contractsAim to go beyond contract

2. Rules Importance of guiding clear rules

Can do outlook, impatience with rule

3. Behaviour referent Norms/customs/practices Values/mission

4. Managerial task Monitoring Nurturing

5. Management Role Transactional Transformational leadership

6. Communication Indirect Direct

7. Conflict handling Reach temporary truce Manage climate & culture

8. T&D Controlled access to courses Learning organization

9. Focus of attention for interventions

Personnel procedures Wide ranging cultural, structural & personnel strategies

10. Shared interests Interests of the org. are uppermost

Mutuality of interests

Distinguishing Between HRM and PM

Points of Difference between Personnel and IR Practices and HRM Practices

Dimension Personnel/IR HRM

Beliefs and assumptions

1. Contract Careful delineation of written contracts

Aim to go 'beyond contract'

2. Rules Importance of devising clear rules/mutuality

'Can-do' outlook; impatience with 'rule'

3. Guide to management action

Procedures 'Business need'

4. Behaviour referent Norms/custom and practice Values/mission

Managerial task vis a vis labour

Monitoring Nurturing

6. Nature of relations Pluralist Unitarist

7. Conflict Institutionalised De-emphasised

Strategic Personnel /IR HRM

8. Key relations Labour management Customer

9. Initiatives Piecemeal Integrated

10.Corporate plan Marginal to Central to

11. Speed of decision

Slow Fast

Line management Personnel / IR HRM

12. Management role Transactional Transformational leadership

13. Key managers Personnel/IR specialists

General/business/line managers

14. Communication Indirect Direct

15. Standardisation High (for example 'parity' an issue)

Low (for example 'parity' not an issue)

16. Prized management

skills

Negotiation Facilitation

Key Levers Personnel / IR

HRM17. Selection Separate, marginal task Integrated, key task

18. Pay Job evaluation (fixed grades)

Performance related

19. Conditions Separately negotiated Harmonisation

20. Labour management Collective bargaining contracts

Towards individual contracts

21. Thrust of relations with stewards

Regularised through facilities and training

Marginalised (with exception of some bargaining for change models)

22. Job categories and grades

Many Few

23. Communication Restricted flow Increased flow

24. Job design Division of labour Teamwork

25. Conflict handling Reach temporary truces Manage climate and culture

26. Training and development

Controlled access to courses

Learning companies

27. Foci of attention for interventions

Personnel procedures Wide ranging cultural, structural and personnel strategies

A Model of the Shift to HRM

Hard HRM

The 'hard' approach rooted in the manpower planning approach is concerned with aligning human resource strategy with business strategy

Soft HRM

The 'soft' approach is rooted in the human relations school, with concern for workers' outcomes and encourages commitment to the organisation by focussing on workers' concerns.

The Human Resource System

Strategic Management and Environmental Pressures

The Human Resource Cycle

The Context of HRM

The HR Functions

Human Resource (Personnel) Management

Resources defined – Means of supplying a want or a stock that can be drawn upon.

Resources – Money, Machines, Materials and Human.To manage is to organise the use of resources towards the objectives of an enterprise.

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Human Resource (Personnel) Management …Contd.

All the resources can be managed through the Human Resource and Human Resource can be managed only through Human Resource.

Human Resource is the only resource which has a “Will to Do” component along with the “Ability” component.

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Human Resource Management (HRM) Aims At AIR

• Attracting• Inspiring and • Retaining

effective and efficient employees to develop a highly competent and committed smoothly functioning workforce.

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Traditional DefinitionHuman resource management is the moulding of the human resources in such a fashion that the goals of the organization are met and at the same time the need satisfaction of all the employees at all the levels is attained to the highest possible degree.

1. Policy and Planning

2. Procurement /Acquisition / Employment (Recruitment

and Selection)

3. Development (Skill enhancement for appropriate Work

Performance)

4. Compensation (Financial and Non – Financial rewards)

5. Integration (Harmony between individual and

organizational interests)

5. Maintenance (Retention of able and willing employees)

6. Separation (Parting of ways in the most amicable

manner)

Traditional HRM Functions

– 1900’s - Employee Advocate – 1940’s - Passive Administrator– 1960’s - Reactive Provider /

Compliance Monitor

– 1980’s - Reactive Partner / Specialist Service

Provider – 1990’s - Proactive Partner /

Business Manager

– 2000’s - Change Agent / Internal Consultant

Changing Role of HRM


Modern DefinitionHuman Resource (Personnel) Management is the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance, and separation of human resources to the end that individual, organizational and societal objectives are accomplished.

