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Six Sigma Deployment in HR: Enhancing Competitiveness

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SCMS Journal of Indian Management, April - June 2017 79

Six Sigma Deployment in HR:

Enhancing Competitiveness
Pankaj M. Madhani

Six Sigma is a disciplined, quality approach and philosophy for eliminating defects in any process – from
A
b manufacturing to transactional and from product to service. Six Sigma is flexible enough to be applied to different
s challenges throughout business and organizations can use it in diverse areas such as HR. Six Sigma deployment in HR
t helps in its reengineering by increasing the speed, quality and efficiency of HR services. Six Sigma deployment in HR
r is important for overall performance and growth of business. This research provides HR process improvement steps
a in terms of efficiency and effectiveness, develops various frameworks for its successful implementation and
c document benefits of Six Sigma deployment in HR with various case studies.
t
Key words : HR, Six Sigma, TQM, HRM practices, DMAIC, Competitive advantages

I n this highly competitive environment every functional

areas of an organization needs to perform better, faster
and cheaper, to keep the company ahead of the
competition. In this context, human resource (HR) function
is no exception as more cost effective and streamlined HR
processes will create value for the organization, instead of
just being a support function for the management. By
aligning HR processes and scientifically building human
Dr. Pankaj M. Madhani capital, HR can contribute significantly to the organization's
Associate Dean and Professor, effectiveness and competitiveness (Becker and Huselid,
ICFAI Business School (IBS) 1998). Effective and efficient HR practices will streamline
IBS House, Opp. AUDA Lake
Science City Road, Off. S.G. Road, efforts of various functional departments in the organizations
Ahmedabad – 380 060, India, and thus increase the overall customer value. Six Sigma is well
[email protected] suited to contribute to and support these efforts of the
organizations due to its focus on problem identification,
process improvement, and its emphasis on the customer. Six
Sigma aims to reduce variation in manufacturing and
business processes and was adopted by a large number of
companies in the 'Fortune 500' list with a view to make
measurable improvements and savings based on evidence.
Six Sigma is a data-driven improvement methodology that
emphasizes defect prevention over defect detection by

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SCMS Journal of Indian Management, April - June 2017 80

focusing on improving process inputs to improve process manufacturing through improving processes (Montgomery
outputs and view all work as processes that can be defined, and Woodall, 2008). Tylutki and Fox (2002), empirically
measured, analyzed, improved, and controlled (DMAIC) studied the Six Sigma implementation to improve the
(Benbow and Kubiak, 2005). Six Sigma is a disciplined, feeding system of a dairy farm. Krishna et al., (2008) studied
quality approach and philosophy for eliminating defects in a case study illustrating how a multinational Indian
any process – from manufacturing to transactional and from corporation was able to successfully implement Six Sigma
product to service. Six Sigma has been applied to different principles to improve its manufacturing operations. Six
challenges throughout business and organizations also used Sigma problem-solving methodologies in manufacturing
it in diverse areas such as HR. Six Sigma deployment helps process was studied by Kumar et al., (2007) to identify the
in the reengineering of HR by increasing the speed, quality parameters causing casting defects and to control these
and efficiency of its services. parameters. Six Sigma methodology was also applied to
specific case of thermal power plant for conservation of
2.0 Literature Review
energy (Kaushik and Khanduja, 2008). They implemented
Six Sigma is a philosophy as well as strategy used by Six Sigma project recommendations to reduce the
organizations for systematic problem solving. Six Sigma is consumption of demineralized (DM) make-up water from
a total quality system developed by Motorola, a US based 0.90 to 0.54 percent of maximum continuous rating (MCR)
company to identify tools, methods and best practices for resulting in a comprehensive energy saving of INR 0.305
generating innovation and driving revenue growth million per annum. Kumar and Sosnoski (2009) studied the
(Creveling et al., 2006). Motorola and GE have integrated potential of Six Sigma in realizing the cost savings and
Six Sigma so well into the corporate culture that it can be improved quality by using the case study of a leading
considered part of the DNA of the company. Six Sigma is a manufacturer of tooling.
powerful strategy that enables companies to use simple and
Using Six Sigma methodology, quality management can be
powerful statistical methods to drastically improve their
employed in supply chain management (SCM) to improve
performance (Nabhani and Shokri, 2009). Six Sigma based
the performance of various issues in the whole supply chain
methodology is used to reduce cost of poor quality by
network (Wang et al., 2004). Six Sigma does have something
improving already existing processes, reducing costs,
novel to offer organizations over the contribution of existing
eliminating defects, raising customer satisfaction and
approaches to supply chain improvement (Knowles et al.,
significantly increasing profitability of organizations (Tong
2005). Wei and Yi-zhong (2013) proposed a framework
et al., 2004).
based on Six Sigma metrics to measure and improve supply
Six Sigma offers organizations a statistical toolkit that, chain performance. The deployment of Six Sigma in the
when applied, results in a more successful and profitable manufacturing and supply chain arena has led to next-
organization (Pande and Holpp, 2002). Six Sigma focuses generation supply chain solutions (Keene et al., 2006; Yeh et
on variation and defect reduction (Kumar et al., 2009; al., 2007). The impacts of aligning supply chain and quality
Naslund, 2008), process improvement (Lee-Mortimer, management strategies with manufacturing goals and
2006; Buch and Tolentino, 2006), customer satisfaction and business performance have been investigated by Kanji and
financial enhancement (Kumar et al., 2008a). Six sigma is Wong (1999) and Tan et al., (1999). According to Wang et al.,
described as a business excellence strategy (Antony et al., (2004), improving the quality of all supply chain processes
2007); customer-driven (Nakhai and Neves, 2009), a leads to cost reduction, improved resource utilization and
project-driven (Assarlind et al., 2012) or a business-driven improved process efficiency. Yeung et al., (2005) and Yeung
(Savolainen and Haikonen, 2007) methodology, which (2008) have studied quality-based supply chain strategies.
focuses on decision making based on statistical and non- Six Sigma metrics has been used as a framework for
statistical tools (Manville et al., 2012), to lead towards evaluating and benchmarking the performance of supply
improving the organization's product, process and service chain (Dasgupta, 2003).
(Savolainen and Haikonen, 2007) or financial performance
Researchers have emphasized the importance of the concept
(Nakhai and Neves, 2009).
of Six Sigma as an effective methodology for monitoring and
Six Sigma is a business improvement program that targets controlling supply chain variables (Yousef et al., 2008). Six
process variation. It has been frequently applied in Sigma has been applied in the context of supply chain design

