How the philosophy of W. Edwards Deming can be applicable to the current political climate in the United States?
Please bear with me as I need to provide a little context to make my point…
Earlier in my career, I got involved in the Total Quality Management (TQM) movement and had the privilege to attend a W. Edwards Deming seminar (https://en.wikipedia.org/wiki/W._Edwards_Deming) just a few years before he passed away. One message he constantly reinforced was, “the system that people work in and the interaction with people may account for 90 or 95 percent of performance.” The basic premise is that performance is only as good as the process enables and a lot of organizational inefficiency is because managers don’t understand the capabilities of key business processes and how they impact organizational performance.
What went wrong with the process and what can be done to improve it?
Per Deming, leaders should start addressing issues by asking the above question when things go wrong (e.g., service failures). Too often, the first question is, “Who screwed up?”. Let’s explore an example of how not understanding process capabilities can lead to inefficient management:
Two Level Expense Report Approval – One company I worked for instituted a new policy that all expense reports must have two levels of management approval before they can be submitted to Accounting for reimbursement. The policy was created because an employee was caught cheating and too many expense reports had mistakes. Perhaps the policy did improve scrutiny and provided a deterrent for cheaters, but the primary impact was that it significantly lengthened the time for employees to get expenses reimbursed and distracted senior managers from more important tasks. I met with the CEO who instituted that policy and asked him, “What percentage of employees do you think cheat or make mistakes on an expense report that their primary manager or Accounting would not catch?” We both agreed it was less than 5%. Then I asked, “What’s the cost of all the time 2nd level managers must spend reviewing expense reports? What’s the cost of employee frustration due to delays in reimbursement? How do the additional costs compare to the potential savings that may be realized by eliminating 2nd level approval?” We agreed to do some analysis of rejected expense reports at the 2nd level of approval. The data showed it was minimal, mostly honest mistakes and likely to be caught by Accounting. Eventually, the 2nd level approval policy was eliminated (though it required a promise of publicly flogging anyone caught cheating!).
With this example, a special cause (mistakes or deliberate cheating) was treated like common cause. Essentially, 95% of the organization was being penalized for the mistakes or deliberate cheating of 5%.
WHAT DOES DEMING’S PHILOSOPHY HAVE TO DO WITH POLITICS?
One of the prominent political issues getting a lot of attention is the cost of entitlements, like Medicaid. Recently, elected officials from many states have pushed for tighter restrictions on Medicaid eligibility. For example, The Centers for Medicare and Medicaid Services (CMS) issued a State Medicaid Director Letter providing new guidance for Section 1115 waiver proposals that would impose work requirements (referred to as community engagement) in Medicaid as a condition of eligibility (https://www.kff.org/medicaid/issue-brief/medicaid-and-work-requirements-new-guidance-state-waiver-details-and-key-issues/). The guidance asserts that such provisions would promote program objectives by helping states “in their efforts to improve Medicaid enrollee health and well-being through incentivizing work and community engagement.” That’s a very noble intent, but the message in between the lines is that many people are using Medicaid entitlement programs because they don’t want to work. And no doubt, some probably are.
So, let’s go back to the expense report approval scenario where 95% of the people were penalized for the sins of a few and implementing the 2-level approval actually added cost and inconvenience. I think this same scenario can apply to Medicaid eligibility. It would be helpful to analyze some data, but my hypothesis is that implementing new eligibility restrictions will actually cost the government much more money and cause more inconvenience to innocent people. Systems would need to be built to track if/how Medicaid recipients are looking for work and remain compliant. Medicaid clients will have more inconvenience and potential delays receiving much needed benefits. Oversight and compliance reporting will be additional cost. Innocent people will be denied benefits due to unintended system defects.
Do we really know what percentage of the Medicaid population really does try to cheat the system? My guess (no hard evidence) is that it’s probably in the 5-10% range.
I volunteer at our local Food Pantry (https://www.honeybrookfoodpantry.org/). The Honey Brook Food Pantry provides a 3-4 day supply of various food items on a monthly basis to neighbors in need within the Honey Brook community. Their mission is to serve them with respect while empowering them toward food security and independence. To be eligible, the families must reside in our township and earn less than 150% of the federal poverty level for their family size. Many of the clients have serious disabilities and require home deliveries. I noticed that most of the clients at the Honey Brook Food Pantry that can work, do work. Unfortunately, it seems they have very low-paying jobs and often, many mouths to feed. They simply cannot afford good food, housing, transportation, and family care with such low wages. Plus, it’s a difficult process for anyone to figure out how to obtain the benefits for which they are eligible and truly need. I believe more eligibility restrictions would make it even more difficult to obtain needed benefits, penalizing those who need the most help.
Please don’t see this as a political statement. I’m not aligning with a Democratic or Republican platform. It’s an economic viewpoint. We need to be addressing the root causes of failures and inefficiencies in our government programs, not simply treating the symptoms. I think we should be looking to continuously improve the process to provide benefits to those with legitimate needs. In my opinion, adding new restrictions and qualification requirements to key government programs will negatively impact the vast majority of people who need support. It will also add cost and inefficiencies.
I view this issue much like the drug crisis. We are wasting way too much money and public safety by trying to control the supply of drugs. I think the root cause solution is to reduce the demand for drugs. Treat drug use as a medical issue, not a criminal one. As an example, we’ve made great progress over the past years reducing the consumption of cigarettes and the frequency of drinking and driving through awareness campaigns and changing social norms. We will not eliminate all demand (that’s human nature), but we learned from prohibition that trying to control the supply only creates more crime. That’s why prohibition failed.
What do you think? Please share your comments.