The cost of poor quality

When you think about poor quality, what is the first thing that comes to mind? Is it an image of something broken? Perhaps an item that is flimsy or cheap? What about misfiled or incomplete paperwork? Regardless, the example is typically something tangible that is not up to our standards. An inanimate object that has failed some form of a test. There are whole books written on how to improve quality in this regard and none of these examples are wrong definitions of poor quality. I am writing today to talk about some of the other ways in which poor quality can effect costs within your organization.

Let's start with hiring. For the sake of time we are going to assume this is a new position, but it is worth noting that the cost of backfilling a departed employee is 50%-200% of said employees salary depending on the industry. So let that sink in for a bit. You may be asking yourself where quality comes into play when hiring, but the quality of your candidate is of monumental importance. Furthermore, the quality of your new hire is going to be reflective of the quality of the process that hired them. The good news is that you own that process, and it starts with vetting. So you need to ask yourself, are you looking for the right things? What criteria are you measuring this person against and is it properly reflective of the job duties? Do you even have a job description for the role?

Assuming all of these questions are answered, you then need to ensure that the information coming from the candidate is more than just surface level. For example, don't look for a number of years in a role to gauge competency. Just because someone has been in a role for a long time does not mean they are good at it. They could be the world's worst employee that was just never reprimanded or fired. Ask instead what they have done in the role and what they have accomplished. This is a better reflection of competence.

Next, think through the quality of your interview questions. Avoid yes or no questions at all costs. Asking someone if they work well in stressful environments or if they are a team player, just results in them saying "yes". You do not learn much from yes and no questions. Ask instead for examples of these situations and let them answer from their experience. For example, "Tell me about a situation when you had to work with someone whose personality was really different from yours" or "Tell me about a time you were under a lot of pressure. What was going on, and how did you get through it?" These types of questions will allow you to get to know your candidate on a more personal level. How they respond to varying situations will give you insight into how they are going to think and react while working for you. A bad hire will not only cost you money, but they can negatively impact the culture of your business. The one aspect of your organization you should protect at all costs. The wrong person can create animosity, frustration, and jealousy within a business. This threatens not only your bottom line, but future turnover. Remember those backfilling costs we talked about earlier? These are some of the costs of poor quality as it pertains to hiring.

Let's talk about communication. Specifically, the quality of communication within the organization. Have you ever had an interaction with someone where the information you received was incorrect? I know, its completely unheard of, right?! We all know too well the frustration that comes from mistakes made by people either untrained, moving to quickly, or simply having no pride in their work. This manifests itself in many ways. If a salesman intakes a customer order incorrectly, every department downstream of them will have issues. If a quote is bad, the price may be bad, if the price is bad then the margins take a hit. If a purchaser makes mistakes and orders too few of a key component, then lead times and logistics costs go up. If the SOP for a product is documented wrong, then the manufacturer builds the order incorrectly. If the shipping department doesn't get the address right, then the product doesn't arrive at all. These examples go on and on and on. Every slow down, redo, expedite, requote, scrapped part, and returned material have costs. These are all tied back to poor communication. Poor communication due to tribal (undocumented) processes, or poor communication due to ineffective infrastructure. It's important to understand that expecting people to just "remember" things is not a process.

Lastly, let's talk about meetings and their quality. There are many opinions about whether meetings are valuable or not, and I do not plan to throw my hat in either ring. I'm not going to tell you when to and when not to have a meeting. Different industries have different needs. Therefore some things that are necessary in one business sector may not be required in the other. Its a fruitless argument. Just understand that a meeting should have a purpose. There is a significant cost with meetings. You are disrupting the work flow of everyone who is attending. That begins with the preparation for the meeting, whether that be mentally or simply gathering information. The next cost is the time they are away from their work area, which is lost. Also, assuming there are any action items, they have home work to take back with them, affecting future work productivity. Therefore, be wise. Don't have a meeting when an email will do, and similarly, don't send an email when a meeting is required. Your meetings should have a purpose, inputs and outputs. Your purpose is your reason for pulling your people together and taking them away from their jobs. The inputs are the information that is brought into the meeting and the outputs are the decisions or actions that are assigned to people when leaving. The quality of your meetings will make them meaningful and fruitful. If done properly, the people attending them will also find them fruitful and enjoy coming to them. Everyone should take away something to justify the cost of having it in the first place.

These are just a few of the ways that poor quality can cost you time and money. You need to apply that lens to every part of your organization. Whether it be hiring, communicating, meetings or any other activity. Do not let quality be only a department in your business. It is part of how you run your business. Success comes when we perform every activity with the highest level of quality that we can.