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SCMS Journal of Indian Management, April - June 2017 81

to analyze mitigation of container security risk (Kumar et service/process improvement. The research outcome showed
al., 2008c). Chang and Wang (2008) presented a case study that the healthcare organization gained a greater ability to
to show the benefits of Six Sigma improvement model on address challenges across the system; maximized resource
replenishment forecasting. According to Breyfogle (1999), utilization; reduced redundancies, waste and rework;
reduced cycle time, superior customer delight, decreased diminished bottle-necks related to scheduling; and improved
errors, elimination of wasted effort, improved transactions, working conditions for healthcare personnel. The findings
and continuous improvement are a few deliverables showed that healthcare organizations are able to increase
achieved from deploying Six Sigma. Liu (2006) offered an their market share in the long run after Six Sigma
application of Six Sigma to reduce cycle time and defects in implementation. Dreachslin and Lee (2007) designed a case
clinical report entry. Nabhani and Shokri (2009) used a case on application of Six Sigma techniques in determining the
study to highlight reduction of the delivery lead time with effectiveness of diversity initiatives in healthcare
the implementation of the Six Sigma methodology. Chang et management in the USA.
al.,(2012) applied the Six Sigma to improve the
Six Sigma is a powerful business strategy that yields a
performance of the production planning procedures.
dramatic reduction in defects, errors, or mistakes in service
Does et al. (2002) conclude that Six Sigma can be applicable processes (Antony, 2005a, b). Kumar et al., (2008b)
in non-manufacturing contexts with minor adaptations. presented a case of implementation of the Six Sigma
According to Mehrjerdi (2013), Six Sigma is not only for approach for improvement in service system by a major
manufacturing, but any process where an opportunity exists consumer electronics and appliance retailing company in the
for error and hence can be used in diverse business areas to USA. Six Sigma benefits are related to various areas such as
improve on time delivery; reduce cycle time for hiring and reduction in process variability, increase in profitability,
training new employees; improve sales forecasting ability; reduction of operational costs, increase in productivity,
and improve quality of customer service. Motorola, GE and reduction of customer complaints and improved sales
Honeywell are some of the companies that have utilized the (Antony et al., 2007). Chen et al., (2005) presented a case
Six Sigma methodology beyond production and integrated study in context of automobile industry in Taiwan. The study
those principles throughout the business operation (Pande et used Six Sigma to measure the performance of customer
al., 2000). Li et al., (2008) studied a specific case on requirements.
implementation of Six Sigma approach to improve the
capability of the solder paste printing process by reducing Six Sigma is a powerful methodology developed to
variations in thickness from a nominal value. A case study accelerate improvement in service quality by focusing
on improvement of the Sigma level at the screening process, relentlessly on reducing process variation and eliminating
which is regarded as the most critical process in printed non-value added steps or tasks (Kwak and Anbari, 2004). Six
circuit boards (PCB) manufacturing was studied by Tong et Sigma is gaining recognition not only in a product and
al. (2004). manufacturing environment but also in transactional
activities. Six Sigma can and should be applied to sales and
Lean and Six Sigma are seen as complementary process marketing processes with the ultimate goal being customer
excellence methodologies (Salah et al., 2010; Shah et al., satisfaction (De Mast and Bisgaard, 2007; Reidenbach and
2008) and the tools and techniques are often rolled together Kenett, 2009). Morgan (2006) has identified three key
in order to maximize the gains from initiatives and sustain it. elements in achieving Six Sigma performance related
Lean Six Sigma implementation has shown that the average directly to the customer: focus on the customer and identify
patient waiting time and variation in waiting times in an their critical to quality (CTQ) factors; ensure that processes
Indian super specialty hospital have been reduced by 50 and are designed to meet the CTQ's; ensure there are
40 per cent, respectively. This has resulted in significant measurements to understand how well the customer
patient satisfaction and the overall patient satisfaction score requirements are being met and the customers' perception
within the pathology department has been increased by over about how well they are being met. In CTQ concept only
50 per cent in the subsequent years (Gijo et al., 2013). Taner process, outcome, or service characteristics vital to customer
et al., (2007) studied five case studies in healthcare to show satisfaction are investigated for improvement (Black and
the performance improvement accomplished by Six Sigma Revere, 2006).
presenting a road-map for problem solving and