- Edwin B. Flippo

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I. Statutory HRMCompliance of Legal Framework

II. Voluntary HRM Guidelines for Carrying Out Human Resource Management

Human Resource Management …Contd.

We must understand that corporations are not in the business of human resource development. They are in their own business, but human resource development is an important tool which, unfortunately, is being used in a limited sense. The corporate mission has not been attached to it. Actually, human resources must become the business of everyone in the organization.

- T. V. RaoEqual access to all resources is forcing organisations to rely on their people as the only source of competitive advantage today

HRM Today

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Human resource strategy involves a central philosophy of the way the people in the organization would be managed and the translation of this into human resource policies and practices. It requires human resource policies and practices to be integrated so that they make a coherent whole and also that this whole is integrated with the business or organizational strategy.

HRM Today …Contd.

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HUMAN CAPITAL MANAGEMENT

• HCM refers to the task of measuring the cause and effect relationship of various HR programs and policies on the bottom line of the organization. It seeks to obtain additional productivity.

• What is Human Capital?Think of it as “quality of labor”• Similarity to “physical capital” – It is productive – It is produced• Investment• Role of savings….importance of “credit constraints” – It earns “returns” to the investment – It is subject to depreciation

Elements of human capital

Sumantra Ghoshal has given the following three categories:

Intellectual Capital: Stock of knowledge, skills & expertise Social Capital: Structure, quality &

flexibility of human relationships Emotional Capital

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Intellectual Capital

Social Capital Emotional Capital

Specialized knowledge

Network of relationships

Self-confidence

Skills and expertise Sociability Ambition and courage

Cognitive complexity

Trust-worthiness Risk taking ability

Learning capacity Resilience

Repositioning HRM

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Three competitive challenges that companies now face will increase the importance of human resource management practices:1. The challenge of sustainability 2. The global challenge and3. Technology challenge

Competitive Challenges Influencing HRM

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Traditionally, sustainability has been viewed as one aspect of corporate social responsibility related to the impact of the business on the environment. However, we take a broader view of sustainability. For our purposes, sustainability refers to the ability of a company to survive and succeed in a dynamic competitive environment. Company success is based on how well the company meets the needs of its stakeholders.

The Sustainability Challenge

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Companies are finding that to survive they must compete in international markets as well as fend off foreign corporations’ attempts to gain ground in the United States. To meet these challenges, U.S. businesses must develop global markets, use their practices to improve global competitiveness and better prepare employees for global assignments.

The Global Challenge

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The Internet has created a new business model—e-commerce, in which business transactions and relationships can be conducted electronically. The Internet is a global collection of computer networks that allow users to exchange data and information.

The Technology Challenge

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Examples of How HRM Practices Can Help Companies Meet Competitive Challenges

GlobalChallenge

SustainabilityChallenge

HRM Practiceso HRM strategy is matched to

business strategy. o Knowledge is shared.o Work is performed by teams.o Pay systems reward skills and

accomplishments.o Selection system is job related

and legal.o Flexibility in which and when

work is performed.o Work attitudes of employees are

monitored.

o Continuous learning environment is created.

o Discipline system is progressive.o Customer satisfaction and

quality are evaluated in the performance management system.

o Skills and values of a diverse workforce are valued and used.

o Technology is used to reduce the time for administrative tasks and to improve HR efficiency and effectiveness.

TechnologyChallenge

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Managing internal and external environmental factors allows employees to make the greatest possible contribution to company productivity and competitiveness. Creating a positive environment for human resources involves:o Linking HRM practices to the company’s business

objectives—that is, strategic human resource management.

o Ensuring that HRM practices comply with federal, state and local laws.

o Designing work that motivates and satisfies the employee as well as maximizes customer service, quality and productivity.

Managing the Human Resource Environment

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This area of human resource management deals with:o Identifying human resource requirements—that is,

human resource planning, recruiting employees, and selecting employees.

o Training employees to have the skills needed to perform their jobs.

Acquiring and Preparing Human Resources …Contd.

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This area of human resource management includes:o Creating pay systems.o Rewarding employee contributions.o Providing employees with benefits.

Compensating Human Resources …Contd.

