Six Stigma?

When Robert Nardelli was ousted as CEO of Home Depot, one unusual side effect was the attention paid to his advocacy of the Six Sigma process-improvement methodology. Consultancies, particularly those with competing approaches, were quick to offer opinions, surveys, and research intended to show that Six Sigma has been oversold. QualPro Inc., which markets a competing "multivariable testing" system, looked at almost five dozen companies that have adopted Six Sigma and found that the vast majority have underperformed the stock market. A recent study of finance shared-services organizations by The Hackett Group found that while fully 86 percent of them use Six Sigma or similar continuous-improvement methodologies, they generally achieve only incremental gains. To achieve what Hackett calls "world-class" performance, companies can't rely on Six Sigma alone; they must regard it as a specialized tool suitable to certain needs but far from a cure-all.

Scot Webster, vice president of global business solutions at Medtronic Inc., which deployed a combination of Six Sigma and Lean Manufacturing more than three years ago, agrees. "Six Sigma doesn't address everything," he says. "You have to use it in combination with other tools." But Medtronic did use its "Lean Sigma" methodology to reduce its payment-processing time by more than 50 percent.

Thomas Davenport, a professor of management and information technology at Babson College, suggests that in the current business climate, which is focused on growth and innovation, Six Sigma's emphasis on cost-cutting and efficiency might prove a harder sell. "Six Sigma is following the course of other methods, like Total Quality Management: after awhile you start seeing cracks in its armor," he says. "Then something new comes along and companies rush to get it."

Critics have long contended that the further Six Sigma strays from its manufacturing roots, the less effective it becomes. — Laura DeMars

So Much for that Post-Enron Glow

You may not inspire as much confidence as you used to. According to a Watson Wyatt Worldwide survey of more than 12,000 workers at all job levels and across all industries, confidence in senior management's capabilities has dipped. Not surprising, you say, given the Enron scandal and an uncertain economy. Well, consider that between 2002 and 2004 the scores actually went up. What's going on? "Crises often lead to better communication," says Watson Wyatt's national practice director for organization effectiveness Ilene Gochman, "whether it's the 9/11 attacks, the dot-com crash, or financial scandals." At those times, she says, senior executives become more visible and get the message out. When they fail to do so, employees become less engaged and even disenchanted. At companies with what Watson Wyatt dubs a "highly engaged" workforce, confidence levels in senior management are 30-plus points higher. Good communication alone won't transform your workforce, Gochman says, but it will play a larger role than most senior executives believe. She says frequency is what matters most. And if you have actual good news to deliver, that can't hurt. — Scott Leibs

Private Equity Attracts Public Scrutiny

As private equity gets hotter, it continues to attract heat. The latest wrinkle inspiring calls for increased regulation are so-called club deals, in which PE firms team up to bid for large companies.

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