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Though Six Sigma was first used in manufacturing set up, its Lean Six Sigma: a decrease in employee voluntary turnover
scope is expanding from manufacturing to the fields like and an increase in employees' satisfaction.
sales for deciding pricing (Sodhi and Sodhi, 2005) and HR There is a greater partnership between Six Sigma and the HR
involving employee-customer engagement (Fleming et al., function (Fazzari and Levitt, 2008). Dow Chemical's HR
2005) and has opened up new opportunities (DeFeo, 2000). resource center saved $3.2 million in financial benefits
Companies deploying Six Sigma company-wide have also through Six Sigma implementation (Linda, 2004). HR
realized efficiencies in their marketing processes (Maddox, practitioners at Ford Europe and Intel have significantly
2004). Applications of Six Sigma to sales and marketing are improved their internal processes based on Six Sigma
not common, but the potential for huge benefits exists initiatives (Bhatnagar et al., 2004). Six Sigma deployment in
(Pestorius, 2006, 2007). Six Sigma can lead to improved HR is important for overall performance and growth of
customer relationships by improving the process that business. This research provides HR process improvement
delivers the product or service to the customer, and that the steps in terms of efficiency and effectiveness, develops
key is for companies to recognize the entire system, and not various frameworks for its successful implementation and
to focus on optimizing individual departments such as document benefits of Six Sigma deployment in HR with
advertising, sales, or operations (Donath, 2005). Madhani various case studies.
(2017) provided various frameworks for deployment of Six
Sigma in sales and marketing. 3.0 Successful Six Sigma Deployment in HR: Various
Case Studies
Six Sigma highlights the organizational mindset in which
Successful Six Sigma deployment in HR is illustrated with
people make decisions based on data, look for root causes of
two case studies: (1) reducing turnover of regular employees
problems, define defects based on external or internal
(Case study-I) and (2) reducing turnover of contract
customer, seek to control variation, and track leading
employees (Case study-II). In both cases, HR deployed Six
indicators of problems to prevent them (Lanyon, 2003). Six
Sigma DMAIC methodology to reduce employee turnover
Sigma practices have been deployed in HRM (Human
rate.
Resource Management) also. The combination of Six Sigma
and HRM was first applied at GE, where Six Sigma 3.1 Case Study – I: Reducing Turnover of Regular
deployment helped improve the overall quality of HRM (Formal) Employees
(Pande et al., 2000). US defense giant Raytheon has also In a large multinational company in the service sector there
employed Six Sigma in HRM as a broad tool for creating was high employees' turnover, with an average of 35 per cent
customer value and changing culture to make HRM and highs of 40 per cent in specific regions and/or functions.
processes more efficient, cost-effective, and user-friendly For the company, the recruitment and training costs of new
(Lanyon, 2003). Hewitt, the global leader in human resource employees were $5,000, and in the previous year the
solutions has achieved remarkable results in retaining company had to hire 5,500 new employees, for a whopping
employees by introducing Six Sigma process improvement total cost of$27.5 million, excluding the productivity lost
methods since 2006. Hewitt claimed that Six Sigma allowed during the learning curve of a new employee. The project
HR specialists to think differently about business issues and was given high priority status and sponsor of the project was
solve the fundamental problems (Leatherbury, 2008). the vice president for global talent management, who
Wyper and Harrison (2000) described a case study on using assembled a project team led from a Six Sigma Black Belt,
the Six Sigma methodology to improve processes within a and with members from various departments within the HR
HR function. They confirmed that Six Sigma is applicable in areas i.e. recruiting, training, compensation and career
non-manufacturing areas but difficulties arise in HR field development. The objective of the project was to reduce
such as defining the project scope and working with less turnover to an overall average of 25 per cent across the
tangible measurements. They also emphasized that the data organization.
analysis mismanagement can be a major cause of A project charter was made and agreed from relevant
unsuccessful end results when implementing Six Sigma in stakeholders and VOC was collected from former employees
HR process. Laureani and Antony (2010) did a Lean Six of last two years to know the reasons why they left the
Sigma case study in transactional services. The study organization. Key metrics of the project were identified to
describes improvements in the HR practices attributable to determine the size of the opportunity and calculate the

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SCMS Journal of Indian Management, April - June 2017 83