This area of human resource management addresses:o Measuring employees’ performance.o Preparing employees for future work roles and

identifying employees’ work interests, goals, values and other career issues.

o Creating an employment relationship and work environment that benefits both the company and the employee.

Assessment and Development of Human Resources …Contd.

For HR to play a strategic role it must focus on the longer-term implications of HR issues. How changing workforce demographics and workforce shortages will affect the organization and what means will be used to address the shortages over time, are examples of the strategic role. A strategic role for HR is important, but it requires a high level of professional and business knowledge. The HR Perspective shows that the transition to a strategic role is not without difficulties.

Strategic Role for HR

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Organizational performance can be seen in how effectively the products or services of the organization are delivered to customers. The human resources in organisations are designers, producers and deliverers of those services. Therefore, one goal of HR management is to establish activities that contribute to superior organizational performance. Only by doing so can HR professionals justify the claim that they contribute to the strategic success of organisations.

Enhancing Organizational Performance

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Involvement in Strategic Planning

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Compensation , labor markets HRP Decision making on mergers and acquisitions-

Layoff’s Redesigning –BPR, TQM

Strategic HRM is the linking of HRM with strategic goals and objectives in order to improve business performance and develop an organizational culture that fosters innovation and flexibility.

Strategic HRM

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Strategic Plan (5 yrs)

Individual Plan (1 yr)

Team Plan (1 yr)

Branch Plan (1 yr)

Business Plan (2-3 yrs)

Key Tasks

Development Plan

Review

Review

Organisational Planning Process

Assessment(Survey?)

Assessment(Survey?)

BranchNeeds

TeamNeeds

Human ResourceDevelopment Challenges

SuccessionPlanning

SuccessionPlanning

ProfessionalDevelopmentAnd Training

ProfessionalDevelopmentAnd Training

Induction / OrientationInduction / Orientation

Recruitmentand SelectionRecruitment

and Selection

EverybodyNeeds

IndividualNeeds

Organisationaland CulturalBehaviours

Job-RelatedSkills andKnowledge

Individual Review(Ideal Case)

Organisational andCultural DefinitionsOrganisational andCultural Definitions

Measuring HR’s Contribution

The HR Scorecard Shows the quantitative standards,

or “metrics” the firm uses to measure HR activities.

Measures the employee behaviors resulting from these activities.

Measures the strategically relevant organizational outcomes of those employee behaviors.

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The New HR Manager

New Proficiencies HR proficiencies

Business proficiencies

Leadership proficiencies

Learning proficiencies

1–63

EMOTIONAL INTELLIGENCE

• Emotional Intelligence (EQ)

– The extent to which people are self-aware, can manage their emotions, can motivate themselves, express empathy, and possess social skills

• Persons with high EQs may perform better on jobs that require interaction and directing others.

• EQ can be developed and is not biologically based.

•The ability of an organization to perform depends on the relationships of the people involved, which ultimately relates to the degree of emotional intelligence of its employees and leaders.•Leaders possessing Emotional Intelligence will create an effective work climate that will further develop emotional intelligence at the subordinate level.•The higher the level of a job’s complexity and authority, the greater the impact of high Emotional Intelligence.

•The ability of an organization to perform depends on the relationships of the people involved, which ultimately relates to the degree of emotional intelligence of its employees and leaders.•Egon Zehnder International analyzed 515 senior executives. Those strong in EQ were more likely to succeed than those who were strongest in relevant experience or IQ. EQ is a stronger predictor of success than experience or high IQ. Study included exec’s from Latin America, Germany, Japan with same results across cultures.

FOUR QUADRANT MODEL FOR EMOTIONAL INTELLIGENCE

SelfSelf OthersOthers

Aware-nessAware-ness Quadrant 1Quadrant 1

Emotional Self Emotional Self AwarenessAwareness

Quadrant 3Quadrant 3

Social AwarenessSocial Awareness

ActionsActions Quadrant 2Quadrant 2

Emotional Self Emotional Self ControlControl

Quadrant 4Quadrant 4

Social SkillsSocial Skills

FOUR QUADRANT MODEL (SCHEMATIC)

SelfSelf OthersOthers

Aware-Aware-nessness

Emotional Self AwarenessEmotional Self Awareness

•Emotional awarenessEmotional awareness

•Self imageSelf image

•Self expressionSelf expression

Social AwarenessSocial Awareness

•Social awarenessSocial awareness

•ImpactImpact

•EmpathyEmpathy

ActionsActions Emotional Self ControlEmotional Self Control

•ResilienceResilience

•Self ControlSelf Control

•ExpressionExpression

•MotivationMotivation

Social SkillsSocial Skills

•Communication, Active Communication, Active ListeningListening

•AssertionAssertion

•Conflict managementConflict management

•Interpersonal skills, trust Interpersonal skills, trust and intimacyand intimacy

MENTORING --- DEFINITIONS

Mentoring is a term used to help, advise and guide employees through the complexities of the business.

