Unit 1


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Unit 1

  1. 1. Unit -1
  2. 2. •HRM is concerned with the people’s dimension in theorganization•Facilitating the competencies and retention of skilledforce• Developing management systems that promotecommitment• Developing practices that foster team work• Making employees feel valued and rewarded.
  3. 3. Scope of HRM Prospects Nature of of HRM HRMIndustrialRelations Employee HR Hiring M  Very Vast Employee  Covers all major Employee Maintenance & Executive activities in the working Remunera tion life of a worker Employee Motivation -from time an individual enters into an organization until he or she leaves
  4. 4. The Nature of the EmploymentRelationship
  5. 5. 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.
  6. 6. Functions of HR MANAGERIAL OPERATIVE FUNCTIONS FUNCTIONS •Planning •Staffing •Development • Organizing • Compensation •Directing •Motivation • Controlling •Maintenance • Integration •Emerging Issues
  7. 7. Operative functions of HRSTAFFING Job analysis, HRP, Recruitment, Selection, Placement, Induction, Internal Mobility Competency profiling, Training andDEVELOPMENT development, Performance & potential management, Career management, 360 degree feedback Job design, Work scheduling, JobCOMPENSATION evaluation, Compensation& MOTIVATION administration, Incentives and benefits
  8. 8. Operative functions of HR (contd.) Health, Safety, Welfare, SocialMAINTENANCE security Employment relations, Grievance,INTEGRATION Discipline, Trade unions, Participation, Collective bargainingEMERGING HRIS, HR audit, HR scorecard, International HRM, WorkforceISSUES Diversity
  9. 9. 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 objectives To recognize the role of HRM in bringing about organizational effectiveness  Functional objectives To maintain the department’s contribution at a level appropriate to the organization’s needs  Personal objectives To assist employees in achieving their personal goals in a manner that their personal goals enhance the individual’s contribution to the organization
  10. 10. • 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
  11. 11. Evolution of HRM in India Welfare (1920s-1930s) Administration (1930s- 1940s) Employee relations (1940- 1960s) Functional expertise (1970s- 1980s) Business partner / player (1990s)
  12. 12. History of HRMIndustrial revolution-18th -19th Century Robert Owen – 1800 -1828 Practiced reduced working hours, housing facilities, education for worker’s etc. Worked towards British Factory Act, 1819 Charles Babbage: 1828-1839 British Mathematician Worked on work measurement, cost determination and incentives Daniel McCallum Initiated JD’s merit promotions
  13. 13.  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
  14. 14. From PM to HRM Commodity conceptHumans 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.
  15. 15.  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
  16. 16.  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
  17. 17. 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.
  18. 18. 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
  19. 19. Personnel Versus Human ResourceManagement Sometimes means the same things. HRM can mean a particular philosophy
  20. 20. Traditional HR Functions
  21. 21. Differences between PM & HRM Dimension Personnel Management Human Resources Management1. Employment Contract Careful delineation of written Aim to go beyond contract contracts2. Rules Importance of guiding clear Can do outlook, impatience rules with rule3. Behaviour referent Norms/customs/practices Values/mission4. Managerial task Monitoring Nurturing5. Management Role Transactional Transformational leadership6. Communication Indirect Direct7. Conflict handling Reach temporary truce Manage climate & culture8. T&D Controlled access to courses Learning organization9. Focus of attention for Personnel procedures Wide ranging cultural, interventions structural & personnel strategies10. Shared interests Interests of the org. are Mutuality of interests
  22. 22. Distinguishing Between HRM and PM
  23. 23. Points of Difference between Personneland IR Practices and HRM Practices Dimension Personnel/IR HRM Beliefs and assumptions 1. Contract Careful delineation of written Aim to go beyond contract contracts 2. Rules Importance of devising clear Can-do outlook; impatience with rules/mutuality rule 3. Guide to management Procedures Business need action 4. Behaviour referent Norms/custom and practice Values/mission Managerial task Monitoring Nurturing vis a vis labour 6. Nature of relations Pluralist Unitarist 7. Conflict Institutionalised De-emphasised
  24. 24. Strategic Personnel /IR HRM8. Key relations Labour management Customer9. Initiatives Piecemeal Integrated10.Corporate plan Marginal to Central to11. Speed of decision Slow Fast