defects of the process. These metrics include cost per hire; HR, the overall, corporation wide, employees' turnover rate
time to fill a position; training/orientation expenses per hire; decreased from an average of 35 to 25 per cent as 559
use of performance management programme; and use of exit employees voluntarily left the organization, instead of the
interviews. The vast majority of turnover (61.3 per cent) was 783 that would have if the turnover rate stayed the same. The
in the first 6 to 12 months of employment. Hence, cost to replace each departing employee was estimated at
improvement actions were focused on the recruitment and $5,000 and hence reduced turnover has resulted in to cost
orientation steps, as those were the steps directly affecting savings of about $1.1 million (Laureani and Antony, 2010).
new recruits. In terms of defect, the Six Sigma project team
considered a defect of the HR process as any employee who 3.2 Case Study – II: Reducing Turnover of Contract
voluntarily left the organization: as such the defects per (Dispatched) Employees
million opportunities (DPMO) was calculated. Hence,
Company M, a typical foreign invested high-tech electronics
employees' turnover of 35% corresponds to 350,000 DPMO.
enterprise in Tianjin City, China was facing high turnover
The most common reasons for turnover during first 6-12 rate of dispatched (contract) employees. Company M
months were found from the survey: mismatch of work
deployed about 6000 dispatched employees. Dispatched
duties / work schedule expectations; lack of training /
employees are persons hired through an employment service
orientation/ career progression; higher salary expectations.
agency, who later work at different companies or locations
Based on these findings, following improvements actions
and they have no employment relationship with the
were piloted in two regions (one US state and one European
country) and, after a positive result, they were deployed companies where they work. The high turnover rate (2.5%
across all of the corporations: per week) of dispatched employees resulted in high
recruiting and training costs as well as production problems
1. The recruitment process was reviewed, with less for Company M. Hence, HR department deployed Six
reliance on recruitment agencies and more use of Sigma DMAIC methodology to reduce the turnover rate (i.e.
direct recruitment and a so-called “Refer-A- goal of 1.5%per week) and increase retention rate of
Friend” programme, where existing employees are dispatched employees. In this study, dispatched employees
rewarded for referring a person to the company. are external customers of the HR department while
The underlying idea was to recruit people that best departments in need of dispatched employees are regarded
fit the organization, therefore trying to reduce the as internal customers. Also, employee turnover rate was
high first-year turnover. To incentivize the considered as CTP (critical to process) and employee
programmer, a bonus scheme was put in place: retention as CTQ (critical to quality).
once a person was hired, being referred from an
employee, that employee would receive a $500 To identify root cause of high turnover of dispatched
bonus, and if the new recruit stayed more than six employees, their organizational commitment, work
months, another$500 bonus would be paid to the satisfaction, job hunting, and family responsibility were
employee that referred him or her. studied. Impact of various factors - such as salary and
benefits, work pressure, training and work environment,
2. An extensive review of the training and orientation career development, external opportunities, rotation system,
for new hires was done - spanning the time from the personal relationships, and humane care - on work
new hire accepting the offer to the end of the satisfaction were also analyzed. It was found that many
induction period. dispatched employees complained of unsatisfying work and
were unwilling to stay because of low salary, obscure future,
3. A standard, global orientation day was designed, to
frequent changes of working schedule etc. After taking care
ensure each new employee was exposed to the
of these factors by HR department, the voluntary turnover
mission, vision and values of the organization.
rate of dispatched employees in company M declined from a
All these actions were implemented and a “C-Chart” control weekly average of 2.5% to 1.4%, saving recruiting and
chart was developed to monitor the employees' turnover training costs while contributing to production quality and
level over the last 24 months, After Six Sigma deployment in yield stability (He et al., 2014).

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4.0 Need for Improvement in HR: TQM versus Six Sigma and revamping existing HRM practices to fit into quality
Initiatives plans and objectives (Blackburn and Rosen, 1993; Vouzas,
2004). Prior studies found that organizations introduce or re-
For any organization, HR is a service department as it has
design HRM practices, such as HR planning, recruitment
various services to provide, customers to satisfy,
and selection, performance appraisal, rewards and
government rules and regulations to comply with, HR
recognition, and HR development to integrate with TQM
budgets to meet, and a bottom line to improve. Prior to the
expectations (Ahmad and Schroeder, 2002; Bou and
introduction of improvement initiatives in the HR function,
Beltran, 2005; Hassan et al., 2006; Kanji and Sa, 2003;
most traditional HR department did not enjoy a desirable
Monks et al., 1997; Paauwe and Boselie, 2003; Soltani,
reputation in the organization. It was mainly because of
2005; Soltani et al., 2004; Zairi, 1998).
perceptions regarding HR as it was seen as reactive,
uncoordinated, and even unprofessional, delivering poor, Process improvement initiatives are introduced by
slow and non-cost-effective services. Hence, Total quality organizations, within the HR department in such a way to
management (TQM) has been deployed across various support strategic aims of quality and to bring it more along
functions of the organizations including HR to improve the lines of TQM principles (Greasley, 2004; Hur, 2009;
overall performance. Santos-Vijande and Alvarez-Gonzalez, 2009). According to
4.1 TQM and HRM Practices Bendell (2005), there is need of process improvement along
with quality improvement initiatives. Process improvement
TQM is generally defined as the presence of a quality is core to a variety of models of quality excellence such as
management philosophy that focuses on customer ISO 9001, European Quality Award, Canadian Quality
satisfaction, continuous improvement and treating the Award, MBNQA and Deming Prize (Stading and Vokurka,
organization as a total system (Dean and Snell, 1991; Sitkin 2003). Process improvement within the HR department is
et al., 1994).TQM is an organization-wide process-oriented essential to organization-wide structured approach to
philosophy that requires changes not only in production, but quality improvement (Bowen and Lawler, 1992; Soltani et
also in employee development, employee participation and al., 2006).
involvement and also in decision-making processes
(Abdullah et al., 2009; Mehra et al., 2001; Power and Sohal, 4.2 Six Sigma and HRM Practices
2000). Customer satisfaction and focus, team working, cost
Six Sigma can be just as suitable in HR as it would be in any
reduction, continuous improvement, training and education,
other functional departments of the organization. The
top leadership commitment, and having an appropriate work
statistical thinking of Six Sigma can be an effective tool for
culture are key contents of a TQM approach (Reed et al.,
analyzing HR issues and improving performance of the HR
2000).
department. With Six Sigma's focus on the entire process, its
The research evidence shows that when organizations aim methods would be more appropriate for a complete overhaul
towards TQM they adopt more constructive approach to the of HR processes. Six Sigma based HR practices and
management of HR by advancing the role of HR function Traditional HR practices are compared in Table I.
Table I: Traditional HR Practices versus Six Sigma based HR Practices
Sr. Traditional Six Sigma Based HR
Parameters
No. HR Practices Practices
1 New initiatives Trial & Error Robust design
2 Analysis basis Experience Data
3 Focus End result Process
4 Time Reactive Proactive
5 Planning Short term Long term
6 Control External Self-control
7 Psychological contract Compliance Commitment
8 Structures & Systems Bureaucratic Organic
9 Employee relations Low trust High trust
(Source: Tabulated by author)

