Background
The point under discussion is the eleventh principle proposed by Dr. Deming that suggests “eliminating arbitrary numerical targets.” The key idea of this principle resides in placing a greater focus on the quality of performance rather than on the quantitative indicators. Hence, Dr. Deming proposes to eliminate those norms and standards that oblige employees to concentrate on numerical quotas. He provides two rationales to explain the ineffectiveness of this quantitative approach. First, he points out that numerical targets fail to consider any external factors that tend to prevent an employee from fulfilling the assigned quantitative norm, i.e. delays and cancellations, the lack of clients on a particular day, etc. As a result, the evaluation of performance outcomes is distorted.
Second, Dr. Deming notes that numeric work standards are incompatible with effective leadership that is supposed to be targeted at a continual quality and productivity improvement. Thus, the quantitative approach overlooks the importance of operation processes placing the entire emphasis on their final results. In such a manner, performance outcomes become the main criteria for evaluating the accomplishment of a set purpose. Meanwhile, Dr. Deming does not reject the need for measurements in management. The solution that he proposes is to change the object of measuring. Hence, he suggests evaluating the quality of the product and service provided rather than the number of calls made or units sold.
Current Condition
The discussed principle is not integrated into Costco’s management practice to the full extent. Thus, significant emphasis is still put on the numeric indicators such as the number of purchase agreements made per month or the scope of new customers involved. As a result, employees strive to reach the highest scores possible sacrificing the quality when it is required. In the meantime, it should be noted that officially, managers do not impose any numerical targets and encourage employees to focus on continual quality improvement. Thus, there is no formal document that would describe the quantitative standards an employee is obliged to meet. It might be suspected that employees are focused on the quantitative indicators of their performance because the payment system is largely based on the performance-related format. Hence, bonuses are commonly assigned for more sales and contracts so that incentives serve as a powerful driver of quantity-focused performance.
Target Condition
It is proposed that adopting the discussed principle will imply numerous benefits for Costco. First, it will help to develop an effective leadership approach that is aimed at ensuring continuous quality and productivity improvement. The shift from the focus on focus will allow employees to concentrate on the quality of their performance and evaluate the service they provide to their customers from a new perspective. They will receive a chance to develop their professional skills and design new communication techniques.
Additionally, the implementation of this principle will provide for a better understanding of the target customers, their needs, and requirements. As a result, the customer’s satisfaction with the service will increase, and the quantitative indicators will improve naturally. The second positive outcome is that the integration of this principle into the management strategy will allow for establishing a healthier workplace atmosphere. Thus, employees will experience less tension and stress associated with the rush towards enhanced numerical achievements. The positive reinforcement, in its turn, will become a powerful driver of quality improvement.