  25. 25. Line management Personnel / IR HRM12. Management role Transactional Transformational leadership13. Key managers Personnel/IR specialists General/business/line managers14. Communication Indirect Direct15. Standardisation High (for example Low (for example parity parity an issue) not an issue)16. Prized management Negotiation Facilitation skills
  26. 26. Key Levers Personnel / IR HRM17. Selection Separate, marginal task Integrated, key task18. Pay Job evaluation (fixed Performance related grades)19. Conditions Separately negotiated Harmonisation20. Labour management Collective bargaining Towards individual contracts contracts21. Thrust of relations with Regularised through Marginalised (with exception stewards facilities and training of some bargaining for change models)22. Job categories and Many Few grades23. Communication Restricted flow Increased flow24. Job design Division of labour Teamwork25. Conflict handling Reach temporary truces Manage climate and culture26. Training and Controlled access to Learning companies development courses27. Foci of attention for Personnel procedures Wide ranging cultural, interventions structural and personnel strategies
  27. 27. A Model of the Shift to HRM
  28. 28. Hard HRM The hard approach rooted in the manpower planning approach is concerned with aligning human resource strategy with business strategy
  29. 29. 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.
  30. 30. The Human Resource System
  31. 31. Strategic Management and EnvironmentalPressures
  32. 32. The Human Resource Cycle
  33. 33. The Context of HRM
  34. 34. The HR Functions
  35. 35. Human Resource (Personnel) ManagementResources defined –Means of supplying a want or a stock that can bedrawn upon.Resources –Money, Machines, Materials and Human.To manage is to organise the use of resources towardsthe objectives of an enterprise. 35
  36. 36. Human Resource (Personnel) Management …Contd.All the resources can be managed through the HumanResource and Human Resource can be managed onlythrough Human Resource.Human Resource is the only resource which has a“Will to Do” component along with the “Ability”component. 36
  37. 37. 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. 37
  38. 38. Human Resource (Personnel) Management …Contd.Traditional DefinitionHuman resource management is the moulding ofthe human resources in such a fashion that thegoals of the organization are met and at thesame time the need satisfaction of all theemployees at all the levels is attained to thehighest possible degree.
  39. 39. Traditional HRM Functions1. Policy and Planning2. 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)
  40. 40. Changing Role of HRM – 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
  41. 41. Human Resource (Personnel)Management …Contd.Modern DefinitionHuman Resource (Personnel) Management is the planning,organizing, directing and controlling of the procurement,development, compensation, integration, maintenance, andseparation of human resources to the end that individual,organizational and societal objectives are accomplished. - Edwin B. Flippo
  42. 42. Human Resource Management …Contd. I. Statutory HRM Compliance of Legal Framework II. Voluntary HRM Guidelines for Carrying Out Human Resource Management 42
  43. 43. HRM TodayWe must understand that corporations are not in thebusiness of human resource development. They are in theirown business, but human resource development is animportant tool which, unfortunately, is being used in alimited sense. The corporate mission has not been attachedto it. Actually, human resources must become the businessof everyone in the organization. - T. V. RaoEqual access to all resources is forcing organisations to relyon their people as the only source of competitive advantagetoday 43
  44. 44. HRM Today …Contd.Human resource strategy involves a central philosophy ofthe way the people in the organization would be managedand the translation of this into human resource policiesand practices.It requires human resource policies and practices to beintegrated so that they make a coherent whole and alsothat this whole is integrated with the business ororganizational strategy. 44
  45. 45. 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
  46. 46. Elements of human capitalSumantra Ghoshal has given the following three categories: Intellectual Capital: Stock of knowledge, skills & expertise  Social Capital: Structure, quality & flexibility of human relationships  Emotional Capital
  47. 47. Intellectual Capital Social Capital Emotional CapitalSpecialized knowledge Network of Self-confidence relationships Skills and expertise Sociability Ambition and courageCognitive complexity Trust-worthiness Risk taking ability Learning capacity Resilience 47
