In echo at LO 18014 and 18468,
there is a very interesting article on post launch blues in quality and HR
mangement initiatives. It can be found on the web and in Management
Science:
Unanticipated Side Effects of Successful Quality Programs: Exploring a
Paradox of Organizational Improvement
by John Sterman, Nelson Repenning, and Fred Kofman
Here is the abstract provided with the article:
Recent evidence suggests the connection between quality improvement and
financial results may be weak. Consider the case of Analog Devices, Inc.,
a leading manufacturer of integrated circuits. Analog's TQM program was a
dramatic success. Yield doubled, cycle time was cut in half, and product
defects fell by a factor of ten. However, financial performance worsened.
To explore the apparent paradox we develop a detailed simulation model of
Analog, including operations, financial and cost accounting, product
development, human resources, the competitive environment, and the
financial markets. We used econometric estimation, interviews,
observation, and archival data to specify and estimate the model. We find
that improvement programs like TQM can present firms with a tradeoff
between short and long run effects. In the long run TQM can increase
productivity, raise quality, and lower costs. In the short run, these
improvements can interact with prevailing accounting systems and
organizational routines to create excess capacity, financial stress, and
pressures for layoffs that undercut commitment to continuous improvement.
We explore policies to promote sustained improvement in financial as well
as nonfinancial measures of performance.
There is some technical modeling, but the article is worth the effort.
Daniel Atlan
atlan@compuserve.com
[Host's Note: John Sterman presented this work at a Pegasus conference; I
thought it very interesting. ...Rick]
--"Atlan, Daniel" <Atlan@compuserve.com>
Learning-org -- Hosted by Rick Karash <rkarash@karash.com> Public Dialog on Learning Organizations -- <http://www.learning-org.com>