Sunday, 02 May 2010

The deadly diseases of western management

W Edwards Demming elaborated a theory of management that helped to transform Japanese industry. The popular approaches of Total Quality Management, Continuous improvement and Just in Time are all variations of the same approach and derived from Demming's 14 points.

These terms have become very popular in the West, and every company now has  continous improvement and assorted programmes. But these have been implemented without paying the slightest attention to Demming's 14 points. 

Demming outlines 7 deadly diseases that mitigate against the successful implementation of these approaches. 

These are documented in his 1982 book 'Out of the Crisis'. Although much time has passed since the book was first published, little has changed. 
  • Lack of constancy of purpose
  • Emphasis on short-term profits - short-term thingking
  • Evaluation of performance, merit rating, or annual review
  • Mobility of management (job hopping)
  • Management by use only of visible figures (no consideration of the unknown)
  • Excessive medical costs
  • Excessive costs of liability
The first of these is governed by the obsession with quarterly (of half yearly or even annual) results. A short term fall in profits (or a loss) can set the stage for panic and open the company to takeover bids. Japanese companies, by contract plan for the long-term - five to twenty years (sometimes more). Short term profit or divident falls are inevitable and could be built into the long term plan. Working towards improving the processes can result in a short-term loss but long term sustainability. Not possible in Western management thought. 

The emphasis on short-term profits means that all sort of essential expenditure is expendable. Training, research, education are all targets. 

Demming devotes much time and many pages to explain why performace evaluations are destructive. Rather than assisting a business in its quest for quality, performance management makes it all but impossible. One of the reasons is that it is almost impossible to find measures that will provide a useful reflection. It prevents people and departments from working together as that could negatively impact on the performance ratings. It works against team work - everything is about the individual. 

Then we have the mobility in management. One bad result and the CEO packs his bags and is replaced by another. In other scenarios, good managers are lured away to greener pastures on a regular basis. 

Doesn't do much for continuity, building relationships or leadership.

How many companies claim to have a continuous improvement management process in place? The name sounds good. Empowerment? Have you actually seen empowered workers? 

I have witnessed many annual review processes. 

What happened to the company? Everyone was frantically doing what they needed to get the required scores. So what is the problem with that? you may ask. At the time there were many critical issues that should have been dealt with. Much more important issues than the performance measures. These were ignored. 

Then they want to have both continuous improvement and performance management. Illustrated by Demming to be mutually unatainable. 

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