  48. 48. Repositioning HRM 48
  49. 49. Competitive Challenges Influencing HRMThree competitive challenges that companies nowface will increase the importance of human resourcemanagement practices: 1. The challenge of sustainability 2. The global challenge and 3. Technology challenge
  50. 50. The Sustainability ChallengeTraditionally, sustainability has been viewed as oneaspect of corporate social responsibility related tothe impact of the business on the environment.However, we take a broader view of sustainability.For our purposes, sustainability refers to the abilityof a company to survive and succeed in a dynamiccompetitive environment. Company success is basedon how well the company meets the needs of itsstakeholders. 50
  51. 51. The Global ChallengeCompanies are finding that to survive they must compete ininternational markets as well as fend off foreign corporations’attempts to gain ground in the United States. To meet thesechallenges, U.S. businesses must develop global markets, usetheir practices to improve global competitiveness and betterprepare employees for global assignments. 51
  52. 52. The Technology ChallengeThe Internet has created a new business model—e-commerce, in which business transactions and relationshipscan be conducted electronically. The Internet is a globalcollection of computer networks that allow users to exchangedata and information. 52
  53. 53. Examples of How HRM Practices Can Help Companies Meet Competitive Challenges Global Sustainability Challenge Challenge HRM Practiceso HRM strategy is matched to business o Continuous learning environment is strategy. created.o Knowledge is shared. o Discipline system is progressive.o Work is performed by teams. o Customer satisfaction and quality areo Pay systems reward skills and evaluated in the performance accomplishments. management system.o Selection system is job related and legal. o Skills and values of a diverseo Flexibility in which and when work is workforce are valued and used. performed. o Technology is used to reduce the timeo Work attitudes of employees are for administrative tasks and to monitored. improve HR efficiency and effectiveness. Technology Challenge 53
  54. 54. Managing the Human ResourceEnvironmentManaging internal and external environmental factors allowsemployees to make the greatest possible contribution to companyproductivity and competitiveness. Creating a positive environmentfor 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. 54
  55. 55. Acquiring and Preparing Human Resources … Contd.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.Compensating Human Resources …Contd.This area of human resource management includes: o Creating pay systems. o Rewarding employee contributions. o Providing employees with benefits. 55
  56. 56. Assessment and Development of 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.
  57. 57. Strategic Role for HRFor HR to play a strategic role it must focus on the longer-termimplications of HR issues. How changing workforcedemographics and workforce shortages will affect theorganization and what means will be used to address theshortages over time, are examples of the strategic role. Astrategic role for HR is important, but it requires a high level ofprofessional and business knowledge. The HR Perspectiveshows that the transition to a strategic role is not withoutdifficulties. 57
  58. 58. Enhancing Or ganizationalPerformanceOrganizational performance can be seen in howeffectively the products or services of theorganization are delivered to customers. Thehuman resources in organisations aredesigners, producers and deliverers of thoseservices. Therefore, one goal of HRmanagement is to establish activities thatcontribute to superior organizationalperformance. Only by doing so can HRprofessionals justify the claim that theycontribute to the strategic success oforganisations. 58
  59. 59. Involvement in Strategic Planning Compensation , labor markets HRP Decision making on mergers and acquisitions- Layoff’s Redesigning –BPR, TQM 59
  60. 60. Strategic HRMStrategic HRM is the linking of HRM with strategicgoals and objectives in order to improve businessperformance and develop an organizational culturethat fosters innovation and flexibility. 60
  61. 61. Organisational Planning Process Strategic Plan (5 yrs) Human Resource Development Challenges Succession Business Plan (2-3 yrs) Planning Individual Review Branch Plan (1 yr) Professional (Ideal Case) Development And Training Everybody Individual Team Plan (1 yr) Needs Needs Induction / Review Orientation Organisational Job-Related Individual Plan (1 yr) Key Tasks and Cultural Skills and Development Plan Behaviours Knowledge Review Recruitment Branch Team and Selection Needs Needs Organisational and Assessment Cultural Definitions (Survey?)
