Ups and downs

“Life is full of ups and downs.”

We understand it in a non-business setting. So why is an appreciation for variation so lacking in a business setting? Dunno. But let me give you a (fictional) example.

Rob works in an insurance company, processing claim forms. Rob is measured on how many forms he processes in a day. The more forms, the happier Rob’s boss is. Fine.

So on Monday, Rob handles 20 forms. Tuesday he completes 24. Brilliant. Tick and a star. Wednesday we see Rob completing 16 forms. Booo, hisssss. Thursday 21 and Friday 18. Hmmmm…

What is happening here? Is Rob working harder on Monday and especially on Tuesday? Has he suddenly gone thick on Wednesday? Or is there something else happening here? What is happening is that there is variation due to the system. (The system of work, not the IT system, by the way.)

Some insurance claims are longer than others, some more tricky, some are less easy to read and some contain more errors or omissions than others. Some days the computer network responds faster than other days and some days Rob gets more interruptions from his boss (probably more on Thursday morning after Rob’s performance on Wednesday!!).

If he was clued up like the reader, Rob’s boss would have Rob plot his own forms per day on a control chart. Boss would see that the average is 19.8 and that it would be quite normal for Rob to do as many as 33 forms or as few as 7 forms on any given day. That is the variation that this system could exhibit. If however, Rob did 38 or 2 in a day, Rob’s boss would know that something special had happened and that would need to be investigated. But between 7 and 33 nothing need to be done. No employee of the month awards and no “motivational” sessions when the figures get lower.

(Actually, if the boss was really as clued up as the reader, he would know that the number of forms per day is a terrible measure since it can’t possibly be aligned to customer purpose!! He would also know that 5 points is really too few to get a proper measure of the variation. But hey, this is fiction.)

So if we wanted to raise that average what do we do? We have to find the sources of variation in the system and remove them. Stop the errors getting onto the forms, ensure clean data from the start of the flow, ensure that the network is reliable etc. But our clued up boss would not work on Rob and his “energy” or “alignment to corporate values”, the boss would understand that it was his own responsibility to change the system in which Rob works.

And that understanding, which comes from an appreciation of a fairly simple statistical technique, can be quite profound, since it changes how management see themselves, their staff and their respective responsibilities and tasks.

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