How to Write an Objective Statement for Six Sigma
After you know what your problem statement is and how much improvement you’re aiming for with Six Sigma, you’re ready to craft your objective statement. Your objective statement spells out the specific, quantifiable amount of improvement planned above the baseline performance that was indicated in the problem statement. You also need to determine how long completing this project and achieving your goal will take.
The objective statement directly addresses the information in the problem statement. Just like the problem statement, the objective statement must contain certain information in order to be effective. A good objective statement contains all the following elements: metric, baseline, goal, amount of time, impact, and corporate goal/objective.
That is, you want to improve some metric from some baseline to some goal in some amount of time with some impact against some corporate goal or objective. This timeline should be aggressive but realistic.
To begin crafting your objective statement, start with the baseline performance you established in the problem statement. After you’ve set your improvement goal, you can estimate the financial benefit of achieving this goal. This estimate should be aggressive but reasonable, and you shouldn’t worry about being accurate to the nearest penny.
You estimate the financial benefit by assessing what will be different at the new operating level versus what it is today. Your task, with the assistance of the financial organization, is to identify the differences and to estimate the annual benefit.
Linking Six Sigma projects to the key goals and objectives of the organization is always a good idea. Aside from the common sense benefits, this strategy is a good way to roll up all projects and the accumulated benefits related to the company’s goals and objectives. In some businesses, Six Sigma has created, for the first time, the ability to quantitatively link improvement effort to strategy.
The following are several Six Sigma–style objective statements that you can adapt for your projects, along with some painful examples of how not to craft your objective statement.
Poor Objective Statement 1A: Reduce inventory levels as soon as possible.
Can you succeed at this goal? Can you get excited about working on this project? Well, those answers may depend more on the mood of your boss than anything else! Consider your attitude and the enthusiasm of your boss if the statement looked something like this:
Better Objective Statement 1A: Reduce raw material inventory levels from 31.2 days average to 23 days average with a maximum of 27 days by August 1, 2012. This project will save $235,000 per year for interest, space, and personnel in support of our corporate goal to improve asset management and ROI.
Now management and team members know where the goal line is, how long they have to get there, and how much benefit their efforts will create, and they have the reassurance that their efforts will be for a good cause. With this more specific objective, everyone involved is more likely to be chomping at the bit to get started.
If you were a manager needing software engineers to complete a design, would you sign up for an aggressive schedule and put your career on the line based on the following objective statement?
Poor Objective Statement 2: Improve how long human resources takes to fill personnel requests.
Unless you have nothing better to do, you probably should look the other way when volunteers are being recruited to take on this project. But your adrenaline may get flowing if the objective was worded like this:
Better Objective Statement 2: Reduce the software engineer recruiting time from an average of 155 days to 51 days, with an upper limit of 65 days. This change will meet the maximum goal of 70 days greater than 99 percent of the time. The new goal will be achieved by June 1, 2012. It will support our Employer of Choice goal and achieve an annualized savings of $145,000 per month.
Finally, one more example:
Poor Objective Statement 3: Retrain employees to eliminate inaccurate claims forms.
In addition to being another poor objective statement, this example has an additional no-no: the inclusion of the solution “retrain employees.” If you already know the solution, why bother with the project in the first place? The following example includes all the necessary information but doesn’t undercut the project with a proposed solution:
Better Objective Statement 3: Reduce the defects per form from 2.3 DPU to less than 0.1 DPU by September 15, 2012. This change will increase revenue collection by $3.2 million per month, resulting in an additional $25,000 profit per month at an 8-percent profit margin. This project supports the corporate goal to increase revenue by 15 percent per year.
Objective statements like the “better” examples here are part of the reason Six Sigma projects are effective and can generate breakthrough levels of improvement.