  62. 62. Measuring HR’s ContributionThe 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.1–62
  63. 63. The New HR ManagerNew Proficiencies  HR proficiencies  Business proficiencies  Leadership proficiencies  Learning proficiencies1–63
  64. 64. 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.
  65. 65. •The ability of an organization to perform depends on therelationships of the people involved, which ultimatelyrelates to the degree of emotional intelligence of itsemployees and leaders.•Leaders possessing Emotional Intelligence will create aneffective work climate that will further develop emotionalintelligence at the subordinate level.•The higher the level of a job’s complexity and authority,the greater the impact of high Emotional Intelligence.
  66. 66. •The ability of an organization to perform depends on therelationships of the people involved, which ultimatelyrelates to the degree of emotional intelligence of itsemployees and leaders.•Egon Zehnder International analyzed 515 senior executives.Those strong in EQ were more likely to succeed than thosewho were strongest in relevant experience or IQ. EQ is astronger predictor of success than experience or high IQ.Study included exec’s from Latin America, Germany, Japanwith same results across cultures.
  67. 67. FOUR QUADRANT MODEL FOR EMOTIONAL INTELLIGENCE Self OthersAware-ness Quadrant 1 Quadrant 3 Emotional Self Awareness Social AwarenessActions Quadrant 2 Quadrant 4 Emotional Self Control Social Skills
  68. 68. FOUR QUADRANT MODEL (SCHEMATIC) Self OthersAware-ness Emotional Self Awareness Social Awareness •Emotional awareness •Social awareness •Self image •Impact •Self expression •EmpathyActions Emotional Self Control Social Skills •Resilience •Communication, Active Listening •Self Control •Assertion •Expression •Conflict management •Motivation •Interpersonal skills, trust and intimacy
  69. 69. MENTORING --- DEFINITIONSMentoring is a term used to help, advise and guide employeesthrough the complexities of the business.Mentoring is a mutual learning partnership in whichindividuals assist each other with personal and careerdevelopment through coaching, role modeling counseling,sharing knowledge and providing emotional support.Offline help from one person to another in making significanttransitions in knowledge, work or thinking.
  70. 70. 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.
  72. 72. 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)
  73. 73. 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
  74. 74. POSSIBLE FORMS OF MENTORING HELP: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
  75. 75. POSSIBLE FORMS OF MENTORING HELP:C. Personal help functions: - Obtaining counseling - Obtaining moral support / encouragement - Obtaining a Role Model - Obtaining praise - Obtaining a confidante - Achieving friendship - Achieving trust
  76. 76. 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.
  77. 77. • 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.
  78. 78. FLEXI-TIMEIt 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
  79. 79. 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.
  80. 80. What is KAIZEN? (Original Definition) = KAI = CHANGE = ZEN = GOOD (FOR THE BETTER) = KAIZEN = CONTINUAL IMPROVEMENT GEM = Real; BA = Place
  81. 81. What really is KAIZEN®?Extracting money by eliminating wastefrom 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
  82. 82. 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.
  83. 83. 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.
  84. 84. THE 9 DIMENSIONS OF QUALITY• Performance• Features• Conformance----------------------------- Performance• Reliability• Durability• Service----------------------------- Cost• Response- of Dealer/ Mfgr. to Customer Service Features• Aesthetics – of product• Reputation- of Mfgr./Dealer
  85. 85. 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.
  86. 86. 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
  87. 87. 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.
  88. 88. 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.
  89. 89. 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.
  90. 90. • 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.
  91. 91. • 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.
  92. 92. 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.
  93. 93. Six steps to Six Sigma
  94. 94. Possible Applications OrderManufactur Human Customer Engineering Finance Fulfillment Resour Service Support ing ce