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Problems Faced By Companies On The Cost Front

On the cost front, most industries such as the manufacturing industry, service industry, health care industry and even the educational industry are all experiencing a great amount of pressure. As an example, hospitals are facing ever-decreasing compensation from insurance companies, which is a serious concern to many. Hospitals also experience the pressure of high labor costs and low productivity. This decline in revenue has come about due to the increase in costs and the ever-increasing competition. 6 Sigma has always been construed as a quality improvement tool, and quality has always been linked with high costs and expenditures. However, the efforts by the black belts and the master black belts to help save on costs have helped companies view Six Sigma favorably.

6 Sigma And It’s Contribution Towards Cost Cutting

Six Sigma was never intended to be used as a cost cutting tool; nevertheless it has made great contributions towards that end. The methodology of 6 Sigma employs unique ways to help cut costs in all aspects of business. Firstly, Six Sigma contributes towards customer servicing. The opinions of the customer alone help define the quality of the products and services provided by any business. By figuring out the customer’s needs; 6 Sigma can help by cutting down on any wastage like over-utilization and under-utilization of capacity. Six Sigma also helps stabilize process variation, which helps save on material conversion. Not only does this result in an increase and improvement in productivity and quality, but it also results in the reduced cost of rejection and re-working.

The reduction in Cost of Poor Quality (COPQ) is massive considering the overall tremendous savings coming from practically no rejections. This has come about due to the graduation from three or four sigma to 6 Sigma. For example, in the case of a hospital, after utilizing the Six Sigma methods in it’s cardiology department, the hospital can cut down the average process time that is necessary for admission. This produces a dual-advantage. The first one being that the reduction of almost 45 minutes of the process time will lead to a decrease in labor costs. Secondly, the hospital department can now accommodate a larger number of patients because of the increase in the productivity.

The doctrines of total customer satisfaction and returns on investment are the main areas of focus. The 6 Sigma team helps generate innovative and creative ideas that are aimed at controlling costs. The team then helps employ risk management schemes and devises that lead to the early detection of various risk factors. An increase in yield from project portfolios will lead to an increase in resources resolving matters of risk.

The Biggest Challenge Faced By Six Sigma

The biggest challenge faced by 6 Sigma is from the outsourcing or off shoring of business processes. The developing third world countries have a lower cost structure and are attracting the large corporations offering them a chance to increase their overall return on investment. This is a process that is being engaged by medium and small-sized businesses, as the larger corporations have experienced significant success using outsourcing.

Leroy was a superstar in the Real Estate business, producing three times the monthly business of his nearest coworker. He was a driven, highly competitive young man who saw his manager as getting in the way of even higher production.

Tension turned to irritability. Yelling and shouting followed. On the day he was fired, he shoved his manager in front of alarmed coworkers who reported his behavior to HR. Anger management classes were required, along with a one month interim, before reinstatement would be considered.

As this case example illustrates, workplace anger is costly to the employee the company, and coworkers. Studies show that up to 42% of employee time is spent engaging in or trying to resolve conflict. This results in wasted employee time, mistakes, stress, lower morale, hampered performance, and reduced profits and or service.

In fact, in 1993 the national Safe Workplace Institute released a study showing that workplace violence costs $4.2 billion ech year, estimating over 111,000 violent incidents. Further, according to the Bureau of Justice Statistics, about 500,000 victims of violent crime in the workplace lose an estimated 1.8 million workdays each year.

Clearly, poorly handled anger, frustration and resentment sabotage business productivity.
Was Leroy justified in his anger? What skills or tools should he learn to prevent future episodes? What could management have done to better handle the situation?

TOOL #1-RESPOND INSTEAD OF REACT
Using the tool of “respond instead of react,” Leroy can clearly learn to control his behavior and communicate needs in a socially acceptable manner without disruptions to work and morale. The issue here is not if he was justified in being angry; it is how to best deal with normal angry feelings. A key ingredient to managing anger is learning to change “self-talk”—that internal dialog that creates or intensify angry feelings.

From a management perspective, proper anger management skills can enhance conflict resolution, promote personal growth in the employee, reduce employee stress and promote increased workplace harmony.

TOOL #2-STRESS MANAGEMENT
Leroy was clearly under a great deal of stress, much of which was self-imposed. Stress often triggers anger responses. Learning to effective deal with stress can help prevent anger outbursts, as well as reducing employee “burnout” and hampered performance. Managers should be alert to stressed employees and recommend help, before things get out of hand. In many companies, HR or EAP (employee assistance professionals) can provide you with resources and referrals.

TOOL #3- EMOTIONAL INTELLIGENCE
Popularized by psychologist Daniel Goleman, much research shows that increasing “EQ” is correlated with emotional control and increased workplace effectiveness.

What is “EQ” exactly? According to Goleman, it is “the capacity for recognizing our own feelings and those of others, for motivating ourselves, and for managing emotions well in ourselves and in our relationships.”

Fortunately, skills to improve your emotional intelligence can be learned by both employees and management. The benefit is increased understanding of yourself and others which directly relates to increased productivity and workplace harmony.

TOOL #4- ASSERTIVE COMMUNICATION Communication problems frequently lead to misunderstandings, conflicts with coworkers and hurt feelings which may hamper concentration and work performance.

Assertiveness is not aggression, but a way to communicate so that others clearly understand your needs, concerns, and feelings. It starts with the familiar advice to use “I” statements instead of “you” statements which can sound accusatory, and may lead to defensiveness instead of cooperation.

Other communication improvements include acknowledging the concerns and feelings of others in your interaction with them. And, being more sensitive to what others are saying to you “beneath the surface.”

TOOL #6-ACCEPTANCE
While sometimes workplace anger is manifest in “exploding,” other times it is born of grievances held by employees over any number of workplace issues. Much research shows that learning to accept and let go of the wrongs done to you can release your anger and resentment. This, in turn, may improve your health, and help you focus on your job instead of your negative feelings.

Is “acceptance” easy? Of course not. Nor does it mean that you think that whatever happened to you was right, or that you have to like the offending person. What it does mean is “letting go” of the negative feelings you now experience when you remember a negative experience or you encounter the offending person, so that it no longer affects you.

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