Deming and the Abdication of Leadership

To use only Deming-based ‘quality methods’ and not his ‘leadership methods’ puts organizations at a distinct disadvantage, writes Kenneth Craddock in this week’s The Deming Files. Indeed, Deming would have considered many common management practices today an employee’s nightmare.

In his two books on management, Out of the Crisis and The New Economics, Dr. W. Edwards Deming provided us with insights about effective leaders and leadership. Dr. Deming had his own unique way of communicating the traits and role of the leader.

There is evidence to indicate that most people are unaware (or have forgotten) about Deming’s teachings/theories on leadership. Nevertheless, his management theories are at the core of his teachings on quality, and are very powerful. To use only Deming-based ‘quality methods’ and not use the Deming’s ‘leadership methods’ puts organizations at a disadvantage to those organizations that are using both the quality methods and the leadership methods.

What is the job of the leader?

Dr. Deming said the job of the leader is to accomplish the transformation of the organization.

Question: But transformation to what?

Answer: transformation to using Deming’s New Philosophy (NP) of Management to lead organizations.

In other words, Deming is saying that to sustain success of an organization leaders need to move beyond the typical command-and-control, numbers driven, western management theories and instead, embrace the theories that are a part of his New Philosophy.

The New Philosophy can be seen in Deming’s 14 Points for Management and it is well-embodied in the System of Profound Knowledge (SoPK). The 4 components of SoPK are:

• Understanding variation, especially statistical variation, but not only statistical variation
• Understanding systems, systems thinking and how to lead systems
• Understanding psychology, especially the differences between intrinsic and extrinsic motivation
• Understanding the theory of knowledge of how we learn, and on how we can truly know if what we have learned about how things work is really how things work.

For those of you who may recall Deming’s 14 points, here are a few favorites:

• #1 Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs
• #8 Drive out fear so that everyone may work effectively for the company. (Fear of speaking up, for example, thwarts innovation and improvement because people are afraid to make a mistake, afraid to be blamed.)
• #9 Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
• #10 Eliminate slogans, exhortations, and targets for the workforce; asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

To recap: the most effective leader will learn how to lead by understanding and applying the 14 Points for Management and by understanding and applying the 4 elements of the System of Profound Knowledge.

A Better Way to Manage

For example, studying the 14 Points and the System of Profound Knowledge will help the leader to recognize the importance of "understanding the organization as a system." (This is a key aspect of the journey of transforming the organization so the New Philosophy of Management is used to lead the organization.) "Understanding the organization as a system" means, among other things, that the leader is concerned with the optimization of the overall system – of the overall organization – and not by trying to optimize the results of each individual department. For example, with optimization of the overall organization everybody wins: owners, workers, customers, suppliers, the community, the environment, et cetera.

When trying to optimize the overall organization, there is no place for the concept that each department or "silo" tries to win at the expense of others. As an example, it does not make sense for individual departments, divisions, teams and people to compete for the biggest part of the budget to try to get ahead of other departments. Nor does it mean that if each department "meets its numbers" that the overall organization wins.

In practice this means, for example, that pay-for-performance schemes must be abolished. Such schemes cause individuals and department heads to try to optimize their own performance so they can get more pay. Not only do pay-for-performance approaches cause people to be more selfish, it causes them to cut corners to reduce expense, and to put off needed training and maintenance so the quarterly results look better. Pay-for-performance also often leads to cheating and other forms of corruption – even sabotage of others in the same company.

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Abolishing pay-for-performance may be counter to your beliefs. Dr. Deming knew his theory of management (sometimes referred to as the Deming Management Method) included a number of practices that were counter to what was commonly taught, practiced and deeply ingrained. Research indicates that organizations which follow his precepts outperform those that do not.

Another belief that Deming said to leave behind: the annual performance review. Deming made it clear that the annual performance review as typically practiced should be abolished. Deming said the typical annual performance review sneaked into organizations and became popular because it does not require anyone to face the problems of people. Further, the typical performance appraisal is based on a lack of knowledge of variation, a lack of knowledge of systems thinking, a lack of knowledge of psychology, and a lack of knowledge about how to accomplish improvements for the future. If one understands SoPK, one will understand why annual performance reviews cause great harm. He said the annual performance review still lives because it makes it easier to rate and rank people and to focus on the outcomes, alone. This annual performance review makes it possible for managers NOT to learn how to manage.

Instead of typical annual performance reviews, here is what is needed from leaders:

• Learn to be a coach and counselor for improvement rather than a judge for ranking, rating, and testing people.
• Help people learn from mistakes. A leader expects there will be mistakes. Rating and ranking of people is counter-productive to learning from mistakes – and causes people to hide mistakes.
• Conduct a long, informal conversation among managers and the people who work for them at least once a year so the manager can understand them, their aims, hopes and fears. This assists the leaders and managers with mentoring, task assignments, and training.

Two final and critically important aspects of the theories which underpin the Deming Management Method:

• Leaders can encourage or destroy innovation: Through their management methods, leaders can either destroy or create an environment of trust that encourages freedom and innovation. Deming proved that the typical management practices in use destroy trust and discourage innovation. Merit pay, incentives, numerical targets without discussion of methods, quota systems, and annual performance reviews are some of those counter-productive management practices.
• Leaders can encourage or destroy a trustful culture of continual improvement: A leader encourages continual improvement by not expecting perfection and by understanding that a focus on perfection can become the enemy of continual improvement. This may surprise many people who mistakenly believe that Deming was a proponent of "zero defects" thinking. A focus on perfection can become the enemy of continual improvement because "zero defects" is an arbitrary numerical goal, it does not help anyone do a better job, and demonstrates a lack of understanding about variation. "Zero defects" may be an auditor’s dream but such a goal is an employee’s nightmare and the abdication of leadership by managers.

The great news is that Deming’s methods have been proven through the decades in many public and private organizations, and there is an abundance of examples which many organizations have overlooked.

©Copyright 2011 by Kenneth C. Craddock

To contact the author: kencraddock@gmail.com

Author’s Note: My thanks to Margaret Eiluned Morgan for her many helpful suggestions, and to Kelly L. Allan for his editing support.

Editor’s Note: The columns published in THE DEMING FILES have been written under the Editorial Guidelines set by The W. Edwards Deming Institute. The Institute views these columns as opportunities to enhance, extend, and illustrate Dr. Deming’s theories. The authors have knowledge of Dr. Deming’s body of work, and the content of each column is the expression of each author’s interpretation of the subject matter.