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4.3 TQM versus Six Sigma: Commonalities and Differences 3. Process management;
According to Hoerl and Snee (2003), following common 4. Fact-based decision-making; and
features can be found in both TQM and Six Sigma 5. Use of statistical tools and techniques for problem
initiatives: solving.
1. Customer focus;
However, following differences (Table II) can also be found
2. Continuous improvement in process/service quality
between TQM and Six Sigma initiatives (Antony, 2005b):
or cost reduction strategies;

Table II: TQM versus Six Sigma

Sr. Criteria TQM Six Sigma

No.
1 Deployment process to drive fundamental Not strong Strong
change in the organization

2 Integration of tools and techniques within the Missing Greatly

problem-solving framework emphasized
3 Role of organizational leadership and Weak Strong
infrastructure to enable the successful deployment
of tools and techniques

4 Alignment of assigned projects with strategic Missing Strong

business objectives of the organization

5 Measurement of financial results in hard-dollar Missing Strong

savings
6 Management style Bottom-up Top-down
leadership
7 Cultural change Gradual and Fast change
slow
8 Rewards and recognition Less More
emphasized emphasized
(Source: Tabulated by author and adapted from Antony, 2005b)

A major difference between Six Sigma and other quality process deviates from perfection. The name of the Six Sigma
approaches is that Six Sigma aims to achieve 3.4 defective methodology is derived from the Greek alphabet symbol
parts per million (Smith et al., 2002). Six Sigma provides sigma (s) utilized in statistics for standard deviation; a
business managers with the strategy, methodology, measure of the variability within a population around the
infrastructure, tools and techniques to change the way mean, a measurement to quantify variation and process
businesses are run. Six Sigma focuses on reducing the inconsistency. Six Sigma focuses to obtain the same result
number of opportunities that could result in defects by every time and utilizes the well-defined problem solving
shifting the emphasis from fixing defective products to approach via statistical tools.
making perfect products (Antony and Banuelas, 2001).
5.0 Six Sigma Concept and Evolutions: An Overview The central idea behind Six Sigma is that if organizations can
measure how many “defects” they have in a process, they can
5.1 Six Sigma Concept systematically figure out how to eliminate them and get as
Sigma is a statistical term that measures how far a given close to “zero defects” as possible. For customer oriented
organizations, defect is anything that caused customer

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dissatisfaction or does not meet a customer's specification. Six Sigma provides a quantitative, statistical notion of
Such organizations see everything through their customer's quality useful in understanding, measuring, and reducing
eyes as they deliver what the customer wants and when she variation. Six-sigma method allows firms to reduce things
or he wants it (George et al., 2004). Reaching Six Sigma to a common denominator - defects per unit and sigma and
level means what organization delivers is what the customer hence provides a common language and the ability to
wants. The Six-Sigma quality level is equal to 3.4 defects benchmark themselves against like products, processes and
per million opportunities (DPMO) and can be shown as 3.4 practices' (Harry, 1997). Most organizations produce at a
DPMO. An “opportunity” is defined as any chance for level of two to three Sigma, meaning that between 66,807
nonconformance or not meeting the required specifications. and 308,537 defects occur with every one million
This reduces waste and hence saves money whilst opportunities; this means between 6.7% and 30.9% of
improving customer satisfaction. everything produced contains a defect (Table III).

Table III: Sigma Level: Defects Per Million Opportunities

Sr. Sigma Level Defects Per Million Yield

No. Opportunities
(Capability of (Error Free)
Process) (DPMO)

1 1 690,000 31%
2 1.5 500,000 50%
3 2 308,537 69.1%

4 3 66,807 93.3%
5 3.5 22,750 97.725%
6 4 6,210 99.38%
7 4.5 1,350 99.87%
8 5 230 99.977%
9 5.5 32 99.997%
10 6 3.4 99.9997%
(Source: Table compiled by author)

There are actually an infinite number of Sigma, with each reduction is termed as Generation I of Six Sigma (Harry and
higher Sigma representing an exponential improvement in Crawford, 2004). Later many companies, including
quality. A Sigma quality level offers an indicator of how Motorola, GE, and Bank of America applied Six Sigma to
often defects are likely to occur, whereby higher sigma service processes and experienced bottom-line benefits
quality levels indicate a process that is less likely to create (Krehbiel et al., 2007). This phase of Six Sigma, where the
defects as the quality level also increases accordingly focus is on process improvement and economics, is termed
(Madhani, 2016). as Generation II. In manufacturing and operations
(Generation I of Six Sigma), usually there are very high
5.2 Six Sigma Evolutions correlations between the quality of process inputs and the
The initial focus of Six Sigma was the rigorous process of quality of process outputs, thereby making operation easy,
variance reduction leading to the design of business predictable, fact based and thus making Six Sigma
processes that produce 3.4 DPMO. This emphasis on defect deployment smooth (Figure 1).

