Understanding the Variability of Work
Data Provide a Basis for Decision Making
Decision Making is a Primary Characteristic of Management
“Whatever a manager does, gets done through making decisions.” Drucker, 1954. Most people understand the world is not a neat and orderly place, that day-to-day activity is pushed and pulled by complexity, and that success means helping others find a course of action in a challenging environment. However, people in charge often provide direction shaped by intuition, sometimes emotion, or far too often, comparisons that assign judgment based on the amount of negative or positive movement in financial data. Although seemingly sound, following this guidance for action can be mostly a gamble.
Holding a management position means having to make choices, having to decide among several courses of action. And one of the most difficult things to avoid in this case is making the wrong choice, drawing the wrong conclusion, without comprehending the true nature of the conditions involved. So, an understanding based on measurement and study, the gathering of facts, helps sort out cause-and-effect relationships and reduce the chance of moving in a wrong direction.
The importance of decisiveness as a key management characteristic is generally recognized. Knowledge is the foundation for good decision-making, and data provides the catalyst that makes reliable discernment possible. So, data collection and analysis become an important management tool. Gathered facts provide information for making choices. Without the knowledge data bring, the resulting decision becomes nothing more than speculation. Understanding data facilitates prediction and the ability to plan with assurance goals can be realized. Leadership is, at its core, all about prediction. That is to define a course for the future.
For some managers, there is a tendency to look at just two data points (for example, this month’s sales are down from last month’s) and decide that something needs to be done. The uncovered dip in sales, however, may be nothing more than normal variability at work. Blowing the whistle on this aberration will do nothing other than make people jump. Two-point comparisons do not predict trends and are very much like rolling the dice. Having the same or higher amounts appear is chance. Contingent on many other forces that may be acting on the sales process. Making people jump, particularly when nothing new is discoverable, can diminish enthusiasm and the future inclination to solve problems.
System Ups and Downs are a Matter of Routine
All systems and processes are impacted and influenced by variability. And that’s all right because life and work have inherent inconsistencies, their ups and downs. Although, much of human endeavor is about creating consistency, there is a continual cascade of inputs that push and pull events, so outputs differ one from another. Sometimes the drift is excessive and noticeable, while at other times the change is modest and imperceptible. Variability is a fact of life, and its impacts have shaped the world, its nature, creatures and environment. Most of the time these inconsistencies are tolerable and a matter of routine. We have learned to live with them. However, on other occasions, these forces are intolerable and produce only troubling results that can have untidy consequences.
Take for example the tasks that comprise the daily ritual of preparing for and getting to work. Each component has its time-consuming activities, which for the most part is routine and automatic. Very little thought is given to how much time is spent on each pursuit, and the cumulative effect is rarely considered until some intervening event, some special cause, interrupts the habitual chain of events. If timed and recorded, however, these individual and sequential activities vary from day-to-day by several seconds and often minutes. Taken as a whole, these differences have little meaning because they have become tolerable and a matter of fact. Just a consequence of getting to work. Yet periodically, by chance, one of these trivial activities turns into a time-consuming event that upsets the whole routine. In this case, we recognize the problem and act to accommodate it.
There are Two Sources of Variation
There are two sources for variation acting on the work-prepping process and all processes as well. The first source includes influences that are predictable and typically stable. We anticipate and live with them. These are called “common cause” variation and can be described as follows:
Then there are those influences that are sporadic and unpredictable. They create notable disorder in the daily scheme of things. These are called “special cause” variation and can be described this way:
There is a Tendency to Misinterpret Variation
Why is this knowledge important? Quite simply, there is a tendency to misinterpret variation and react to its causes inappropriately. These mistakes come in two forms which can be costly because reactions, although intuitive, are often counterproductive and don’t improve process or system outcomes but instead intensify the situation. The first mistake happens when reaction to a routine source for variation is treated as a special cause, an outside occurrence, but the influence was the result of normal activity or common cause variation. The second mistake happens when reaction to an outside source of variation is treated as a common cause, a routine occurrence, but the actual influence was the result of non-routine activity or special cause variation.
