I read with interest on my news feed that #California and federal regulators fined Wells #Fargo a combined $185 million for illegally opening more than 2 million unauthorized bank and credit card accounts for their customers in order to meet sales goals. Fargo must also pay restitution to affected customers. I guess the executives at Fargo fell asleep during their business management classes at Harvard, especially when they studied Edwards #Deming, the father of #TQM — total quality management.
Deming’s 14 Points are as follows:
- Create constancy of purpose for improving products and services.
- Adopt the new philosophy.
- Cease dependence on inspection to achieve quality.
- End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier.
- Improve constantly and forever every process for planning, production and service.
- Institute training on the job.
- Adopt and institute leadership.
- Drive out fear.
- Break down barriers between staff areas.
- Eliminate slogans, exhortations and targets for the workforce.
- Eliminate numerical quotas for the workforce and numerical goals for management.
- Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system.
- Institute a vigorous program of education and self-improvement for everyone.
- Put everybody in the company to work accomplishing the transformation.
Note part of number 10 “Eliminate… targets for the workforce”; part of number 11 “Eliminate numerical quotas… and numerical goals for management”; and part of number 12 “…eliminate the annual rating or merit system.” The reason for that is to avoid exactly what happened at Fargo. When bonus and ratings depend on numerical goals and targets instead on improvements in quality and productivity workers and management will find ways to cheat or improve their numbers without actually making any real improvements.
I think this is exacting what happened within the Veteran Administration. VA Hospitals found creative ways to make their numbers and the waiting period for vets to see doctors without actually helping vets.
When you set numerical goals, you create the environment for cheating and fraud.
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