Wednesday, April 21, 2010

Using Six Sigma principle to drive your human capital performance management


A concept that I implement subtlety is a paradigm shift from performance evaluations (PE). I use six sigma principles to measure what is most important to me, a leader’s effectiveness.

PEs are a monitoring tool. With limited resources, we need efficient measures. I can analyze the performance of 10 managers for a fraction of the costs of 100 employees.

What are the costs of PE? In my estimation, PE have direct costs of $200/per employee (for annual evaluations) plus capital IT resources and immeasurable indirect costs on morale.

Most performance evaluations expect employee performance to statistically fall within a normal distribution that can be divided into 3 categories, where 10% excel, 80% maintain, and 10% need improvement.

Do we need the company overhead to identify the top 10%? Do we need a company-wide PE system to manage low performers and sustain a case for their dismissal?

Managing teams requires immediate feedback to situations. If a team is failing to meet objectives and expected performance, I would look at the manager’s ineffectiveness to lead.

Using six sigma principles to measure only what is most important to you, I recommend to measure the manager’s effectiveness based upon objective, quantifiable metrics like team’s output, deliverable timeliness, and personnel turnover.


I don’t care if the manager likes the subordinates, I care if the employees can rely on their boss for instruction and facilitation.

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