Monday, December 24, 2012

Dr. Edward W. Deming - 7 Deadly Diseases of Management


The Fourteen Points express Deming's philosophy of management. The Seven Deadly Diseases describe the most serious barriers that management faces in its current management actions.

1. Lack of constancy of purpose to plan product and service that will have a market and keep the company in business, and provide jobs.

As long as the focus is on short term thinking, management will fail to plan adequately. Without good long term planning, worker efforts will be irrelevant. More significantly this disease is warning that TQM cannot be a fad. If management changes its philosophy by whatever was the latest book it read, then there will be no long term forward progress.

2. Emphasis  on short-term profits: short-term thinking (just the opposite of constancy of purpose to stay in business), fed by fear of unfriendly takeover, and by push from bankers and owners for dividends.

There is nothing easier to do than boost profits in the short term. All a manager has to do is cut any expense related to the long term: training, maintenance, purchase of new capital, etc.

For non-profits like schools and hospitals, substitute "Emphasis on short term costs" instead of "Emphasis on short  term profits." These institutions, especially when in budget crises, focus on cutting short term costs without regard to long term consequences.

3. Personal review systems, or evaluation of performance, merit rating, annual review, or annual appraisal,  by whatever name, for people in management, the effects of which are devastating.  Management  b objective,  on  a  go,  no-go  basis,  without  a  method  for accomplishment of the objective, is the same  thing  by another name. Management by fear would still be better.

The  essential  problem  with  merit  systems  is  that  they  reward  results  rather  than  process improvement. Results will almost always have a lot of system luck mixed in.

Some managers want to reward people who cooperate more or who seem to have better attitudes. These managers will insist that they can recognize the people who are most cooperative and have the highest work ethic.

When managers reward these attitudes, however, they are setting up a system that will have two fundamental  flaws:  (a)  it  encourages  "kissing  up"  to  the  boss  and  (b)  psychological  research indicates that the best way to develop  cooperation is not through money rewards, but rather by focusing on the nature of work environment itself.

4. Mobility of management; job hopping.

This is perhaps the simplest and yet one of the most deadly of diseases. When top management changes organizations every three or four years, that means continuous improvement efforts will be broken and disjointed as the new "leaders" come on board. Moreover, with changes in leadership, there is frequently a change in management philosophy. How can there be constancy of purpose in such an environment?

When management has no commitment to the long term, how will they ever start thinking long term? Managers who have an eye on the next promotion want results, now, to gain the next rung on the ladder.

5. Use of visible figures only for management, with little or no consideration of figures that are unknown or unknowable.

Many consultants in the quality field have been quoted to say, "If you can't measure it, you can't manage it." Certainly Deming would have been one of the first to argue that good data is essential and should be factored into all  decisions whenever possible. Deming was in fact very critical of people who fail to use data when it is available.

Deming pointed out, however, that some facts are simply unknowable. In spite of that, Deming insisted that leaders must still make decisions and manage the situation. For instance, if a quality effort is truly justified, then it should  cause operating costs to decline and overall sales to rise relative to what would have happened otherwise. This leads to a basic dilemma. How do you know what would have happened if you had kept on your prior course? How do you put a dollar value on the customer loyalty won  through  quality improvement  efforts?  You  can't!  These numbers  are unknowable. If you decide that TQM can be justified only if the benefits are clearly measurable, then you might leave these factors out of your analysis and erroneously conclude that TQM is causing losses when in reality it is generating profits.

6. Excessive medical costs.

American auto companies pay more for medical care than they do for steel. For the economy as a whole, health  care as a percent of overall expenditures has steadily risen for decades gradually pushing numerous business and  government budgets into a state of crisis. Deming would have approved of the political system attempting to reform health care.

7. Excessive costs of liability.

Deming blamed America's lawyers in part for the problems of American business. The US has more lawyers per capita than any other country in the world. They make their livings to a considerable extent by finding people to sue. Like health care costs, Deming believed the solution to this disease will probably have to come from the government.


Eddie Kuang
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