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Evolving Generation
II

(Services and

Pr ogr ession
Processes )

Six Sigma
6σ

Generation
I
(Manufacturing
and Operations )

Established
Defect Service
Reduction Enhancement
Six Sigma
Focus
(Source: Framework developed by author)

Figure 1: Six Sigma Evolutions: Various Generations

Generation II of Six Sigma focuses on transactional 6.1 Six-Sigma Deployment in HR: DMAIC Methodology
processes to reduce its variability and includes its Six Sigma offers an organizational structure and a culture
application to HR services. Improved processes lead to that stimulates an investigative and experiment attitude at all
improved customer satisfaction, increased productivity, levels (De Mast, 2006).Successful deployment of Six Sigma
increased market share, business profitability, and so on. in HR requires commitment of organizational leadership and
Transactional processes that require high human input avoid required infrastructure support. Six Sigma requires trained
control as process inputs and outputs are weakly correlated. men power in different categories such as 'Black Belts,
Hence, in HR, the linkages between inputs and outputs are 'Master Black Belts, Green Belts' etc. According to Six
simply not as easy to adjust as they are in manufacturing Sigma vocabulary, “Black Belts” and “Master Black Belts”
processes and therefore Six Sigma deployment in HR is work full time on projects while “Green Belts” spend some
complex. time working on projects while maintaining their regular
work responsibilities. “Process Owners” are traditional line
6.0 Research Methodology managers whose operations are the focus of Six Sigma
projects. The most important aspect of the Six Sigma
This section focuses on deployment of Six Sigma in HR and
approach is its five-step process DMAIC (define, measure,
provides various frameworks and methodologies.
analyze, improve, and control) methodologies responsible
for improving HR performance (Figure 2).

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Six Sigma DMAIC Methodology

Define Stage 1

Infrastructure Support.
Measure
Stage 2

Six Sigma Stages

eadership and

Analyze Stage 3

Improve Stage 4

Organizational L

Control Stage 5

(Source: Framework developed by author)

Figure 2: Six Sigma DMAIC Methodology in HR

The DMAIC process is the essence and core of Six Sigma 4. Improve: How do HR department remove the causes of
philosophy in identifying and solving problems (Pisani et problems? How do HR re-engineer the process and
al., 2009). The use of the DMAIC process is not limited to
simplify?
solving quality problems, but also involves all aspects of
business improvement, such as time saving, cost saving and 5. Control: How can HR department maintain the
service improvement (Thawani, 2004). By approaching the
improvements? What are various statistical process
HR problems using this framework, it is expected that the
improvement activities can be managed in a structured control tools to monitor performance?
manner, data driven, and involve all line of employees. Six Sigma deployment in HR focus on identifying what
Following are various stages of DMAIC: customers want/need, translating these into CTQ
characteristics and deploying these through specific process
1. Define: What is it HR department is seeking to improvement stages. These stages are explained in detail
improve? below:
2. Measure: How is the HR process measured? What is 6.1.1 Define
the current capability of the process? How is it The first stage in Six Sigma DMAIC methodology is the
performing in terms of variability? define stage. Define stage begins by identifying and
prioritizing the HR processes that offer the greatest options
3. Analyze: What are the most important causes of HR
for growth. It is mainly because not all HR improvement
related problems? How to map the process, and opportunities are worth an investment. The opportunities
prioritize for action? must be evaluated using a quantifiable approach and not one

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driven by guesses, agendas or intuition. Define stage This stage helps to create an understanding of the types of
identifies the HR problem being addressed, its customers performance measures that are currently employed. Some of
being affected, what they view as important, and what the measurement matrices in HR are:
performance matrices will be used. HR goal, scope,
expected outcome, boundaries and project schedules are 1. Reliability: It concerns about the failure to deliver
specified in this stage. HR problems are defined clearly and required processes by HR;
as much possible as numerical. This stage develops problem 2. Customer satisfaction: It concerns about whether
statement, goals and benefits, project plan and milestone and customers are satisfied with the HR service that is
identifies champion, process owner and team members. provided and
3. Cost: It concerns about the cost that is incurred in a
After the HR activities are identified they are assigned to
HR.
process improvement. The define stage focuses on the
defining the core HR process influencing its customer (i.e. 6.1.3 Analyze
their CTQ issues and Voice of the Customer (VOC)) that
Analyze stage uses statistical tools and techniques to narrow
have the highest priority for improvement. This stage also
the list of possible causal elements to those that contribute
identifies and prioritizes CTQ factors that drive the value
the most to the HR problem and find the root causes by
matrix. Without this information, few HR efforts can satisfy
analyzing when and where problems occur. Hence, this stage
either the effectiveness or efficiency criteria that are so
verifies the relationship and causality of factors by
important in HR success. By hearing the VOC, HR process
determining vital few x's for Y=f(x) relationship.
performance can be measured as VOC focuses on
identifying and measuring basic requirements of HR Potential root causes are also analyzed by various Six Sigma
customers (internal as well as external). VOC is a very tools (see Table IV). One of the simple and most widely used
valuable way to uncover the needs of customers and can be tools is a technique known as the “Five Whys.” The Five
captured in a variety of ways: direct discussion or Whys approach uses a systematic questionnaire technique to
interviews, surveys, focus groups, observation, and field search for root causes of a problem. The tool Five Whys is
reports etc. used by asking “why?” at least five times as root cause are
analyzed through various levels of detail. Once it becomes
6.1.2 Measure
difficult to answer to “why?” then probable cause of the
This stage measures the capability of the existing HR problem may have been identified (Pojasek, 2000). Another
processes and focuses on the performance of the core HR widely deployed Six Sigma tool is value stream map as value
processes involved. Measure stage determines what stream map makes it easier to determine where bottlenecks
processes are potentially contributing to the problem, exist in the process (periods of waiting that hold up the
develop a data gathering plan and system, collect data to process). It also provides a visual map for a project team to
determine the types of matrices and validate how the develop a list of quick actions where the solution is fairly
information (data) will be used to drive HR performance obvious. The process of creating the value-stream map helps
decisions and finally establish the base-line performance organization see where the waste is located in the process to
level. The purpose of this stage is to measure problem areas better know - on what they should be working to change. In
and accordingly identify HR performance measures such as an HR process, Lean Six Sigma defines waste as any part of
cost, efficiency, and service levels. Moreover, this measure the process that does not benefit the customers of HR and
can help to identify the deviations of current measurements. defects as errors or mistakes in the process.
This stage focuses on defining value for the issues identified In order to eliminate waste in the HR processes, it is possible
in the define stage. Because the definition of value changes to apply Six Sigma tools to each step of the human capital
from one process to the next, so does the thrust of Six Sigma value stream map (Wyper and Harrison, 2000). The human
approach. It captures the VOC, which provides the basic capital value stream map identifies the flow of human capital
input necessary to make informed decisions and hence required for an organization to deliver its products or service
assures that subsequent changes are directed by the to customers. With set metrics for each step of the human
contingencies of the specific process. In order to begin capital value stream map, an organization can apply Six
measuring performance, HR must define which key data Sigma methodology to it. It is also necessary to establish
exists, where it resides, which data is needed, and how or if proper quantitative metrics in these steps to allow objective
the data can be obtained. This stage begins developing Y= assessment and control of the process step (Sullivan, 2003):
f(x) relationship as it attempts to understand which inputs this makes use of the more quantitative statistical tools from
(x's) have the greatest effect on the output metrics (y's). the Six Sigma tool chest possible.

