What if there was a tool that could dramatically improve company culture, raise net profits, and increase customer satisfaction? There is such a tool! For the last seven years, I have been “preaching” the benefits of Six Sigma for restoration. I have personally watched companies grow in every measure by using the principles found in this article, derived directly from Six Sigma.
It is true that Six Sigma, fully utilized, is primarily used in manufacturing. However, the core concepts of Six Sigma translate for all types of business. By strolling through any bookstore’s business section, one is sure to find Six Sigma books for every aspect of business and life, further validation that these principles can be successfully applied to almost anything. This article highlights some key Six Sigma principles and tools that can be implemented quickly and hopefully spark an interest to learn more.
What is Six Sigma?
Simply put, Six Sigma is a business methodology that uses data to develop effective and efficient processes that have positive results on the bottom line of any company. Six Sigma is used by a majority of the top Fortune 500 companies that are known for quality. It became popular in the mid- to late-90s and is still strongly used today. What makes Six Sigma so unique is that it has a measurable effect on all areas of a business, especially the bottom line. While Six Sigma is full of mathematical formulas, I have spent the last seven years boiling it down to a few practical ways restoration contractors can use the methodology to improve their business.
Blame the Process, Not the People
One of my favorite core doctrines of the Six Sigma methodology is: Blame the process, not the people. As managers and owners, it is often easier to blame the people who work for us rather than looking at the process, or lack thereof, we have in place. Generally speaking, most people want to do a good job and while everyone has different capabilities, no business can sustainably grow if only rock star employees can be successful. A good process can make a mediocre employee successful just as easily as a bad process can cause a good employee to fail. While it is one of the hardest core doctrines to implement, the moment owners and managers stop blaming their employees for failures and blame the process, positive change happens.
When faced with a major problem, “not getting paid fast enough” for example, a common issue in the restoration industry, blaming the AR clerk, bookkeeper, or project manager is not an effective place to start. Rather, look at the process that has been set up for collection and see how it can be changed to shorten the time it takes to get paid.
Follow a Process to Make Positive Change
With Six Sigma, there are processes for fixing any problem - my favorite one is called DMAIC (Define, Measure, Analyze, Improve, Control). This simple process can be life changing, not only in business but in everyday life. There are many practical applications for using DMAIC to problem solve, but fair warning, following this process closely is key to realizing maximum results in a sustainable way.
Step One: Define the Problem Clearly
When using DMAIC as a process to define the problem, it is important to be clear and focused when executing this step. Tackle one issue at a time, get a team together and brainstorm to create a clear and concise statement that accurately expresses the problem that needs to be addressed. For example, “It takes too long to get paid.”
Step Two: Measure Success and Failure
There is an old cliché “what gets measured gets done.” While that is very true, I like to modify that to “what gets measured can be improved.” With no ability to measure, it is impossible to determine if any effort to improve has worked or not. When a company can’t measures success and failure, there is no basis for making improvements. Moreover even if improvements are attempted, without the ability to measure, positive effects are difficult to identify.
In our example, we would want to measure the amount of time it takes from when the job is complete to the date paid. This key measurement will set a baseline in the current problem and then can be tracked to indicate if the problem has been corrected. Let’s say the data indicates our average time to get paid is 30 days.
Step Three: Analyze Why
Now that the problem is defined and the data has been identified, the next step is to brainstorm all of the possible causes. This is where including key staff members is important. If done right, having multiple voices from a variety of perspectives lends itself to more accurately identifying the root cause of any problem. In order for this process to work effectively, each person participating must feel comfortable and safe to identify any possible root cause, even if that root cause is a process problem that includes the owner or management.
A common example: “All estimates must be reviewed by the owner or management prior to being sent to the adjuster and that takes too long.” The purpose of this article is not to discuss the actual effectiveness or merits of any one process, so try not to get distracted by the example. I use it only to point out that sometimes a process that runs through upper management could be a root cause. People must feel safe to identify these potential problems or otherwise the root cause may never be discovered. If the data shows that it takes 15 days from the date completed to get an estimate/invoice out the door, half of the problem can be solved through just an internal process change.
Step Four: Improve the Process
Making an improvement to the process is the most gratifying step, but also the most common error made when companies start implementing Six Sigma principles. Because many are natural problem solvers, once a problem is identified, it is a common reflex to skip the measurement and analyze steps and jump right to the improvement phase. Resist the urge and make sure to follow the steps in sequence. Don’t attempt to improve the process until the preceding steps are complete.
In this phase, a process modification should be outlined that will make a change designed to improve the problem that has been identified. Generally, simplifying the overall process, removing redundancies and complexities, and using technology are good places to start to improve a process.
In this example, the process could be adjusted to have management review estimates prior to the job being completed while ensuring that all estimate changes are made in real-time throughout the length of the job. This would lead to estimates and invoices being ready the moment the job is complete and would shrink the wait time to get paid by 15 days.
Step Five: Control the Process
The “Control” step of DMAIC is commonly forgotten but critical to the long-term success of a restoration contractor implementing Six Sigma. Flash-forward to the successful change of the example process where the new average time to get paid is 15 days. Without the “Control” step, odds of slipping back to the original average of 30 days will be a reality with time.
Assuring this slip does not occur relies on the creation of a control process for monitoring the data points identified in the “Measure” step. These data points need to be routinely monitored for slow changes in the wrong direction. The moment a negative trend is identified, swift action is recommended to reverse course.
For example, if the average number of days to get paid remains at 15 for six months after the initial process change but begins to rise at a rate of one day per month each subsequent month, DMAIC should quickly be used to address the problem.
There are many management fads, books, and thought processes that have come and gone while Six Sigma has only grown among top quality companies. It has been shown that using data to drive process development and management leads to better company cultures, increased profitability, and higher customer satisfaction. While there is a lot to Six Sigma and much to learn, there are simple truths that can transform a restoration company; chief among them, blame the process and not the people. Also, use the process for problem solving, DMAIC, to make positive change throughout a company.
If you want to learn more, visit www.SixSigmaforRestoration.com