Individual and System Performance – Pass or Fail?

By on November 22, 2011 in Current Events, Human Resources with 17 Comments

A Department of Defense Task Force is nearing the completion of a final report that identifies alternatives for the National Security Personnel System (NSPS). One of the recommendations is to rate civilian employees on a pass-fail basis. According to the task force:  

“A standardized two-tier rating system would be simpler and more consistent, would lead to less time spent on grievances, and would allow managers to concentrate less on the final rating and more on employees’ year-round performance.”

Of all the individual performance systems I’ve experienced in the civil service, the pass-fail option did the least amount of damage. In the late 1980s, the Department of Defense embraced the Total Quality Management (TQM) initiative. The initial draft of the guidance, DoD 5000.51-G, was published on August 23, 1989, and the final draft was published on February 15, 1990. The Army organization I worked for at the time incorporated the logic and rationality of W. Edwards Deming regarding performance and briefly experimented with the pass-fail option before resorting back to the status quo. Deming points out that the system determines the majority of the results, top management is responsible for the system and employees control very few of the system variables that impact their performance.  

The aim of the system should be to meet the needs of the customers and stakeholders by providing the optimum value with the least amount of resources. Given that the system determines the majority of the results (and even all of the results in some cases), wouldn’t it make sense to rate the system first before trying to assess individuals’ contributions in improving that system? 

Deming referred to individual ranking and rating systems as a deadly disease. He concluded that these types of performance systems introduced constraints on employees that were demoralizing and resulted in decreased productivity. These systems, along with the prevailing style of management within America, contributed to his assessment that the United States was the most undeveloped nation in the world:

“What is the world’s most underdeveloped nation? With the storehouse of skills and knowledge contained in its millions of unemployed, and with the even more appalling underuse, misuse, and abuse of skills and knowledge in the army of employed people in all ranks in all industries, the United States may be today the most underdeveloped nation in the world.” — W. Edwards Deming (Out of the Crisis, MIT Press, 2000,  p. 6)

Rating and Ranking Organizational Performance and Leadership

Results from the Office of Personnel Management’s 2011 Federal Employee Viewpoint Survey identify persistent issues that impede building an effective and efficient workforce. Survey results indicate “that less than half of employees feel senior leaders inspire high levels of motivation and commitment and less than half of employees are satisfied with the policies and practices of senior leaders.” These low survey scores indicate common cause variation and are a result of poorly performing systems that senior leaders have the responsibility to improve with the support of their employees.

As I mentioned in my previous articles, the Baldrige Criteria for Performance Excellence provide a method for assessing organizational and system performance. Few senior leaders in federal government organizations take advantage of this option, but initial assessments would likely indicate scores in the 200 point range out of a possible 1,000 points. But all federal organizations are required to provide individual performance appraisals. Adopting a method for assessing system performance would provide insight on what, if anything, is needed beyond an individual pass-fail appraisal system.

 

Rating and Ranking the System of Government

The challenge in assessing performance becomes more apparent when considering how Americans can rate the performance of government. What would be the standard for a passing or failing grade and who decides? Elections provide a pass-fail option. A high reelection rate of an incumbent indicates that the people who voted for that person are satisfied with his or her performance.

The American Customer Satisfaction Index (ACSI) provides customer satisfaction related feedback across many industries and sectors. The federal government’s overall ACSI score is among the lowest. Only the airline and newspaper industries scored lower. On a positive note, the federal government’s scores are among the highest in the ACSI E-Government Satisfaction Index, which looks at customers’ satisfaction with electronic services provided through government websites. 

A proposed option for improving government performance is represented by the Strong America Now initiative. The aim of this initiative is reduce waste in the system in order to achieve the following results:

  • End the deficit in 2017 with no new taxes
  • Reduce unemployment below 5% by 2017
  • Save Medicare with no new costs to seniors

 The Plan for achieving these results includes the application of Lean Six Sigma methods and tools:  

“Each presidential candidate has been asked to sign a pledge that binds them to eliminating spending deficits and start paying down the national debt by 2017 by deploying Lean Six Sigma waste reduction methods across the entire federal government. The pledge also requires each candidate to attend two days of Lean Six Sigma training, and complete a waste reduction project prior to Inauguration.”

I am not an advocate of the Lean Six Sigma label. I believe the label imposes a constraint in that it introduces unnecessary terms that are then explained using common language (e.g., reduce waste, increase value and improve speed of delivery, thereby improving quality). Lean Six Sigma training and associated certifications can be another constraint. I haven’t come across too many people who can’t relate to or haven’t improved quality.

The Lean Six Sigma methods and tools do represent proven quality improvement tools and methodologies that are applied to help reduce the Total Cost of Quality. The Total Cost of Quality (TCOQ) represents “the difference between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products or defects in their manufacture.” This difference is estimated to be about 25% to 40% of an organization’s total sales or budget. An option for Congress is to continually reduce federal budgets until each organization’s TCOQ is reduced to less than 5% of its total budget. 

The TCOQ concept is not new. Awareness of the advantage of reducing the TCOQ emerged in the 1950s and was integrated within initiatives under the labels of Zero Defects, Total Quality Management (TQM) and now Lean Six Sigma. Within the Lean Six Sigma glossary of
terms, “TCOQ” is repackaged as “hidden factory” costs. Acknowledging, validating and continually reducing these costs should be part of any quality improvement process, which Deming defined as a chain reaction: 

 

Deming Chain Reaction

  • Improve quality
  • Costs decrease because of less rework, fewer mistakes, fewer delays and snags, and better use of machine-time and materials 
  • Productivity improves 
  • Capture the market with better quality and lower price
  • Stay in business 
  • Provide jobs and more jobs

 In regard to government services, where there is generally no market to capture, “a government agency should deliver economically the service prescribed by law or regulation” (Deming, Out of the Crisis, p. 6).

A Way Ahead

Albert Einstein remarked that “We can’t solve problems by using the same kind of thinking we used when we created them.” This statement is certainly true when it comes to the theory that changing individual performance appraisal systems is a substitute for the leadership that is needed to continually improve overall system performance. The “new kind of thinking” that is needed was introduced in my last article and referred to as the Foundations of Quality.

In the absence of applying better methods for assessing individual performance in the context of the system within which the individual works, the pass-fail option may be the least costly approach for assessing individual performance. An optimum performance system must align individual accomplishments with organizational results using feedback that is validated and shared with all the stakeholders.  

Bringing about the type of change in government that will continually result in an upward trend in things gone right and a downward trend of things gone wrong, as defined by the American people, will require a more common understanding of why reducing variation is the key to quality. Application of this knowledge will result in a stronger America.

© 2016 Timothy J. Clark. All rights reserved. This article may not be reproduced without express written consent from Timothy J. Clark.

About the Author

Timothy J. Clark, is the author of Success Through Quality, Support Guide for the Journey to Continuous Improvement. He retired from the federal government with over 30 years of service. He is also a former enlisted soldier in the U.S. Army and retired at the rank of Colonel with over 30 years of combined service in the U.S Army National Guard and Army Reserve.

He is currently the Director of the Deming Application Network that supports leaders in transitioning to the application of better methods that will immediately result in higher levels of performance.

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