Mentoring is a mutual learning partnership in which individuals assist each other with personal and career development through coaching, role modeling counseling, sharing knowledge and providing emotional support.

Offline help from one person to another in making significant transitions in knowledge, work or thinking.

MENTORING --- DEFINITIONS

• Creating possibilities and providing guidance and support to others in a relationship of trust; it includes facilitating, bringing visions to life and enabling people to achieve.

• A mentor is that person who achieves a one-to-one developmental relationship with a learner; and one whom the learner identifies as having enabled personal growth to take place.

DIMENSIONS OF MENTORING

(Directive)INFLUENCE

(Non-Directive)INFLUENCE

INTELLECTUAL NEED EMOTIONAL NEED

(Challenging) (Nurturing)

COACHGUARDIAN

NETWORKER/FACILITATOR

COUNSELLOR

A MENTOR & A COACH: THE DIFFERENCE

• Coaching earlier seen as a remedial activity; mentoring as positive, developmental intervention

• Coaching is seen more skill related, with specific capabilities-linked outcomes

• Line managers often called upon to coach.

• Mentoring positioned much more around the whole person and the big picture

• Line manager, due to performance management responsibility, not seen as appropriate to take a mentoring role.

• Coaching normally short term; Mentoring is long term.

• Coaching addresses specific issues; Mentoring --- larger issues

• Coaching (the How); Mentoring (the Why)

POSSIBLE FORMS OF MENTORING HELP:

A. Specific learning functions:

- Learning technical skills and knowledge

- Learning current jobs

- Learning organizational culture

- Learning organizational policies

- Being prepared for future jobs / promotions


B. General Career Development functions:

- Obtaining challenging tasks

- Obtaining protection

- Obtaining sponsorship, recommendations

- Obtaining endorsement for acts / views

- Making career moves

- Getting achievements showcased

- Clarifying work / Career goals


C. Personal help functions:

- Obtaining counseling

- Obtaining moral support / encouragement

- Obtaining a Role Model

- Obtaining praise

- Obtaining a confidante

- Achieving friendship

- Achieving trust

ESOP• An employee stock ownership plan (ESOP) is a way

in which employees of a company can own a share of the company they work for. There are different ways in which employees can receive stocks and shares of their company. Employees can receive them as a bonus, buy them directly from the company, or receive them through an ESOP.

• In the United States, ESOPs are a very common form of employee ownership. They have been growing in strength since about 1974.

• The main purpose of an ESOP is to reward and motivate employees. They are also used to provide a market for departing owners of successful companies. In most cases, an ESOP is given to an employee, rather than purchased by an employee.

• An ESOP is similar to a profit-sharing plan. • A trust fund, • contributes either new shares of its own stocks or cash

to buy existing shares. • Another version of the ESOP borrows money in order to

buy existing or new shares. • repay the loan.• Shares in the trust are generally allocated to individual

employee accounts. • When employees leave the company, they receives their

share options, and the company must be able to buy back these options. They must buy them back at their full market value. In private companies, employees are able to vote their shares on major issues such as relocation or closure. In public companies, employees can vote on all issues.

http://www.wisegeek.com/what-is-an-a-trust.htm

http://www.wisegeek.com/what-is-market-value.htm

FLEXI-TIME

It is a programme that allows flexible entering and leaving times for employees.

Advantages are: Increase in productivity Decline the tardiness & absenteeism Reduction in employee turnover Increase in morale and work consciousness

rather than time consciousness Improve Quality

KAIZEN TECHNIQUE

• Kaizen- defines the managements role in continuously encouraging and implementing small improvements in the individual & organization.

• Break the complex process into sub-processes and then improve the sub-processes.

• Continuous improvements in small increments make the process more efficient ,controllable and adaptable.

• Does not rely on more expense, or sophisticated equipment and techniques.