For instance, Businesses collect a wealth of information about production, sales, expenses, and shipments. However, well-meaning managers often evaluate numbers on a point-to-point comparison. Assessing between a budgeted standard or a previous set of figures and the current set of numbers. If results are positive, then all is assumed to be well. If the results are negative, then there is a call for action. Unfortunately, the assumptions are often wrong and irrational because the bases for comparison did not reflect the system’s true nature including ever-present and inherent variability. The tendency for results to move up as well as down in a normal pattern.
Rewarding or praising positive results that are an expression of normal variability creates disincentives. It encourages confidence and a continued course for action when an alternative or more robust effort might be required to sustain or improve process realities. Likewise criticizing or punishing the negative effects of common cause variation produces an undercurrent or resentment because people recognize the futility of problem-solving when there is nothing to uncover. A sense of apathy sets in when a call to action only finds routine ambiguities. Then, when real trouble is discovered, the workforce is slow to react, and corrective action can become a protracted process.
Yes, system ups and downs are a matter of routine because an assortment of inputs and pressures continually act upon underlying processes. However, not recognizing the influence of variability, or misreading its sources, and then acting inappropriately typically leads to calamity. The result is increased costs, reduced performance, lower quality, and ultimately loss of customer or stakeholder confidence. As a remedy, understand variability, its attributes and consequences; then learn when to act so the system can remain stable over the long term. Relying on intuition or perception is not the solution, but acting upon the signs imbedded in system highs and lows is an approach that is more insightful and less speculative. Variability is a fact of life. Appreciate its messages and learn how to apply its lessons.
Data Provide a Voice for the System
Measurement, analysis, and improvement work best in an environment where there is trust and a realization that data are being used to seek improvement, not blame. When data are collected under conditions of fear and distrust, outcomes will, in most cases, not reflect true issues or concerns, and some facts may remain hidden, buried, or not reported. Instead, judgments will tend to reflect a biased notion about conditions or the people working in the system rather than about what is really occurring. Meaningful improvement is not likely to happen, which can impact long-term prospects for efficiency, quality, and customer satisfaction. Data provide a voice for the system and the processes that occur within it. These messages can be used to monitor and improve practices so outcomes indeed match expectations. Here are some simple guidelines for assessing process variation:
These signals indicate exceptions to the usual system or process tendency, announcing to those who work in the process that steps should be taken to identify and correct the causes that could lead to costly or unproductive conditions. Start by Initiating problem-solving that will change and improve the underlying process dynamics. The reason, of course, is managing what often seems to be the randomness and whimsy of process problems.
Why is an understanding of variation important?
All processes display variability. Although, outputs may appear identical, if measured and quantified, differences will be detected. These differences when plotted in relationship to time will produce a discernible pattern. The patterns produced tell a story and are a powerful tool for assessing the stability of the process being studied and measured. These can be observations related to sales, shipments, product defects, customer complaints, inventory turnover, accounts receivable turnover, or any variable that can be tracked on a regular basis. The reason is to understand the spread in variability and process stability or instability. The goal of course is to uncover problems and reduce costs. When special cause variation is removed. The underlying arrant sources have been found and corrected. The process is stabilized, and variability is reduced. Thus, reducing costs.
Understanding the variability of work is all about knowing when to act and when not to. This grasp of events starts with spotting what is normal and how far process measures have drifted from a central or average measure before customers and stakeholders will be disappointed by the organization’s products or services. Understanding variability also provides a means for improving process outputs. Reducing variability, the magnitude of normal ups and downs through problem-solving and experimentation, enhances consistency and quality, but more importantly decreases costs even further. Stable processes are easier to manage because their outputs are repeatable and predictable. One of management’s goals is stability or recognizing when there is the potential for trouble and initiating action to deal with the inconsistencies. The ability to understand and read the ups and downs of variability quite simply makes the job easier.