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Establishing HR metrics can be contentious, with different system. Statistical methods are used to validate the
parts of the organization having different objectives (Jamrog improvements. After this testing, the improvement should be
and Overholt, 2005), but for each step focusing on expected implemented throughout the process.
deliverable, relevant metrics, key performance indicators 6.1.5 Control
and probabilities of defects may help in identifying the real
value each step can provide. Analyze stage focuses on the Control stage maintains changes made to the HR process and
evaluating data collected and process maps to determine monitor process performance to determine whether it is in
overall opportunities for improvement. In this stage the control. If the process is in control, the standards of cost,
causes of problems that yield process variations are efficiency, and service are set to those of the improved
investigated and relevant factors examined in details. The process. Hence, this stage identifies the controls that must be
purpose is to evaluate current performance and re-evaluate in place to sustain the benefit of the new process. The basic
the standards for cost, efficiency, and service objectives. As purpose is to control and monitor efficiency and service
Six Sigma approaches is process focused and value driven, performance in HR to ensure that the process meets the
these tools are designed to capture and use the customer's identified standards. A control chart can be employed to
perception of value. detect whether or not the process is in control. A process is
considered as in control when there are no occurrences of
6.1.4 Improve special causes of variations. Once the process is in control,
The first step in this stage consists of identifying and current data can be used to evaluate the process performance.
prioritizing improvement areas. Once these areas have been In this last stage, focus is to eliminate the causes of problems
prioritized, the areas that must receive immediate attention, and to maintain the continuity in sales process improvement.
considering time and cost restrictions, are identified. The In this final stage, standards and procedures are developed
purpose of continuous improvement is to reduce the amount for controlling future process performance, benefits are
of common-cause variations in the HR processes. Improve verified, cost savings is documented, handover plan and
stage develops plans to change the HR process involved to documents are finalized, and action plan is communicated to
eliminate or reduce the effect of the root causes of variations. process owner.
This stage focuses on the enhancing target process by 6.2 Six Sigma Deployment in HR: Performance Matrices and
designing creative solutions to fix and prevent HR problems. Process Tools
It involves testing these plans, determine whether the
solution is able to reduce variations, establish their efficacy, Six Sigma provides a variety of analytical and statistical
and then implement changes so that the overall HR process tools. The Six Sigma DMAIC process utilizes a set of
performance can be improved. This stage develops potential statistical and visual tools as shown in Table IV.
solutions and defines operating tolerances of potential
Table 4 : Overview of the DMAIC Process Tools
Sr.
Stage Tools
No.
1 Define Project charter, Basic rules, Stakeholders analysis Responsibility matrix, SIPOC (Supplier-
Input-Process-Output- Customer), Flowcharts, Flow process charts, Relation diagrams and
Gantt charts
2 Measure Process maps, VOC (Voice of Customer), Histogram for variable frequency analysis, Initial
process capability, Fishbone (Ishikawa) diagrams, Benchmarking
3 Analyze Cause and effect diagram, Correlation analysis, Regression analysis, ANOVA (Analysis of
variance), Standard deviation, FMEA (Failure Mode Effect Analysis), Five Whys, Value
stream maps, Multivariate charts, Pareto analysis
4 Improve Future state maps, Work plan, Simulation model, Pilot study, Design of experiments, Brain
storm, Fool-proofing, Performance/Importance gap analysis
5 Control Capability of final process, Standard work, Scatter diagram for variable relationship analysis,
Statistical process control, Control charts, Run charts for trend analysis, Standard operating
procedures, Training, Checklists, Surveys
(Source: Table compiled by author)

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6.3 Six-Sigma Deployment in HR: Strategic - Tactical - strategic approach to the management of all people that
Operational Linkages contribute to the achievement of the objectives of the
When Motorola first implemented Six Sigma in the late business (Armstrong, 2006). In fact, it includes all steps
1980s and obtained amazing results, it was then faced with where an employee and an organization come into contact,
the dilemma of how to reward its employees for those with the potential of adding value to the organization (Ulrich,
successes (Gupta, 2005): this was the first time Six Sigma 1996). To fully capture HR's responsibilities of value
and HR practices came into contact. In the past the term HR delivery from its service offering, the deployment of Six
was related only to administrative functions (e.g. payroll, Sigma DMAIC methodology should focus on HR's strategic,
timekeeping, etc.), however, in the last few decades the term tactical, and operational aspects. HR's role in each of these
has increased substantially to include the acquisition and three areas can be defined by the activities it performs in each
application of skills and strategies to maximize the return on and how it links the strategic, tactical, and operational areas
investment (ROI) from an organization's human resource in a closed-loop fashion (Figure 3).
(Milmore et al., 2007). Hence, HR management is the