= KAI = CHANGE

= ZEN = GOOD(FOR THE BETTER)

= KAIZEN =CONTINUAL

IMPROVEMENT

What is KAIZEN? (Original Definition)

GEM = Real; BA = Place

What really is KAIZEN®?

Extracting money by eliminating waste from process is Kaizen.Kaizen is process improvement:• which is significant (large)• done in strategically important areas• speedily • in sustainable manner• using Scientific data; not opinion.• using Systematic Roadmap, Tools & Techniques• under KAIZEN Paradigms• resulting in Human Development

QUALITY IS ….THE QUALIFIER!

Doing it right first time and all the time.

• This boosts Customer satisfaction immensely and increases efficiency of the Business operations.

• Clearing the bar (ie. Specification or Standard stipulated) Excellence that is better than a minimum standard.

QUALITY - DEFINITIONS

• Quality is excellence that is better than a minimum standard.

• It is conformance to standards and ‘fitness of purpose’

• ISO 9000:2000 definition of quality-

It is the degree to which a set of inherent characteristics fulfills requirements.

• Quality is ‘ fitness for use ‘ of the product –Joseph Juran.

• TQM philosophy and guiding principles continuously improve the Organisation processes and result in customer satisfaction.

THE 9 DIMENSIONS OF QUALITY• Performance

• Features

• Conformance

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• Reliability

• Durability

• Service

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• Response- of Dealer/ Mfgr. to Customer

• Aesthetics – of product

• Reputation- of Mfgr./Dealer

Service Features

Performance

Cost

TQM SIX BASIC CONCEPTS

• Management commitment to TQM principles and methods & long term Quality plans for the Organisation

• Focus on customers – internal & external

• Quality at all levels of the work force.

• Continuous improvement of the production/business process.

• Treating suppliers as partners

• Establish performance measures for the processes.

EFFECTS OF POOR QUALITY

• Low customer satisfaction

• Low productivity, sales & profit

• Low morale of workforce

• More re-work, material & labor costs

• High inspection costs

• Delay in shipping

• High repair costs

• Higher inventory costs

• Greater waste of material

BENEFITS OF QUALITY

• Higher customer satisfaction

• Reliable products/services

• Better efficiency of operations

• More productivity & profit

• Better morale of work force

• Less wastage costs

• Less Inspection costs

• Improved process

• More market share

• Spread of happiness & prosperity

• Better quality of life for all.

ROLE OF TQM LEADERS

• All are responsible for quality improvement especially the senior management & CEO’s

• Senior management must practice MBWA

• Ensure that the team’s decision is in harmony with the quality statements of the organization

• Senior TQM leaders must read TQM literature and attend conferences to be aware of TQM tools and methods

• Senior managers must take part in award and recognition ceremonies for celebrating the quality successes of the organization

• Coaching others and teaching in TQM seminars

• Senior managers must liaise with internal ,external and suppliers through visits, focus groups, surveys

• They must live and communicate TQM.

TQM IMPLEMENTATION

• Begins with Sr. Managers and CEO’s

• Timing of the implementation process

• Formation of Quality council

• Union leaders must be involved with TQM plans implementation

• Everyone in the organization needs to be trained in quality awareness and problem solving

• Quality council decides QIP projects.

• What is Six Sigma?

• Sigma is a measure of “goodness: the capability of a process to produce perfect work.

• A “defect” is any mistake that results in customer dissatisfaction.

• Sigma indicates how often defects are likely to occur.

• The higher the sigma level, the lower the defect rate.

• The lower the defect rate, the higher the quality.

• A metric that indicates how well a process is performing.

• Measures the capability of the process to perform defect-free work.

• Also known as “z”, it is based on standard deviation for continuous data.

• For discrete data it is calculated from DPMO.

SIX SIGMA METHOD

• Six sigma method is a TQM process that uses process capability analysis as a means of measuring progress.

• The smaller the standard deviation, the lesser the deviation of the product characteristic from its mean value. If the process has a normal distribution, the upper and lower specification limits are +/- 6 sigma from the mean u. The non-conformance is 2ppb and the process capability Cp is 2.0(1.33 Cp is de facto standard.)

• A normal process with mean shifted +/-1.5 sigma from the target value desired has non-conformance of 3.4ppm and process capability index Cpk= 1.5, with 1.0 being the de facto standard.

Six steps to Six Sigma

Possible Applications

Human Resour

ce

Customer Service

Engineering Support

FinanceOrder

FulfillmentManufacturing