What are your views on performance management in the service sector-healthcare, education, non-profits,…
A lot of the concepts we have talked about earlier, ISO 9000, Baldrige, or even Six Sigma, people come back and say it is really for the manufacturing environment. My experience at Johnson Controls is that when we applied the concept of Six Sigma, when we applied what we needed to do for ISO 9000, we actually could improve performance within those areas from 10 to 100 times more in non-manufacturing related environments. As an example, if I improved a process within manufacturing, the typical return would be about $50,000 worth of waste elimination and savings. If I did the same improvement within a back-office operation, as an example, I could yield anywhere from $250,000 to $500,000 of improvement, simply because we haven’t focused a lot of attention on the service-related operations of the organization or even service-related organizations in the past. Take for instance SSM Health Care, a healthcare organization obviously, service-related if that’s what you want to call it (it’s hard to define that in terms of products), and that they have been able to do to differentiate themselves as a result of applying quality tools and concepts. Their turnover rate for nurses, as an example, has been about a fourth of the industry average. So think about how much less time the organization needs to focus on a critical parameter, which is nurse shortages and skills, and they can use their time and energy focusing on other aspects of the business. But recruitment and retention is not one of their major issues.