Strategic

Long - term
Benefits

Six Sigma
in HR
Short - term Functional
Benefits Benefits

Operational Tactical
(Source: Framework developed by author)

Figure 3: Six Sigma Deployment in HR: Key Linkages

The application of Six Sigma at operational levels results in 1. Improving quality of hire and reducing time and cost to
short-term benefits (e.g. cost reduction in routine activities) hire new employees.
whereas the application at the strategic levels results in 2. Developing job descriptions and providing training.
organization-wide benefits. Strategic level HR practices
make efforts to attract, retain and motivate key talent and 3. Faster response time to internal queries about
compensation, benefits and payroll.
builds organizational culture with commitment of
leadership. Tactical level HR practices focus on staffing, 4. Establishing and tracking career progression and career
training, development, appraisal, and remuneration. paths with employees performance management
Operational level HR practices focus on educating review.
employees, communicating HR related matters and 5. Reducing employee turnover and increasing employee
retention.
providing support for generating work-life balance.
7.0 Six Sigma Deployment in HR: Major Challenges
6.4 Application Areas of Six Sigma in HR
Transactional processes that require high human input avoid
Following are various areas where Six Sigma can be
control as process inputs and outputs are weakly correlated.
deployed in HR:
In HR the linkages between inputs and outputs are simply

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SCMS Journal of Indian Management, April - June 2017 92

not as easy to adjust as they are in manufacturing processes the field of HR, as the project team is dealing with
and hence proven to be difficult for Six Sigma application. very sensitive issues. There is also difficulty to
There are various other reasons why HR applications of Six
perform any pilot project and hence it is going to
Sigma are uncommon:
impact on the behavior of staff, making it
challenging to accurately measure its results.
1. Six Sigma program has inherent production-
centric bias. Six Sigma consultants are typically 8.0 Research Implications
from manufacturing background and do not The Six Sigma approach adds more “science” to the “art” of
understand HR processes. The manufacturing HR. Process-centric work design of Six Sigma may at first
sector is full of numbers-oriented people seem slow, routine, and burdensome. There is doubt that
accustomed to the process concept while those deployment of a structured approach requiring processes,
matrices and data would only suppress the quick response
people involved in HR are not. Also, many times
required to be successful in HR. Besides, HR may think
“Black Belts” and “Master Black Belts”
statistical analysis can dampen outcome of their traditional
supporting projects in this arena have little or no practices. Even with the hurdles inherent in applying Six
hands-on experience in HR. They cannot provide Sigma, there is promising future for Six Sigma application in
the practical, knowledgeable assistance that newly HR. Significant savings can be realized from improved
trained Six Sigma HR personnel require. transactional processes because, unlike most manufacturing
efficiency gains, improved HR processes directly impact
2. In manufacturing, it is often believed that almost
satisfaction of internal customers. While manufacturing and
every processes variable can be controlled.
even supply chain operation costs have been squeezed
However, there is no strong call for actions such as effectively without compromising quality, HR operations
the quality concerns (e.g. removing process have not seen comparable increases in efficiency as well as
variability) in HR. Six Sigma has difficulty in effectiveness.
establishing an appropriate HR measurement 8.1 Benefits of Six Sigma in HR
system analysis and metrics as HR processes are
1. Six Sigma establishes a common language and
not very well defined. In most cases, process
systematic approach to problem solving methods
performance data such as defect levels, cycle time,
and thus provides new capabilities for problem
etc. does not exist or is difficult to access as HR solving
issues are transactional in nature, and process
2. Six Sigma establishes focus on reduction of
performance parameters are sparse. Thus, it creates
variability and waste elimination and hence drives
measurement challenge in HR. the improvement of HR processes to achieve the
3. Measurability of a HR process depends on the strategic objectives of the organization.
perception of an individual HR person in HR 3. Six Sigma in HR helps organizations in getting right
activities. Where there is no any standard people in the right place at the right time at the right
parameter to measure the HR process, it depends cost.
on the perception of individual decision. Even 4. Six Sigma in HR helps organizations in providing
though there are some tools called HR score cards prompt HR response to internal inquiries for
are available in industry to measure HR benefits, payroll, promotion and fairness.
performance, many times there is no benchmark 5. Six Sigma deployment in the HR function provides
for HR performance as it is consider as the benefits such as reduction in time and cost to hire an
supporting activity in organizations. employee, reduction in training costs, reduction in
overtime, reduction in employee turnover, reduction
4. Data in HR is mostly qualitative and discrete and
in safety violations, reduction in cost of managing
hence end-to-end process outcome thinking is not employee separation (Gupta, 2005).
prevalent. Also, data collection can be difficult in

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The outcomes of these HR improvement activities are better, Antony, J. and R. Banuelas, (2001),“Six sigma: A business
faster and more cost-effective HR services in the strategy for manufacturing organizations.”
organization, with improved internal customer satisfaction, Manufacturing Engineering, Vol. 8, No. 3, pp. 119-121.
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Assarlind, M., I. Gremyr, and K. Backman, (2012),“Multi-
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Sigma Black Belt Handbook, ASQ Quality Press,
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Milwaukee, WI.
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